Essentials of Entrepreneurship and Small Business Management 6th Edition by Norman M. Scarborough Test Bank

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Essentials of Entrepreneurship and Small Business Management 6th Edition by Norman M. Scarborough Test Bank

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Essentials of Entrepreneurship & Small Business Management, 6e (Scarborough)
Chapter 14 Choosing the Right Location and Layout

1) The first phase of determining where to locate a business is:
A) choosing a state in which the business owner wants to live.
B) determining which city has the demographics that best fit the business.
C) conducting a specific site analysis.
D) determining which regions of the country are experiencing growth.
Answer: D
Diff: 2 Page Ref: 445
AACSB: Analytic Skills

2) Entrepreneurs using the Census Bureaus Web site to evaluate potential locations have access to which of the following information about the residents in those locations?
A) Income levels
B) Age distributions
C) Occupational data
D) All of the above
Answer: D
Diff: 1 Page Ref: 446
AACSB: Analytic Skills

3) Which of the following information is available from U.S. Census data?
A) The value of the homes in an area
B) The number of rooms in the homes in an area
C) Number of vehicles owned
D) All of the above
Answer: D
Diff: 2 Page Ref: 446-447
AACSB: Analytic Skills

4) Which of the following information is not available from Census data?
A) Education levels
B) Income levels
C) Expenditures on dining out
D) Occupational data
Answer: C
Diff: 1 Page Ref: 446-447
AACSB: Analytic Skills

5) ________, published annually, provides a detailed breakdown of population, retail sales, spendable income, and other characteristics for census regions, states, metropolitan areas, counties, and cities. It also includes analyses of changes in metro markets, descriptions of newspaper and TV markets, and summaries of sales of certain merchandise.
A) The Survey of Buying Power
B) The Commercial Atlas and Marketing Guide
C) The Zip Code Atlas and Market Planner
D) A Researchers Guide to the 1990 Census
Answer: A
Diff: 2 Page Ref: 448
AACSB: Analytic Skills
6) A publication that reports on more than 128,000 places in the United States, many of which are not available through census data, and includes eleven economic indicators for major markets is the:
A) Topological Integrated Geographic Encoding Referencing.
B) Commercial Atlas and Marketing Guide.
C) Zip Code Atlas and Market Planner.
D) Sales and Marketing Managements Survey of Buying Power.
Answer: B
Diff: 2 Page Ref: 448
AACSB: Analytic Skills

7) A Geographic Information System (GIS):
A) is a software package combining the ability to draw detailed maps with the power to search through databases.
B) helps entrepreneurs discover important trends and characteristics in the population that otherwise might go unnoticed.
C) can be an incredibly powerful tool for determining the ideal location based on specific criteria the entrepreneur establishes.
D) All of the above
Answer: D
Diff: 1 Page Ref: 448-449
AACSB: Analytic Skills

8) TIGER:
A) is a software package combining the ability to draw detailed maps with the power to search through databases.
B) breaks down the population, retail sales, etc., by census region.
C) contains the names of every street in the country and detailed block statistics for 345 urban areas.
D) All of the above
Answer: C
Diff: 2 Page Ref: 449
AACSB: Analytic Skills

9) When choosing a state in which to locate, one must evaluate which of the following?
A) The general business climate
B) The states business laws, regulations, and taxes
C) Tax incentives and/or investment credits
D) All of the above
Answer: D
Diff: 1 Page Ref: 449-453
AACSB: Analytic Skills

10) A glass manufacturer that requires an extremely pure, very fine sand in its production process would be most concerned about the:
A) business climate.
B) proximity to raw materials.
C) demographic profile of the local market.
D) local wage rates.
Answer: B
Diff: 2 Page Ref: 450
AACSB: Analytic Skills
11) When the cost of transporting finished goods to market is high relative to their value, the key location criterion is:
A) low rental or lease rates.
B) proximity to raw materials.
C) proximity to markets.
D) zoning regulations.
Answer: C
Diff: 1 Page Ref: 450
AACSB: Analytic Skills

12) When would a business choose to locate near the source of the raw material?
A) The company requires an important raw material that is difficult to transport.
B) The company requires an important raw material that is expensive to transport.
C) The company keeps its inventory of an important raw material low to keep costs down and counts on quick deliveries from suppliers.
D) All of the above
Answer: D
Diff: 1 Page Ref: 450
AACSB: Analytic Skills

13) When examining a states available labor force, the potential business owner needs to know:
A) the states labor relations history.
B) the demographics of the target customers.
C) both the number and education of the available workforce.
D) the proximity of its customers.
Answer: C
Diff: 2 Page Ref: 451
AACSB: Analytic Skills

14) A labor force that has technical training would be most important to a:
A) clothing store.
B) restaurant.
C) skiing equipment specialty store.
D) computer company.
Answer: D
Diff: 1 Page Ref: 451
AACSB: Analytic Skills

15) What is the states overall attitude toward your kind of business? Has it passed laws that impose restrictions on the way a company can operate? Does the state offer small business support programs of financial assistance to entrepreneurs? These questions help an entrepreneur to assess the overall:
A) population trends.
B) proximity to markets
C) labor supply.
D) business climate.
Answer: D
Diff: 1 Page Ref: 451
AACSB: Analytic Skills
16) One direct way to lower annual operating costs is to locate in a state where:
A) there is an attractive business climate.
B) the labor market is highly competitive.
C) taxes and regulatory costs are lowest.
D) the key markets are relatively accessible.
Answer: C
Diff: 1 Page Ref: 451
AACSB: Analytic Skills

17) The Cost of Doing Business Index indicates that Hawaii is the most expensive state in which to do business based on these factors:
A) wage costs based on hourly and salaried compensation.
B) tax costs and electricity costs .
C) industrial and office rent costs.
D) all the above
Answer: D
Diff: 1 Page Ref: 453, Table 14.2

18) States that are generally most expensive to do business in could be described as:
A) inland states that do not have access to a coastline.
B) states with low population densities.
C) coastal tourist states and those will higher population densities.
D) states located in the mid-west and northwest sections of the country.
Answer: C
Diff: 1 Page Ref: 453
AACSB: Reflective Thinking

19) Which of the following characteristics for selecting a city would be of greatest interest to a retail store selling fine china and collectibles?
A) Public services
B) Transportation
C) Zoning
D) Population characteristics
Answer: D
Diff: 1 Page Ref: 454
AACSB: Analytic Skills

20) Geographic concentrations of interconnected companies, specialized suppliers, and service providers that are present in a region are called:
A) zones.
B) clusters.
C) trading areas.
D) variances.
Answer: B
Diff: 1 Page Ref: 455
AACSB: Analytic Skills
21) ________ is a system that divides a county or city into small cells or districts to control the use of land, buildings, and sites.
A) An enterprise zone
B) Zoning
C) Apportioning
D) Redistricting
Answer: B
Diff: 1 Page Ref: 456
AACSB: Analytic Skills

