Business A Changing World Canadian 6th Edition by Ferrell - Test Bank

Business A Changing World Canadian 6th Edition by Ferrell – Test Bank

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Sample Questions Are Posted Below

TRUE/FALSE. Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) Entrepreneurship is the process of creating and managing a business to achieve desired objectives.
Answer: True False
2) It is difficult to define small business because the concept of “smallness” is relative.
Answer: True False
3) Any business that is independently owned and operated can be classified as a small business.
Answer: True False
4) The Canadian Federation of Independent Businesses (CFIB) offers advice on starting a small
business.
Answer: True False
5) The entrepreneurship movement is declining because of technological advances.
Answer: True False
6) Small businesses rarely have alliances with other companies.
Answer: True False
7) Entrepreneurs possess a wide variety of characteristics. There does not appear to be any common
characteristics shared among them.
Answer: True False
8) In recent years, small businesses generated very few new jobs in Canada.
Answer: True False
9) Small businesses in Canada employ about half of all private sector employees.
Answer: True False
10) Retailing, services, manufacturing, and high technology are attractive to entrepreneurs because these
fields tend to be easy to enter and require low initial financing.
Answer: True False
11) Retailers purchase goods and resell them to consumers and some distributors.
Answer: True False
12) People who operate service businesses are generally not considered retailers.
Answer: True False
13) A number of very successful high technology businesses began as small entrepreneurial ventures.
Answer: True False
14) In the last decade, between 60 and 80 percent of net new jobs annually were created by small
businesses.
Answer: True False
1
15) Of the 50 fastest-growing companies in Canada as identified by Profit magazine, nine of the top 10
are service-based businesses.
Answer: True False
16) Service businesses represent one of the slowest-growing sectors of the Canadian economy.
Answer: True False
17) Technology is increasing start-up costs and preventing entrepreneurs from reaching consumers
around the globe.
Answer: True False
18) The desire to be your own boss is a major reason for going into business for yourself.
Answer: True False
19) Relatively low start-up costs are an advantage of a small business.
Answer: True False
20) Small businesses cannot be operated from an individual’s home.
Answer: True False
21) The ability to develop a reputation for quality and service is an advantage of a small business.
Answer: True False
22) Targeting small niches or product needs is a dangerous strategy for a small business to follow.
Answer: True False
23) Small businesses usually have multiple layers of management.
Answer: True False
24) According to Statistics Canada, independence is the leading reason that entrepreneurs choose to go
into business for themselves.
Answer: True False
25) Small businesses have a high success rate.
Answer: True False
26) Managerial inexperience can lead to business failure.
Answer: True False
27) The shortest path to small-business failure is undercapitalization.
Answer: True False
28) Insufficient funds to withstand slow sales may cause a small business to fail.
Answer: True False
2
29) Poor business management is a cause of many small-business failures.
Answer: True False
30) According to research, the top challenge of small and medium-sized businesses is finding and
retaining qualified employees.
Answer: True False
31) According to a study by Statistics Canada the median income of self-employed individuals was only
91.4 percent of the median income of paid employees.
Answer: True False
32) Statistics Canada, Profit, and the U.S. Census all have produced research indicating that
entrepreneurs work fewer hours than paid employees.
Answer: True False
33) To start any business, large or small, you must first have an idea.
Answer: True False
34) A key element of business success is a business plan.
Answer: True False
35) The most important source of funds for any new business is the employees.
Answer: True False
36) When a business owner uses real personal assets rather than borrowing funds from outside sources
to get started in a new business, it is called debt financing.
Answer: True False
37) Small businesses can also obtain equity financing by finding investors for their operations.
Answer: True False
38) Angel investors are private, wealthy individuals who typically invest less than $5000 in a business
in return for an equity stake in that business.
Answer: True False
39) Banks are the main suppliers of external financing to small businesses.
