2022 Yyh

SAMPLE
EXAM
ENTREPRENEURSHIP
THE ENTREPRENEURSHIP EXAM IS USED FOR THE

FOLLOWING EVENTS:
ENTREPRENEURSHIP SERIES
ENTREPRENEURSHIP TEAM DECISION MAKING
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Test 1249 ENTREPRENEURSHIP EXAM 1
1. What type of law addresses issues that interfere with a firm's right to do business?
A. Environmental C. Judiciary
B. Criminal D. Tort
2. How can you attempt to cancel a contract without facing legal action?
A. Breach the contract and refuse to pay the other party.
B. Bring a lawsuit against the other party.
C. Send a request to the other party asking for cancellation.
D. Cancel the contract within a year of signing it.
3. Which of the following forms of business ownership must obtain a charter from the state(s) in which it
operates:
A. Corporation C. Partnership
B. Sole proprietorship D. Consolidation
4. Which of the following is a personal factor that affects the choice of a form of business ownership:
A. Market considerations C. Area of the country
B. Business experience D. Economic conditions
5. Which of the following is a condition that must exist for channels to be effective:
A. Channel members must have varying goals. C. They must be properly managed.
B. They must have at least five members. D. Channel members must not share tasks.
6. Indirect channels of distribution are the only channels that involve

A. industrial users. C. producers.
B. intermediaries. D. ultimate consumers.
7. The Barker Company is determining which channel of distribution to use by considering the number of
potential customers in various geographic regions. The company is focusing on
A. employees' capabilities. C. product benefits.
B. branding issues. D. market factors.
8. What is one of the reasons why a supervisor might prepare a formal business report?
A. To compile sales expenses C. To analyze marketing trends
B. To request pricing information D. To schedule training sessions
9. When a customer sees a news story on TV about a certain company or brand, it's an example of a(n)
A. brand promise. C. advertisement.
B. touchpoint. D. slogan.
10. One of the benefits of competition to consumers is that competition encourages

A. businesses to limit their product lines. C. government to fix prices.
B. businesses to develop new products. D. government to finance business activity.
11. Which of the following was one of government's original roles in business:
A. Acting as a referee C. Ensuring a business's profitability
B. Regulating technology D. Protecting the environment
12. Which of the following economic concepts influences the cost of the production process:
A. Balance of payments C. Distribution of income
B. Economies of scale D. Inelasticity of demand
13. Changing parts of a game that is marketed in other countries so the game conforms to local customs and
preferences is an example of
A. customization. C. globalization.
B. cultural sensitivity. D. nationalization.
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14. In persuasion, what technique should you follow to be ready to answer questions and give proof?
A. Attract attention. C. Make it personal.
B. Be reasonable. D. Do your homework.
15. How does a goal differ from a vision?

A. A goal is broad and far-reaching.
B. A goal is concrete and measurable.
C. A goal is abstract and indefinite.
D. There is no difference—the two are the same.
16. If an employee is content with the way things are currently done at work, they are more likely to
__________ workplace changes.
A. understand C. accept
B. look forward to D. resist
17. Tory is a new business owner offering data management services for medical records to hospitals. How
can she identify what hospital administrators will expect from her service?
A. Entertain hospital administrators at a sporting event
B. Read about trends impacting the hospital industry
C. Read patient reviews about each hospital
D. Research each hospital's financial information
18. Gianna is attempting to build a strategic relationship with Nico, who is an influential member of the local
business community. What is one technique Gianna could use to build the relationship?
A. Establishing dominance and control C. Seeking a deal as quickly as possible
B. Finding a shared vision D. Focusing on Nico's shortcomings
19. Which of the following businesses best represents an innovative entrepreneurial endeavor:
A. Starting a clothing business online
B. Buying a small local coffee shop from its founder
C. Opening a new pizza franchise
D. Developing and selling a new wood-cutting device
20. Arielle knows that she would be a good entrepreneur because she
A. can withstand ups and downs. C. is easily interested by many different ideas.
B. likes to see immediate results of her work. D. depends on others to get work done.
21. Which of the following statements regarding international trade is true:

A. Businesses shipping internationally must use freight forwarding services.
B. Only large companies typically benefit from conducting international trade.
C. Online businesses can easily become involved in international trade.
D. Foreign language skills are required to conduct international trade.
22. Entrepreneurial discovery is an important process in a free enterprise economic system because an
entrepreneur or small-business owner can
A. change legal requirements. C. improve economic sanctions.
B. form a technological monopoly. D. satisfy an unmet demand.
23. When generating product ideas as a group, who typically guides the discussion?
A. Innovator C. Mentor
B. Negotiator D. Facilitator
24. The financial section of a feasibility study must include sources of

A. funding. C. staffing.
B. materials. D. technology.
25. What financial tool do entrepreneurs use to plan, monitor, and manage their ventures' income and
expenses?
A. Inbound-call report C. Environmental scan
B. Request for proposal D. Operating budget
26. An entrepreneur is most likely to discuss the concept for a new business with an industry expert when the
entrepreneur
A. lacks knowledge or experience in the field.
B. needs to obtain a commercial bank loan.
C. wants to increase the business's profit margins.
D. is ready to plan promotional activities.
27. Karla is obtaining a short-term simple interest loan to start her home-based business. If she borrows
$3,000 at a 4.25% interest rate and pays the loan back two years after obtaining the loan, how much
interest will Karla pay?
A. $255 C. $3,255
B. $127.50 D. $3,127.50
28. Which of the following is a sign that a company may need to hire more employees:
A. Company revenue is below target.
B. Employees are underworked.
C. The company is often unable to meet its deadlines.
D. Employees are happy with working conditions.
29. Al is thinking about moving his company's headquarters to another city, which would be expensive but
would bring the company closer to the raw materials needed for manufacturing. The benefit of moving is
A. feasibility. C. proximity.
B. demand. D. independence.
30. Small-business owners develop and use operating procedures so that everyday tasks are performed in
a(n) __________ way.
A. diverse C. standard
B. imprecise D. innovative
31. Which factor tends to reduce employee productivity and has a negative effect on the success of a new
business?
A. Poor communication C. Clear quality standards
B. Narrow product lines D. Short-term goals
32. To stay competitive, business owners must adapt to changes in the business environment by monitoring
external factors such as
A. profit margins. C. product development.
B. economic conditions. D. staffing needs.
33. The profit a business earns can be determined from the business's
A. income statement. C. budget.
B. balance sheet. D. assets.
34. Calculate a business's cash receipts if it has $12,450 in sales, earns $78 in interest, collects $625 in
sales tax, and owns $5,700 worth of equipment.
A. $13,153 C. $18,853
B. $12,528 D. $17,150
35. Which of the following is an example of a current asset:

A. Checking account C. Machinery
B. Building D. Land
36. Which of the following is an example of business process thinking:

A. A company strives to fix its method of internal communications.
B. The marketing department and finance department avoid interacting.
C. Whenever a customer complains about slow service, servers are fired.
D. A company prioritizes product promotions over product development.
37. Which of the following types of credit might business owners obtain to purchase seasonal goods for
resale:
A. Mortgage debts C. Stocks and bonds
B. Short-term loans D. Accounts receivable
38. Which of the following is a benefit of debt financing when starting a business:
A. You have control over how the money is spent.
B. You don't need to pay interest on the money.
C. You have help from knowledgeable, experienced investors.
D. You don't have to pay back the money if the business fails.
39. When businesses divide the change in total revenue by the marginal product, they are calculating the
A. marginal revenue. C. earned income.
B. break-even point. D. cash-flow level.
40. Which of the following is an advantage of the jury of executive opinion method of sales forecasting:
A. It is based on the opinion of outside experts.
B. All opinions expressed carry equal weight.
C. It is a quick and easy method to use.
D. All opinions gathered are from sales executives.
41. Which of the following financial analysis methods involves comparing the same items on a company's
financial statements for two or more periods:
A. Fundamental analysis C. Technical analysis
B. Vertical analysis D. Horizontal analysis
42. Which of the following is an onboarding activity:

A. Grievances C. Orientation
B. Compliance D. Exit interviews
43. Job applications provide human resources personnel with information about an applicant's training, skills,
education, and
A. intelligence levels. C. hobbies and interests.
B. employment history. D. insurability levels.
44. Which of the following is the primary stakeholder influencing corporate governance:
A. Organizational employees C. The board of directors
B. Company shareholders D. High-level company executives
45. What is the main purpose of encouraging feedback during an employee training session?
A. To ensure employees understand the material
B. To identify employees with leadership skills
C. So employees can evaluate the training session
D. So employees can build better relationships
46. What approach to managing people is intended to discourage further violations of company rules after
infractions have already occurred?
A. Corrective C. Preventive
B. Termination-at-will D. Open-door management
47. Which of the following is a way that marketers can use data to follow up on any problems or issues with a
product:
A. Providing salespeople with additional training
B. Determining what new products to offer
C. Deciding which wholesalers to use for distribution
D. Budgeting for product development
48. Marketing research can affect the business's marketing mix by providing information about various
locations that will influence the business's __________ decision.
A. price C. place
B. promotion D. product
49. Identify the marketing function in the following situation: While shopping at the mall, Susan is asked her
opinion of different brands of shampoo.
A. Behavioral segmentation C. Marketing-information management
B. Promotion D. Specialty advertising
50. Which of the following actions is most appropriate for a business to take when competitors introduce
similar products to the marketplace:
A. Increase its prices to improve its image C. Reduce its advertising efforts
B. Adjust its marketing strategies D. Focus on its working conditions
51. An overall purpose of market segmentation is to divide the market

A. into well-defined groups of consumers. C. into consumer or industrial markets.
B. by distance from store or producer. D. by consumer or industry income.
52. Which of the following situations is an example of a business using niche marketing:
A. A soft drink manufacturer advertises its product during a national television broadcast.
B. A national petroleum company offers credit cards for use at its gas and service stations.
C. A chemical manufacturer offers a hand soap that contains an antibacterial agent.
D. An athletic footwear company produces a line of shoes for children who play soccer.
53. One reason why it is important to accurately forecast sales for a marketing plan is because the forecast is
the basis of other
A. pricing strategies. C. business reports.
B. operational activities. D. management techniques.
54. A controversial way for an organization to collect data on consumer purchasing habits and use the data
to assess advertising objectives is by using
A. detailed consumer questionnaires. C. random phone surveys.
B. online tracking methods. D. indirect response techniques.
55. Why do businesses establish specifications for selecting hardware and software systems?
A. To obtain systems that perform required functions
B. To develop training programs for employees
C. To analyze the prices of various vendors
D. To keep up with the latest technological fads
56. Which of the following is a primary purpose of data mining:

