ENT Final

________ financing entails obtaining funds for the company in exchange for ownership. A) Bootstrap B) Equity C) Debt D) Commercial

B) Equity

In the________ task, the mutual benefits from the relationship are explored, making the "size of the pie" larger. A) distributive B) assessment C) integrative D) reservation

C) integrative

Which of the following is not an exit strategy? A) an IPO B) a private sale of stock C) liquidation D) franchising

D) franchising

A joint venture is a separate entity that involves a partnership between two or more active participants. true false

true

The________ strategy focuses on selling the firm's existing products to new groups of customers .A) market development B) penetration C) product development D) market development E) diversification F) product development G) diversification

.A) market development D) market development

________ are used to characterize potential customers based upon their income, education, age, sex, and so forth. A) Demographics B) Development strategies C) Democracies D) Diversifications

A) Demographics

________ is the process of improving an individual's productivity through more efficient use of time. A) Time management B) Delegation C) The principle of effectiveness D) The principle of prioritized planning

A) Time management

Typically, debt financing requires A) an asset as collateral. B) a degree of ownership in the firm. C) reduction of short-term assets. D) reduction of working capital

A) an asset as collateral.

In negotiations, the________ task involves how the benefits of the relationship will be allocated between the parties. A) distributive B) assessment C) integrative D) reservation

A) distributive

Which factor in valuing your company is the most important? A) future earnings capacity B) book value C) outlook of the economy D) market price of similar companies' stocks

A) future earnings capacity

A________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash. A) leveraged buyout B) merger C) franchise agreement D) integrated task

A) leveraged buyout

A________ is a separate entity that involves a partnership between two or more active participants. A) merger B) franchise C) joint venture D) leveraged buyout

A) merger C) joint venture

The strategy for growth in which the entrepreneur encourages existing customers to buy more of the firm's current product is a A) penetration strategy. B) product development strategy. C) market development strategy. D) diversification strategy.

A) penetration strategy.

Which is not a strategy used to elicit information about the other party in a negotiation? A) take up a new negotiation at the end of the first B) ask lots of questions C) make multiple offers simultaneously D) build trust and share information

A) take up a new negotiation at the end of the first

Involving employees in the decision-making process is A) a passive management style. B) a participative management style. C) an autocratic management style. D) impossible for small businesses

B) a participative management style.

Debt financing is also known as ________. A) a 7(a) loan B) asset-based financing C) bootstrap financing D) angel financing

B) asset-based financing

Growth of the venture A) lessens pressures on existing financial resources. B) causes pressures on human resources. C) lessens legitimacy of the firm. D) lessens time spent on management decision making

B) causes pressures on human resources.

A ________ is an arrangement whereby the manufacturer or sole distributor of a trademarked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and conformance to standardized operating procedures. A) joint venture B) franchise C) merger D) leveraged buyout

B) franchise

Business angels usually find their deals through A) the Internet. B) referral sources. C) venture capitalists. D) cold calling

B) referral sources.

The concept that "the whole is greater than the sum of its parts" is known as A) the price earnings ratio. B) synergy. C) the bargaining zone. D) integration

B) synergy

Which of the following is not a benefit of time management? A) improvement of esprit de corps B). decreased job satisfaction C) increased productivity D) less anxiety and tension

B). decreased job satisfaction

Creating a positive organization culture involves A) not communicating all matters to key employees. B) being more involved in every aspect of the task, and avoiding delegation. C) establishing a "we" spirit, not a "me" spirit in meetings and memorandum. D) being conservative in the training process

C) establishing a "we" spirit, not a "me" spirit in meetings and memorandum.

Acquisitions are so similar to ________ that at times the two terms are used interchangeably. A) leveraged buyouts B) joint ventures C) mergers D) franchises

C) mergers

When using equity financing from family and friends A) business arrangements should bein good faith. B) details such as terms of the investment and rights of the investor need not be in writing. C) they can be more patient than other investors in when they expect a return on investment. D) since the amount of money is usually small, they do not have an ownership position in the venture

C) they can be more patient than other investors in when they expect a return on investment.

________ strategies involve selling anew product to a new market. A) Penetration B) Market development C) Product development D) Diversification

D) Diversification

Which statement about capital requirements in franchising is not true? A) Franchisees pool monies to lower the costs for advertising and sales promotion. B) Most franchisors will offer managerial assistance on the basis of need upon the start of the franchisee. C) Newsletters and other publications reflecting new ideas and developments are continuously sent to franchisees. D) The franchisee has to spend resources to establish the credibility of the business.

D) The franchisee has to spend resources to establish the credibility of the business.

The most common type of joint venture is A) international joint ventures. B) created for cooperative research. C) an industry-university agreement. D) between two or more private sector companies.

D) between two or more private sector companies.

Going public A) is often viewed negatively by risk-averse venture capitalists. B) ensures that the company gains control in decision making. C) increases flexibility for the company. D) enhances the company's ability to obtain future funds.

D) enhances the company's ability to obtain future funds.