Answer: True False
40) Small businesses may obtain funding from their suppliers in the form of a trade credit–that is,
suppliers allow the business to take possession of the needed goods and services and accept other
needed goods and services as payment, in a way similar to bartering.
Answer: True False
41) In Canada, family businesses account for 80 to 90 percent of all firms.
Answer: True False
3
42) The most widely requested financial instrument by SMEs is lease financing.
Answer: True False
43) Occasionally, small businesses engage in bartering.
Answer: True False
44) The practice of franchising first began in Canada when Singer used to sell sewing machines in the
19th century.
Answer: True False
45) Research has found that franchisees fail at the same rate as traditional small and medium-sized
firms.
Answer: True False
46) A franchisee is a company that sells a franchise.
Answer: True False
47) Franchisees pay the franchiser a monthly or annual fee based on a percentage of sales or profits.
Answer: True False
48) Industry Canada offers financing for small business but is not able to provide training programs for
entrepreneurs.
Answer: True False
49) National publications such as Profit, Inc., and Entrepreneur share statistics, advice, tips, and
success/failure stories.
Answer: True False
50) While networking may be crucial in a corporate environment, it is not necessary to run your own
small business.
Answer: True False
51) Small businesses typically are not vulnerable to turbulence and change in the marketplace.
Answer: True False
52) Millennials are also called Generation Y.
Answer: True False
53) The baby boomer cohort represents the segment of the population that is probably the wealthiest,
although generally the least pursued by small businesses.
Answer: True False
54) Technological advances have resulted in fewer opportunities for small businesses abroad.
Answer: True False
4
55) According to many small business owners, the market with the least potential is the echo generation,
the children of the baby boomers.
Answer: True False
56) The Millennials are considered an attractive market because they shop frequently and spend lavishly
on clothing, entertainment, and food.
Answer: True False
57) Companies that have the most success with the Millennial segment, are the ones that cater to health
care, pharmaceutics, and pet supplies.
Answer: True False
58) More and more firms are emulating small businesses in an effort to improve their own bottom line.
Answer: True False
59) Small business principles cannot be transferred to larger organizations.
Answer: True False
60) Downsizing is one way firms try to enhance their competitiveness.
Answer: True False
61) Large firms avoid entrepreneurship.
Answer: True False
62) Intrapreneurs take responsibility for the development of innovations of any kind within larger
organizations.
Answer: True False
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
63) Which of the following began as a small business based on the entrepreneurial visions of its
founders?
A) Rogers Communications.
B) Pizza Pizza.
C) 1-800-GOT-JUNK?
D) Magna International Inc.
E) All of the businesses began as small businesses based on the entrepreneurial visions of their
founders.
Answer: E
5
64) Your textbook uses the term small business to refer to an owner-managed business that employs not
more than:
A) 1,000 people.
B) 100 people.
C) 25 people.
D) 15,000 people.
E) 500 people.
Answer: E
65) Which of the following is not part of the definition of a small business used in this text?
A) It is not dominant in its field.
B) It employs more than 500 employees.
C) It is independently owned.
D) It is independently operated.
E) It employs fewer than 500 employees.
Answer: B
66) The CFIB is:
A) Canadian Federation of Independent Buyers.
B) Canadian Faction of Internet Businesses.
C) Canadian Federation of Independent Businesses.
D) Canadian Franchising and International Businesses.
E) Canadian Farmers and Independent Businesses.
Answer: C
67) Which of the following are characteristics of entrepreneurs?
A) Energetic.
B) Strong desire to act independently.
C) High need for achievement.
D) Willingness to take some risks.
E) All of the choices are characteristics of many entrepreneurs.
Answer: E
68) The CFIB uses a slightly different definition of small business, and believes the cut-off should be:
A) 250 employees
B) 1000 employees
C) 750 employees
D) 1250 employees
E) 50 employees
Answer: A
6
69) The majority of all new jobs created in Canada in recent years were generated by:
A) large businesses.
B) provincial governments.
C) corporations.
D) small businesses.
E) medium businesses.
