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ENTREPRENEURSHIP 2017 - Quiz Answer : Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland) - Chapter 13

Entrepreneurship and Effective Small Business Management, 11e (Scarborough)

Entrepreneurship and Start Up

ENTREPRENEURSHIP 2017 - Quiz Answer and Case Study Guides

Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)

Quiz Answers and Case Guides

 

Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)

Chapter 13   Preparing for and Evaluating the Challenges of Growth

 

1) Big Fish Presentations, the company profiled in the opening feature of Chapter 13, prepares presentations that help clients present themselves in new and innovative ways. In regard to growth, Big Fish Presentations has opted to ________.

  1. A) pursue a conservative and patient approach to growth based primarily on international expansion
  2. B) pursue a liberal and aggressive approach to growth based primarily on mergers and acquisitions
  3. C) pursue a conservative and patient approach to growth based primarily on strategic alliances and joint ventures
  4. D) pursue a liberal and aggressive approach to growth based primarily on expanding their product lines
  5. E) pursue a conservative and patient approach to growth based primarily on expanding their product lines

Answer:  E

Diff: 2      Page Ref: 441

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Analytical Thinking

 

2) Jeremy Westbrook owns an organic food company which has increased both its profits and revenues over an extended period of time. Jeremy's firm is experiencing ________ growth.

  1. A) persistent
  2. B) unremitting
  3. C) sustained
  4. D) unbroken
  5. E) moderate

Answer:  C

Diff: 1      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

3) In regard to firm growth, evidence shows that ________.

  1. A) relatively few firms generate sustained growth
  2. B) the majority of firms generate sustained growth
  3. C) about 50 percent of firms generate sustained growth
  4. D) manufacturing firms tend to generate sustained growth while service firms do not
  5. E) service firms tend to generate sustained growth while manufacturing firms do not

Answer:  A

Diff: 3      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Application of Knowledge

 

4) Which of the following statements regarding firm growth is incorrect?

  1. A) Most entrepreneurial firms want to grow.
  2. B) Growth in sales revenue is a poor indicator of an entrepreneurial firm's potential to survive today and be successful tomorrow.
  3. C) Firm growth is exciting.
  4. D) Many entrepreneurial firms have grown quickly, producing impressive results for their employees and owners.
  5. E) Growing a business successfully requires preparation, good management, and an appreciation of the issues involved.

Answer:  B

Diff: 3      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

5) According to the textbook, most entrepreneurial firms ________.

  1. A) are ambivalent about growth
  2. B) want to grow
  3. C) do not want to grow
  4. D) want to grow if the economy is strong but do not want to grow if the economy is weak
  5. E) want to grow if they are a service firm but do not want to grow if they are a manufacturing firm

Answer:  B

Diff: 2      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

 

 

 

6) According to the textbook, the three important things that a business can do to prepare for growth are ________.

  1. A) plan for growth, adopt a growth-oriented business model, and stay committed to a core strategy
  2. B) appreciate the nature of business growth, stay committed to a core strategy, and plan for growth
  3. C) develop a viral marketing campaign, stay committed to a core strategy, and adopt a growth-oriented business model
  4. D) develop business partnerships, diversify beyond the company's core strategy, and appreciate the nature of business growth
  5. E) retain or hire one or more business growth consultants, diversify beyond the company's core strategy, and plan for growth

Answer:  B

Diff: 2      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Application of Knowledge

 

7) According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that ________.

  1. A) solve a significant problem or have a major impact on their customers' productivity or lives
  2. B) are cost leaders and promote themselves aggressively
  3. C) have a major impact on their customers' lives and sell high quality products
  4. D) take advantage of environmental trends and are cost leaders
  5. E) solve a significant problem or sell high quality products

Answer:  A

Diff: 2      Page Ref: 444

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

8) According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are ________.

  1. A) not all businesses have the potential to be aggressive growth firms, business success scales, and business growth is a top priority of most entrepreneurial firms
  2. B) business growth is a top priority of most entrepreneurial firms, a business can't grow too fast, and businesses that price their products aggressively grow the fastest
  3. C) a business's valuation increases with its growth, a business can grow too fast, and business growth is a top priority of most entrepreneurial firms
  4. D) the majority of businesses have the potential to be aggressive growth firms, a business can't grow too fast, and business success scales
  5. E) not all businesses have the potential to be aggressive growth firms, a business can grow too fast, and business success doesn't always scale

Answer:  E

Diff: 2      Page Ref: 444

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Analytical Thinking

 

9) Which of the following is not one of the 10 warning signs that a business is growing too fast?