A. To locate someone C. To spy on competitors
B. To identify patterns D. To attract customers
57. Which of the following is a reason why a small business might share its financial records:
A. To convince a supplier to offer discounts on products purchased
B. To persuade a customer of the business's excellent service
C. To show competitors why brand competition is useless
D. To prove the business's net worth to acquire a bank loan
58. What type of internal business record will help a firm determine the status of its supplies?
A. Credit report C. SWOT analysis
B. Income statement D. Inventory report
59. Which of the following is an operations activity in business:

A. Selecting media C. Obtaining resources
B. Contacting customers D. Analyzing investments
60. Electrical hazards, slipping and tripping, and violence are all examples of potential __________ in the
workplace.
A. non-negotiables C. safety issues
B. compromises D. success indicators
61. Why might a business decide to purchase goods for a price higher than the lowest possible price?
A. To arrange flexible contracts C. To satisfy a favorite vendor
B. To spend additional funds D. To obtain a needed delivery date
62. Three-way light bulbs are all made with the same size base. This is an example of a production process
that uses __________ parts.
A. segmented C. branded
B. standardized D. graded
63. Businesses that develop and implement procedures for employees to follow to expedite task completion
are trying to establish efficient
A. production processes. C. management techniques.
B. workflows. D. supervision.
64. Abbra-Kadabra Company examined its expenses for electricity for the past six months and found the
average electric bill to be $2,300 per month, with a high of $2,375 and a low of $2,250 during that period.
This type of expense would be classified as a __________ cost.
A. variable C. semi-variable
B. fixed D. nonoperating
65. A business's budget estimated $165,500 in sales each month for the next four months, with 55% of that
amount each month being for expenses. If actual sales for the four-month period were $690,000 and
expenses were 55% of the actual sales, by what amount did the business's income increase?
A. $14,500 C. $12,600
B. $13,900 D. $15,100
66. One of the primary goals of supply chain management is to

A. minimize overall value to the customer.
B. gain a competitive advantage in the marketplace.
C. set prices for products that maximize profits.
D. control customer perceptions of a business.
67. Wellston Industries wants to compare a current business situation with a target situation. Which of the
following tools will help Wellston obtain the information that it wants:
A. Mind map C. Decision tree
B. Gap analysis D. Critical path
68. Income from sales, cost of goods sold, gross profit on sales, operating expenses, and net profit or loss
are all part of a(n)
A. sales budget. C. income statement.
B. balance sheet. D. marketing plan.
69. A manufacturing company is required by the local government to dispose of its waste in an
environmentally safe way. This is an example of how process design can be affected by __________
factors.
A. natural C. technological
B. human D. regulatory
70. One of the main external factors that may cause a firm to change its business processes is
A. high operating costs. C. low employee morale.
B. desire for growth. D. competition.
71. How does supply chain management increase customer satisfaction?

A. Enhances data quality
B. Integrates information throughout an organization
C. Improves cash flow
D. Reduces the time it takes for goods to reach consumers
72. Which of the following should a person do first when facing the need to make a decision:
A. Evaluate information C. Analyze results
B. Make a choice D. Define the objective
73. What is a benefit of corporate governance?

A. Improved access to capital C. Ability to bypass sustainability efforts
B. Increased distance from investors D. Freedom from stakeholder interference
74. Members of a board of directors are

A. not able to make decisions. C. a business's vendors.
B. required to be stockholders. D. elected by stockholders.
75. Which of the following is an example of an external mechanism of corporate governance:

A. A company's business objectives C. Government regulations
B. Board of directors' policies D. A company's code of conduct
76. Most employers require applicants to complete

A. reference checks. C. resumes.
B. letters of intent. D. application forms.
77. Performance standards should be

A. informally discussed. C. measurable.
B. subjective. D. extremely challenging.
78. What pricing strategy would be most effective for a business that wants to create an image of excellent
quality and prestige?
A. High C. Moderate
B. Wholesale D. Discount
79. The Salty Pretzel Company, which has been doing very well in the market, shifts its pricing objectives to
maximize profits. Most likely, The Salty Pretzel Company is
A. obtaining market share. C. trying to improve cash flow.
B. creating an exclusive image. D. stabilizing prices.
80. Which of the following is an internal method that a company uses to facilitate ongoing product and market
opportunity recognition:
A. Customer interviews C. Vendor surveys
B. Task force meetings D. Association membership
81. Reliability, courtesy, and competence are primary factors that a company should consider when it
develops strategies to
A. evaluate its customers' experiences. C. improve the competition's market share.
B. personalize its mass advertising messages. D. comply with local ordinances.
82. Which of the following is a good reason why a business would remove a product from its product mix and
replace it with another:
A. The company wants to expand its product line.
B. The product has become a fast seller.
C. The company wants to increase its market share.
D. The product has become a collectible.
83. Why has enterprise risk management developed?

A. Declining quality standards C. Reduced government regulation
B. The elimination of certain insurance plans D. An increasingly diverse array of risks
84. External factors that affect a company's promotional decisions include

A. competition and technology. C. distribution and technology.
B. environment, product, and price. D. product, social trends, and demand.
85. The advertising medium that can best reach a targeted customer with a specific message is
A. TV. C. magazines.
B. email. D. billboard ads.
86. Jamie is a loyal customer of Glamor Girl cosmetics. She purchases every new product the company
releases, writes glowing reviews online, and tells her friends and family to try the brand's cosmetics.
Jamie could be described as a
A. potential customer. C. brand evangelist.
B. late adopter. D. discount customer.
87. One of the most important, fundamental keys to successful change management is
A. ensuring changes do not impact competitiveness.
B. focusing on processes over people.
C. minimizing use of resources.
D. involving everyone in the organization.
88. Nelly recently purchased a new toaster oven. The manufacturer of the toaster oven offered a special
promotion where Nelly could receive $50 cash back if she mailed her proof of purchase to the company.
This is known as a
A. coupon. C. rebate.
B. point-of-sale promotion. D. sweepstakes.
89. Why do some businesses sponsor local events?

A. To generate revenue C. To obtain publicity
B. To create news D. To sell products
90. Which of the following is a task involved in quality assurance:

A. Repairing defective goods to maintain quality
B. Inspecting products to ensure quality
C. Making changes for better quality
D. Training employees to strive for quality
91. Which of the following is a true statement regarding the relationship between risk and business
objectives:
A. The more objectives a business has, the less risk it faces.
B. Objectives should never be modified because of risk.
C. Effective business objectives are not risky.
D. Risks help businesses determine objectives.
92. Which of the following minimizes the costs associated with maintaining a product mix:
A. High breadth C. Economy image
B. Shallow depth D. Premium value
93. All goods or services sold to customers should

A. be of the finest quality. C. have many possible uses.
B. be needed by the customers. D. have the lowest possible price.
94. Which of the following parts of a business plan includes the history of the business:
A. Strategy and implementation C. Company description
B. Market analysis D. Executive summary
95. The ski shop manager set an objective to increase sales by 10% over the previous year even though the
forecast was for a mild and rainy winter. The manager's objective was
A. unrealistic. C. reasonable.
B. practical. D. scientific.
96. Which of the following identifies an upward economic trend:

A. Businesses are using more computers.
B. Sales in the auto industry are increasing.
C. Businesses must meet stricter licensing requirements.
D. The number of firms accused of price fixing is increasing.
97. Which of the following technologies do many businesses use to monitor key performance indicators:
A. Firewalls C. Extranets
B. Dashboards D. Terabytes
98. What company has the highest sales-to-receivables ratio based on the following information: Company A
has sales of $250,000 and accounts receivable of $20,000; Company B has sales of $275,000 and
accounts receivable of $25,000; Company C has sales of $300,000 and accounts receivable of $30,000;
and Company D has sales of $290,000 and accounts receivable of $32,000.
A. Company D C. Company C
B. Company B D. Company A
99. For successful innovation in the workplace, employees should have a desire to learn and be willing to
A. accept change. C. exhibit bias.
B. follow procedures. D. suppress ideas.
100. The advantage to a business that uses opt-in email to promote its products is that the business can
A. customize offers. C. predict trends.
B. influence demographics. D. control sales.
KEY
Test Number 1249
Entrepreneurship Exam
ENT – Entrepreneurship Series Event
ETDM – Entrepreneurship Team Decision Making Event
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Test 1249 ENTREPRENEURSHIP EXAM—KEY 10
1. D
Tort. The concept of wrongful action is the basis of all torts. Tort law that applies to business involves the
wrongful interference with the right of a business to operate. Therefore, business torts are wrongful
actions against a business that cause it harm in some way. An example might be unfair competition.
Criminal law addresses issues that involve wrongdoing against society, such as robbery and murder.
Environmental law addresses issues that affect the environment and natural resources. Judiciary refers
to the judicial branch of a government and the ways in which court systems are established.
SOURCE: BL:069 Identify the basic torts relating to business enterprises
SOURCE: Laws.com. (2020, September 12). A brief overview of tort law. Retrieved August 23, 2021,
from https://tort.laws.com/tort-law
2. C
Send a request to the other party asking for cancellation. The first step you can take to attempt to get out
of a contract is to communicate with the other party and ask for cancellation. The other party might be
willing to let you out of the contract for free or for a small price. Bringing a lawsuit against the other party
will not help you avoid legal action. Breaching the contract and refusing to pay will almost certainly lead
to legal action. While there might be a "cooling off" period during which you can cancel the contract
without penalty, it is generally much shorter than a year.
SOURCE: BL:002 Describe the nature of legally binding contracts
SOURCE: Soble, D. (2020, January 18). Terminating a contract: The many ways to end a legally
binding relationship. Retrieved August 23, 2021, from
https://provenresource.com/terminating-a-contract-the-many-ways-to-end-a-legally-binding-
relationship/
3. A
Corporation. To incorporate a business in the United States, you must apply for a charter with the state
government where the business is located. To obtain a charter, a document containing information about
the firm, called Articles of Incorporation, must be filed with the state. A sole proprietorship is owned and
managed by one person. A partnership is a business owned by two or more persons. Neither of these
forms of ownership requires a charter. Consolidation is the joining of two or more companies to form a
new company.
SOURCE: BL:003 Explain types of business ownership
SOURCE: LAP-BL-003—Own It Your Way (Types of Business Ownership)
4. B
Business experience. An individual's business experience is a personal factor that determines the type of
ownership for which the individual is qualified. In some cases, individuals have had sufficient experience
in a particular field to qualify them to go into business for themselves—a sole proprietorship. In other
cases, the individual may have expertise that can be combined with that of another person, or persons, to
form a partnership or corporation. Market considerations, area of the country, and economic conditions
are factors other than personal qualifications that may affect the decision.
SOURCE: BL:006 Select form of business ownership
SOURCE: LAP-BL-006—Taking Care of Business (Selecting Forms of Business Ownership)
5. C
They must be properly managed. To be effective, channels must be properly managed. Channel
members must share common goals, and channel members must share tasks appropriately. Channels
can be effective no matter how many members they have.
SOURCE: CM:001 Explain the nature and scope of channel management
SOURCE: LAP-CM-001—Chart Your Channels (Channel Management)
6. B
Intermediaries. Intermediaries are also called middlemen, and they include sales agents, wholesalers,
and retailers who perform specific functions in the movement of goods from producers to consumers.
Direct channels of distribution do not involve intermediaries. All channels of distribution involve producers
and either industrial users or ultimate consumers.
SOURCE: CM:003 Explain the nature of channels of distribution
SOURCE: LAP-CM-003—Channel It (Channels of Distribution)
7. D
Market factors. When a business selects its channels of distribution, it considers market factors, including
the geographic location of the target market. If a target market is clustered in a few geographic regions, a
business might decide that it would be more cost-effective and efficient to sell direct than it would be to
sell through several wholesalers. On the other hand, if the target market covers several large geographic
regions, the business might use several wholesalers or set up regional sales offices and/or distribution
centers. Other market factors that a business considers include the type of market and the average size
of an order. Branding issues and product benefits are product factors that the business considers, and
employees' capabilities are organizational factors that the business considers.
SOURCE: CM:010 Select channels of distribution
SOURCE: Lesonsky, R. (2015, June 17). 4 market factors you should monitor for business success.
Retrieved August 24, 2021, from https://www.americanexpress.com/en-us/business/trends-
and-insights/articles/monitor-market-factors-business-success/
8. C
To analyze marketing trends. Complicated and important topics, such as marketing trends, are analyzed
in formal business reports. The purpose of formal reports is to define a specific topic or problem area,
present and interpret data, draw conclusions, and make recommendations. Supervisors prepare formal
business reports to gather all the pertinent information that will help them in making important decisions.
They generally use shorter memos to request pricing information and to schedule training sessions.
Compiling sales expenses is an accounting function.
SOURCE: CO:009 Prepare complex written reports
SOURCE: Indeed. (2021, February 22). How to write a formal business report (with examples).
Retrieved August 24, 2021, from https://www.indeed.com/career-advice/career-
development/formal-business-report-example
9. B
Touchpoint. When a customer sees a news story on TV about a certain company or brand, it's an
example of a touchpoint. A touchpoint is any interaction between a company and its customers or
potential customers. This news story is a form of publicity—it's not a brand promise, an advertisement
(which would be paid for by the company), or a slogan (advertising catchphrase).
SOURCE: CR:001 Identify company's brand promise
SOURCE: LAP-CR-006—Share the Promise (Identifying Brand Promise)
10. B
Businesses to develop new products. Competition encourages the development of products that satisfy
consumers' needs. Government does not finance business activity. Price fixing is an illegal activity that
would not benefit consumers. When businesses limit their product lines, they often create dissatisfaction
among customers.
SOURCE: EC:012 Explain the concept of competition
SOURCE: LAP-EC-912—Ready, Set, Compete! (Competition)
11. A
Acting as a referee. When the United States was created, government was not intended to have a hand
in business. Businesses would be free to act in their own best interests without government involvement.
The basic role of government in business would be as a referee only. Government does not ensure a
business's profitability. Regulating technology and protecting the environment are areas of responsibility
that government took on as the country grew and business expanded.
SOURCE: EC:008 Determine the relationship between government and business
SOURCE: LAP-EC-016—Regulate and Protect (Government and Business)
12. B
Economies of scale. Economies of scale is the concept that increasing the scale of production will lead to
a decrease in the cost of production while increasing the output. This concept affects the cost of
production because businesses that apply this concept usually develop large production facilities that
produce large quantities of specific items. The larger the facility, the less it costs to produce an item.
Balance of payments, distribution of income, and inelasticity of demand are not economic concepts that
influence the cost of the production process.
SOURCE: EC:077 Describe the concept of economies of scale
SOURCE: Kenton, W. (2021, April 10). Economies of scale. Retrieved August 24, 2021, from
https://www.investopedia.com/terms/e/economiesofscale.asp
13. B
Cultural sensitivity. Cultural sensitivity involves being sensitive to the customs, habits, and traditions of a
particular group of people. When doing business in other countries, it is important to first be aware that
people throughout the world live and think very differently than we do. They may have local preferences,
habits, and customs that are even contradictory to ours. So, it is important to know what these are and to
adapt product names, promotional approaches, and, often, even products themselves where necessary.
Customization means inventing a completely new product for a different country's market, while
globalization means keeping products and advertising messages the same throughout the world.
Nationalization refers to a government taking ownership of something and is not related to the concept of
cultural sensitivity.
SOURCE: EI:033 Exhibit cultural sensitivity
SOURCE: LAP-EI-033—Getting To Know You (Cultural Sensitivity)
14. D
Do your homework. It's not enough just to suggest something. You should provide information, reasons,
and proof. Anticipate that others may not agree with you at first. Do your homework to be ready. Be
prepared to give details and answer questions. When using persuasion, it is important to be reasonable,
make your appeal personal, and attract the audience's attention. However, these techniques will not help
you prepare to answer questions and give proof.
SOURCE: EI:012 Persuade others
SOURCE: LAP-EI-912—Win Them Over (Persuading Others)
15. B
A goal is concrete and measurable. A goal and a vision are two different things. A goal is a concrete
achievement that you want to complete. Goals tend to be more specific, targeted, and measurable than
visions. A goal isn't abstract and indefinite like a vision. A vision tends to be broad and far-reaching in
scope.
SOURCE: EI:063 Determine personal vision
SOURCE: Robson, P. (2016, November 30). The difference between goals and visions. Retrieved
August 23, 2021, from https://medium.com/thrive-global/goals-and-visions-8ebd067f51d5
16. D
Resist. When people are used to doing things a certain way and are happy with those methods, they
usually don't see a need to change and may resist changes. An employee who is content with the way
things are is not likely to look forward to changes, accept them, or understand why they are needed.
SOURCE: EI:006 Demonstrate adaptability
SOURCE: LAP-EI-023—Go With the Flow (Demonstrating Adaptability)
17. B
Read about trends impacting the hospital industry. One way to identify what clients will expect is to read
about trends impacting their specific industry. Entertaining clients helps form better relationships and
goodwill, but it may not help collect much detailed information. Patient reviews and financial information
about a business do not provide much information that explains what a client expects from a service
provider.
SOURCE: EI:113 Determine stakeholder expectations
SOURCE: Business Queensland. (2020, May 19). Meeting customers' expectations. Retrieved August
24, 2021, from https://www.business.qld.gov.au/running-business/consumer-laws/customer-
service/improving/expectations
18. B
Finding a shared vision. Strategic relationships are successfully formed when both sides share a
common vision that they can work toward together. Both parties will be equally motivated to succeed.
Establishing dominance and control, seeking a deal as quickly as possible, and focusing on Nico's