In the venture capital industry, the ________ is formed from the resources of wealthy individuals or institutions who are limited partners. A) equity participation B) angel fund C) deal structure D) equity pool

D) equity pool

The most effective use of the interim ________ is to establish cost standards and compare the actual amount with the budgeted amount for that time period. A) cash flow statement B) inventory analysis C) balance sheet D) income statement

D) income statement

Which of the following would not be are commended diversification strategy A) backward integration B) horizontal integration C) forward integration D) integration into markets unrelated to existing products

D) integration into markets unrelated to existing products

The________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers A) value chain B) inventory C) electronic data interchange D) market accounting system

D) market accounting system

A joint venture is the purchase of an entire company, or part of a company. true false

false

About 50 percent of family firms successfully make the transition to the second generation true false

false

An ESOP is a five-year plan to sell a business to its employees true false

false

An entrepreneur contributing his or her own capital would be an example of internally generated funds true false

false

Brokers for acquisitions represent the buyer, not the seller true false

false

Challenges usually outweigh the benefits with international joint ventures, making them rarely successful. true false

false

Early-stage financing is usually the least costly type of financing to obtain. true false

false

Employee turnover for part-time and freelance workers is lower than that for full-time workers true false

false

Equity financing requires the entrepreneur to repay the amount borrowed plus interest true false

false

In a leveraged buyout, the entrepreneur uses equity funds to purchase an existing venture for cash true false

false

In a value-added chain, value is added only at the first stage of the chain true false

false

In order to better serve customers, all customer information should be stored in the memory of individual salespeople true false

false

More than 50 percent of firms filing for chapter 11 bankruptcy emerge from the process true false

false

One disadvantage to an acquisition is that they are often a slow way to expand true false

false

Synergy is defined as "the intangible benefits of mergers and acquisitions." true false

false

The four growth strategies outlined in the text are: penetration strategy, customer development strategy, service development strategy, and diversification

false

The principle of teamwork states that an entrepreneur spends too much time with employees and should try to become less accessible to them in order to increase their efficiency. true false

false

The quiet period is a 90-day period in going public when company information that will help increase stock price should and can be released. true false

false

The type of funds most frequently used by businesses in externally generated funds true false

false

When an entrepreneur bootstraps the purchase of a company, none of the price of the acquisition is cash. true false

false

When borrowing from friends and family, the entrepreneur should avoid putting agreements in writing to avoid future disagreements true false

false

A merger is joining two or more companies into one company. true false

true

A new franchisee can be expected to be required to undergo considerable training on operating the business true false

true

All ventures have some equity true false

true

An S Corporation combines the tax advantages of the partnership and the corporation. true false

true

An acquisition is the purchase of a company, or part of a company, in which the acquired company cease to exist independently true false

true

An employee stock option plan establishes a new legal entity true false

true

Bankruptcy should be a last resort for the entrepreneur true false

true

By understanding more about the other party, the entrepreneur has a greater opportunity to achieve integration in negotiation true false

true

Cultural differences between international joint venture partners can create management difficulties. true false

true

Debt financing requires the entrepreneur to repay the amount borrowed plus interest true false

true

Effective time management can increase an entrepreneur's job satisfaction true false

true

Expansion or development financing is easier to obtain than early-stage financing. true false

true

Financial ratios are control mechanisms to test the financial strengths of a new venture. true false

true

For the venture capitalist, the executive summary is an important part of the business plan. true false

true

Growing a venture through franchising allows the venture to expand quickly using little capital. true false

true

If an entrepreneur decided to sell the business but does not need to sell immediately, they may consider getting nondisclosure agreements from key employees early in the process. true false

true

If an entrepreneur recognizes the waring signs of bankruptcy early, he or she may be able to prevent it from occurring true false

true

If employees are involved in the decision-making process, they are more motivated to implement the decided course of action. true false

true

If employees are spread too thin because of growth, the firm will face problems of employee morale and increased employee turnover. true false

true

In general, entrepreneurs ignore the warning signs of bankruptcy true false

true

In most of the significant public offerings, the company technically sells the shares to the underwriters, who then resell the shares to the public investors. true false

true

Investors usually insist that the management team not operate the business as a part-time venture. true false

true

Market development strategies involve selling the firm's existing products to a new group of customers, such a new geographic market true false

true

Most entrepreneurs could benefit from implementing time management techniques true false

true

Obtaining funds for the company in exchange for ownership is equity financing true false

true

One advantage of franchising is that the entrepreneur usually enters into a business that has an accepted name and product true false

true

One advantage to an acquisition is that there is an established customer base. true false

true

One disadvantage of ESOPs is that they are difficult and complex to establish true false

true

One key advantage of an ESOP is that they are difficult and complex to establish true false

true

Only 60 percent of businesses have succession plan in place, but the percentage is likely lower for small businesses true false

true

Serial entrepreneurs sell a business and use the money to start a new business true false

true

State-sponsored venture capital funds are typically required to invest a certain percentage of its capital in the particular state. true false

true

Terminating a franchise results in more lawsuits than any other issue in franchising true false

true

The bankruptcy type that is most common is Chapter 7 bankruptcy. true false

true

The entrepreneur should decide on the legal form of organizing the new venture before asking for venture capital true false

true

The principle of prioritized planning requires the entrepreneur to categorize his or her tasks by their degree of importance and then to allocate time to tasks based on this categorization true false

true

The private equity market provides capital for privately held ventures. true false

true

The sale of the company to employees is an exit strategy. true false

true

The underwriting syndicate is a group of firms involved in selling stock to the public. true false

true

The valuation of a company is at the core of determining how much ownership an investor is entitled to for a certain amount of funding. true false

true

The venture capital process is the decision procedure of a venture capital firm. true false

true

There is more risk involved in financing a business's early operations, therefore, higher rates of return are expected true false

true

Time management is the process of improving an individual's productivity through more efficient use of time true false

true

To attract venture capital funding, an investment must have significant capital appreciation potential. true false

true

To improve the chances of being approved for a bank loan, the entrepreneur should prepare a "mini" business plan for the loan committee,. true false

true

Two major disadvantages of going public are the increased reporting requirements and potential loss of control. true false

true

When a venture is in trouble and facing bankruptcy, the entrepreneur should first sit down with his or her spouse and explain what is happening true false

true