Deck 9: The Location Plan

Question 1

A home location is still almost always considered a temporary situation until the business grows.

Answer 1

False

Question 2

Customer accessibility is vital in industries in which the cost of shipping the finished product is high relative to the product's value.

Answer 2

True

Question 3

An entrepreneur who works from home may deduct costs related to space used in the home for business from any taxes that may be owed from the venture's income, as long as he or she conforms to the rules established by the IRS.

Answer 3

True

Question 4

Most state and city governments go to great lengths to support startups.

Question 5

Manufacturing equipment can be categorized as general-purpose and special-purpose.

Question 6

Many small business owners recognize the value of seeking assistance from local realtors in determining site availability and appropriateness.

Question 7

The amount of square feet of office area per employee has increased significantly in recent years.

Question 8

Sometimes an attorney can add an escape clause to a lease agreement that allows the lessee to exit the agreement under certain conditions.

Question 9

The choice of a location for a physical facility is rarely a one-time decision.

Question 10

E-commerce can provide a benefit to startups with early cash flow problems by compressing the sales cycle.

Question 11

Business incubators rent space to new businesses or people wishing to start businesses but do not offer management advice or provide any other form of assistance.

Question 12

One of the disadvantages of operating a business-to-consumer (B2C) e-commerce business as opposed to a brick-and-mortar store is lack of flexibility.

Question 13

The primary factor in determining the location for a sawmill would most likely be customer accessibility.

Question 14

Because business-to-business (B2B) model success stories generally receive more publicity than business-to-consumer (B2C) model ventures do, the potential for B2C opportunities are overlooked.

Question 15

To maximize sales and profits, a discount shoe store should create an atmosphere similar to higher price point shoe stores because the customers will expect the same atmosphere.

Question 16

The dollar amounts generated by firms using a business-to-business (B2B) model are significantly greater than those for firms without a business-to-consumer (B2C) model.

Question 17

While one of the six key factors in determining a good location may carry more weight for a particular business and its unique situation, each factor should always have some influence on the final location decision.

Question 18

Local zoning ordinances typically do not apply to home-based businesses.

Question 19

Bottling machines and manufacturing robots used in factories are examples of special-purpose equipment.

Question 20

A brick-and-mortar store is actually a general term that refers to a retail outlet dealing in building supplies.

Question 21

Which of the following statements concerning business environment conditions for a new business is true?

A) State governments will help new business by levying taxes.
B) Determining the zoning is important because it may limit a company's operations.
C) Many states offer location incentives to attract jobs to very stable areas.
D) Finding an area that has a low cost of living means a low standard of living for employees.

Question 22

Many e-commerce companies generate a lot of sales by merging the content- and transaction-based models into one website.

Question 23

For a hair stylist, the top priority in the location decision would be

A) his or her personal preference.
B) the availability of resources.
C) customer accessibility.
D) business environment conditions.

Question 24

Which of the following statements about location decisions is NOT true?

A) The importance of the initial decision to locate a traditional physical building is underscored by both the high cost of such a place and the hassle of pulling up stakes and moving an established business.
B) The choice of a location for a physical facility is rarely a one-time decision.
C) The choice of a good location is much more vital to some businesses than to others.
D) Regardless of the specific resources involved, every location decision should be based on certain fundamental principles that can guide the process.

Question 25

Arthur's business needs a physical building. Arthur's most important decision will be

A) where to locate.
B) how much to spend.
C) whether to rent or own.
D) whether to build or purchase an existing structure.

Question 26

Which of the following would be a critical consideration in the location decision for a manufacturing business?

A) Future advertising costs
B) Access to key suppliers
C) An appropriate labor supply
D) Customer accessibility

Question 27

Auction sites generate most of their revenue through listing fees and commissions.

Question 28

Roger is analyzing regional differences in seeking a location for a new firm and is looking at states with favorable tax systems for small businesses. Based on this information, he should look at which of the following states?