shortcomings will hinder Gianna from building a strategic relationship with Nico.
SOURCE: EI:114 Establish strategic relationships with others
SOURCE: Lead Generation World. (2019, September 4). Building strategic relationships for success.
Retrieved August 24, 2021, from https://leadgenerationworld.com/building-strategic-
relationships-for-success/
19. D
Developing and selling a new wood-cutting device. An innovative entrepreneurial endeavor is one that
involves creating or inventing something new to sell in the marketplace, such as a new wood-cutting
device. A coffee shop, a pizza franchise, and an online clothing store all sell commonly known products
and are not examples of innovative endeavors because nothing new is being developed or invented.
SOURCE: EN:039 Describe the nature of entrepreneurship
SOURCE: Purcell, W. (2019, October 31). The importance of innovation in business. Retrieved August
23, 2021, from https://www.northeastern.edu/graduate/blog/importance-of-innovation/
20. A
Can withstand ups and downs. One of the most important traits of an entrepreneur is resiliency—the
ability to recover from setbacks or obstacles. If Arielle can withstand ups and downs, she is resilient,
which would make her a good entrepreneur. Seeing immediate results of your work is not associated with
entrepreneurship; sometimes it takes years for hard work to pay off when starting a new business.
Entrepreneurship also requires a high degree of focus, so if Arielle is easily interested in different ideas,
she might not have the focus necessary to be an entrepreneur. Finally, entrepreneurs need to be
independent and able to do much of the necessary work alone. If Arielle depends on others to get work
done, she might not be well-suited as an entrepreneur.
SOURCE: EN:040 Explain the role requirements of entrepreneurs and owners
SOURCE: Indeed. (2021, June 9). Entrepreneurial skills: Definition and examples. Retrieved August 23,
2021, from https://www.indeed.com/career-advice/career-development/entrepreneurial-skills
21. C
Online businesses can easily become involved in international trade. A company that has a website can
easily be found by people in foreign countries, and online services make international transactions easy
to conduct. Small businesses represent a large majority of international trade. Freight forwarding services
are often used by companies, but they are not required. Foreign language skills may be helpful, but they
are not required to conduct international trade, since people in many countries speak more than one
language and translation services exist.
SOURCE: EN:041 Describe small-business opportunities in international trade
SOURCE: Holden, G. (2021). How to set up your online business for international trade. Retrieved
August 23, 2021, from https://www.dummies.com/business/online-business/how-to-set-up-
your-online-business-for-international-trade/
22. D
Satisfy an unmet demand. An opportunity is a circumstance that presents itself. Entrepreneurial
discovery is the process of detecting and matching product and market opportunities with one another in
a manner that satisfies the market and the business. To do that, an entrepreneur or small-business
owner must conduct research to discover what the market needs or wants. The entrepreneurial discovery
process does not allow an entrepreneur or small-business owner to form a technological monopoly. The
process does not affect economic sanctions, and it does not involve changes in legal requirements.
SOURCE: EN:001 Explain the need for entrepreneurial discovery
SOURCE: Step Change. (2018, May 23). 4 ways to identify unmet customer needs. Retrieved August
24, 2021, from https://blog.hellostepchange.com/blog/identify-unmet-customer-needs
23. D
Facilitator. A facilitator's primary role is to objectively guide the discussion, keep the group on track, and
record the group's ideas. A negotiator is an individual who takes part in the negotiation process.
Negotiation is the process of persuading or influencing someone to take a certain course of action to
achieve a desired outcome. A mentor is an experienced worker who helps new employees adjust to their
work environment. An innovator is an individual who creates a new product, strategy, or process.
SOURCE: EN:006 Generate venture ideas
SOURCE: The Change Network. (2018, September 4). The role of the meeting facilitator. Retrieved
August 24, 2021, from https://www.changenetwork.com.au/single-post/2018/09/04/the-role-
of-the-meeting-facilitator
24. A
Funding. The financial section of a feasibility study must include sources of funding. You must be certain
that you'll have enough money to finance your venture. Materials, staffing, and technology are issues that
are covered in other sections of the feasibility study.
SOURCE: EN:038 Determine feasibility of venture ideas
SOURCE: LAP-EN-038—Explore the Possibilities (Conducting Feasibility Studies)
25. D
Operating budget. Budgets are estimates of income and expenses for a specific time period. Budgets are
planning tools that help entrepreneurs monitor and manage their ventures' money. Operating budgets
estimate the business's day-to-day financial inflows (e.g., sales) and outflows (e.g., payroll and
inventory). By setting a budget and comparing it to actual performance, an entrepreneur can evaluate the
financial well-being of the venture at regular intervals. Entrepreneurs often consider other sources of
information when setting the operating budget, such as requests for proposal, environmental scans, and
in-bound call reports. A request for proposal (RFP) is a bid extended to vendors to provide prices for
goods and services the business needs. An environmental scan is an analysis of the environment
surrounding the business. An inbound-call report is a summary of phone calls processed by sales and
service representatives within a specific time period.
SOURCE: EN:008 Explain tools used by entrepreneurs for venture planning
SOURCE: Bamboo HR. (2021). Operating budget. Retrieved August 24, 2021, from
https://www.bamboohr.com/hr-glossary/operating-budget/
26. A
Lacks knowledge or experience in the field. When an entrepreneur discovers a business opportunity,
they might need to obtain more in-depth information to develop the business idea. Industry experts are
external resources from which an entrepreneur can obtain useful information and ideas when they do not
have extensive knowledge or experience in the specific field. An entrepreneur may obtain a bank loan or
plan promotional activities after developing and analyzing the venture concept. Increasing profit margins
is an issue that entrepreneurs address after the business is open.
SOURCE: EN:012 Assess the need to use external resources for concept development
SOURCE: Tucker, D. (2020, October 20). 9 reasons it's important to work with experts. Retrieved
August 24, 2021, from https://60secondmarketer.com/2020/10/20/9-reasons-its-important-to-
work-with-experts/
27. A
$255. New business owners often obtain loans to start their ventures. The amounts, interest rates, and
terms of the loans vary. The formula for calculating the interest amount for a simple interest loan is
principle (loan amount) X interest rate X time = interest amount in dollars. The amount of interest Karla
will pay on her loan is $255 ($3,000 X 4.25% [or .0425] X 2 = $255).
SOURCE: EN:016 Select sources to finance venture creation/start-up
SOURCE: Hayes, A. (2021, March 23). Simple interest. Retrieved August 24, 2021, from
https://www.investopedia.com/terms/s/simple_interest.asp
28. C
The company is often unable to meet its deadlines. If a company is having difficulty completing work on
time, or if it has had to extend deadlines frequently, then it likely needs to hire more employees.
Overworked employees are a sign that a company should hire more employees; underworked employees
may mean that a company is overstaffed. If company revenue is below target, a company may not be
able to afford new employees. Employees often complain about working conditions when they are
overworked, which means more employees are needed. If employees are happy, then it is less likely that
the company needs to increase staff.
SOURCE: EN:018 Explain considerations in making the decision to hire staff
SOURCE: Bliss, M. (2020, January 7). The 10 signs you need to hire more employees. Retrieved
August 24, 2021, from https://www.simplybusiness.com/simply-u/articles/2020/01/10-signs-
you-need-to-hire-more-employees/
29. C
Proximity. Resources are the items or people that a business uses to accomplish a goal or to make a
product. Small-business owners must consider both the costs and the benefits in obtaining resources,
such as hiring a new employee, contracting a transportation company, or obtaining raw materials for
manufacturing. If Al moves the company's headquarters, the costs are the possibility of losing good
employees and the financial burden associated with a large move. The benefit of moving is proximity, or
being closer to the raw materials the company needs to manufacture its products. The benefit of being
closer is that communication might improve due to the proximity, and the company may save
transportation costs since the raw materials are closer to the manufacturing equipment. Demand,
feasibility, and independence are not benefits of moving the company.
SOURCE: EN:021 Assess the costs/benefits associated with resources
SOURCE: Dictionary.com. (2021). Proximity. Retrieved August 24, 2021, from
https://www.dictionary.com/browse/proximity
30. C
Standard. Operating procedures are the step-by-step processes that employees follow when performing
specific work-related tasks. By developing and implementing operating procedures, small-business
owners reduce the amount of time that they spend answering questions and making decisions about
routine, day-to-day activities. This reduction occurs because the employees have guidelines or a
standard way to complete tasks. Conducting activities in a standard way often increases employee
productivity and efficiency. Everyday tasks do not always need to be performed in imprecise, diverse, or
innovative ways.
SOURCE: EN:026 Describe the use of operating procedures
SOURCE: Rush, M. (2021). Standard operating procedures for a business. Retrieved August 24, 2021,
from https://smallbusiness.chron.com/standard-operating-procedures-business-3228.html
31. A
Poor communication. Productivity is the amount of work that employees (human resources) perform in a
given period, such as output per hour. If management does not clearly communicate the business's
goals, processes, needs, and expectations to employees, they will not know how to perform their jobs,
which can reduce their productivity. Lower productivity often results in lower customer satisfaction, which
negatively affects the business. Narrow product lines, clearly expressed quality standards, and short-term
goals do not have a negative effect on the business.
SOURCE: EN:030 Explain the impact of resource productivity on venture success
SOURCE: Smarp. (2020, July 9). 11 reasons why business communication is critical to your company's
success. Retrieved August 24, 2021, from https://blog.smarp.com/11-reasons-why-business-
communication-is-crucial-for-companys-success
32. B
Economic conditions. Because the business environment is always changing, it is important for business
owners to monitor these changes and adapt to them as appropriate so they remain competitive in the
marketplace. An external factor that affects the business environment is the economic conditions in which
the business operates. For example, in an area where the economy is doing well, people tend to spend
more money, driving up demand for certain products. If the business does not adjust to demand
increases, it will lose sales. Profit margins, product development, and staffing needs are internal factors
that affect the business.
SOURCE: EN:033 Adapt to changes in business environment
SOURCE: Sherman, F. (2019, March 8). What are internal & external environmental factors that affect
business? Retrieved August 24, 2021, from https://smallbusiness.chron.com/internal-
external-environmental-factors-affect-business-69474.html
33. A
Income statement. An income statement is a summary of a business's income and expenses over a
period of time. It is also referred to as a profit-and-loss statement. Assets are things of value owned by a
business. A balance sheet shows what a business is worth at any point in time. A budget is an estimate
of revenue and expenditures.
SOURCE: FI:085 Explain the concept of accounting
SOURCE: LAP-FI-085—Show Me the Money (Nature of Accounting)
34. B
$12,528. Cash receipts are the money that a business collects (e.g., business income). Cash receipts are
all the money flowing into a business, such as sales and interest. To calculate cash receipts, add the
sales and interest income ($12,450 + $78 = $12,528). Although a business collects sales tax, that money
is not income, because it must be paid to the government. Equipment is an asset and is not included in
cash receipts.