22) Job training for workers and reduced tax rates to financial grants and loans are examples of what some ________ offer as business ________ to locate in their jurisdictions.
A) states; motivators
B) cities; incentives
C) regions; perks
D) counties; attractions
Answer: B
Diff: 1 Page Ref: 456
AACSB: Analytic Skills

23) The purpose of zoning regulations is to:
A) restrict the growth of businesses.
B) contain similar types of activities in suitable locations.
C) help new businesses incubate in their startup period.
D) build the traffic volume for retail and service businesses.
Answer: B
Diff: 2 Page Ref: 456
AACSB: Analytic Skills
24) Jan and Detmar Wolcinski live in a cozy house in a beautiful old neighborhood. When they bought the 152-year-old house in which they live, they began remodeling it with one goal in mind: opening a bed and breakfast inn. The Chadwick Inn has exceeded the Wolcinskis expectations in its first year of operation, but now some neighbors are starting to complain about the increased traffic in their neighborhood and the late hours some of the Inns guests keep. The Wolcinskis greatest challenge in the near future is most likely:
A) convincing the local historical preservation board that the modifications they made to the house are in keeping with its historical character.
B) zoning laws prohibiting commercial businesses in a residentially zoned area.
C) major hotel chains opening competing bed and breakfast hotels on adjacent lots.
D) encroaching shopping centers and malls that push up real estate prices.
Answer: B
Diff: 2 Page Ref: 456
AACSB: Reflective Thinking

25) A ________ is a special exemption to a zoning ordinance.
A) variance
B) exception
C) trade area
D) cluster
Answer: A
Diff: 1 Page Ref: 456
AACSB: Analytic Skills
26) The region from which a business can expect to draw its customers over a reasonable time span is called its:
A) enterprise zone.
B) zoning area.
C) trading area.
D) retail draw.
Answer: C
Diff: 1 Page Ref: 459
AACSB: Analytic Skills

27) The primary variable(s) that influence(s) the scope of a trading area is/are:
A) the character of the transportation network.
B) the nature of competing businesses.
C) the type and size of the business operation.
D) the racial and political barriers in the local community.
Answer: C
Diff: 2 Page Ref: 459
AACSB: Analytic Skills

28) Natures Way, a health food store, has just opened in a popular neighborhood shopping center next to Silvers Gym, a physical fitness center catering to both men and women. Natures Way is relying on which location principle?
A) Piggybacking
B) Retail consistency
C) Retail compatibility
D) Zoning
Answer: C
Diff: 1 Page Ref: 459
AACSB: Analytic Skills

29) The index of retail saturation:
A) is retail expenditures times retail facilities divided by the number of customers.
B) is the ratio of a trading areas sales potential to its sales capacity.
C) evaluates both the number of customers and the intensity of competition in a trading area.
D) B and C above
Answer: D
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills
Refer to the following information to answer these questions:

An entrepreneur considering two sites for a men and boys shop determines that he needs sales of $158 per square foot to be profitable. Site #1 has 13,500 potential customers who spend an average of $160.20 per year on men and boys wear. Two competitors occupy 14,200 square feet of space. Site #2 has 10,800 potential customers spending an average of $152.10 per year on men and boys wear. One competitor has 10,000 square feet.

30) The index of retail saturation for site #1 is:
A) $150.21.
B) $168.51.
C) $152.30.
D) $166.19.
Answer: B
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills

31) The index of retail saturation for site #2 is:
A) $164.27.
B) $140.83.
C) $170.64.
D) $146.30.
Answer: A
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills

32) Based on the above calculations, what is the entrepreneurs best option?
A) He should choose site #1.
B) He should choose site #2.
C) Neither site meets minimum criteria of $158 per square foot.
D) Either site will work well since both meet minimum criteria of $158 per square foot.
Answer: A
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills

33) Shopping malls typically average ________ parking spaces per 1,000 square feet of shopping while a typical central business district offers ________ spaces per 1,000 square feet of shopping space.
A) 20; 1
B) 3; 6
C) 5; 3.5
D) 3; 8
Answer: C
Diff: 2 Page Ref: 460-461
AACSB: Analytic Skills
34) Carmen is starting a childcare center. One location closed after a murder on the property and is near a neighborhood where there are many single parents. What city site selection factor might give Carmen problems with her childcare center?
A) Transportation
B) Police and fire protection
C) The reputation of the location
D) Compatibility with the community
Answer: C
Diff: 2 Page Ref: 461-462
AACSB: Analytic Skills

35) Marys successful clothing store was located on the back edge of the parking lot of a large mall. She did not have to pay mall rents since she was not part of the mall, but drew many customers who parked at the mall and then noticed her store. The mall developers built a movie theater on the part of the parking lot directly in front of Marys store, basically hiding her from most mall customers. After about six months, Marys business dropped off so much she had to move. What retailer site selection criterion forced Mary to move?
A) Proximity of competitors
B) Visibility
C) Adequate parking
D) Room for expansion
Answer: B
Diff: 2 Page Ref: 462
AACSB: Analytic Skills

36) According to the International Council of Shopping Centers, the average cost to lease space in a shopping center is about $17 per square foot, ________ that of regional malls, lifestyle centers and power centers.
A) less than
B) about the same as
C) more than
D) twice as much as
Answer: A
Diff: 1 Page Ref: 462
AACSB: Analytic Skills

37) The central business district (CBD):
A) is the traditional center of town.
B) in many cities experienced decay in years past as customers began shopping more frequently at malls and shopping centers, but are now going through revitalization programs.
C) attracts customers from the entire trading area of the city.
D) All of the above
Answer: D
Diff: 2 Page Ref: 462
AACSB: Analytic Skills
38) Which of the following is an advantage of locating in a central business district?
A) Low rent
B) Easy and abundant parking
C) The ability to attract customers from the entire trading area
D) Moderate to low levels of competition
Answer: C
Diff: 2 Page Ref: 462
AACSB: Analytic Skills

39) Which of the following are disadvantages of locating in a central business district?
A) Intense competition
B) High rental rates
C) Traffic congestion and inadequate parking facilities
D) All of the above
Answer: D
Diff: 1 Page Ref: 462
AACSB: Analytic Skills

40) The typical ________ is relatively small, contains from 3 to 12 stores, and serves a population that lives within a 10-minute drive.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
Answer: A
Diff: 2 Page Ref: 463, 464
AACSB: Analytic Skills
41) A ________ contains from 12 to 50 stores and serves a population of 40,000 to 150,000 people.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
Answer: B
Diff: 2 Page Ref: 463,464
AACSB: Analytic Skills