Answer: D
70) Perhaps one of the most significant strengths of small businesses is:
A) the encouragement they receive from larger businesses.
B) their ability to innovate and bring significant changes and benefits to customers.
C) the entrepreneurial spirit they foster.
D) the ease of starting one.
E) the competition they encourage.
Answer: B
71) Which of the following sectors are most attractive to small businesses?
A) Retailing and wholesaling, services, manufacturing, and high technology
B) Wholesaling, retailing, and services
C) Services, distribution, and high technology
D) Retailing, distribution, and services
E) Wholesaling, services, and high technology
Answer: A
72) All of the following are reasons why a small business would choose to become a retailer, except
that:
A) Gaining knowledge and experience in retailing is relatively easy.
B) Retailing does not require a large capital investment.
C) Starting a retail business is relatively easy.
D) Retailing requires a large capital investment.
E) The owner can capitalize on personal expertise or interests.
Answer: D
73) In the context of starting a new business, a retailer differs from a manufacturer in that the retailer is
less likely to make a heavy investment in:
A) space.
B) advertising.
C) equipment and distribution systems.
D) stationery.
E) bookkeeping.
Answer: C
7
74) Many service businesses are considered retailers because they:
A) sell small quantities of goods.
B) sell from a single store location.
C) sell their services to consumers.
D) employ only a small number of people.
E) open their businesses for the same hours that most retailers stay open.
Answer: C
75) One of the fastest-growing sectors of the Canadian economy is represented by:
A) wholesalers.
B) service providers.
C) retailers.
D) manufacturers.
E) exporters.
Answer: B
76) One of the major reasons people want to own and operate their own business is to:
A) have an easy life.
B) eliminate all pressure.
C) be their own boss.
D) make a fortune.
E) have complete freedom.
Answer: C
77) When market conditions change rapidly, a small business usually has fewer layers of management to
work through in making decisions. This advantage of small business is called:
A) standardization.
B) flexibility.
C) focus.
D) hierarchical organization.
E) reputation.
Answer: B
78) Which of the following is an advantage of small-business ownership?
A) Poor reputation
B) Lower cost of formation
C) High stress level
D) High failure rate
E) Lack of flexibility
Answer: B
8
79) Which of the following is not an advantage of small-business ownership?
A) Flexibility in decision-making
B) Ability to gain a solid reputation
C) Ability to focus on specific groups of customers
D) Lower cost of formation
E) Over-optimism
Answer: E
80) One advantage that small businesses have over large businesses is that they:
A) have well-defined goals and objectives.
B) have specialized knowledge about the various areas of business concern.
C) can arrange financial help easily because their capital needs are much smaller.
D) know what they want to do and have the ability to do it.
E) are better able to focus on a few key customers.
Answer: E
81) A small business’s ability to focus on narrow niches can help it develop:
A) flexibility.
B) higher costs.
C) lower costs.
D) high blood pressure.
E) an enviable reputation for quality and service.
Answer: E
82) Worries about new equipment, expanding inventory, rent increases, competition, changing market
conditions, and the like may contribute to:
A) a high stress level.
B) optimism.
C) a low stress level.
D) a high failure rate.
E) undercapitalization.
Answer: A
83) Although some businesses are less risky than others, overall the financial risks of running a small
business are:
A) low.
B) moderate.
C) very low.
D) very high.
E) insurmountable.
Answer: D
9
84) Which of the following is a disadvantage of small-business ownership?
A) Low stress level
B) High failure rate
C) Low failure rate
D) Flexibility
E) Focus
Answer: B
85) All of the following concerns contribute to high stress levels for small-business owners, except:
A) the expanding inventory.
B) the changing market demand.
C) competition.
D) reputation.
E) rent increases.
Answer: D
86) According to research, the top challenge of small and medium-sized businesses is:
A) Finding and retaining qualified employees
B) Increasing costs of materials and health care
C) Managing the growth of the business
D) Changing economic conditions
E) Increasing revenue
Answer: A
87) Small-business success:
A) is a sure thing.