  1. A) Borrowing money to pay for routine expenses
  2. B) Comfortable operating margins
  3. C) Customer complaints are up.
  4. D) Those working with the business's financial structure are starting to worry.
  5. E) E-mail and text messages start going unanswered.

Answer:  B

Diff: 2      Page Ref: 445

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Analytical Thinking

 

10) The Partnering for Success feature in Chapter 13 focuses on Threadless, the popular community-centered T-shirt design site. According to the feature, at one point during its early growth, Threadless almost collapsed under the weight of operational problems. Threadless solved the problem by ________.

  1. A) hiring professional managers
  2. B) replacing the founder CEO with a seasoned CEO from an established company
  3. C) hiring a consulting firm
  4. D) selling a minority interest to a venture capital firm, which provided Threadless operational assistance
  5. E) merging with Zappos and folding its operations into Zappos' operations

Answer:  D

Diff: 2      Page Ref: 446

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

11) Sustained growth is defined as growth in both revenues and profits over an extended period of time.

Answer:  TRUE

Diff: 1      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Analytical Thinking

 

12) Most entrepreneurial firms are reluctant to try to grow.

Answer:  FALSE

Diff: 1      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Analytical Thinking

 

13) All businesses have the potential to be aggressive growth firms.

Answer:  FALSE

Diff: 2      Page Ref: 444

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

14) Business success doesn't always scale.

Answer:  TRUE

Diff: 2      Page Ref: 445

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

15) A firm's core strategy is largely determined by its core competencies, or what it does particularly well.

Answer:  TRUE

Diff: 2      Page Ref: 445

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

16) Do most firms want to grow or are they reluctant to grow? What are the advantages of growth?

Answer:  Most entrepreneurial firms want to grow. Especially in the short run, growth in sales revenue is an important indicator of an entrepreneurial venture's potential to survive today and be successful in the future.

Diff: 1      Page Ref: 443

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Application of Knowledge

 

17) According to Chapter 13, business success doesn't always scale. What is meant by this statement?

Answer:  Scaling a business means increasing its size and pace of activity. Unfortunately, the very thing that makes a business initially successful often makes it difficult to grow or scale. For example, businesses that are based on providing high levels of individualized service often don't grow or scale well. This is because it's hard to continue to offer individualized service as a business grows. There is also a category of businesses that sell high-end or specialty products that earn high margins. These businesses typically sell their products where customers prioritize quality over price. These businesses can grow, but only at a measured pace. If they grow too quickly, they can lose the "exclusivity" they are trying to project or can damage their special appeal. For example, fashion clothing boutiques often limit the number of garments they sell in a certain size or color. Even though they know they could sell more of a particular tie or dress, they deliberately limit their sales so their customers don't see each other wearing identical items.

Diff: 3      Page Ref: 445

LO:  13.1: Describe how firms can properly prepare for growth.

AACSB:  Reflective Thinking

 

18) A firm's pace of growth is the rate it is growing ________.

  1. A) compared to industry norms
  2. B) compared to a national index of all firms
  3. C) on an annual basis
  4. D) compared to the national economy
  5. E) compared to its closest competitor

Answer:  C

Diff: 2      Page Ref: 446

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

 

19) Which of the following options was not identified in the textbook as an appropriate reason for growth?

  1. A) Need to accommodate the growth of key customers
  2. B) Influence, power, and survivability
  3. C) Economies of scale
  4. D) Market leadership
  5. E) Maintain the appearance that the firm is successful

Answer:  E

Diff: 2      Page Ref: 448

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

20) Which of the following is not an appropriate reason for firm growth?

  1. A) Increasing the compensation of the top managers of the firm
  2. B) Ability to attract and retain talented employees
  3. C) Need to accommodate the growth of key customers
  4. D) Market leadership
  5. E) Economies of scale

Answer:  A

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

 

21) ________ are(is) generated when increasing production lowers the average cost of each unit produced.

  1. A) Business scalability
  2. B) Economies of scale
  3. C) Reaching for scale
  4. D) Market leadership
  5. E) Economies of scope

Answer:  B

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

 

22) Economies of scale occur when ________.