SOURCE: FI:092 Prepare cash flow statements
SOURCE: Carrasquillo, P. (2017, September 26). How to calculate cash receipts. Retrieved August 24,
2021, from https://bizfluent.com/how-7924170-calculate-cash-receipts.html
35. A
Checking account. A checking account is a current asset. This means that it can be converted into cash
fairly quickly—in one year or less. Buildings, machinery, and land are fixed assets. They are less easily
converted into cash and are meant to be kept for long periods of time.
SOURCE: FI:093 Explain the nature of balance sheets
SOURCE: LAP-FI-093—The Right Balance (The Nature of Balance Sheets)
36. A
A company strives to fix its method of internal communications. Processes are sets of steps used to
reach an outcome. Process thinking means keeping processes in mind throughout a project or business
venture. An example of a process is a method for communicating internally in an organization. If a
company strives to fix its method of internal communications, it is focused on process thinking. Business
process thinking involves departments working together rather than avoiding interaction. Firing
employees rather than fixing the overall customer service process is not an example of business process
thinking. Finally, prioritizing product promotions over product development is not related to business
process thinking.
SOURCE: OP:474 Discuss business process thinking and its impact
SOURCE: Tallyfy. (2021). Importance of process thinking in business management. Retrieved August
23, 2021, from https://tallyfy.com/process-thinking/
37. B
Short-term loans. Businesses often obtain short-term loans to purchase goods to sell quickly. Short-terms
loans are paid back within a brief period of time, usually 90 days but no longer than one year. Mortgages
are agreements with a lending institution that pledge property as collateral in exchange for loans. Stocks
and bonds are issued to investors in exchange for lending money to the businesses. Accounts receivable
are all monies owed to a business by its customers.
SOURCE: FI:023 Explain the purposes and importance of obtaining business credit
SOURCE: Corporate Finance Institute. (2021). Short term loan. Retrieved August 24, 2021, from
https://corporatefinanceinstitute.com/resources/knowledge/finance/short-term-loan/
38. A
You have control over how the money is spent. One of the biggest benefits of debt financing is the ability
to control how the financing is spent. When you take out a business loan, you are in control of what you
do with the money. When you obtain equity financing, however, the investors that are helping you start
your business have primary control over business decisions. Some of the downsides of debt financing
include interest payments and the need to pay the money back even if the business fails. Help from
experienced investors is a benefit of equity financing, not debt financing.
SOURCE: FI:340 Discuss factors to consider in choosing between debt and equity capital
SOURCE: Maverick, J.B. (2021, April 26). Equity financing vs. debt financing: What's the difference?
Retrieved August 24, 2021, from https://www.investopedia.com/ask/answers/042215/what-
are-benefits-company-using-equity-financing-vs-debt-financing.asp
39. A
Marginal revenue. Marginal revenue, or the extra revenue associated with the production and sale of one
additional unit of output for a business, is determined by dividing the change in total revenue by the
marginal product. Businesses calculate marginal revenue to determine if they are earning the desired
amount of profit by increasing production and selling more items. The break-even point is the level of
sales at which revenues equal total costs. Earned income is the amount earned by an employee. Cash
flow is the movement of funds into and out of a business.
SOURCE: FI:358 Determine relationships among total revenue, marginal revenue, output, and profit
SOURCE: Tuovila, A. (2021, April 1). Marginal revenue (MR). Retrieved August 24, 2021, from
https://www.investopedia.com/terms/m/marginal-revenue-mr.asp
40. C
It is a quick and easy method to use. The jury of executive opinion (JEO) method is quick and easy to
use because it does not require complicated techniques, expensive equipment, or major amounts of time
and effort. It is popular with many companies because it uses the opinions of the companies' own experts
rather than those of outsiders. Disadvantages of this method are that all opinions expressed carry equal
weight, whether or not they are valid, and that the opinions are gathered from all executives, some of
whom are not knowledgeable about sales.
SOURCE: FI:096 Forecast sales
SOURCE: Nasdaq. (2021). Jury of executive opinion. Retrieved August 24, 2021, from
https://www.nasdaq.com/glossary/j/jury-of-executive-opinion
41. D
Horizontal analysis. Horizontal analysis is a comparison of the same items on a company's financial
statements for two or more periods. It involves comparing the value of a certain account at the end of
year one with the value of that same account at the end of year two, for instance, and calculating the
difference between the values. Vertical analysis involves stating each dollar amount on a financial
statement as a percentage of another amount on the statement or a base amount. After calculating these
percentages, you can compare them with each other, with previous years' figures, or with percentages of
other companies in the same industry. Technical analysis involves using historical information from
market activity, prices, and volume to evaluate securities and predict future price activity. Fundamental
analysis involves studying all aspects of a company in an effort to understand its intrinsic value.
SOURCE: FI:334 Describe types of financial statement analysis (e.g., ratio analysis, trend analysis,
etc.)
SOURCE: Tuovila, A. (2021, July 10). Horizontal analysis. Retrieved August 24, 2021, from
https://www.investopedia.com/terms/h/horizontalanalysis.asp
42. C
Orientation. Orientation is an onboarding activity, an HR management activity that gets new employees
started on the job. It may involve giving an employee a tour of the facilities and making introductions,
giving the employee information about company procedures and policies, and familiarizing the employee
with their new workspace and equipment. Compliance is an HR management activity that involves
making sure the company is following laws and regulations. Grievances are formal employee complaints
made to an HR representative. Exit interviews are conducted with an employee who is leaving, not one
who is new to the job.
SOURCE: HR:410 Discuss the nature of human resources management
SOURCE: LAP-HR-410—People Pusher (Nature of Human Resources Management)
43. B
Employment history. A company often requires job applicants to complete an employment application.
The application provides the company with a snapshot of an applicant's education, skills, training, and
employment history. The company uses the information to determine if the applicant meets the minimal
requirements for a specific position. Companies do not use employment applications to measure an
applicant's intelligence levels, to inquire about an applicant's hobbies and interests, or to determine the
applicant's insurability levels.
SOURCE: HR:354 Screen job applications/resumes
SOURCE: Doyle, A. (2021, January 22). Job applications: Types, forms, and samples. Retrieved
August 23, 2021, from https://www.thebalancecareers.com/job-application-form-sample-
2061607
44. C
The board of directors. The board of directors is the primary stakeholder affecting corporate governance.
The board of directors exists to make important decisions for the company, including appointing
corporate officers, setting executive compensation, and making dividend policies. The board of directors
directly influences the company's corporate governance. Company shareholders, employees, and
executives are not the primary stakeholders affecting corporate governance.
SOURCE: PD:302 Identify the factors that impact governance structures
SOURCE: Chen, J. (2021, July 4). Corporate governance. Retrieved August 23, 2021, from
https://www.investopedia.com/terms/c/corporategovernance.asp
45. A
To ensure employees understand the material. Encouraging employees to provide feedback during a
training session gives them opportunities to ask questions so the trainer can ensure they understand the
material. Team-building activities and group work are better techniques to help employees build
relationships during a training session. There are more effective ways to identify employees with
leadership skills than evaluating their feedback during a training session. Trainers who ask employees to
evaluate a training session usually do so after the training session is complete.
SOURCE: HR:392 Train staff
SOURCE: McQuerrey, L. (2019, July 24). How to conduct a training session effectively. Retrieved
August 23, 2021, from https://bizfluent.com/how-4555347-conduct-training-session-
effectively.html
46. A
Corrective. There are two general approaches to remedial action that supervisors can use: preventive
and corrective. Preventive discipline is essentially an approach to managing people in such a way that
behaviors which would require discipline are prevented. One action that supervisors can use to prevent
discipline problems is open-door management: a policy permitting employees to voice their complaints,
grievances, or problems to successively higher levels of management. Corrective discipline is intended to
discourage further violations after infractions have already occurred. It may consist of one or several
forms of action, including progressive discipline, corrective counseling, and constructive criticism.
Termination-at-will is a policy that allows for the discharge of any employee without cause, provided there
is no legal restriction or contract which applies to the situation.
SOURCE: HR:369 Explain the nature of remedial action
SOURCE: UC Merced. (2021). How to conduct corrective action (discipline). Retrieved August 23,
2021, from https://hr.ucmerced.edu/employeelabor-relations/employeelabor-relations-how-
tos/how-conduct-corrective-action-discipline
47. A
Providing salespeople with additional training. Data may show that salespeople need additional training
for a certain product. This is something marketers want to provide so sales and profits can be as high as
possible. Determining what new products to offer, deciding which wholesalers to use for distribution, and
budgeting for product development are all activities that should take place before a product hits the
market.
SOURCE: IM:012 Describe the need for marketing data
SOURCE: LAP-IM-012—Data Do It (Need for Marketing Data)
48. C
Place. Marketing research can tell the business the advantages and disadvantages of various locations
so that the business can choose the location that would get its products in the right place at the right
time. The price decision involves deciding the amount of money marketers will ask in exchange for their
products; the product decision involves deciding what goods, services, or ideas to sell; and the promotion
decision involves selecting the types of communications that will be used to inform, persuade, or remind
customers of their products.
SOURCE: IM:010 Explain the nature of marketing research
SOURCE: LAP-IM-010—Seek and Find (Marketing Research)
49. C
Marketing-information management. Gathering information through surveys is an example of the
marketing-information management function. Specialty advertising is categorized as "other media" such
as pens and calendars embossed with a company's name. Behavioral segmentation is the division of a
market based on customers' responses to a product. Promotion communicates information about goods,
services, images, and/or ideas to achieve a desired outcome.
SOURCE: MK:002 Describe marketing functions and related activities
SOURCE: LAP-MK-001—Work the Big Seven (Marketing Functions)
50. B
Adjust its marketing strategies. Changes in the marketplace require changes in marketing strategy.
Changes such an increase in operating expenses, tighter government regulations, and the entry of new
competitors in the marketplace require that businesses have flexible strategies so they can respond
quickly to those changes. Pricing changes and advertising efforts are often considerations when a new
competitor arrives on the scene. The business is more likely to increase advertising and reduce its prices,
depending on the competitors' marketing and positioning activities. The business should always be
concerned about maintaining safe working conditions, but this consideration does not impact marketing
decisions in relation to its competitors.
SOURCE: MP:001 Explain the concept of marketing strategies
SOURCE: LAP-MP-002—Pick the Mix (Nature of Marketing Strategies)
51. A
Into well-defined groups of consumers. Segmenting the market into well-defined groups of consumers
enables the business to know as much as possible about customers or potential customers, which helps