B) rarely lasts for more than two years.
C) happens only in Canada.
D) is not really attainable.
E) is not guaranteed.
Answer: E
88) Which of the following is not a common cause of small business failure?
A) Poor business concept
B) Entrepreneurial vision
C) Undercapitalization
D) Managerial inexperience
E) Inability to cope with growth
Answer: B
10
89) Few businesses make money:
A) at all.
B) easily.
C) from the start.
D) with competent managers.
E) and grow at the same time.
Answer: C
90) When the founder of a Quebec-based waste-disposal firm spent $16 million on a hazardous-waste
incinerator project, believing that the project would benefit the environment and the community,
despite local residents’ objections, he may have had:
A) a poor business concept.
B) overextended finances.
C) poor financing.
D) inefficient expectations.
E) a lack of optimism
Answer: A
91) The shortest path to failure in a small business is:
A) overregulation by government.
B) poor inventory control.
C) undercapitalization.
D) improper policies and procedures.
E) poor vendor relations.
Answer: C
92) The lack of funds to operate a business normally is called:
A) undercapitalization.
B) financial pessimism.
C) discounting.
D) creative financing.
E) overcapitalization.
Answer: A
93) Initially, the factor that probably affects a company’s reputation more than anything else is poorly
managed:
A) diversification.
B) labourers.
C) growth.
D) collateral.
E) equity.
Answer: C
11
94) Many small business in Canada fail because of events which occur in a company’s external
environment that the company cannot control. In these situations, failure is due to:
A) insufficient capital.
B) external shocks.
C) the failure to adapt.
D) external dilemmas.
E) an inadequate business plan.
Answer: B
95) To start any business, you must first have:
A) capital.
B) an idea.
C) a business plan.
D) employees.
E) investors.
Answer: B
96) A precise statement of the rationale for a business and a step-by-step explanation of how it will
achieve its goals is a:
A) mission statement.
B) business plan.
C) corporate statement.
D) corporate charter.
E) balance sheet.
Answer: B
97) The business plan should do all of the following, except:
A) include an analysis of the competition.
B) include estimates of income and expenses.
C) act as a shackle to limit the business’s flexibility and decision making.
D) explain the business.
E) establish a strategy for acquiring sufficient funds.
Answer: C
98) Many financial institutions decide whether to loan a small business money based on its:
A) business plan.
B) goals.
C) employees.
D) owners.
E) reputation.
Answer: A
12
99) To make money from a small business, the owner must obtain capital. A small retail store will
probably need at least what amount of initial financing?
A) $500,000 B) $5,000 C) $50,000 D) $500 E) $1,000
Answer: C
100) The money used to start a business and keep it running is also called:
A) currency. B) leverage. C) stock. D) capital. E) trade.
Answer: D
101) The most important source of funds for any new business is:
A) the bank.
B) the Chamber of Commerce.
C) the stockholders.
D) donations.
E) the owner.
Answer: E
102) Persons or organizations that agree to provide some funds for a new business in exchange for an
ownership interest or stock are called:
A) shareholders.
B) entrepreneurs.
C) stockholders.
D) corporate raiders.
E) venture capitalists.
Answer: E
103) Venture capitalists are a source of:
A) preferred stockholders.
B) tax deductions.
C) equity financing.
D) debt financing.
E) owners’ equity.
Answer: C
104) A mortgage is an example of:
A) owners’ equity.
B) equity financing.
C) an unsecured loan.
D) debt financing.
E) venture capitalism.
Answer: D
13
105) The type of financial instrument most used by SMEs is:
A) personal savings
B) trade credit
C) personal credit cards
D) leasing
E) loans from friends and relatives
Answer: A
106) A licence to sell another’s products or to use another’s name in business is called a:
A) franchise logo.
B) franchiser development system.
C) franchise.
D) franchiser.
E) franchisee.