42) The ________ serves a large trading area (10 to 15 miles or more), contains from 50 to 100 stores, and draws customers from a population that lives within 20- to 40-minutes driving time.
A) neighborhood shopping center
B) community shopping center
C) regional shopping mall
D) central business district
Answer: C
Diff: 2 Page Ref: 464, Table 14.3
AACSB: Analytic Skills
43) A ________ combines the drawing strength of a large regional mall with the convenience of a neighborhood shopping center.
A) power center
B) community shopping center
C) central business district
D) strip mall
Answer: A
Diff: 1 Page Ref: 463, Table 14.2
AACSB: Analytic Skills

44) Which of the following is an important consideration for an entrepreneur evaluating a shopping mall or center location?
A) In terms of customer demographics, is the mall or center a good fit for my products or services? How much foot traffic and vehicle traffic does the mall or center generate?
B) Who are the other tenants? The anchor tenants? Is there a good fit for my products and services?
C) What are the malls or centers vacancy and turnover rates?
D) All of the above
Answer: D
Diff: 1 Page Ref: 463
AACSB: Analytic Skills

45) A ________ center combines the drawing strength of a large regional mall with the convenience of a neighborhood shopping center.
A) neighborhood
B) power
C) theme or festival
D) lifestyle
Answer: B
Diff: 1 Page Ref: 463
AACSB: Analytic Skills

46) Typically located near affluent residential neighborhoods where their target customers live, ________ centers are designed to look less like shopping centers and malls and more like the busy streets in the central business districts that once existed in town and cites.
A) neighborhood
B) power
C) lifestyle
D) community shopping
Answer: C
Diff: 1 Page Ref: 464, Table 14.3
AACSB: Analytic Skills

47) A type of business that does well when located near competition is:
A) one that has a unique product line, dissimilar to that of its competitors.
B) one that carries products for which customers comparison shop.
C) one whose location is part of its trademark.
D) None of the above
Answer: B
Diff: 2 Page Ref: 465-466
AACSB: Analytic Skills
48) Which of the following is the greatest advantage of operating a home-based business?
A) The ability to save money by avoiding business startup taxes
B) The exemption that home-based businesses receive from local zoning laws
C) The low cost of setting up and operating the business
D) The ability to claim all household expenses as business deductions for tax purposes
Answer: C
Diff: 2 Page Ref: 466-467
AACSB: Analytic Skills

49) Which of the following is not true of home-based businesses?
A) Home-based businesses represent the fastest-growing segment of the U. S. economy.
B) The biggest benefit of operating a business from home typically is its low cost.
C) Home-based retail businesses represent the fastest-growing segment of all home-based businesses.
D) None of the above
Answer: C
Diff: 2 Page Ref: 466-467
AACSB: Analytic Skills
50) Which of the following is a potential disadvantage of a home-based business?
A) Frequent interruptions of work
B) Feelings of isolation
C) Problems with zoning laws from running a business
D) All of the above
Answer: D
Diff: 1 Page Ref: 467
AACSB: Analytic Skills

51) A specially designated area in or near a U.S. customs port of entry that allows resident companies to import materials and components from foreign counties; assemble, process, manufacture, or package them, and then ship the finished product back out while either reducing or eliminating tariffs and duties is a:
A) empowerment zone.
B) foreign trade zone
C) business incubator.
D) trading area.
Answer: B
Diff: 1 Page Ref: 468, Figure 14.2
AACSB: Analytic Skills

52) ________ offer new businesses the protection of low-cost locations and a multitude of support services in an attempt to improve the companies chances of success.
A) Research parks
B) Business incubators
C) Industrial parks
D) Discount malls
Answer: B
Diff: 1 Page Ref: 468-469
AACSB: Analytic Skills
53) Incubator facilities are established in order to:
A) revitalize central business districts.
B) enhance economic development and diversify the local economy.
C) centralize types of businesses and provide tax breaks to those businesses.
D) reuse old military bases and abandoned structures in economically depressed areas of a city.
Answer: B
Diff: 2 Page Ref: 468-469
AACSB: Analytic Skills

54) The most common sponsors of business incubators are:
A) colleges and universities.
B) government agencies.
C) private investment groups.
D) public/private partnerships.
Answer: B
Diff: 2 Page Ref: 469
AACSB: Analytic Skills
55) Most business incubator residents are engaged in which businesses?
A) Heavy manufacturing
B) Light manufacturing, service, or technology-related fields
C) Mixed retail and restaurant business
D) Heavy manufacturing, food preparation, and service
Answer: B
Diff: 2 Page Ref: 469
AACSB: Analytic Skills

56) Which of the following do incubators offer their tenants?
A) Flexible rental space at below-market rates
B) Larger trading areas
C) Exemptions from zoning regulations
D) Lower, or an exemption from, state and city taxes
Answer: A
Diff: 2 Page Ref: 469
AACSB: Analytic Skills

57) According to the National Business Incubation Association, graduates from incubators have a success rate of ________ percent.
A) 57
B) 67
C) 77
D) 87
Answer: D
Diff: 3 Page Ref: 469
AACSB: Analytic Skills
58) ________ is the logical arrangement of the physical facilities in a business that contributes to efficient operations, increased productivity, and higher sales.
A) The Index of Retail Saturation
B) Layout
C) Logistics
D) The Sales Conversion Index
Answer: B
Diff: 1 Page Ref: 470
AACSB: Analytic Skills

59) When evaluating existing buildings, retailers:
A) need to find the lowest cost per square foot possible due to the need for maximum display space.
B) should locate in store space previously occupied by a similar type of business.
C) should recognize that the stores appearance and layout create an image for the customers of the business.
D) can discount the interior appearance of the building if it has a strong exterior appeal.
Answer: C
Diff: 2 Page Ref: 472
AACSB: Communication
60) Which of the following statements concerning layout is true?
A) A companys physical facilities send important messages to potential customers about its personality.
B) The physical appearance of a building provides customers with their first impressions of a business.
C) Communicating the right signals through a businesss layout and physical facilities is an important step in creating a competitive edge over rivals.
D) All of the above
Answer: D
Diff: 1 Page Ref: 470-475
AACSB: Reflective Thinking

61) Entrances should invite entry. The way to accomplish this is to:
A) have wide entryways and attractive displays set back from the doorway that can lure customers into the store.
B) offer discounts.
C) have displays as close to the entry of the store as possible.
D) have a big sign to attract customers.
Answer: A
Diff: 2 Page Ref: 472
AACSB: Communication
62) The Americans with Disabilities Act of 1990 requires:
A) buildings be remodeled to accommodate any disabled customer or employee.
B) businesses must accommodate all disabled customers or job candidates, regardless of the cost to the business.
C) that businesses have all facilities available to physically challenged customers and employees.
D) All of the above
Answer: C
Diff: 2 Page Ref: 542
AACSB: Multicultural & Diversity