the business market its products effectively. This is the overall purpose of market segmentation. Dividing
the market by consumers' incomes or their locations is an aspect of market segmentation. Consumer
markets are composed of individuals who purchase goods or services to satisfy their personal desires.
Industrial markets are composed of businesses which purchase items for use in the operation of their
businesses, for resale, or for making other goods.
SOURCE: MP:003 Explain the concept of market and market identification
SOURCE: LAP-MP-003—Have We Met? (Market Identification)
52. D
An athletic footwear company produces a line of shoes for children who play soccer. A niche market is a
specific or narrow classification of customers in a market segment. An athletic shoe manufacturer
produces shoes for people who engage in athletic activities. If the shoe company designs and sells
footwear for a specific type of activity (e.g., soccer), it is appealing to a specific group within its larger
market segment. A petroleum company offering credit options to anyone who purchases its gasoline is
not necessarily engaging in niche marketing. An antibacterial hand soap is one item in a product line and
does not necessarily target any specific or narrow market. Advertising a soft drink during a national
television broadcast is an example of a mass marketing activity.
SOURCE: MP:005 Select target market
SOURCE: Ward, S. (2020, August 6). What is a niche market? Retrieved August 24, 2021, from
https://www.thebalancesmb.com/niche-market-definition-for-business-2947188
53. B
Operational activities. The sales forecast, the prediction of future sales over a specific period of time, is
the basis for many other operational activities. The forecast affects decisions about production,
distribution, purchasing, promotion, etc. Therefore, the sales forecast needs to be as accurate as
possible so the business correctly plans the other operational activities. For example, if the forecast is too
high, a business might produce substantially more product than it will be able to sell. A sales forecast is
not the basis of pricing strategies, business reports, or management techniques.
SOURCE: MP:014 Forecast sales for marketing plan
SOURCE: Metcalf, T. (2018, April 5). Top 10 reasons why sales forecasting is important. Retrieved
August 24, 2021, from https://yourbusiness.azcentral.com/top-10-reasons-sales-forecasting-
important-24818.html
54. B
Online tracking methods. Development and widespread use of computer software, computer hardware,
and the internet has made it possible for companies to track hits, purchases, and information gathered or
requested by consumers. This provides information to understand and develop profiles of consumers.
The profiles are used to develop and assess marketing and advertising objectives. The reason this
method is controversial is because many feel that the process invades the privacy of the consumer.
Consumer questionnaires and phone surveys are ways to collect data, but they are not necessarily
considered controversial. Indirect response techniques is not a term used in data collection for profiling
use.
SOURCE: MP:031 Develop customer profile
SOURCE: Federal Trade Commission. (n.d.). How to protect your privacy online. Retrieved August 24,
2021, from https://www.consumer.ftc.gov/articles/how-protect-your-privacy-online
55. A
To obtain systems that perform required functions. There is a wide selection of hardware and software
systems, and not all systems meet the specific needs of all businesses. Therefore, businesses establish
specifications so they will obtain the systems that have the capability of performing the required
functions. For example, some businesses need only basic hardware and a few software programs such
as Word and Excel. Other businesses may need more complex hardware and a vast selection of
software programs to manage manufacturing, distribution, billing, and customer service. Businesses do
not establish specifications to develop training programs for employees, to analyze the prices of various
vendors, or to keep up with the latest technological fads.
SOURCE: NF:091 Establish specifications for selecting hardware/software systems
SOURCE: CMI. (2020). Choosing the right hardware and software. Retrieved August 24, 2021, from
https://www.newcmi.com/blog/choosing-the-right-hardware-software
56. B
To identify patterns. Data mining is the process of analyzing large amounts of information to find patterns,
identify outliers, and predict outcomes. Companies use data mining to improve their marketing strategies,
cut costs, improve customer service, and more. Data mining is not typically used to locate someone, to
spy on competitors, or to attract customers.
SOURCE: NF:148 Discuss the nature of data mining
SOURCE: SAS Institute Inc. (2021). Data mining: What it is and why it matters. Retrieved August 23,
2021, from https://www.sas.com/en_us/insights/analytics/data-mining.html#
57. D
To prove the business's net worth to acquire a bank loan. Financial records showing the value of a
business would help prove the company's net worth and could be used to acquire a bank loan. Financial
records showing profits or expenses would be of little value in proving excellent service. Financial records
contain private information that would not be shown to competitors or to suppliers.
SOURCE: NF:001 Describe the nature of business records
SOURCE: LAP-NF-001—Record It (Business Records)
58. D
Inventory report. An inventory report captures information about the status of the firm's supplies or
products. For example, the inventory report may indicate that the firm is running low on copy paper for
the photocopier and that the paper should be ordered so the firm does not run out. An income statement
(profit-and-loss statement) is a financial summary that shows how much money the firm has made or has
lost over a period of time. A SWOT analysis is a summary of the firm's strengths, weaknesses,
opportunities, and threats. A credit report provides information about the firm's or its customers' credit
history.
SOURCE: NF:014 Monitor internal records for business information
SOURCE: Lopienski, K. (2019, July 15). Guide to reporting on inventory + free inventory report
templates. Retrieved August 23, 2021, from https://www.shipbob.com/blog/inventory-report/
59. C
Obtaining resources. Resources refer to any person or item that the business uses to accomplish an
objective. Operations management is the process of planning, controlling, and monitoring the day-to-day
activities required for the company to function. This includes obtaining and allocating the appropriate
types and amounts of resources to do the work, such as employees, equipment, and supplies.
Contacting customers is a sales activity. Selecting media is a promotional activity. Analyzing investments
is a financial activity.
SOURCE: OP:189 Explain the nature of operations
SOURCE: LAP-OP-189—Smooth Operations (Nature of Operations)
60. C
Safety issues. There are plenty of safety issues that companies must consider when planning a new
workspace or evaluating a current one, including electrical hazards, slipping and tripping from obstacles
or slippery floors, and workplace violence. These are all examples of safety issues, not compromises,
non-negotiables, or success indicators. A compromise is an agreement between two parties where each
side must make sacrifices to reach an outcome that is acceptable for everyone. A non-negotiable is
something that is deemed too important not to have. A success indicator is a sign that suggests that a
person or organization is achieving success.
SOURCE: OP:151 Identify potential safety issues
SOURCE: Root, G. (2021). What are some workplace safety issues? Retrieved August 24, 2021, from
https://smallbusiness.chron.com/workplace-safety-issues-1303.html
61. D
To obtain a needed delivery date. The people responsible for purchasing should always seek to buy
needed goods and services at the lowest possible price, provided quality, delivery, and service do not
suffer. It may not be efficient to purchase at the lowest possible price if the materials cannot be delivered
on time. Obtaining the needed delivery date is a reason why a business might decide to purchase goods
for a price higher than the lowest possible price. A business would not purchase goods for a price higher
than the lowest possible price to spend additional funds, satisfy a favorite vendor, or arrange flexible
contracts.
SOURCE: OP:015 Explain the nature and scope of purchasing
SOURCE: LAP-OP-015—Buy Right (Purchasing)
62. B
Standardized. Some production processes, such as mass production, use standardized parts to make
large quantities of similar products. Standardized parts are interchangeable. Grading is the process of
rating products according to certain established standards or characteristics. Branding is the ongoing
decision-making process about the use of brands. Segmenting divides people or things into sections
according to certain criteria.
SOURCE: OP:017 Explain the concept of production
SOURCE: LAP-OP-017—Can You Make It? (Nature of Production)
63. B
Workflows. Businesses want to establish efficient procedures to expedite task completion and make it
possible for employees to do their jobs correctly. Businesses establish efficient workflows by developing
and implementing procedures for employees to follow so they can avoid making mistakes. If employees
have specific procedures to follow, they are more likely to be able to work efficiently and achieve quality.
Production processes are the ways that products are produced. Management techniques are ways of
supervising personnel.
SOURCE: OP:022 Establish efficient operating systems
SOURCE: Monday.com. (2020, December 27). What is a workflow and how can it boost productivity?
Retrieved August 24, 2021, from https://monday.com/blog/productivity/what-is-a-workflow/
64. C
Semi-variable. Semi-variable costs are expenses that change very little and are not affected by sales
volume as much as variable costs. Fixed costs are going to remain the same no matter how many units
of a product are produced or marketed. Variable costs vary according to changes in sales volume or
sales revenue and can also change in proportion to the number of items produced. Nonoperating costs
are costs to the company for goods for which they resell or raw materials that are used to produce goods
or services to be sold.
SOURCE: OP:024 Explain the nature of overhead/operating costs
SOURCE: Tuovila, A. (2020, October 29). Semi-variable cost. Retrieved August 23, 2021, from
https://www.investopedia.com/terms/s/semivariablecost.asp
65. C
$12,600. Businesses use budget information to monitor sales and expenses and to compare budgeted
amounts with actual figures. If sales increase over the amount budgeted and expenses remain steady,
the business's income will also increase. In this example, the business's actual sales increased over the
budgeted amount. To calculate the increase in income, first determine the budgeted four-month sales
total ($165,500 x 4 = $662,000). Then, calculate the amount of that figure that was budgeted for
expenses ($662,000 x 55% [or .55] = $364,100). Then, subtract budgeted expenses from budgeted sales
to calculate budgeted income ($662,000 − $364,100 = $297,900). Next, calculate the amount of
expenses based on actual sales ($690,000 x 55% [or .55] = $379,500). Subtract expenses from actual
sales to calculate actual income ($690,000 − $379,500 = $310,500). To determine the increase in
income, subtract budgeted income from actual income ($310,500 − $297,900 = $12,600).
SOURCE: OP:030 Use budgets to control operations
SOURCE: Inc. (2021, January 5). How to start a business budget. Retrieved August 24, 2021, from
https://www.inc.com/encyclopedia/businessbudget.html
66. B
Gain a competitive advantage in the marketplace. Supply chain management involves supervising the
complete process of getting products into the marketplace, from production to purchase by an end
consumer. Two of the main goals of supply chain management are maximizing the value that is provided
to the customer and gaining a competitive advantage in the marketplace by moving goods effectively and
efficiently. Setting prices and controlling customer perceptions are not primary goals of supply chain
management.
SOURCE: OP:303 Discuss the nature of supply chain management
SOURCE: Fernando, J. (2021, April 10). Supply chain management (SCM). Retrieved August 23, 2021,
from https://www.investopedia.com/terms/s/scm.asp
67. B
Gap analysis. A business uses a gap analysis to compare the current status of an activity or process with
the desired outcome for that activity or process. Businesses use gap analyses to evaluate many types of
business functions and activities including necessary skills, training, technology, and profitability. A mind
map is a creative-thinking technique that involves generating ideas by making associations. A decision
tree is a method that businesses often use to facilitate the decision-making process. It involves using a