  1. A) increasing production lowers the average cost of each unit produced
  2. B) increasing production increases the average cost of each unit produced
  3. C) decreasing production lowers the average cost of each unit produced
  4. D) decreasing production increases the average cost of each unit
  5. E) increasing production increases the fixed cost of doing business

Answer:  A

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

 

23) London Simpson owns a company that makes smartphone accessories. She is trying to increase her sales, primarily because she knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is ________.

  1. A) economies of scope
  2. B) market leadership
  3. C) influence, power, and survivability
  4. D) need to accommodate the growth of key customers
  5. E) economies of scale

Answer:  E

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

24) ________ costs are costs that a company incurs whether it sells something or not. ________ costs are the costs a company incurs as it generates sales.

  1. A) Preset; Marginal
  2. B) Variable; Fixed
  3. C) Set; Marginal
  4. D) Fixed; Variable
  5. E) Marginal; Set

Answer:  D

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

25) ________ costs are costs that a company incurs whether it sells something or not.

  1. A) Fixed
  2. B) Consistent
  3. C) Steady
  4. D) Variable
  5. E) Regular

Answer:  A

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

26) ________ costs are the costs a company incurs as it makes sales.

  1. A) Static
  2. B) Irregular
  3. C) Balanced
  4. D) Variable
  5. E) Flexible

Answer:  D

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

27) Zack Shields leases a manufacturing facility that produces computer monitors. Zack tries to keep production high, because his lease payments are $10,500 a month, regardless of whether he produces one computer monitor a month or 10,000. Zach's lease payment is a ________ cost.

  1. A) variable
  2. B) secondary
  3. C) fixed
  4. D) marginal
  5. E) tangible

Answer:  C

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

28) Karen West owns a barbecue restaurant. One expense that Karen watches closely is the cost of propane, which she uses to heat her ovens. The more barbecue food Karen sells, the more it costs her for propane on a monthly basis. For Karen, the cost of propane is a(n) ________ cost.

  1. A) variable
  2. B) secondary
  3. C) resultant
  4. D) fixed
  5. E) irregular

Answer:  A

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

29) Paul Mason's firm sells medical equipment to heart surgeons. The company fields a direct sales force that travels the country demonstrating its equipment to heart surgeons and hospital administrators. Recently, Paul's company started producing equipment for eye surgeons, partly to maximize the value of his sales force, which can now call on both heart surgeons and eye surgeons when it makes hospital visits. Paul's firm is attempting to capture economies of ________ through this strategy.

  1. A) reach
  2. B) scope
  3. C) capacity
  4. D) range
  5. E) scale

Answer:  B

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

 

 

30) Market leadership occurs when a firm ________.

  1. A) is the number one or number two firm in an industry or niche market in terms of net profits
  2. B) is one of the top five firms in an industry or market niche in terms of sales volume
  3. C) earns twice as much as its closest competitor
  4. D) sells twice as much as its closest competitor
  5. E) is the number one or the number two firm in an industry or niche market in terms of sales volume

Answer:  E

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

31) Some firms feel that they can better appeal to their customers if they can advertise that they are the "Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled ________.

  1. A) economies of scope
  2. B) need to accommodate the growth of key customer
  3. C) economies of scale
  4. D) market leadership
  5. E) influence, power, and survivability

Answer:  D

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

32) Katlyn Williams owns a company that makes specialized components for the aerospace industry. Her most important customer is a company that is growing at a rate of 33% per year. Katlyn is working hard to grow her firm, because she knows that unless her company continually grows it will not be able to keep pace with the growth of its most important customer. This example illustrates the reason for growth referred to as ________.

  1. A) capturing economies of scope
  2. B) executing a scalable business model
  3. C) market leadership
  4. D) influence, power, and survivability
  5. E) need to accommodate the growth of a key customer

Answer:  E

Diff: 2      Page Ref: 450

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

33) A firm's pace of growth is the rate at which it is growing compared to its main competitors.

Answer:  FALSE

Diff: 2      Page Ref: 448

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

 

34) Fixed costs are the costs a company incurs as it generates sales.

Answer:  FALSE

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Analytical Thinking

 

35) Market leadership occurs when a firm holds the number one or number two position in an industry or niche market in terms of sales volume.

Answer:  TRUE

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

 

36) Sometimes firms are compelled to grow to accommodate the growth of a key customer.

