Scenario Questions Use the following to answer questions 117-119: Scenario 1-1. Larry Linsuine is thinking of marketing a new idea he has been using. After years of experience as a deer hunter he has perfected a tree stand that gives him an added advantage in deer hunting. He calls his new tree stand The Tree Hugger. He has now begun the process of manufacturing his tree stands with 20 employees working out of his garage. His life savings have provided the equity for his operation. 117. Refer to Scenario 1-1. What type of business is Larry beginning? a) Large business b) Joint venture c) Small business d) None of the above 118. Refer to Scenario 1-1. What advantage will Larry have over his competition with his new product? a) Competitive advantage b) Comparative advantage c) Qualitative advantage d) Financial advantage 119. Refer to Scenario 1-1. What will be the most difficult problem that Larry will encounter? a) Obtaining sufficient cash b) Finding a target market c) Obtaining accurate information d) Deciding upon appropriate advertising media Use the following to answer questions 120-124: Scenario 1-2. Franky Ferguson has just reached a turning point in his business. He can no longer retain quality employees because he cannot meet his payroll he does not have an adequate cash flow to pay his current bills and he is three months behind in his loan payment to the bank. He must close the doors of this business. 120. Refer to Scenario 1-2. The valuable skills and knowledge that Franky’s employees possessed is known as a) Financial capital b) Intellectual capital c) Monetary capital d) Knowledge capital 121. Refer to Scenario 1-2. What is the primary reason Franky has failed? a) Inadequate management b) Lack of a quality product c) No target market d) Inadequate advertising 122. Refer to Scenario 1-2. All but which of the following are areas Franky should have worked upon in order to help ensure the success of his business? a) Plan for the future b) Understand that commitment and hard work are required for business success c) Managing finances d) Increased his advertising budget 123. Refer to Scenario 1-2. With the closing of his business Franky has experienced a) Business termination b) Business failure c) Business closing d) Business merger 124. Refer to Scenario 1-2. Franky joins what percentage of small businesses that have failed? a) 10 percent b) 18 percent c) 50 percent d) 75 percent Short-Answer Questions 125. Describe in detail the three primary characteristics of a small business. 126. Briefly discuss the value of diversity in business. 127. Explain in detail three advantages that contribute to the success of a small business. 128. Describe the four primary types of innovation.