Answer: C
107) Since Rachel Hollings decided to purchase the rights to own and operate a Tim Horton’s fast-food
restaurant rather than start her own operation, she is probably a(n):
A) trade creditor.
B) franchiser.
C) industrialist.
D) franchisee.
E) venture capitalist.
Answer: D
108) An organization that sells a licence to use its products or name is a:
A) franchiser.
B) contract manufacturer.
C) venture capitalist.
D) franchisee.
E) cooperative.
Answer: A
109) One of the attractive features of franchising is that:
A) a new-business owner can be assured that he or she gets honest information from the
franchiser.
B) franchisees are almost certain to succeed.
C) franchises are inexpensive.
D) franchisers have total financing available so that a new business owner doesn’t need any
capital.
E) franchisers have well-known names and products.
Answer: E
14
110) Franchising first began in the United States within the following industry:
A) printing services.
B) fast food restaurants.
C) sewing machines.
D) home delivery food services.
E) maid services.
Answer: C
111) In a franchise business, the following generally happens:
A) Each pays separate fees to the other.
B) Both the franchiser and the franchisee pay fees to the capital investors.
C) The franchiser pays a fee to the franchisee.
D) The franchisee pays a fee to the franchiser.
E) No one pays any fees to anyone.
Answer: D
112) All of the following are advantages of franchising, except:
A) The standardized quality of goods and services
B) Brand-name appeal
C) Management training and support
D) A limited product line
E) Centralized buying power
Answer: D
113) Which segment of the population is probably the wealthiest in Canada?
A) Echo boomers
B) Millennials
C) Generation Y
D) Generation Z
E) Baby boomers
Answer: E
114) Which market segment is most targeted by marketers and small businesses?
A) Generation Y
B) Millennials
C) Generation Z
D) Echo boomers
E) Baby boomers
Answer: E
15
115) Millennials number around 6 million and represent a huge business opportunity in Canada. Who are
they?
A) First generation immigrants
B) It is another term for baby boomer
C) It is a synonym for Generation X
D) People born at the turn of the millennium between 1999 and 2001
E) People born between 1977 and 1994
Answer: E
116) The Echo generation, who are the children of the baby boomers:
A) were born between 1977 and 1994.
B) are immigrants.
C) are also known as baby boomers.
D) are the market of the future.
E) are over the age of 50.
Answer: A
117) Which of the following characteristics is generally true of the millennial generation?
A) They are determined to invest in their future.
B) They have shopping habits very similar to the baby boom generation.
C) They shop frequently and lavishly.
D) They are frugal and conservative in their spending habits.
E) They are big contributors to their retirement savings plans.
Answer: C
118) Approximately how many people immigrate to Canada each year?
A) 10,000 B) 500,000 C) 250,000 D) 100,000 E) 50,000
Answer: C
119) All of the following have helped to create new opportunities abroad for small businesses, except:
A) free trade agreements.
B) an increase in service exports.
C) deregulation.
D) communication advances.
E) technological advances.
Answer: C
120) Which industries will be likely to continue to grow as baby boomers age?
A) Recreation and sports equipment
B) Clothing and entertainment
C) Cosmetics and food
D) Clothing, travel, and cosmetics
E) Travel, financial planning, and health care
Answer: E
16
121) Downsizing helps firms to become:
A) less resourceful.
B) more flexible.
C) independent.
D) larger.
E) less innovative.
Answer: B
122) Some larger corporations have acted like small businesses from their inception with great success.
Which of the following companies are cited in the text as examples?
A) Air Canada.
B) Nortel.
C) WestJet Airlines
D) Bell Canada.
E) All of the choices are examples given in the text.
Answer: E
123) Individuals who take responsibility for the development of innovations of any kind within larger
organizations are called:
A) inventors.
B) intrapreneurs.
C) entrepreneurs.
D) crazy.
E) engineers.
Answer: B
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
124) What is a small business?
Answer: Answers will vary
Small business is defined in your textbook as any business that is independently owned and operated,
does not dominate in its competitive area, and employs fewer than 500 people.