Answer:  TRUE

Diff: 2      Page Ref: 450

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

37) Define the term "market leadership." Why do firms work hard to obtain market leadership?

Answer:  Market leadership occurs when a firm is the number one or number two firm in an industry or niche market in terms of sales volume. Many firms work hard to achieve market leadership, to realize economies of scale in production, and to be recognized as the brand leader. Being the market leader also permits a firm to use slogans such as "Number 1 Software Producer in America" in its promotions, helping the firm to win customers and attract talented employees, as well as business partners.

Diff: 2      Page Ref: 449

LO:  13.2: Discuss the six most common reasons firms pursue growth.

AACSB:  Reflective Thinking

 

38) The majority of businesses go through a discernable set of stages of growth referred to as the ________.

  1. A) business rotation cycle
  2. B) business existence cycle
  3. C) organizational sequence
  4. D) business life cycle
  5. E) organizational life cycle

Answer:  E

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

 

 

39) Which of the following is not one of the five stages in the organizational life cycle?

  1. A) Introduction
  2. B) Early growth
  3. C) Scale
  4. D) Maturity
  5. E) Decline

Answer:  C

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

 

40) The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

  1. A) introduction
  2. B) launch
  3. C) ramp-up
  4. D) early growth
  5. E) continuous growth

Answer:  A

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

41) The main challenges for a business in the introduction stage of the organizational life cycle is ________.

  1. A) beginning the process of transitioning the owner from a hands-on supervisor to a more managerial role and developing business partnerships
  2. B) developing business partnerships and making sure the initial product or service is right
  3. C) determining whether the owner of the business and the current management team is capable of taking the business further and developing systems and procedures
  4. D) developing systems and procedures and beginning the process of transitioning the owner from a hands-on supervisor to a more managerial role
  5. E) making sure the initial product or service is right and starting to lay the groundwork for building a larger organization

Answer:  E

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

 

42) For a business to be successful in the early growth stage of the organizational life cycle, the two important things that must happen are ________.

  1. A) the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role, and increased formalization must take place
  2. B) a decision must be made whether the owner-manager and the current management team is capable of taking the business further, and the organization must start laying the groundwork for future growth
  3. C) increased formalization must take place, and the business must achieve price stability
  4. D) a decision must be made whether the owner-manager or the current management team is capable of taking the business further, and business partnerships must be established
  5. E) the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role, and the business must be cash flow positive

Answer:  A

Diff: 3      Page Ref: 452

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

43) According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle.

  1. A) introduction
  2. B) early growth
  3. C) continuous growth
  4. D) maturity
  5. E) decline

Answer:  C

Diff: 3      Page Ref: 452

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

44) According to the textbook, a well-managed business that finds its products and services are mature often ________.

  1. A) replaces its board of directors to breathe new life into the firm
  2. B) looks for licensing opportunities
  3. C) looks for partnering or acquisition opportunities to breathe new life into the firm
  4. D) looks for new managerial talent to breathe new life into the firm
  5. E) looks for international business opportunities

Answer:  C

Diff: 2      Page Ref: 453

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Application of Knowledge

 

 

45) According to the textbook, it is ________.

  1. A) not inevitable that a business enter the decline stage of the organizational life cycle
  2. B) inevitable that a business enter the decline stage of the organizational life cycle
  3. C) not inevitable that service firms enter the decline stage of the organizational life cycle but is inevitable for manufacturing firms
  4. D) not inevitable that manufacturing firms enter the decline stage of the organizational life cycle but is inevitable for service firms
  5. E) not inevitable that international firms enter the decline stage of the organizational life cycle but is inevitable for strictly domestic firms

Answer:  A

Diff: 2      Page Ref: 453

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

46) The Savvy Entrepreneurial Firm feature in Chapter 13 focuses on Salesforce.com, a company that pioneered the idea of software as a service (SaaS). The main point of the case is that rather than remaining a niche product, Salesforce.com's product, which is an online software platform for salespeople, has ________ and appeals to mainstream customers.

  1. A) crossed the divide
  2. B) jumped the divide
  3. C) leaped the technology curve
  4. D) crossed the chasm
  5. E) crossed the valley

Answer:  D

Diff: 2      Page Ref: 454

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

47) The majority of businesses go through a discernable set of stages referred to as the business/industry life cycle.