63) The Justice Department estimates that more than 20 percent of the cases customers have filed under the Americans with Disabilities Act involved changes the business owners could have made at a cost of:
A) $0.
B) $250.
C) $1,000.
D) $8,000.
Answer: A
Diff: 2 Page Ref: 473
AACSB: Multicultural & Diversity

64) Under the Americans with Disabilities Act, a newly constructed:
A) building must have elevators if they are three stories or higher.
B) retail store must have checkout aisles wide enough to accommodate wheelchairs (36 inches).
C) restaurant must make five percent of its tables accessible to wheelchair-bound patrons.
D) All of the above
Answer: D
Diff: 2 Page Ref: 472-473
AACSB: Multicultural & Diversity

65) The Americans with Disabilities Act:
A) protects disabled employees, job candidates, and customers.
B) does not apply to small businesses with fewer than 15 employees.
C) requires companies to hire any disabled worker who applies for a job and then find a way to fit the job requirements to that workers abilities.
D) All of the above
Answer: A
Diff: 2 Page Ref: 472-473
AACSB: Multicultural & Diversity

66) To be effective, a business sign should:
A) be large enough for passersby to read from a distance.
B) contain a message that is short, simple, and clear.
C) be properly illuminated so that it is legible both day and night.
D) All of the above
Answer: D
Diff: 1 Page Ref: 473
AACSB: Communication
67) Which of the following is not a characteristic of an effective business sign?
A) Includes a message that is short, simple, and clear.
B) Is illuminated so that it is readable both day and night.
C) Uses complementary color schemes and ornate typefaces.
D) Is well maintained.
Answer: C
Diff: 2 Page Ref: 473
AACSB: Communication

68) The science of adapting work and working conditions to complement employees strengths and to suit customers needs is called:
A) physiology.
B) ergonomics.
C) formology.
D) kinesiology.
Answer: B
Diff: 1 Page Ref: 473
AACSB: Analytic Skills

69) Which of the following is an example of ergonomics?
A) Evaluating the climate-control needs of the work environment
B) Assessing the lighting needs and the acoustics of a business office
C) Considering the proper height of desks, chairs, etc., when designing a work station
D) All of the above
Answer: D
Diff: 1 Page Ref: 473
AACSB: Analytic Skills

70) One extensive study concluded that changes in office design have a direct impact on workers:
A) performance.
B) job satisfaction.
C) ease of communication.
D) All of the above
Answer: D
Diff: 1 Page Ref: 473
AACSB: Analytic Skills

71) When designing the layout of a store, office, or plant, a business owners primary focus is usually on ________; however, it should be on ________.
A) minimizing costs; maximizing security
B) enhancing workers productivity; minimizing costs
C) increasing sales; customer accessibility
D) minimizing costs; minimizing injuries and enhancing employees productivity
Answer: D
Diff: 2 Page Ref: 473-474
AACSB: Reflective Thinking
72) In addition to the layout of the store, behavioral experts recommend that retailers consider the impacts of ________ , ________ and ________ on customer behavior.
A) lighting; sound; scent
B) lighting; noise; orientation
C) lighting; sound; noise
D) signage; sound; scent
Answer: A
Diff: 2 Page Ref: 474-475
AACSB: Communication

73) A bakery is an example of a business that may benefit from intentional use of ________ within the space.
A) color
B) music
C) smell
D) lighting
Answer: C
Diff: 1 Page Ref: 474-475
AACSB: Communication
74) The most progressive companies seeking environmentally-friendly designs are using:
A) all new materials, installing high efficiency lighting, and striving to meet LEED standards.
B) recycled materials, installing high efficiency lighting, and meeting building code standards.
C) recycled materials, installing high efficiency lighting, and striving to meet LEED standards.
D) recycled materials, installing high cost lighting, and striving to meet LEED standards.
Answer: C
Diff: 3 Page Ref: 475
AACSB: Reflective Thinking

75) An effective retail layout should:
A) pull customers into the store.
B) make it easy for customers to locate the merchandise they are looking for.
C) take customers past displays of items they might buy on impulse.
D) All of the above
Answer: D
Diff: 1 Page Ref: 476
AACSB: Analytic Skills

76) The most valuable space in a store is the:
A) nonselling space.
B) main entry-level space.
C) space at the back of the store.
D) left-side, entry-level space.
Answer: B
Diff: 2 Page Ref: 477
AACSB: Analytic Skills
77) Products with the highest markup should be placed:
A) so as to pull customers into the store.
B) in prime selling space.
C) near the front of the store.
D) anywhere since they draw their own customers.
Answer: B
Diff: 2 Page Ref: 477-478
AACSB: Communication

78) When the typical shopper enters a store, (s)he turns ________ and moves in a ________ fashion which increases the value of this section of the space.
A) left; clockwise
B) right; clockwise
C) left; counterclockwise
D) right; counterclockwise
Answer: D
Diff: 2 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

79) Which of the following sections of a retail store would be most valuable?
A) Third floor
B) Intersection of two secondary aisles
C) The front right corner of the store
D) The front left corner of the store
Answer: C
Diff: 2 Page Ref: 478, Figure 14.4

80) Which of the following statements concerning store layout is true?
A) The farther an area is from the stores entrance, the greater its value.
B) Most shoppers turn left upon entering a store and move around it in a clockwise fashion.
C) Only about one-fourth of a stores customers will go more than halfway into a store.
D) The second quarter of the store is worth one-half of the front quarter.
Answer: C
Diff: 2 Page Ref: 476-478
AACSB: Reflective Thinking

81) What is the 40-30-20-10 rule in retailing?
A) A way of figuring who your best and worst customers are
B) A formula for calculating the ratio of expenditures on signage, displays, advertising, and interior decorating
C) An expression of the decline of the value of store space as you move front to back in the store
D) The percentage of customers who move straight into a store, go right, go left, leave before fully entering
Answer: C
Diff: 2 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills
82) Manufacturing layout decisions take into consideration:
A) customer buying behavior, the types of product sold, and the physical dimensions of the building.
B) the status of the building: built, bought, or leased, and the type of product sold.
C) the product, the process, the space availability within the facility, ergonomic considerations, and key economic considerations.
D) the employees, the customer, and the mechanical process used to produce the product.
Answer: C
Diff: 2 Page Ref: 478-481
AACSB: Analytic Skills

83) A process layout would be best suited to:
A) an automobile assembly plant.
B) an oil refinery.
C) a manufacturer of handmade metal gifts.
D) a textbook publishing plant.
Answer: C
Diff: 2 Page Ref: 480
AACSB: Analytic Skills

84) A good manufacturing layout requires all but which of the following?
A) Flow/process study
B) Easy adjustment to changing conditions
C) Good housekeeping
D) An assembly line
Answer: D
Diff: 2 Page Ref: 480
AACSB: Analytic Skills