A) South Dakota
B) Massachusetts
C) Ohio
D) New York

Question 29

A website built on the content-based model offers only information about a business, its products, and other related matters.

Question 30

Customer accessibility is the most critical factor in evaluating a specific site for a

A) clothing manufacturer.
B) drugstore.
C) car-parts maker.
D) software development company.

Question 31

The role of a website can range from merely offering information and basic content to enabling complex business transactions.

Question 32

Callista can locate her business in any state regardless of its weather because she sells:

A) air conditioners.
B) outdoor swimming pools.
C) consumer yard irrigation systems.
D) mattresses.

Question 33

Research has shown that online businesses that begin as part-time ventures tend to have higher rates of failure than those launched by owners who choose to jump in with both feet from the start.

Question 34

Which of the following is NOT one of the five key factors in determining a good business location?

A) The entrepreneur's personal preference
B) Business plan complexity
C) Business environment conditions
D) Site availability and costs

Question 35

Zoning ordinances often apply to factors related to

A) nonrelated employees working in a home.
B) commercial signage.
C) the storage of hazardous materials.
D) All of these are correct.

Question 36

Renee plans to open a gift shop in a tourist location. She will rely heavily on walk-in customers to support her business. Renee will need a

A) clicks-and-mortar facility.
B) bricks-and-clicks facility.
C) brick-and-mortar facility.
D) professionally developed website.

Question 37

Bart is ready to look for a site for his new business. To help him in his search he should

A) contact a local real estate agent.
B) check property for sale ads in the local newspaper.
C) check into site-selection software.
D) check with the local small business development office.

Question 38

Blogs and podcasts are among the emerging options for an online presence.

Question 39

It is possible for an entrepreneur to do business over the Internet without creating either a website or a storefront.

Question 40

Many entrepreneurs start their online businesses as a part-time venture.

Question 41

An important advantage an entrepreneur gains by leasing rather than buying a facility is

A) receipt of an investment tax credit.
B) a decrease in risk by minimizing investment.
C) a decrease in the amount of promotion required.
D) a customized layout.

Question 42

Which of the following is an advantage for choosing a hometown as a location for a new business venture?

A) The entrepreneur knows the landmarks around his or her home community.
B) It may be easier to establish credit.
C) The entrepreneur is more likely than an outsider to be offered a better price on a building or land to locate his or her business.
D) The risk is significantly reduced.

Question 43

Harry is starting a business where he restores homes built before 1900. He is purchasing used equipment, specifically lathes, planing mills, and drill presses. This equipment is an example of _____ equipment.

A) special-purpose
B) product-layout
C) general-purpose
D) automated

Question 44

Eaton is writing the location plan for his business plan. He should be sure to identify the company's major equipment because

A) this is the largest expense he will have for his startup.
B) he does not plan to work from home.
C) it is important to present the proper image to his clients.
D) this can ensure that the financial section of the plan will include funds for their purchase.

Question 45

Daisy is planning a clothing manufacturing company. When selecting the location for her production facility, Daisy will want to consider

A) ease of access to her customers.
B) ease of access to transportation.
C) availability of suitable labor.
D) the overall cost of living of an area.

Question 46

According to government surveys, about _____ of all U.S. business owners choose to run their businesses primarily out of their home.

A) 10 percent
B) half
C) 25 percent
D) 35 percent

Question 47

An example of special-purpose equipment for a carbonated beverage company is a(n)

A) refrigerator that keeps the product at the appropriate temperature.
B) bottling machine that adjusts pressure for different flavors.
C) assembly line that moves the beverages to the loading dock.
D) mixer that combines the ingredients in the proper order.

Question 48

Using special-purpose equipment in the manufacturing process can result in

A) increased operator errors.
B) higher labor cost per unit of product.
C) a rise in accident rates.
D) greater output per machine-hour of operation.