125) List some characteristics shared by many entrepreneurs.
Answer: Answers will vary
Strong desire to act independently.
High need for achievement.
Willingness to take some risks.
Energetic.
17
126) How important is small business to the Canadian economy?
Answer: Answers will vary
Small businesses are vital to the Canadian economy. More than 99 percent of all Canadian firms are
classified as small businesses. Small businesses create most new jobs in Canada and provide
significant opportunities for women and minorities.
127) What are some of the advantages of small-business ownership?
Answer: Answers will vary
Independence is probably one of the leading reasons that entrepreneurs go into business for themselves
It costs less to start and maintain small businesses than larger businesses. Small businesses can be
more flexible in adapting to changing market demands. Also, small businesses can focus their efforts o
a few key customers to avoid competition from larger firms. They have the opportunity to
develop an excellent reputation for quality and service.
128) Why do small businesses have a high failure rate?
Answer: Answers will vary
There are many reasons small businesses fail, but some of the major reasons include the inability to
cope with growth, undercapitalization, and managerial inexperience or incompetence. Additional
reasons include burdens imposed by government regulation, insufficient funds to withstand slow sales,
and vulnerability to competition from larger companies.
129) What is a business plan and why is it important?
Answer: Answers will vary
The key element of business success is a business plan. The business plan is a precise statement of the
rationale for the business and a step-by-step explanation of how it will achieve its goals. The business
plan should include an explanation of the business, an analysis of the competition, estimates of income
and expenses, and other information.
130) Exemplify some Canadian companies that have been successful in tapping the huge potential of the
echo generation.
Answer: Answers will vary
Companies that have the most success with this group are ones that cater to the teens’ and young adults
lifestyles. Some successful small businesses aimed at this market include Sylvan Learning Centre, a
franchise that offers after-school tutoring; Alien Workshop, which designs and distributes skateboards
and apparel; Burton Snowboards, a manufacturer of snowboards and accessories; and Femme
Arsenal, which develops and distributes cosmetics.
18
131) What demographic trends will have the most impact on small business in the future?
Answer: Answers will vary
The aging baby boom generation (those born between 1946 and 1964) will provide opportunities in the
travel, financial planning, and health care industries. The echo boom market (those born between 1977
and 1994) typically shops frequently and spends lavishly, creating opportunities for small businesses to
service this lifestyle. Small businesses that specialize in ethnic products to offer bi- or
multilingual employees may find great potential in the growing number of immigrants to
Canada.
132) What economic trends will have the most impact on small business in the future?
Answer: Answers will vary
In recent years, economic turbulence has provided both opportunities and threats for small businesses.
As large information technology companies had to recover from an economic slowdown and an
oversupply of Internet infrastructure products, some smaller firms found new niche markets. Many
small businesses are learning how to use the Internet to promote their businesses and sell
products online.
133) Why would a big business “act small”?
Answer: Answers will vary
The continuing success and competitiveness of small businesses through rapidly changing business
conditions have caused many larger firms to take notice. More and more firms are emulating small
businesses to improve their own bottom line. Some firms have done this through downsizing, while
others have made their operating units function more like independent small businesses
responsible for their own profits, losses, and resources.