85) Two important criteria for selecting and designing a production layout are:
A) worker effectiveness and material handling costs.
B) worker effectiveness and maximum visibility.
C) space use and proximity to raw materials.
D) material handling costs and overall convenience factors.
Answer: A
Diff: 2 Page Ref: 480-481
AACSB: Analytic Skills

86) The key to finding a suitable location is identifying the characteristics that can give a company a competitive edge and then searching out potential sites that meet those criteria.
Answer: TRUE
Diff: 2 Page Ref: 445
AACSB: Analytic Skills

87) By collecting a wealth of data on possible locations, entrepreneurs will find that the location decision is made for them.
Answer: FALSE
Diff: 2 Page Ref: 445-446
AACSB: Analytic Skills
88) The first phase in selecting a location is determining what regions of the country are experiencing substantial growth.
Answer: TRUE
Diff: 1 Page Ref: 445
AACSB: Analytic Skills

89) When conducting a regional evaluation, one of the first places an entrepreneur should turn for information is the U.S. Census Bureau.
Answer: TRUE
Diff: 1 Page Ref: 446
AACSB: Analytic Skills

90) Published annually, The Survey of Buying Power provides a detailed breakdown of population, retail sales, spendable income, etc., for various census regions, states, etc.
Answer: TRUE
Diff: 2 Page Ref: 448
AACSB: Analytic Skills

91) The Zip Code Atlas and Market Planner provides detailed information on sales, spendable income, etc., by census region, county, and city.
Answer: FALSE
Diff: 2 Page Ref: 448
AACSB: Analytic Skills

92) Geographic Information Systems (GIS) are powerful software programs that allow entrepreneurs to pinpoint the ideal location for their businesses.
Answer: TRUE
Diff: 1 Page Ref: 448
AACSB: Analytic Skills

93) The U.S. Census Departments TIGER file is a computerized map of the entire United States that gives entrepreneurs the power to pinpoint existing and potential customers.
Answer: TRUE
Diff: 2 Page Ref: 449
AACSB: Analytic Skills

94) By studying the demographics of a proposed location, a small business owner can determine how well it matches the market for the owners product or service.
Answer: TRUE
Diff: 1 Page Ref: 449-450
AACSB: Analytic Skills

95) When the cost of transporting a product is high relative to its value, locating close to the market a manufacturer plans to serve is critical.
Answer: TRUE
Diff: 2 Page Ref: 450
AACSB: Analytic Skills

96) Proximity to needed raw materials is critically important for a service firm.
Answer: FALSE
Diff: 1 Page Ref: 450
AACSB: Analytic Skills
97) When analyzing the labor supply, a small business is concerned only with the level of education and training of the labor force in the area.
Answer: FALSE
Diff: 1 Page Ref: 451
AACSB: Analytic Skills

98) When choosing a location, a small business owner should match the characteristics of the labor force her company requires with the characteristics of an areas available labor pool.
Answer: TRUE
Diff: 1 Page Ref: 451
AACSB: Analytic Skills

99) Knowing the type of labor a business needs and preparing job descriptions and job specifications in advance will help a business owner determine whether or not there is a good match with the available labor pool.
Answer: TRUE
Diff: 1 Page Ref: 451
AACSB: Analytic Skills

100) The most important factor when evaluating the labor supply in an area is its prevailing wage rate.
Answer: FALSE
Diff: 2 Page Ref: 451
AACSB: Analytic Skills

101) The Cost of Doing Business Index indicates that Hawaii is the most expensive state in which to do business based on wage costs, tax burden, electricity, industrial rent, and office rent factors.
Answer: TRUE
Diff: 2 Page Ref: 453, Table 14.2
AACSB: Analytic Skills

102) The Cost of Doing Business Index considers wage costs, tax burden, electricity, industrial rent, office rent, and living desirability as key factors.
Answer: FALSE
Diff: 3 Page Ref: 453, Table 14.2
AACSB: Reflective Thinking

103) Increased traffic flow can be beneficial to similar businesses located in close proximity to one another, such as auto dealers, clothing retailers, and antique shops.
Answer: TRUE
Diff: 2 Page Ref: 455
AACSB: Analytic Skills

104) Zoning is a system for mixing types of business and industrial activities in order to make maximum efficient use of the area.
Answer: FALSE
Diff: 2 Page Ref: 456
AACSB: Analytic Skills
105) Zoning is a system that divides a city or country into small cells or districts to control the use of land, buildings, and sites.
Answer: TRUE
Diff: 1 Page Ref: 456
AACSB: Analytic Skills

106) A variance is a special exemption to a zoning ordinance.
Answer: TRUE
Diff: 1 Page Ref: 456
AACSB: Analytic Skills
107) For many entrepreneurs, quality of life is one of the key determinants of their choice of locale.
Answer: TRUE
Diff: 1 Page Ref: 457
AACSB: Analytic Skills

108) One element of the location decision common to all businesses is the need to locate where customers want to do business.
Answer: TRUE
Diff: 1 Page Ref: 458
AACSB: Analytic Skills

109) Few decisions are as important for retailers as the choice of a location.
Answer: TRUE
Diff: 2 Page Ref: 459
AACSB: Analytic Skills

110) Criteria for a good location are universal and apply to all types of small businesses.
Answer: FALSE
Diff: 2 Page Ref: 458-467
AACSB: Analytic Skills

111) Generally, the larger a retail store and the greater its selection, the broader its trade area.
Answer: TRUE
Diff: 1 Page Ref: 459
AACSB: Analytic Skills

112) Clever business owners choose their location with an eye on the surrounding mix of businesses.
Answer: TRUE
Diff: 1 Page Ref: 459
AACSB: Reflective Thinking

113) Retail compatibility describes the benefits a company receives by locating near other businesses selling complementary products and services.
Answer: TRUE
Diff: 1 Page Ref: 459
AACSB: Analytic Skills
114) A companys trade area can be influenced by intangible factors, such as physical and political barriers.
Answer: TRUE
Diff: 2 Page Ref: 459
AACSB: Analytic Skills

115) The Index of Retail Saturation (IRS) is a measure of the potential sales per square foot of store space for a given product in a specific trading area.
Answer: TRUE
Diff: 1 Page Ref: 459-460
AACSB: Analytic Skills

116) To calculate the IRS, a retailer needs to know the number of customers in the area, the retail expenditures for his product, and the total square feet of space allocated to selling his kind of product in the trading area.
Answer: TRUE
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills

117) To calculate the IRS, a retailer needs to know the number of customers, the number of competitors, and the total square feet of space allocated to selling his kind of product in the trading area.
Answer: FALSE
Diff: 2 Page Ref: 459-460
AACSB: Analytic Skills

118) Reillys Law of Retail Gravity uses the analogy of gravity to estimate the attractiveness of a particular business to potential customers.
Answer: FALSE
Diff: 2 Page Ref: 460
AACSB: Analytic Skills