Answer:  FALSE

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

48) The main challenges for a business in the introduction stage are to make sure the initial product or service is right and to start laying the groundwork for building a larger organization.

Answer:  TRUE

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

 

 

49) A business's early growth stage is generally characterized by increasing sales and heightened complexity.

Answer:  TRUE

Diff: 2      Page Ref: 452

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Analytical Thinking

 

50) As a business moves beyond its early growth stage and its pace of growth accelerates, the need for structure and formalization decreases.

Answer:  FALSE

Diff: 2      Page Ref: 452

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

51) What is the organizational life cycle and why is it important?

Answer:  The majority of businesses go through a discernable set of stages referred to as the organizational life cycle. The stages include introduction, early growth, continuous growth, maturity, and decline. It's important for business owners to be familiar with these stages, because each stage offers unique opportunities and challenges. By knowing the unique opportunities and challenges posed by each stage, a business owner can be prepared to respond appropriately.

Diff: 2      Page Ref: 451

LO:  13.3: Explain the importance of being able to manage the stages of growth.

AACSB:  Reflective Thinking

 

52) The author of the book titled The Theory of the Growth of the Firm, which is referred to in Chapter 13, is ________.

  1. A) Jim Collins
  2. B) Joseph Schumpeter
  3. C) Edith Penrose
  4. D) Michael Gerber
  5. E) Seth Godin

Answer:  C

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Application of Knowledge

 

53) Trevor Kimble owns a firm that sells products to the publishing industry. Trevor is currently evaluating a set of opportunities that he feels his firm is capable of pursuing. According to the textbook, Trevor is evaluating his firm's ________.

  1. A) prolific potential
  2. B) dynamic opportunity options
  3. C) productive opportunity set
  4. D) passionate opportunity set
  5. E) creative field of potential

Answer:  C

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

54) According to Penrose, ________ services generate new market, product and service ideas, while ________ services administer the routine functions of the firm and facilitate the profitable execution of new opportunities.

  1. A) managerial; entrepreneurial
  2. B) administrative; business
  3. C) entrepreneurial; managerial
  4. D) business; commercial
  5. E) commercial; administrative

Answer:  C

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

 

55) When a firm's managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the ________ problem.

  1. A) commercial capacity
  2. B) entrepreneurial aptitude
  3. C) managerial capacity
  4. D) business capacity
  5. E) business aptitude

Answer:  C

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

56) Jack Wills owns a commercial nursery. Jack has more business than he wants, in fact, he is presently turning away exciting new business opportunities because it is expensive to hire new employees, and he knows that if he did hire new employees it would take time for the new employees to be trained and to be socialized into the culture of his firm. Jack's inability to take advantage of the new business opportunities that are coming his way is due largely to the ________ problem.

  1. A) business aptitude
  2. B) entrepreneurial aptitude
  3. C) commercial opportunity
  4. D) business capacity
  5. E) managerial capacity

Answer:  E

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

 

57) ________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

  1. A) Difficult hazard
  2. B) Adverse hazard
  3. C) Adverse selection
  4. D) Moral selection
  5. E) Moral hazard

Answer:  C

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

 

58) Kendell Adams owns a software development company. When he first launched his firm, he was careful to hire employees who had the experience he was looking for, were good matches for the positions he had available, and could be properly supervised. As Kendell's firm has grown, and his need for employees has increased, he is finding that it is increasingly difficult to find employees who have the qualifications he is looking for, are good matches for the positions he has available, and fit within the supervisory framework he has developed. Kendell is dealing with an issue referred to as ________.

  1. A) adverse hazard
  2. B) adverse selection
  3. C) complicated hazard
  4. D) ethical hazard
  5. E) moral selection

Answer:  B

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

59) ________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

  1. A) Moral hazard
  2. B) Adverse selection
  3. C) Adverse hazard
  4. D) Complex hazard
  5. E) Complex selection

Answer:  B

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

60) ________ means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work.

  1. A) Difficult selection
  2. B) Adverse hazard
  3. C) Ethical selection
  4. D) Productivity hazard
  5. E) Moral hazard

Answer:  E

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

 

61) According to the basic model of firm growth articulated in Chapter 13, the ability to increase managerial services to facilitate growth is not friction free but is constrained and limited. Which of the following selections is not one of the factors that constrains or limits a firm's ability to increase its managerial services?

