CH 1: AVENUES OF ACQUIRING BUSINESS
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Questions and Answers

What is one potential disadvantage of outsourcing certain business functions?

  • Tax benefits as lease payments can often be deducted as business expenses
  • Potential loss of control over certain business functions (correct)
  • Reduced initial capital expenditure
  • Flexibility to upgrade to newer assets

What is typically included in detailed service level agreements when outsourcing?

  • Conditions for early termination and asset return policies
  • Duration of the lease term and renewal options
  • Maintenance and repair responsibilities
  • Scope, quality, and timelines of work (correct)

What is one advantage of leasing assets rather than purchasing them outright?

  • Reduced initial capital expenditure (correct)
  • Overall cost over time may exceed the cost of purchasing the asset outright
  • Possible restrictions imposed by the lease agreement
  • The lessee does not own the asset and has no equity in it

Which of the following is a disadvantage of leasing assets?

<p>The lessee does not own the asset and has no equity in it (A)</p> Signup and view all the answers

What is typically included in the contractual implications of a lease agreement?

<p>Duration of the lease term and renewal options, maintenance and repair responsibilities, conditions for early termination and asset return policies (C)</p> Signup and view all the answers

What is one potential disadvantage of outsourcing that is not related to loss of control?

<p>Risks associated with sharing sensitive data with third-party providers (C)</p> Signup and view all the answers

Which of the following is not a typical advantage of leasing assets?

<p>The lessee does not own the asset and has no equity in it (C)</p> Signup and view all the answers

What is a potential disadvantage of leasing assets compared to purchasing them outright?

<p>Overall cost over time may exceed the cost of purchasing the asset outright (A)</p> Signup and view all the answers

Which of the following is not a typical contractual implication of outsourcing?

<p>Duration of the lease term and renewal options (C)</p> Signup and view all the answers

What is franchising?

<p>An arrangement where an entrepreneur pays fees to use an established brand's business model and system (C)</p> Signup and view all the answers

What is a potential advantage of franchising?

<p>Access to a proven business model and brand recognition (C)</p> Signup and view all the answers

What is a potential disadvantage of franchising?

<p>Limited operational autonomy due to the need to comply with the franchisor's guidelines (B)</p> Signup and view all the answers

What is outsourcing?

<p>A process where a business hires external organizations to perform specific functions or processes (C)</p> Signup and view all the answers

What is a potential advantage of outsourcing?

<p>Access to specialized skills and technologies (A)</p> Signup and view all the answers

Which of the following is NOT a potential advantage of outsourcing?

<p>Increased operational autonomy for the business (A)</p> Signup and view all the answers

What is a contractual implication of franchising?

<p>Payment of initial fees and ongoing royalties to the franchisor (D)</p> Signup and view all the answers

Which of the following is NOT a contractual implication of franchising?

<p>Ability to operate in any location without territorial restrictions (D)</p> Signup and view all the answers

Which of the following is a primary avenue for acquiring a business, as mentioned in the text?

<p>Leasing (D)</p> Signup and view all the answers

What is a key advantage of franchising mentioned in the text?

<p>Training and support from the franchisor. (B)</p> Signup and view all the answers

What is one potential disadvantage of outsourcing that is not related to loss of control?

<p>Risks associated with sharing sensitive data with third-party providers (A)</p> Signup and view all the answers

What is a typical contractual implication of outsourcing?

<p>Detailed service level agreements outlining the scope, quality, and timelines of work (B)</p> Signup and view all the answers

Which of the following is a primary disadvantage of outsourcing as discussed in the text?

<p>Reduced control over the outsourced processes. (B)</p> Signup and view all the answers

What is a typical disadvantage of leasing assets compared to purchasing them outright?

<p>Limited operational autonomy. (A)</p> Signup and view all the answers

Which of the following is a potential advantage of leasing assets rather than purchasing them outright?

<p>Flexibility to upgrade to newer assets (A)</p> Signup and view all the answers

What is a potential disadvantage of leasing assets compared to purchasing them outright?

<p>The lessee does not own the asset and has no equity in it (A)</p> Signup and view all the answers

Which of the following is NOT a contractual implication of franchising according to the text?

<p>Access to specialized skills and technologies. (A)</p> Signup and view all the answers

What is a typical contractual implication of a lease agreement?