119) The average community net income is the key factor in Reillys Law of Retail Gravitation to determine the point of customer indifference.
Answer: FALSE
Diff: 3 Page Ref: 460
AACSB: Analytic Skills

120) To ensure ready access to raw materials and to customers, a manufacturer should consider the quality of an areas transportation network when choosing a location.
Answer: TRUE
Diff: 1 Page Ref: 461
AACSB: Analytic Skills

121) One of the key factors in choosing a location for a convenience store is finding a location with high traffic volume and easy accessibility.
Answer: TRUE
Diff: 1 Page Ref: 461
AACSB: Analytic Skills

122) On average, the typical central business district has more parking spaces per square foot of shopping space than the typical shopping mall.
Answer: FALSE
Diff: 1 Page Ref: 462
AACSB: Analytic Skills

123) Choosing a location in which many other businesses have failed can create a negative image, even for a new business.
Answer: TRUE
Diff: 1 Page Ref: 462
AACSB: Reflective Thinking

124) A location that has housed several businesses that have failed within the past few years is likely to have a bad reputation and a negative image.
Answer: TRUE
Diff: 1 Page Ref: 462
AACSB: Reflective Thinking

125) Because they are centrally located, central business district locations offer business owners the ability to attract customers from the entire trading area of the city.
Answer: TRUE
Diff: 2 Page Ref: 462
AACSB: Analytic Skills

126) Many central business districts suffer from intense competition, high rental rates, traffic congestion, and inadequate parking facilities.
Answer: TRUE
Diff: 2 Page Ref: 462
AACSB: Analytic Skills

127) The typical neighborhood shopping center contains from 3 to 12 stores and serves a population that lives within a 10-minute drive.
Answer: TRUE
Diff: 2 Page Ref: 463
AACSB: Analytic Skills

128) A community shopping center contains from three to twelve stores and serves a population that lives within a 10-minute drive.
Answer: FALSE
Diff: 2 Page Ref: 463, Table 14.3
AACSB: Analytic Skills

129) A community center is an upscale shopping experience with specialty stores, dining and entertainment in an outdoor setting.
Answer: FALSE
Diff: 2 Page Ref: 464, Table 14.3
AACSB: Analytic Skills
130) A power center combines the drawing strength of a large regional mall with the convenience of a neighborhood shopping center.
Answer: TRUE
Diff: 1 Page Ref: 463, Table 14.3
AACSB: Analytic Skills

131) A regional shopping mall serves a large trading area (10 to 15 miles or more), contains from 50 to 100 stores, and draws customers from a population that lives within 20 to 40 minutes driving time.
Answer: TRUE
Diff: 2 Page Ref: 465 &Table 14.3
AACSB: Analytic Skills

132) Clothing is one of the most popular items sold in regional shopping malls.
Answer: TRUE
Diff: 3 Page Ref: 465
AACSB: Analytic Skills

133) Shopping centers are always a wise location for a small business owner to choose.
Answer: FALSE
Diff: 1 Page Ref: 463-465
AACSB: Reflective Thinking

134) For some retailers, locating near competitors makes sense because similar businesses located near one another can increase traffic flow to all.
Answer: TRUE
Diff: 2 Page Ref: 465-466
AACSB: Analytic Skills

135) Retailers should be careful not to locate near anyone in direct competition with them.
Answer: FALSE
Diff: 2 Page Ref: 465-466
AACSB: Analytic Skills

136) If a business sells merchandise for which customers typically do a good deal of comparison shopping, it should choose a location as far away from competitors as possible.
Answer: FALSE
Diff: 2 Page Ref: 465-466
AACSB: Analytic Skills

137) The ideal location for a retail business is in the entrepreneurs home.
Answer: FALSE
Diff: 2 Page Ref: 466-467
AACSB: Analytic Skills

138) For a service company that goes into its customers homes to perform its service, the choice to locate in the entrepreneurs home is a poor one.
Answer: FALSE
Diff: 1 Page Ref: 466-467
AACSB: Analytic Skills
139) A recent study found that 52 percent of all small companies are home based.
Answer: TRUE
Diff: 2 Page Ref: 466-467
AACSB: Analytic Skills

140) Many home-based entrepreneurs whose businesses are successful run into problems with zoning laws as they run businesses from locations in areas that are zoned residential.
Answer: TRUE
Diff: 2 Page Ref: 466-467
AACSB: Analytic Skills

141) A foreign trade zone is an area designated as economically disadvantaged in which businesses get tax breaks on the investments they make within zone boundaries.
Answer: FALSE
Diff: 2 Page Ref: 468, Figure 14.2
AACSB: Analytic Skills

142) Empowerment zones are specially designated areas in or near a U.S. customs port of entry that allows resident companies to import materials and components from foreign countries; assemble, process, manufacture, or package them; and then ship the finished product while either reducing or eliminating tariffs and duties.
Answer: FALSE
Diff: 2 Page Ref: 468
AACSB: Analytic Skills

143) Abusiness incubator is a facility that offers low rental rates and permits startup small businesses to share resources.
Answer: TRUE
Diff: 1 Page Ref: 468
AACSB: Analytic Skills

144) The primary reason for establishing a business incubator is to enhance economic development in an area and to diversify the local economy.
Answer: TRUE
Diff: 2 Page Ref: 468-469
AACSB: Analytic Skills

145) Common sponsors of incubators include government agencies and colleges and universities.
Answer: TRUE
Diff: 2 Page Ref: 469
AACSB: Analytic Skills

146) Graduates from business incubators have a much higher success rate than the typical small business.
Answer: TRUE
Diff: 2 Page Ref: 469
AACSB: Reflective Thinking
147) Layout is the logical arrangement of the physical facilities in a business that contribute to efficient operations, increased productivity, and higher sales.
Answer: TRUE
Diff: 1 Page Ref: 470-471
AACSB: Analytic Skills

148) Developing a layout plan really is not essential unless an entrepreneur is able to build a new building to house the business.
Answer: FALSE
Diff: 2 Page Ref: 471
AACSB: Analytic Skills

149) A stores external appearance plays only an insignificant role in identifying its personality or image to customers.
Answer: FALSE
Diff: 2 Page Ref: 471-472
AACSB: Analytic Skills

150) The rules of the Americans with Disabilities Act protecting customers are designed to ensure that disabled customers have equal access to a companys goods and services.
Answer: TRUE
Diff: 1 Page Ref: 472
AACSB: Multicultural & Diversity

151) Any company with 15 or more employees and any buildings occupied after January 25, 1993, must comply with the Americans with Disabilities Act.
Answer: TRUE
Diff: 2 Page Ref: 472
AACSB: Multicultural & Diversity