  1. A) The time required to socialize new managers
  2. B) How motivated entrepreneurs and/or managers are to grow the firm
  3. C) Adverse selection
  4. D) Moral hazard
  5. E) Benchmarking

Answer:  E

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

62) Which of the following was not identified in the textbook as one of the day-to-day challenges involved with growing a firm?

  1. A) Cash flow management
  2. B) Channel conflict
  3. C) Capital constraints
  4. D) Quality control
  5. E) Price stability

Answer:  B

Diff: 2      Page Ref: 456

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

 

63) Which of the following statements is not true regarding the day-to-day challenges of growing a firm?

  1. A) As a firm grows, it requires a decreasing amount of cash to service its customers.
  2. B) If firm growth comes at the expense of a competitor's market share, price competition can set in.
  3. C) Most businesses, regardless of their industry, need capital from time to time to invest in growth-enabling projects.
  4. D) Although most businesses are started fairly inexpensively, the need for capital is typically the most prevalent in the early growth and continuous stages of the organizational life cycle.
  5. E) One of the most difficult challenges that businesses encounter as they grow is maintaining high levels of quality and customer service.

Answer:  A

Diff: 2      Page Ref: 456

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

 

64) Terry Wells owns a growing company that makes innovative kitchen appliances. One thing that Terry has to continually work at is to keep enough cash on hand to make sure she has sufficient liquidity to meet her payroll and cover her other short-term obligations. The day-to-day challenge of firm growth this example is referring to is ________.

  1. A) quality control
  2. B) capital constraints
  3. C) price stability
  4. D) cash flow management
  5. E) personnel issues

Answer:  D

Diff: 2      Page Ref: 457

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

65) The What Went Wrong feature in Chapter 13 focuses on Wesabe, a Web-based company that was launched in 2006 to help people manage their personal finances. According to Marc Hedlund, one of Wesabe's cofounders, the company failed for two primary reasons. First, it didn't allow a partner to provide it with an essential service that it decided to build on its own. Second, it ________.

  1. A) didn't hire an experienced CEO
  2. B) didn't achieve a large enough critical mass of users
  3. C) didn't implement a revenue model fast enough
  4. D) didn't utilize both internal and external growth strategies
  5. E) misunderstood its users

Answer:  E

Diff: 2      Page Ref: 458

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

66) Megan Johnson owns a kitchen and bathroom cabinet company. Her market research is telling her that she is taking business away from the large home improvement stores in her trade area. One thing that Megan is worried about is that the large stores might fight back by lowering their prices, which hurts everyone except the consumer. The day-to-day challenge of firm growth that this example is referring to is ________.

  1. A) quality control
  2. B) price stability
  3. C) capital constraints
  4. D) cash flow management
  5. E) benchmarking

Answer:  B

Diff: 2      Page Ref: 459

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

67) Kelly Andrews owns a company that makes office furniture. Recently, a favorable article was written about Kelly's company in a business magazine, and as a result, Kelly has seen a spike in his orders. Although Kelly is grateful for the additional orders, he is worried about one thing. An increase in activity means that his firm must handle more service requests and paperwork and contend with more customers, stakeholders, and vendors. Kelly knows that if he doesn't handle this increased activity properly, the workmanship of his products could decline. The day-to-day challenge of firm growth that this example illustrates is ________.

  1. A) quality control
  2. B) price stability
  3. C) capital constraints
  4. D) benchmarking
  5. E) cash flow management

Answer:  A

Diff: 2      Page Ref: 459

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

68) According to Penrose, managerial services generate new market, product, and service ideas, while entrepreneurial services administer the routine functions of the firm and facilitate the proper execution of new opportunities.

Answer:  FALSE

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

69) According to Penrose, entrepreneurial services generate new market, product, and service ideas.

Answer:  TRUE

Diff: 2      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

70) Moral hazard means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

Answer:  FALSE

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

 

71) Adverse selection means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work.

Answer:  FALSE

Diff: 3      Page Ref: 455

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

72) Growth usually increases rather than decreases the challenges involved with cash flow management.

Answer:  TRUE

Diff: 3      Page Ref: 449

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

73) One of the most difficult challenges that businesses encounter as they grow is maintaining high levels of quality and customer service.