tree-shaped image in which each branch of the tree represents a possible occurrence or outcome.
Critical path refers to a project management tool that illustrates all activities needed to complete a task in
the order in which they need to be performed.
SOURCE: OP:327 Discuss the nature of business analysis
SOURCE: Kenton, W. (2020, November 27). Gap analysis. Retrieved August 23, 2021, from
https://www.investopedia.com/terms/g/gap-analysis.asp
68. C
Income statement. An income statement is a financial summary that shows how much money the
business has made or lost. It is also called a profit-and-loss statement. A balance sheet shows a firm's
assets, liabilities, and owner's equity. A marketing plan is a set of procedures or strategies for attracting
the target customer to the business. A sales budget is an estimate of expenditures related to sales.
SOURCE: FI:094 Describe the nature of income statements
SOURCE: LAP-FI-094—Watch Your Bottom Line (Income Statements)
69. D
Regulatory. Because the manufacturing company is required by local government to dispose of its waste
safely, the company must design its waste disposal process to abide by the regulations. This is an
example of regulatory factors affecting business process design. Human factors affecting process design
include stress, employee morale, and fatigue. Technological factors that can affect process design
include the cost of any equipment or hardware that is necessary for the process. The term “natural
factors” is not usually used to describe factors affecting process design.
SOURCE: OP:475 Describe the factors that influence business process design
SOURCE: Taylor, H. (2017, September 26). Factors that affect process design. Retrieved August 23,
2021, from https://bizfluent.com/list-7444011-factors-affect-process-design.html
70. D
Competition. Competition is one of the main external factors that may cause a firm to change its business
processes. Although desire for growth, low employee morale, and high operating costs are reasons to
change business processes, these are all internal factors.
SOURCE: OP:476 Explain the causes of business process changes
SOURCE: Gleeson, P. (2019, February 12). Factors that may cause change in an organization.
Retrieved August 23, 2021, from https://smallbusiness.chron.com/factors-may-cause-
change-organization-203.html
71. D
Reduces the time it takes for goods to reach consumers. Supply chain management reduces the time it
takes for goods to reach consumers, which improves customer satisfaction. Integrating information
throughout an organization, improving cash flow, and enhancing data quality do not directly increase
customer satisfaction.
SOURCE: OP:477 Explain the impact of supply chain on business performance
SOURCE: Flexe. (2019, September 26). 4 supply chain secrets to drive customer satisfaction.
Retrieved August 23, 2021, from https://www.flexe.com/articles/4-supply-chain-secrets-to-
drive-customer-satisfaction
72. D
Define the objective. The first step in the decision-making process is identifying what it is you want to do
and defining the objective. The decision-making process begins when a person becomes aware of a
situation and sees the need to make a decision. Making a choice, analyzing results, and evaluating
information are steps in the decision-making process that occur after the objective is defined.
SOURCE: PD:017 Make decisions
SOURCE: LAP-PD-017—Weigh Your Options (Decision-Making)
73. A
Improved access to capital. Corporate governance includes the structures and processes that direct and
control companies. Evidence indicates that well-governed companies receive higher market valuations
and have increased capital flows. Strong corporate governance practices do not increase distance from
investors; rather, corporate governance makes companies more accountable and transparent to
investors. Corporate governance does not give companies the ability to bypass sustainability efforts. It
instead gives them more tools to increase sustainability. Finally, corporate governance increases
stakeholder involvement, rather than limiting it.
SOURCE: PD:213 Discuss the importance of corporate governance in business
SOURCE: Management Study Guide. (2021). Corporate governance - Definition, scope and benefits.
Retrieved August 23, 2021, from https://www.managementstudyguide.com/corporate-
governance.htm
74. D
Elected by stockholders. A board of directors is elected by stockholders. Board members may be
stockholders, but they are not required to be. Vendors are not board members. The board of directors
makes many decisions for the business.
SOURCE: PD:214 Describe the components of a well-governed company (e.g., board of directors,
reporting, transparency, internal and external audit functions)
SOURCE: Chen, J. (2021, April 12). Board of directors (B of D). Retrieved August 23, 2021, from
https://www.investopedia.com/terms/b/boardofdirectors.asp
75. C
Government regulations. External mechanisms are controls that come from outside of the organization.
An example is government regulations that are imposed upon a company. Internal mechanisms come
from within an organization. A board of directors' policies, a company's business objectives, and a
company's code of conduct are all internal mechanisms of control.
SOURCE: PD:302 Identify the factors that impact governance structures
SOURCE: Davoren, J. (2021). Three types of corporate governance mechanisms. Retrieved August 23,
2021, from https://smallbusiness.chron.com/three-types-corporate-governance-mechanisms-
66711.html
76. D
Application forms. Most employers require applicants to complete an application form for the position
under consideration. It is completed prior to the job interview so that the interviewer has an opportunity to
review the information supplied on the application form before talking with the applicant. Letters of intent
and resumes are initiated by applicants, while reference checks are conducted by employers.
SOURCE: HR:356 Select and hire new employees
SOURCE: CareerOneStop. (2021). Job applications. Retrieved August 23, 2021, from
https://www.careeronestop.org/JobSearch/Resumes/job-applications.aspx
77. C
Measurable. When an organization is developing performance standards, it should ensure that those
standards are measurable so that they can actually be used to evaluate performance. Performance
standards should be objective rather than subjective. They also should be clearly stated in writing rather
than informally discussed. Finally, performance standards should be realistic rather than extremely
challenging.
SOURCE: PD:256 Establish performance standards to meet organizational goals
SOURCE: U.S. Office of Personnel Management. (n.d.). Performance management cycle. Retrieved
August 24, 2021, from https://www.opm.gov/policy-data-oversight/performance-
management/performance-management-cycle/planning/developing-performance-standards
78. A
High. High prices suggest high quality and prestige to customers, while moderate or discount prices are
associated with low quality. Wholesale prices are what the business pays for the items it buys for resale.
SOURCE: PI:001 Explain the nature and scope of the pricing function
SOURCE: LAP-PI-001—The Price Is Right (Nature of Pricing)
79. C
Trying to improve cash flow. The Salty Pretzel Company is using a profit-oriented pricing objective of
maximizing profits. Because there is no indication that the company is in financial trouble, it is most likely
trying to improve cash flow for one reason or another. If the company was trying to create an exclusive
image, it would use a sales-oriented pricing objective to do so. The company already has market share
and would lower prices to capture more. The company is most likely increasing prices, not stabilizing
them.
SOURCE: PI:002 Explain factors affecting pricing decisions
SOURCE: LAP-PI-003—Make Cents (Factors Affecting Selling Price)
80. B
Task force meetings. A task force is a group of employees who work in different company departments
(e.g., sales, finance) that meets on a regular basis. During the meetings, the task force generates ideas
and discusses new product and market opportunities. Because each member represents a different
aspect of the business, a task force is often an effective way to facilitate product and market
development. Interviewing customers, distributing vendor surveys, and belonging to a trade association
are external methods of recognizing product and market opportunities.
SOURCE: PM:136 Create processes for ongoing opportunity recognition
SOURCE: Sarokin, D. (2019, October 21). What are the characteristics of a task force group in
business? Retrieved August 24, 2021, from https://smallbusiness.chron.com/characteristics-
task-force-group-business-20615.html
81. A
Evaluate its customers' experiences. Customers' experiences with a firm are greatly influenced by the
service the company provides. By evaluating its customers' experiences, a company can determine ways
in which it is achieving customer satisfaction and ways in which it needs to improve. To evaluate its
customers' experiences, the company must ask its customers what they like and dislike about the
business, which is often done by conducting a survey or interview. When developing the questions, the
company should consider the various factors that affect the customers' experiences, such as reliability
(e.g., delivery), courtesy (e.g., employees' attitudes), and competence (e.g., product knowledge). Mass
advertising messages are nonpersonal rather than personal. A company's goal is to improve its own
market share, not the competition's market share. Knowing and understanding regulations help
businesses comply with local ordinances.
SOURCE: PM:138 Evaluate customer experience
SOURCE: Moore, S. (2019, May 28). How to measure customer experience. Retrieved August 24,
2021, from https://www.gartner.com/smarterwithgartner/how-to-measure-customer-
experience/
82. C
The company wants to increase its market share. Most businesses have goals for their firms, and the
products they sell should help the firms achieve those objectives. When a product no longer helps a
business attain its share of a particular market, the firm may decide to replace it with a product that may
do so. The firm in this case is not expanding its product line, since it is simply replacing one product with
another. A product that sells well or is a collectible would be a good reason for the company to keep the
product in its product mix.
SOURCE: PM:003 Explain the concept of product mix
SOURCE: LAP-PM-003—Mix and Match (The Nature of the Product Mix)
83. D
An increasingly diverse array of risks. In the past, risks were managed through the purchase of
insurance. However, companies have begun to manage many different types of risks that need to be
managed on a broader level. Enterprise risk management is now a plan-based strategy that is
incorporated throughout an organization. Enterprise risk management has not developed due to the
elimination of certain insurance plans, reduced government regulation, or declining quality standards.
SOURCE: RM:062 Discuss the nature of enterprise risk management (ERM)
SOURCE: Hayes, A. (2021, June 2). Enterprise risk management (ERM). Retrieved August 23, 2021,
from https://www.investopedia.com/terms/e/enterprise-risk-management.asp
84. A
Competition and technology. The environment, social trends, and demand, in addition to competition and
technology, are external factors, or influences from outside the business, that influence promotional
decisions. Product, price, and distribution are internal factors.
SOURCE: PR:001 Explain the role of promotion as a marketing function
SOURCE: LAP-PR-002—Razzle Dazzle (Nature of Promotion)
85. B
Email. The main advantage of email marketing is that, using email contact lists, the business can send its
message only to those people most likely to buy its products. For example, an electronics store can send
sale notices to its best customers who are most likely to buy the store's goods. Billboard ads, TV, and
magazines reach a wide variety of people who may not be potential customers.
SOURCE: PR:007 Explain types of advertising media
SOURCE: LAP-PR-003—Ad-quipping Your Business (Types of Advertising Media)
86. C
Brand evangelist. Brand evangelists are loyal customers who act as unofficial brand ambassadors to
their friends and family members by recommending and endorsing the brand's products. In this example,
Jamie could be described as a brand evangelist—not a late adopter, potential customer, or discount
customer. A late adopter is skeptical of a new product and therefore slow to begin using or buying that
good or service. A potential customer is someone with a particular want or need who is highly likely to
purchase your product. A discount customer is someone that makes purchasing decisions based on the
size of current markdowns.
SOURCE: PR:247 Describe word-of-mouth channels used to communicate with targeted audiences
SOURCE: Hodak, B. (2020, August 11). What is a brand evangelist? Retrieved August 23, 2021, from