152) Studies show that complying with the Americans with Disabilities Act (ADA) requires businesses to spend an average of almost $17,000 to bring their buildings up to ADA standards.
Answer: FALSE
Diff: 2 Page Ref: 472-473
AACSB: Analytic Skills

153) The Justice Department estimates that more than 20 percent of the cases customers have filed under the Americans with Disabilities Act involved changes the business owners would have made at no cost.
Answer: TRUE
Diff: 2 Page Ref: 473
AACSB: Analytic Skills
154) Most small companies that invest in making their locations accessible to all customers under the Americans with Disabilities Act qualify for a tax credit.
Answer: TRUE
Diff: 2 Page Ref: 473
AACSB: Analytic Skills
155) In some cities and towns, local regulations impose restrictions on the size, location, height, and construction materials used in business signs.
Answer: TRUE
Diff: 1 Page Ref: 473
AACSB: Communication

156) Signs are one of the most expensive and least effective ways of communicating with customers available to small businesses.
Answer: FALSE
Diff: 1 Page Ref: 473
AACSB: Communication

157) Ergonomics, the science of adapting work and the work environment to complement employees strengths and to suit customers needs, is an integral part of a successful layout.
Answer: TRUE
Diff: 1 Page Ref: 473
AACSB: Analytic Skills

158) When planning store, office, or plant layouts, business owners usually focus on minimizing costs when what they should focus on is minimizing injuries and enhancing employees productivity.
Answer: TRUE
Diff: 2 Page Ref: 473-474
AACSB: Analytic Skills

159) Lighting is often an inexpensive investment for improving employee performance and the overall appearance of the business.
Answer: TRUE
Diff: 1 Page Ref: 474
AACSB: Analytic Skills

160) Attributes such as lighting, sound and scent are unimportant attributes to most retail stores.
Answer: FALSE
Diff: 1 Page Ref: 474
AACSB: Communication

161) When designing the layout of a store, office, or plant, a business owners primary focus should be minimizing costs.
Answer: FALSE
Diff: 2 Page Ref: 473-474
AACSB: Analytic Skills

162) Office design has little impact on workers job performance, job satisfaction, and ease of communication.
Answer: FALSE
Diff: 2 Page Ref: 473-474
AACSB: Analytic Skills
163) Retailers design their layouts with the goal of maximizing sales revenue while manufacturers see layout as an opportunity to increase efficiency and productivity and to lower costs.
Answer: TRUE
Diff: 2 Page Ref: 476-478
AACSB: Analytic Skills

164) Layout in a retail store evolves from a clear understanding of customers buying habits.
Answer: TRUE
Diff: 1 Page Ref: 447
AACSB: Analytic Skills

165) The layout of any retail facility requires the owners observation and understanding of what will work best for their staff.
Answer: FALSE
Diff: 1 Page Ref: 477
AACSB: Analytic Skills

166) Observing customer behavior in a retail store can help a business owner identify hot spots where merchandise sells briskly and cold spots where it may sit indefinitely.
Answer: TRUE
Diff: 1 Page Ref: 477
AACSB: Analytic Skills

167) The wise small retailer separates selling and nonselling activities; she does not waste valuable selling space with nonselling activities.
Answer: TRUE
Diff: 2 Page Ref: 477
AACSB: Analytic Skills

168) Well-designed floor displays are critical to a retailers success.
Answer: TRUE
Diff: 1 Page Ref: 477-478
AACSB: Analytic Skills

169) In a retail layout, impulse and convenience goods should be located near the front of the store.
Answer: TRUE
Diff: 1 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

170) Prime selling space should be reserved for items that are slow sellers so that customers will notice them.
Answer: FALSE
Diff: 2 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

171) Prime selling space should be reserved for items that carry the highest markups.
Answer: TRUE
Diff: 2 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills
172) In small stores, every portion of the interior space is of equal value in generating sales.
Answer: FALSE
Diff: 1 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

173) The majority of a stores customers go more than halfway into the store.
Answer: FALSE
Diff: 2 Page Ref: 478, Fgure 14.4
AACSB: Analytic Skills

174) Space values increase as their distance from the main entry-level floor increases.
Answer: FALSE
Diff: 1 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

175) The decline in value of store space from front to back of the shop is expressed in the 40-30-20-10 rule.
Answer: TRUE
Diff: 2 Page Ref: 478, Figure 14.4
AACSB: Analytic Skills

176) Creating a proper layout is important for retail operations, but not for manufacturers since manufacturing layout principles offer very little opportunity to improve efficiency or to increase productivity.
Answer: FALSE
Diff: 1 Page Ref: 478, 480
AACSB: Analytic Skills

177) An effective manufacturing layout avoids what lean manufacturing principles identify as the seven forms of waste: transportation, inventory, motion, waiting, overproduction, processing, and defects.
Answer: TRUE
Diff: 2 Page Ref: 480
AACSB: Analytic Skills

178) Ergonomics is one of lean manufacturings seven forms of waste.
Answer: FALSE
Diff: 2 Page Ref: 480
AACSB: Analytic Skills

179) Manufacturers can lower materials handling costs by using layout designed so that product flow is automated whenever possible and flow distances and times are minimized.
Answer: TRUE
Diff: 2 Page Ref: 480
AACSB: Analytic Skills
180) Discuss the various sources of information available to the small business owner for deciding in which region of the country to locate her business.
Answer: In evaluating a region for site selection, entrepreneurs should evaluate the general demographic characteristics of the population in government publications, census information, and statistical data. In evaluating a region for site selection, entrepreneurs should evaluate the general demographic characteristics of the population. Government publications, census information, and statistical data are useful sources of this information. The U.S. Census Bureau sources: U.S. Statistical Abstract, County and City Data Book and the www.census.gov site. Other sources of demographic data include:
Sales and Marketing Managements Survey of Buying Power
Editor and Publisher Market Guide
The American Marketplace
Demographic and Spending Patterns
Rand McNallys Commercial Atlas and Marketing Guide
Zip Code Atlas and Market Planner
Many entrepreneurs combine map drawing and database management capabilities (GIS). GIS street files originate in the U. S. Census Departments TIGER (Topographically Integrated Geographic Encoding Referencing). Universities and the Small Business Administration Small Business Development Centers also provide numerous sources of information.
Diff: 3 Page Ref: 445-449
AACSB: Reflective Thinking

