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It is fair to say that a strong small business sector is the backbone of the private enterprise system.
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Only 10% of today’s large businesses were started by entrepreneurs
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Business
Chapter 4/5 True and False World Trade
| Term | Definition |
|---|---|
| It is fair to say that a strong small business sector is the backbone of the private enterprise system. | True |
| Only 10% of today’s large businesses were started by entrepreneurs | False |
| In the United States, the number of small businesses is declining. | False |
| Almost two-thirds of all new jobs are created by small businesses. | True |
| Less than a fourth of the nation’s private workforce are employed by small businesses. | False |
| Small businesses account for barely one-quarter of the nation’s private GDP. | False |
| Small businesses are more likely to hire women and military veterans returning to the workforce than are larger businesses. | True |
| Franchising is a contractual business arrangement between a manufacturer or supplier and a dealer. | True |
| A well-established franchise is cheaper to open than an independent small business. | False |
| Franchisees often have little support offered to them by franchisors. | False |
| Major advantages of franchises include a tested management system, name recognition, and a proven business model. | True |
| The buyer of a franchise is known as the franchisee. | True |
| One franchise unit can suffer from the actions or poor performance of other units of the same franchise. | True |
| Franchising offers entrepreneurs greater independence and flexibility than other types of small businesses. | False |
| Sole proprietorships give owners ease of formation and dissolution, maximum flexibility, and the owner retains all the after tax profits. | True |
| Corporations are the most common form of business ownership | False |
| Like sole proprietorships, partnerships are easy to form and dissolve | False |
| Major advantages that can be achieved through the partnership form of ownership include complimentary management skills and expanded financial capability. | True |
| Corporations face double taxation. | True |
| Top managers include job titles like CEO, CFO, COO, and CIO | True |
| Top managers are responsible for the day-to-day operational functions of the firm | False |
| States often require at least one incorporator. | False |
| The board of directors is elected by the corporation’s common stockholders and appoints top management. | True |
| A corporation that operates outside the state of incorporation is known as a domestic corporation | False |
| A corporation that operates outside the country of incorporation is known as an alien corporation. | True |
| Most businesses in the United States are small businesses. | True |
| The quickest and simplest form of business ownership to start is the sole proprietorship. | True |
| The government usually offers small businesses the option of foregoing the paperwork required of larger businesses. | False |
| Partnerships often prove difficult to form. | False |
| In a partnership, the death of one partner does not affect the business in any way. | False |
| Many small business owners get added help in lowering costs by involving family members who often contribute without being paid. | True |
| There are less Limited Liability Companies (LLCs) today than there were in the past. | False |
| A franchise owner typically can generate profits faster than an independent business owner can. | True |
| Most small businesses prove successful after the first year. | False |
| The SBA will lend money to anyone with a really good idea. | False |
| The SBA will lend money to anyone with a really good idea. | True |
| A conglomerate merger combines similar firms in order to drive profits. | False |
| Poor management is a frequently cited reason for small business failure. | True |
| An organization that is operated collectively by its owners is a cooperative. | True |
| An organization that is operated collectively by its owners is a cooperative. | False |
| Fewer than 20% of businesses in the United States qualify as small businesses. | False |
| Small Business Investment Company (SBIC) is an investment group that funds small businesses under an SBA license. | True |
| The number of minority-and women-owned businesses is decreasing. | False |
| An important disadvantage of sole proprietorships is lack of continuity. | True |
| Sole proprietorships are easy to dissolve. | True |
| Small business plays a key role in international trade, accounting for over 30% of U.S. exports. | True |
| Foreign trade makes up a large portion of American’s business activity | True |
| The U.S. mainly trades with Western Europe over other areas of the world. | False |
| Trading with other countries increases a company’s dependence on economic conditions in its home market. | False |
| Trading with other countries spreads out risk for multinational firms. | True |
| A positive balance of trade is referred to as a balance surplus | True |
| An unfavorable balance of trade results in a trade deficit. | True |
| A strong dollar helps the United States create a favorable balance of trade. | False |
| Currency values rarely fluctuate. | False |
| The overall flow of money into or out of a country comprises that country’s balance of trade. | Flase |
| All of the world’s major currencies are based on a fixed standard: the price of gold | False |
| Where obstacles to multinational economic integration still exist, the trend is toward greater free trade. | True |
| The European Union (EU) is composed of only western European countries in order to avoid trading or job-related conflicts. | False |
| The General Agreement on Tariffs and Trade (GATT) has been succeeded by the World Trade Organization (WTO). | True |
| The General Agreement on Tariffs and Trade (GATT) has been succeeded by the World Trade Organization (WTO). | True |
| The World Bank is also known as the International Monetary Fund (IMF). | False |
| country’s level of risk falls as its level of involvement in global business increases. | False |
| Contracting with a foreign manufacturer to produce a product rather than exporting it is known as foreign licensing | True |
| Franchising works well for companies working to expand into international markets. | True |
| While it is not generally considered a way of initiating business internationally, offshoring, or the relocation of business processes to a lower-cost location overseas, has become widespread practice | True |
| In general, the greater degree of control a company exercises through foreign investment, the less risk the company faces. | False |
| In a global business strategy, a business will adjust how they sell a particular product for each country. | False |
| When a unique product and/or marketing strategy is designed for each foreign market, a multidomestic business strategy is in use. | True |
| Companies that neglect the global nature of the Internet can unwittingly cause problems for potential customers by failing to adapt their strategy | True |
| Regardless of global business strategies, companies need to be aware of cultural and business customs in the countries in which they do business and of whether certain behaviors are accepted. | True |
| The United States is the world’s largest importer. | True |
| Foreign trade is less critical to the United States than to countries such as Mexico. | False |
| When a nation’s imports exceeds its exports, it is said to have a favorable balance of trade. | False |
| When a nation’s imports exceeds its exports, it is said to have a favorable balance of trade. | False |
| Countertrade involves business payments with currency rather than products. | True |
| Dumping refers to a practice of countries carrying their waste products out to sea beyond their international boundary and disposing of them in the ocean. | False |
| An embargo imposes a total ban on importing a specified product or even a total halt to trading with a particular country. | True |
| The European Union is a common market. | True |
| A tariff produces revenue for the government of the importing country. | False |
| A complete ban on certain products is called a tariff. | False |
| In a free-trade area, the participants have no tariffs or trade restrictions. | True |
| Most companies choose not to establish an overseas division. | False |
| Exchange control is the regulation of foreign trade through a central bank or government agency. | True |
| If a firm allows a foreign company to produce and distribute its products or use its trademarks or patents it is engaged in dumping. | False |
| The International Monetary Fund was created to promote trade through financial cooperation. | True |
| The International Monetary Fund was established to make long-term loans to countries requiring assistance in conducting trade. | False |
| The International Monetary Fund was established to make long-term loans to countries requiring assistance in conducting trade. | False |
| Developing nations often prove to have higher GDP growth rates. | True |
| The number-one trading partner of the United States is now China. | False |
| country’s size, per-capita income, and stage of economic development are among the economic factors to consider when evaluating it as a candidate for an international business venture. | True |
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tiffanie1719
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