https://brittanyhodak.com/what-is-a-brand-evangelist/
87. D
Involving everyone in the organization. Change management impacts entire organizations. Therefore,
everyone needs to be involved in the process. Focusing on processes over people, using as few
resources as possible, and ensuring changes do not impact competitiveness are not keys to successful
change management.
SOURCE: SM:095 Explain the nature of change management
SOURCE: Candito, N. (2017, August 15). The 4 dos of change management. Retrieved August 23,
2021, from https://www.forbes.com/sites/groupthink/2017/08/15/the-4-dos-of-change-
management/2/#3a53e2456768
88. C
Rebate. A rebate is a sales promotion in which part of the price a customer pays for a good is given back
to the customer. Rebates usually require customers to mail proof of purchase to receive their money
back. This example does not demonstrate a point-of-sale promotion, coupon, or sweepstakes. Point-of-
sale promotions are promotions located where the customer purchases a good or service, such as in a
store. A coupon is a printed or online certificate that entitles the holder to a reduced purchase price. A
sweepstakes is a game of chance in which a customer wins a prize.
SOURCE: PR:249 Identify communications channels used in sales promotion
SOURCE: Hayes, A. (2021, August 17). Rebate. Retrieved August 23, 2021, from
https://www.investopedia.com/terms/r/rebate.asp
89. C
To obtain publicity. By sponsoring an event, businesses are using the event as a communications
channel to provide information to others. The goal of sponsoring an event is to obtain publicity, which is
any nonpersonal presentation of ideas, goods, or services that is not paid for by the company or
individual that benefits from or is harmed by it. In many cases, the media report on the event and include
information about the sponsors. As a result, the businesses obtain publicity. Businesses that sponsor
local events are not creating news. Businesses do not sponsor local events to generate revenue or to sell
products. However, by obtaining publicity, they might attract more customers which will result in selling
more products and generating more revenue.
SOURCE: PR:250 Explain communications channels used in public-relations activities
SOURCE: Friedman, S. (2021, January 7). Why your marketing plan should include sponsorship.
Retrieved August 23, 2021, from https://www.thebalancesmb.com/sponsorship-a-key-to-
powerful-marketing-2295276
90. D
Training employees to strive for quality. Quality assurance is a process that businesses use to prevent
defective products from being created. The focus of quality assurance is planning ahead and getting
things right the first time. An important aspect of quality assurance is training employees to strive for
quality. When employees receive proper training, the goods that they make and the services that they
provide are more likely to meet quality standards during the production process. Quality control involves
inspecting products for defects after the production process. In some situations, quality control involves
repairing defective products to meet quality standards. Quality improvement is the willingness to make
changes to maintain quality or make it better.
SOURCE: QM:001 Explain the nature of quality management
SOURCE: LAP-QM-001—Keep It Quality (Nature of Quality Management)
91. D
Risks help businesses determine objectives. When businesses are determining their objectives, they
must consider risks related to these objectives and ensure that these risks are manageable. Objectives
should be modified because of risk. If a new risk threatens a business objective, it should be changed to
accommodate that risk. Business objectives almost always have at least some risk associated with them.
Finally, the number of objectives is not necessarily related to the amount of risk.
SOURCE: RM:044 Discuss the relationship between risk and business objectives
SOURCE: Pike, R. (2018, October 31). Building a bridge between risk management and business
objectives. Retrieved August 24, 2021, from https://www.finance-
monthly.com/2018/10/building-a-bridge-between-risk-management-and-business-objectives/
92. B
Shallow depth. Depth is a product-mix dimension referring to the number of products and the assortment
of sizes, colors, and models offered in a product line. If the depth is shallow, there are fewer products
available in each category. This minimizes costs by reducing the level of inventory that needs to be
maintained. A business with shallow depth has less money tied up in inventory than a business that
carries a wide assortment. High breadth does not minimize costs, because it involves carrying a lot of
items in the product mix. Economy image and premium value do not minimize the costs associated with
maintaining a product mix.
SOURCE: PM:006 Plan product mix
SOURCE: Suttle, R. (2019, February 12). What is a product mix? Retrieved August 24, 2021, from
https://smallbusiness.chron.com/product-mix-639.html
93. B
Be needed by the customers. Selling should try to fill the needs and wants of consumers. The lowest
price is not always the best choice, because some customers need or want better quality. Some products
need to fill only one need to completely satisfy a customer. There are times when the best quality is not
needed or desired by customers.
SOURCE: SE:017 Explain the nature and scope of the selling function
SOURCE: LAP-SE-017—Sell Away (The Nature and Scope of Selling)
94. C
Company description. The company description accurately portrays the new company or venture,
provides a history of the company, and shows the current business structure, among other things. In the
market analysis, you see how the market has responded (or is likely to respond) to the new company or
product/venture. The strategy and implementation section shows how the business intends to do what it
has planned. The executive summary gives an overview of the entire document.
SOURCE: SM:007 Explain the nature of business plans
SOURCE: LAP-SM-007—Plan Now, Succeed Later (Nature of Business Plans)
95. A
Unrealistic. Setting goals and objectives helps a company move forward, but the goals must be realistic.
Expecting increased sales when the forecast predicts poor skiing weather is unrealistic. Companies that
set unrealistic goals are less likely to achieve those goals. If they plan for the unrealistic goals, acquire
additional inventory, and hire more staff, they may encounter failure. Practical, reasonable, and scientific
are characteristics of realistic goals and objectives.
SOURCE: SM:008 Develop company goals/objectives
SOURCE: The Happy Manager. (2021). What are Smart objectives? Retrieved August 24, 2021, from
https://the-happy-manager.com/tips/smart-objectives/
96. B
Sales in the auto industry are increasing. Auto sales are one of the economic indicators that indicate the
state of the economy. Increasing auto sales indicate economic growth and health. Stricter licensing
requirements and an increase in price-fixing cases would be the result of stronger government
regulations. The increased use of computers is a technological trend.
SOURCE: SM:011 Explain external planning considerations
SOURCE: Corporate Finance Institute. (2021). Economic conditions. Retrieved August 24, 2021, from
https://corporatefinanceinstitute.com/resources/knowledge/economics/economic-conditions/
97. B
Dashboards. Dashboards are types of computer-generated, custom-designed reports that indicate the
overall situation of a business. They present a set of key performance indicators that, when viewed
together, give a snapshot of the health of the company. Managers use dashboards to track the condition
of the company and identify potential problems so they can make adjustments before any harm is done.
Firewalls, extranets, and terabytes are not used to monitor key performance indicators.
SOURCE: SM:027 Identify and benchmark key performance indicators (e.g., dashboards, scorecards,
etc.)
SOURCE: Karlson, K. (2021). What is a KPI tracking dashboard? [Complete guide]. Retrieved August
24, 2021, from https://www.scoro.com/blog/what-is-kpi-tracking-dashboard/
98. D
Company A. Businesses often compare their sales-to-receivables ratios with industry standards to
determine if they are collecting cash as quickly as others. If businesses find that they have low sales-to-
receivables ratios, they might make adjustments to their collection procedures to receive payment in a
more timely manner. To calculate Company A's sales-to-receivables ratio, divide sales by accounts
receivable ($250,000 / $20,000 = 12.5). This figure indicates that receivables turn over more than 12
times a year, which means there is a shorter time between making the sale and collecting the cash for
Company A than there is for the others. Company B's sales-to-receivables ratio is 11, Company C's
sales-to-receivables ratio is 10, and Company D's sales-to-receivables ratio is 9.1.
SOURCE: SM:005 Analyze operating results in relation to budget/industry
SOURCE: Murphy, C. (2021, April 7). Receivables turnover ratio. Retrieved August 24, 2021, from
http://www.investopedia.com/terms/r/receivableturnoverratio.asp
99. A
Accept change. Innovation is the process of creating new or more effective products, processes,
services, technologies, or ideas. Creating something new requires change. When a business encourages
its employees to learn about new processes, customer wants, market needs, and trends, innovation is
more likely to occur. Exhibiting bias and suppressing ideas may have a negative effect on innovation.
Following certain types of business procedures is important for creating a safe and fair work environment
and does not necessarily affect innovative processes.
SOURCE: SM:094 Describe relationship among innovation, learning, and change
SOURCE: Green, N. (2021, July 14). How to encourage innovation in the workplace. Retrieved August
23, 2021, from https://www.wework.com/ideas/professional-development/creativity-
culture/how-to-encourage-innovation-in-the-workplace
100. A
Customize offers. Direct marketing is an effort to obtain business by sending promotional information to
customers directly to their businesses or homes. Opt-in email, which allows a business to send
promotional messages with the receivers' permission, gives the business an opportunity to send
promotional messages and coupons to the customers who are most likely to purchase the product. By
having customers complete a customer profile, the business can customize the promotional offers so that
customers receive promotional information about the products that are of the most interest to them.
Demographics are the physical and social characteristics of the population. A business can use
demographic information to develop messages to appeal to a target market; however, it cannot influence
the actual physical and social characteristics of that market. A trend is the general direction in which
society is moving. Businesses do not send promotional information to predict trends. A business can take
action to try to increase sales, but it cannot control sales.
SOURCE: PR:089 Explain the nature of direct marketing channels
SOURCE: Pavoni, J. (2020, June 16). The beginner's guide to opt-in email marketing. Retrieved August
23, 2021, from https://blog.hubspot.com/insiders/how-to-build-an-opt-in-email-list

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ENTREPRENEURSHIP TEAM DECISION MAKING

Posted online March 2022 by DECA Inc.

6. Indirect channels of distribution are the only channels that involve

10. One of the benefits of competition to consumers is that competition encourages

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15. How does a goal differ from a vision?

21. Which of the following statements regarding international trade is true:

24. The financial section of a feasibility study must include sources of

35. Which of the following is an example of a current asset:

36. Which of the following is an example of business process thinking:

42. Which of the following is an onboarding activity:

51. An overall purpose of market segmentation is to divide the market

56. Which of the following is a primary purpose of data mining:

59. Which of the following is an operations activity in business:

66. One of the primary goals of supply chain management is to

71. How does supply chain management increase customer satisfaction?

73. What is a benefit of corporate governance?

74. Members of a board of directors are

75. Which of the following is an example of an external mechanism of corporate governance:

76. Most employers require applicants to complete

77. Performance standards should be

83. Why has enterprise risk management developed?

84. External factors that affect a company's promotional decisions include

89. Why do some businesses sponsor local events?

90. Which of the following is a task involved in quality assurance:

93. All goods or services sold to customers should

96. Which of the following identifies an upward economic trend:

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