Question 49

Which of the following would be a critical consideration in the location decision for a restaurant?

A) Proximity to important sources of raw materials
B) Access to key suppliers
C) Access to good transportation
D) Federal income taxes

Question 50

According to the International Facility Management Association, nearly _____ percent of office spaces today follow the _____ concept.

A) 25; flexible office
B) 45; open-design
C) 70; open-design
D) 90; flexible office

Question 51

Companies that depend on semiskilled or unskilled workers usually located in a(n)

A) rural area.
B) area where the cost of living is low.
C) area with no zoning ordinances.
D) area with surplus labor.

Question 52

Calvert is contemplating building an aluminum smelting plant. The ratio of bauxite, the raw material from which aluminum is extracted, to aluminum is two to one. It takes two tons of bauxite to product one ton of usable aluminum. Calvert should locate his smelting plant close to

A) his customers.
B) the bauxite mine.
C) transportation.
D) an area with a suitable labor supply.

Question 53

According to data compiled by the National Federation of Independent Business, what is the most important advantage of buying business equipment over leasing it, as reported by small business owners?

A) Can treat the asset as they wish
B) Can own the asset until they want to get rid of it
C) Cheaper overall
D) Puts the asset on the books

Question 54

Helen is planning to open a high-fashion clothing store for young professional women. Which of the following descriptors is the most important consideration for the fixtures?

A) Economical
B) Elegant
C) Feminine
D) Practical

Question 55

Dallas is considering starting his business in his hometown. Which of the following is a reason why he should?

A) He can get a more favorable tax treatment.
B) The city government may waive any startup fees he must pay.
C) His friends and relatives in the community may be quick to buy his product and also spread positive reports about it to others.
D) All of these are correct.

Question 56

Facilities that provide shared space, services, and management assistance to new businesses are called

A) industrial parks.
B) community development centers.
C) shopping centers.
D) business incubators.

Question 57

Genevieve just completed her residency and is ready to open her medical office as a general practitioner. The image her office should convey is

A) trendy, minimalist, and futuristic with bold colors and modern art.
B) old-fashioned, dark, and somber with dark colors and heavy furniture.
C) solid, trustworthy, and confident with neutral colors and comfortable furniture.
D) light-hearted and whimsical with pastel colors and playful art.

Question 58

Businesses that operate in the home

A) can increase profits by decreasing costs.
B) require customer traffic.
C) are called family businesses.
D) are less common today than they were 10 years ago.

Question 59

For many small business owners, the most important reason to lease rather than buy a facility is

A) avoidance of a large cash outlay.
B) freedom in modifying the building.
C) avoidance of interest payments.
D) avoidance of liability lawsuits.

Question 60

A good reason for relocating a typical manufacturing business is to

A) stabilize income taxes.
B) increase customer traffic.
C) be closer to a pool of highly skilled labor.
D) provide free-flow space.

Question 61

Reliable Construction created a website to post photos of some of their completed projects and display their address and phone number, along with a list of the types of projects they can complete. Reliable has used the _____ model.

A) transaction-based
B) content-based
C) information-based
D) customer-relationship-based

Question 62

John created Acme Online to allow paper suppliers to compete for manufacturers' orders over the Internet in live auctions. This model would best be described as

A) B2B.
B) B2C.
C) C2B.
D) C2C.

Question 63

Amazon and Best Buy are examples of _____ firms.

A) B2B
B) B2C
C) C2C
D) C2B

Question 64

Hermione decided to create a website to complement her bricks-and-mortar store. Which of the following would most likely be her primary motive for doing so?

A) To allow her customers to preview her products before coming to her store
B) To attract customers from outside her local area
C) To keep up with the competition
D) To reduce her overall expenses

Question 65

Jason has neither a website nor a storefront. Instead, he lists his products for sale on a site that provides customers with the ability to list products for potential builders. Jason is using a _____ site.