19
Answer Key
Testname: UNTITLED5
1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) FALSE
6) FALSE
7) FALSE
8) FALSE
9) TRUE
10) TRUE
11) FALSE
12) FALSE
13) TRUE
14) TRUE
15) TRUE
16) FALSE
17) FALSE
18) TRUE
19) TRUE
20) FALSE
21) TRUE
22) FALSE
23) FALSE
24) TRUE
25) FALSE
26) TRUE
27) TRUE
28) TRUE
29) TRUE
30) TRUE
31) TRUE
32) FALSE
33) TRUE
34) TRUE
35) FALSE
36) FALSE
37) TRUE
38) FALSE
39) TRUE
40) FALSE
41) TRUE
42) FALSE
43) TRUE
44) FALSE
45) TRUE
46) FALSE
47) TRUE
48) FALSE
49) TRUE
50) FALSE
20
Answer Key
Testname: UNTITLED5
51) FALSE
52) TRUE
53) FALSE
54) FALSE
55) FALSE
56) TRUE
57) FALSE
58) TRUE
59) FALSE
60) TRUE
61) FALSE
62) TRUE
63) E
64) E
65) B
66) C
67) E
68) A
69) D
70) B
71) A
72) D
73) C
74) C
75) B
76) C
77) B
78) B
79) E
80) E
81) E
82) A
83) D
84) B
85) D
86) A
87) E
88) B
89) C
90) A
91) C
92) A
93) C
94) B
95) B
96) B
97) C
98) A
99) C
100) D
21
Answer Key
Testname: UNTITLED5
101) E
102) E
103) C
104) D
105) A
106) C
107) D
108) A
109) E
110) C
111) D
112) D
113) E
114) E
115) E
116) A
117) C
118) C
119) C
120) E
121) B
122) E
123) B
124) Answers will vary
Small business is defined in your textbook as any business that is independently owned and operated, does not
dominate in its competitive area, and employs fewer than 500 people.
125) Answers will vary
Strong desire to act independently.
High need for achievement.
Willingness to take some risks.
Energetic.
126) Answers will vary
Small businesses are vital to the Canadian economy. More than 99 percent of all Canadian firms are classified as
small businesses. Small businesses create most new jobs in Canada and provide significant opportunities for wome
and minorities.
127) Answers will vary
Independence is probably one of the leading reasons that entrepreneurs go into business for themselves. It costs less
to start and maintain small businesses than larger businesses. Small businesses can be more flexible in adapting to
changing market demands. Also, small businesses can focus their efforts on a few key customers to avoid
competition from larger firms. They have the opportunity to develop an excellent reputation for quality
and service.
22
Answer Key
Testname: UNTITLED5
128) Answers will vary
There are many reasons small businesses fail, but some of the major reasons include the inability to cope with
growth, undercapitalization, and managerial inexperience or incompetence. Additional reasons include burdens
imposed by government regulation, insufficient funds to withstand slow sales, and vulnerability to competition from
larger companies.
129) Answers will vary
The key element of business success is a business plan. The business plan is a precise statement of the rationale for
the business and a step-by-step explanation of how it will achieve its goals. The business plan should include an
explanation of the business, an analysis of the competition, estimates of income and expenses, and other
information.
130) Answers will vary
Companies that have the most success with this group are ones that cater to the teens’ and young adults’ lifestyles.
Some successful small businesses aimed at this market include Sylvan Learning Centre, a franchise that offers
after-school tutoring; Alien Workshop, which designs and distributes skateboards and apparel; Burton Snowboards
a manufacturer of snowboards and accessories; and Femme Arsenal, which develops and distributes
cosmetics.
131) Answers will vary
The aging baby boom generation (those born between 1946 and 1964) will provide opportunities in the travel,
financial planning, and health care industries. The echo boom market (those born between 1977 and 1994) typically
shops frequently and spends lavishly, creating opportunities for small businesses to service this lifestyle. Small
businesses that specialize in ethnic products to offer bi- or multilingual employees may find great potential
in the growing number of immigrants to Canada.
132) Answers will vary
In recent years, economic turbulence has provided both opportunities and threats for small businesses. As large
information technology companies had to recover from an economic slowdown and an oversupply of Internet
infrastructure products, some smaller firms found new niche markets. Many small businesses are learning how to
use the Internet to promote their businesses and sell products online.
133) Answers will vary
The continuing success and competitiveness of small businesses through rapidly changing business conditions have
caused many larger firms to take notice. More and more firms are emulating small businesses to improve their own
bottom line. Some firms have done this through downsizing, while others have made their operating units function
more like independent small businesses responsible for their own profits, losses, and resources.
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