Answer:  TRUE

Diff: 2      Page Ref: 459

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

74) Few businesses need access to capital to fuel their growth.

Answer:  FALSE

Diff: 2      Page Ref: 459

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Analytical Thinking

 

 

75) What are the primary day-to-day challenges involved with growing a firm? Briefly describe each challenge.

Answer:  The primary day-to-day challenges involved with growing a firm are cash flow management, price stability, quality control, and capital constraints. In regard to cash flow management, as a firm grows, it requires an increasing amount of cash to service its customers. In addition, a firm must carefully manage its cash on hand to make sure it maintains sufficient liquidity to meet its payroll and cover its other short-term obligations. In regard to price stability, if a firm's growth comes at the expense of a competitor's market share, a price war can result. In regard to quality control, as a firm handles the increase in activity that accompanies growth, unless it is careful, quality can suffer. Finally, in regard to capital constraints, growth often requires the expansion of a firm's facilities, which is difficult because purchasing or building facilities takes capital.

Diff: 2      Page Ref: 456

LO:  13.4: Describe the challenges of firm growth, particularly those of adverse selection and moral hazard.

AACSB:  Reflective Thinking

 

 

 

-----
Entrepreneurship: Starting and Operating A Small Business, 4th Edition, 2016, Steve Mariotti
Entrepreneurship: Successfully Launching New Ventures, 5th Edition, 2016, Bruce R. Barringer
Essentials of Entrepreneurship and Small Business Management, 8th Edition, 2016, Norman M. Scarborough
Fundamentals for Becoming a Successful Entrepreneur: From Business Idea to Launch and Management, 2016, Malin Brannback, Alan Carsrud
Entrepreneurship and Effective Small Business Management, 11th Edition, 2015, Norman M. Scarborough

------
PART 1: Decision to Become an Entrepreneur
1. Introduction to Entrepreneurship
PART 2: Developing Successful Business Ideas
3. Feasibility Analysis
4. Developing an Effective Business Model
5. Industry and Competitor Analysis
6. Writing a Business Plan
PART 3: Moving from an Idea to an Entrepreneurial Firm
7. Preparing the Proper Ethical and Legal Foundation
8. Assessing a New Venture’s Financial Strength and Viability
9. Building a New-Venture Team
10. Getting Financing or Funding
PART 4: Managing and Growing an Entrepreneurial Firm
11. Unique Marketing Issues
12. The Importance of Intellectual Property
13. Preparing for and Evaluating the Challenges of Growth
14. Strategies for Firm Growth
15. Franchising

------
PART I. STARTING THE PROCESS
Chapter 1. Why Plan?
PART II. WHAT TO DO BEFORE THE BUSINESS PLAN IS WRITTEN
Chapter 2. Developing and Screening Business Ideas
Chapter 3. Feasibiity Analysis
PART III. PREPARING A BUSINESS PLAN
Chapter 4. Introductory Material, Executive Summary, and Description of the Business
Chapter 5. Industry Analysis
Chapter 6. Market Analysis
Chapter 7. Marketing Plan
Chapter 8. Management Team and Company Structure
Chapter 9. Operations Plan and Product (or Service) Design and Development Plan
Chapter 10. Financial Projections
PART IV. PRESENTING THE BUSINESS PLAN
Chapter 11. Presenting the Plan with Confidence