181) Identify and explain five of the seven criteria a small business owner should consider when selecting the state in which to locate her business.
Answer:
1. Proximity to marketsLocating close to markets is critical in reducing distribution costs, staying competitive and making it easy for customers to access products and services.
2. Proximity to needed raw materialsThe value of product and service components, their material costs, transportation costs, and their function all interact in determining how close a business needs to be to its source of supplies.
3. Wage ratesWages can vary significantly from state to state, affecting a companys cost of doing business.
4. Labor supply needsTwo factors should be considered: the number of workers available in the area and their level of education.
5. Business climateIncludes whether a city/state regulates restrictions on the way a company can operate, imposes inventory taxes, implements laws that prohibit certain business activities on Sundays (blue laws), and whether or not a state provides support programs or financial assistance.
6. Tax ratesLocation selection must consider: state income taxes, payroll taxes sales taxes, property taxes, and any specialized taxes on the operations of their business.
7. Internet accessHigh speed and reliable service is important. DSL and T1 line availability is essential for a high-tech company and those engaging in e-commerce.
8. Total operating costsThe impact of a states total cost of operation on the business venture must consider wages, taxes, electricity, industrial rent and office rent costs.
Diff: 3 Page Ref: 449-453
AACSB: Reflective Thinking

182) Identify and briefly discuss the nine factors an entrepreneur should consider when selecting the city in which to locate her business.
Answer:
1. Population trendsIn addition to demographics; growth trends, family size, age distribution, education, income levels, religion, race, nationality, and gender, matching the market to your products or services.
2. CompetitionLocate near or away from competitors? Evaluate the number and strengths/weaknesses of competitors.
3. ClusteringSome cities have characteristics that attract certain industries, and, as a result, companies tend to cluster there.
4. Compatibility with the communityCompanys image must fit in with the character of a town and the needs and wants of its residents.
5. Local laws and regulationsGovernment regulations affect many aspects of a companys operation, from acquiring business licenses and building permits to erecting business signs and dumping trash.
6. InfrastructureQuality and availability of various transportation options; availability of loading and unloading zones.
7. Cost of utilities and public servicesSeek a municipality that provides all utility services, street maintenance, police and fire protection and other services at a reasonable cost.
9. Incentives- Financial and other incentives may encourage businesses in an effort to create jobs to locate within city and county borders.
10. Quality of lifeComfortable weather, cultural events, museums, outdoor activities, concerts, restaurants, interesting nightlife, and other quality of life factors are attractive to an entrepreneur and can make recruiting employees easier.
Diff: 3 Page Ref: 454-457
AACSB: Reflective Thinking

183) List and explain the main location criteria for retail and service businesses.
Answer:
Trade area sizeThe region from which the business can expect to draw customers over a reasonable time span. The following environmental factors influence trading area size:
Retail compatibilityShoppers tend to be drawn to clusters of related businesses.
Degree of competitionSize, location, and activity of competing businesses.
Index of retail saturationMeasures the level of saturation in an area; ratio of a trading areas sales potential for a particular product or service to its sales capacity.
Transportation networkHighways, roads, and public service routes that presently exist or are planned. If customers find it inconvenient to get to a location, the stores trading area is reduced.
Physical, racial, or emotional barriersParks, rivers, lakes, high crime areas; clusters of people sharing a common culture and language; fear.
Customer trafficThe business must be able to generate sufficient sales to surpass its breakeven point, and that requires an ample volume of customer traffic going past its doors.
Adequate parkingIf customers cannot find convenient and safe parking, they are not likely to stop in the area.
ReputationOf the previous owner or the fact that several businesses have failed in that location (creates negative image in customers minds).
VisibilityMakes it easy for customers to find your business and to make purchases.
Diff: 3 Page Ref: 459-462
AACSB: Reflective Thinking

184) List and discuss the six basic areas where retail and service businesses can locate. What are their advantages and disadvantages?
Answer:
1. Central business districts (CBDs)The traditional center of town. Advantages include the ability to attract customers from the entire trading area and benefiting from the customer traffic generated by other stores in the district. Disadvantages may include intense competition, high rental rates, traffic congestion, and inadequate parking facilities.
2. Neighborhood locations Locating near residential areas relies heavily on the local trading areas for business. Most grocery stores are within a five-mile radius of their customers. An advantage is relatively low rents and operating costs.
3. Shopping centers and mallsThere are four types and each have separate requirements: neighborhood shopping centers (3-12 stores within a 10-mile drive), community shopping centers (12-50 stores from 40-150 thousand people), regional shopping malls (50-100 stores needs an excess of 150,000 people living within 20- 40-minute drive), power centers (80 percent need to be anchor stores).
4. Near competitorsHigh price items and those products and services that customers prefer to comparison shop, typically benefit from locating near competitors or retail outlets offering complementary offerings. Potential disadvantage of market saturation, with one store cannibalizing sales from another, making it difficult to succeed.
5. Outlying areasGenerally not advisable unless the business can distinguish itself from competitors.
6. Home-based businessesA total of 24 million, almost 52 percent of all small businesses, and the fastest growing segment. The biggest benefit is the low cost of set up and operations. The disadvantages include interruptions, isolation, and neighborhood and zoning regulations.
Diff: 3 Page Ref: 462-467
AACSB: Reflective Thinking

185) What is a business incubator? What can an incubator offer an entrepreneur just starting out?
Answer: A business incubator is an organization that combines low-cost, flexible rental space with a multitude of support services. This may include secretarial services, meeting rooms, fax machine, telephone systems, and other operational requirements for its small business residents. The goal of the incubator is to nurture young companies during the volatile start-up period and to help them survive until they are strong enough to go out on their own. Incubators have entry requirements and expectations for graduation. After graduation into the business world, these businesses have a significantly higher success rate than independent small businesses.
Diff: 2 Page Ref: 468-469
AACSB: Reflective Thinking

186) Briefly explain the fundamental considerations in evaluating an existing building as a location. Utilize the explanation of zoning laws, ergonomics and the Americans with Disabilities Act in your explanation.
Answer: Zoning is a system that divides a city or county into small cells or districts to control the use of the land, buildings, and sites. Its purpose is to contain similar activities in suitable locations. Each city has its own ordinances that place restrictions on certain types of business activity altogether. Because of this, entrepreneurs must be familiar with all necessary ordinances in cities where they are considering a building location.
The Americans with Disabilities Act requires practically all businesses to make their facilities available to physically challenged customers and employees. In addition, the law requires businesses with 15 employees or more to accommodate physically challenged people in their hiring practices. The law requires business owners to remove architectural and communication barriers when readily achievable. Although the law allows for a good deal of flexibility in retrofitting existing structures, buildings that are occupied after January 25, 1993, must comply with all aspects of the law.
Ergonomics, the science of adapting work and the work environment to complement employees strengths and to suit customers needs, is an integral part of a successful design. An ergonomically designed workplace can improve workers productivity significantly and decrease days lost due to injuries and accidents.
Diff: 3 Page Ref: 470-475
AACSB: Reflective Thinking

187) Briefly describe the three basic layout options available to retailers. Generally comment on the most and least valuable areas in a retail store.
Answer: The three basic retail layouts are:
1. Grid, which arranges displays in a rectangular fashion with parallel aisles that control traffic pattern.
2. Free-form is a less formal layout and is primarily designed to relax and encourage customers to purchase impulse items.
3. The boutique la

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