A) C2C
B) C2B
C) B2C
D) B2B

Question 66

ShoeBiz produces shoes that until recently have been available only at the most exclusive stores. ShoeBiz decided to create its own website and sell directly to the consumer. This strategy is known as

A) intermediation.
B) disintermediation.
C) disinterment.
D) dismantling the distribution chain.

Question 67

Annie is starting a photography business and locating it in her family home. Which of the following aspects is critical in the balance between her business and her family?

A) Making sure family members don't spoil the image of the business when clients arrive
B) Having a professional studio area that is separate from the family area
C) Shielding her family from the business taking over the home
D) All of these are correct.

Question 68

In the B2B model, the customers are

A) businesses.
B) other consumers.
C) franchisees.
D) auction participants.

Question 69

Garland uses the family room of his home for his business. The children share his computer for their homework and games. The family room also contains the TV and homework space for the children. The IRS is likely to disallow his deduction for this space because

A) a separate space must be clearly devoted to the activities of the business.
B) IRS regulations restrict the use of a family room as the designated space for a home-based business.
C) no deduction is allowed for space in the home used for a business.
D) the IRS designates any home-based business as a hobby, and hobby expenses are not deductible.

Question 70

Rachel is starting a daycare at her home in a suburban area. Which of the following professionals should she contact first before starting?

A) The city's planning and zoning board to make sure she can have a business in the home
B) Her CPA to determine if she can claim a tax deduction for the business
C) Her insurance agent to increase the policy for coverage on the equipment and business activities on site
D) Her attorney to help draw up a business plan

Question 71

An e-commerce operation can help a startup with early cash flow problems by

A) focusing on customization.
B) lowering labor costs.
C) providing a cheaper distribution system.
D) compressing the sales cycle.

Question 72

Sites such as eBay and uBid.com derive most of their revenues from

A) banner ads.
B) listing fees and commissions.
C) corporate sponsors.
D) investors.

Question 73

Juanita is considering locating her consulting business in her home. Which of the following might be her greatest challenge?

A) An increase in the amount of time needed to get the business running
B) Maintaining a professional image
C) An increase in the amount of taxes owed to the IRS
D) A decrease in the amount of time spent with friends

Question 74

For small businesses, the Internet tends to blur ____ boundaries.

A) industry
B) geographic
C) skill-dependent
D) technological

Question 75

Which of the following is a challenge for a B2C e-commerce business?

A) The amount of time involved in modifying the appearance of the website
B) The inability to change prices quickly
C) The inability to change merchandise mixes quickly
D) Customers who refuse to purchase a product without first seeing it

Question 76

Jeff's Website Design and Data Storage deals directly with corporate customers online and builds websites and data storage to specifications after an order is placed. By reducing the firm's storage and carrying costs, this example illustrates that B2B firms can create

A) greater efficiency in their operations.
B) greater efficiency in their buying and selling activities.
C) synergies between buying and selling.
D) market reach through e-commerce.

Question 77

A variation of the information-based model is sometimes called the _____ model.

A) electronic
B) emerging
C) content-based
D) transaction-based

Question 78

How does e-commerce benefit small firms?

A) Small firms are often more "tech savvy," allowing quicker adoption of innovations.
B) Large firms may not push the consumer toward the Internet, resulting in small firms being able to gain customers.
C) E-commerce allows small firms to expand their reach beyond local markets.
D) The government has committed significant resources to encourage small firms to adopt an e-commerce business model.

Question 79

E-commerce refers to

A) having an online website in addition to a brick-and-mortar facility.
B) the facilitation of business by making initial contact by electronic means.
C) the buying and selling of products or services on the Internet.
D) a form of business that involves online trades and auctions.

Question 80

The major difference between the information-based model and the content-based model is the

A) presence of ads in the content-based model.
B) ability to contact the site developer in the information-based model.
C) presence of an order-processing feature in the information-based model.
D) the ability for the visitor to post comments on the content-based model.