------
BRIEF CONTENTS
UNIT 1 Entrepreneurial Pathways
Chapter 1 Entrepreneurs Recognize Opportunities
Chapter 2 Franchising
Chapter 3 Finding Opportunity in an Existing Business
Chapter 4 The Business Plan: Road Map to Success
Honest Tea Business Plan
Unit 1 Case Study: Spanx
UNIT 2 Who Are Your Customers?
Chapter 5 Creating Business from Opportunity
Chapter 6 Exploring Your Market
Unit 2 Case Study: Kitchen Arts & Letters, Inc.
UNIT 3 Integrated Marketing
Chapter 7 Developing the Right Marketing Mix and Plan
Chapter 8 Pricing and Credit Strategies
Chapter 9 Integrated Marketing Communications
Chapter 10 Marketing Globally
Chapter 11 Smart Selling and Effective Customer Service
Unit 3 Case Study: Empact
UNIT 4 Show Me the Money: Finding, Securing, and Managing It
Chapter 12 Understanding and Managing Start-Up, Fixed, and Variable Costs
Chapter 13 Using Financial Statements to Guide a Business
Chapter 14 Cash Flow and Taxes
Chapter 15 Financing Strategy: Debt, Equity, or Both?
Unit 4 Case Study: Lee’s Ice Cream
UNIT 5 Operating a Small Business Effectively
Chapter 16 Addressing Legal Issues and Managing Risk
Chapter 17 Operating for Success
Chapter 18 Location, Facilities, and Layout
Chapter 19 Human Resources and Management
Unit 5 Case Study: ONLC
UNIT 6 Leadership, Ethics, and Exits
Chapter 20 Leadership and Ethical Practices
Chapter 21 Franchising, Licensing, and Harvesting: Cashing in Your Brand
Unit 6 Case Study: Honest Tea
Appendix 1 Sample Student Business Plan: University Parent, Inc.
Appendix 2 BizBuilder Business Plan
Appendix 3 Resources for Entrepreneurs
Appendix 4 Useful Formulas and Equations
------
Section 1: The Rewards and Challenges of Entrepreneurship
1. Entrepreneurs: The Driving Force Behind Small Business
2. Ethics and Social Responsibility: Doing the Right Thing
3. Creativity and Innovation: Keys to Entrepreneurial Success
4. Strategic Management and the Entrepreneur
Section 2: Launching a Venture: Entry Strategies
5. Choosing a Form of Ownership
6. Franchising and the Entrepreneur
7. Buying an Existing Business
8. New Business Planning Process: Feasibility Analysis, Business Modeling, and Crafting a Winning Business Plan
Section 3: Building a Marketing Plan
9. Building a Bootstrap Marketing Plan
10. Creative Use of Advertising and Promotion
11. Pricing and Credit Strategies
12. Global Marketing Strategies
13. E-Commerce and Entrepreneurship
Section 4: Building a Financial Plan
14. Creating a Solid Financial Plan
15. Managing Cash Flow
16. Sources of Equity Financing
17. Sources of Debt Financing
Section 5: Building an Operating Plan
18. Location, Layout, and Physical Facilities
19. Supply Chain Management
20. Managing Inventory
21. Staffing and Leading a Growing Company
Section 6: Legal Aspects of Small Business: Succession, Ethics, and Government Regulation
22. Management Succession and Risk Management Strategies in the Family Business
23. The Legal Environment: Business Law and Government Regulation
------
Section I: The Challenge of Entrepreneurship 
1. The Foundations of Entrepreneurship
2. Ethics and Social Responsibility: Doing the Right Thing
3. Inside the Entrepreneurial Mind: From Ideas to Reality
Section II: The Entrepreneurial Journey Begins
4. Conducting a Feasibility Analysis and Designing a Business Model
5. Crafting a Business Plan and Building a Solid Strategic Plan
6. Forms of Business Ownership and Buying an Existing Business
7. Franchising and the Entrepreneur
Section III: Launching the Business
8. Building a Powerful Bootstrap Marketing Plan
9. E-commerce and the Entrepreneur
10. Pricing and Credit Strategies
11. Creating a Successful Financial Plan
12. Managing Cash Flow
Section IV: Putting the Business Plan to Work: Sources of Funds
13. Sources of Financing: Equity and Debt
14. Choosing the Right Location and Layout
15. Global Aspects of Entrepreneurship
16. Building a New Venture Team and Planning the Next Generation
------

 

ENTREPRENEURSHIP 2017 - NEW COLLECTION 2016 - 2017

1. Youtube Playlist: See the collection of videos - www.youtube.com/ecomftu2012

2. Download Power Point Slides Free

Entrepreneurship: Starting and Operating A Small Business, 4th Edition, 2016, Steve Mariotti - LINK
Entrepreneurship: Successfully Launching New Ventures, 5th Edition, 2016, Bruce R. Barringer  - LINK
Essentials of Entrepreneurship and Small Business Management, 8th Edition, 2016, Norman M. Scarborough - LINK
Fundamentals for Becoming a Successful Entrepreneur: From Business Idea to Launch and Management, 2016, Malin Brannback - LINK
Entrepreneurship and Effective Small Business Management, 11th Edition, 2015, Norman M. Scarborough - LINK

 

For Test Bankz, Quiz Answers and Case study Guides, email toThis email address is being protected from spambots. You need JavaScript enabled to view it.

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