<p>All of the above (D)</p> Signup and view all the answers

What is a key advantage of outsourcing business functions as mentioned in the text?

<p>Cost savings on labor and operational expenses. (A)</p> Signup and view all the answers

Which of the following is not a typical advantage of leasing assets?

<p>Increased equity in the asset over time (C)</p> Signup and view all the answers

Which of the following is a typical disadvantage of leasing assets discussed in the text?

<p>Higher initial setup costs and ongoing royalties. (D)</p> Signup and view all the answers

What is a key disadvantage of franchising according to the text?

<p>Limited operational autonomy. (A)</p> Signup and view all the answers

What is a potential disadvantage of outsourcing certain business functions?

<p>Dependence on the vendor's reliability and performance (C)</p> Signup and view all the answers

Which of the following is a primary avenue for acquiring a business, as mentioned in the text?

<p>All of the above (D)</p> Signup and view all the answers

Which of the following is a key advantage of leasing assets as discussed in the text?

<p>Easier obtain financing due to established brand's track record. (C)</p> Signup and view all the answers

What is a potential advantage of franchising?

<p>Established brand recognition and customer base (C)</p> Signup and view all the answers

What is a primary disadvantage of outsourcing certain business functions according to the text?

<p>Reduced control over the outsourced processes. (B)</p> Signup and view all the answers

Which of the following is a potential disadvantage of outsourcing that is not mentioned in the text?

<p>Loss of intellectual property and trade secrets (B)</p> Signup and view all the answers

Which of the following is a contractual implication of franchising that is not mentioned in the text?

<p>Minimum advertising and marketing expenditure requirements (C)</p> Signup and view all the answers

Based on the information provided, which of the following statements about leasing is NOT true?

<p>Leasing agreements often require compliance with the lessor's operational guidelines (B)</p> Signup and view all the answers

Which of the following is NOT a potential advantage of franchising?

<p>Ability to set pricing and promotional strategies independently (B)</p> Signup and view all the answers

Which of the following statements about outsourcing is NOT supported by the information provided in the text?

<p>Outsourcing agreements typically include non-solicitation clauses for employees (D)</p> Signup and view all the answers

Based on the information provided, which of the following is a potential disadvantage of franchising that is NOT mentioned in the text?

<p>Difficulty in adapting to changing consumer preferences (C)</p> Signup and view all the answers

Which of the following statements about outsourcing is NOT true?

<p>Outsourcing agreements typically include clauses prohibiting the outsourcing of core business functions (D)</p> Signup and view all the answers

Which of the following statements about franchising is NOT true, based on the information provided in the text?

<p>Franchisees have complete operational autonomy within their territory (A)</p> Signup and view all the answers

Based on the information provided, which of the following is a potential advantage of leasing assets that is NOT mentioned in the text?

<p>Reduced maintenance and repair costs for the lessee (B)</p> Signup and view all the answers

Which of the following is NOT a potential disadvantage of outsourcing?

<p>Increased operational costs (C)</p> Signup and view all the answers

Which of the following is NOT a typical contractual implication of a lease agreement, as per the text?

<p>Equity ownership of the leased asset (D)</p> Signup and view all the answers

Based on the information provided, which of the following is a potential advantage of franchising that is NOT explicitly stated?

<p>Established brand recognition (C)</p> Signup and view all the answers

What is NOT a potential disadvantage of leasing assets compared to purchasing them outright?

<p>Limited flexibility to upgrade to newer assets (C)</p> Signup and view all the answers

Which of the following is NOT a typical contractual implication of outsourcing, as per the text?

<p>Equity ownership and profit-sharing arrangements (C)</p> Signup and view all the answers

Based on the information provided, which of the following statements about franchising is NOT accurate?

<p>Franchisees typically pay ongoing royalty fees to the franchisor (D)</p> Signup and view all the answers

Which of the following is a key advantage of leasing assets rather than purchasing them outright?

<p>Tax benefits as lease payments can often be deducted (A)</p> Signup and view all the answers

Which of the following statements about outsourcing is NOT supported by the information provided in the text?

<p>Outsourcing can reduce the need for in-house expertise and resources (A)</p> Signup and view all the answers

Based on the information provided, which of the following statements about leasing assets is accurate?

<p>Leasing agreements often include clauses for early termination and asset return (B)</p> Signup and view all the answers

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