Entrepreneurship Final

A reason new venture managers lack knowledge in the strategic planning process is because

they have minimal exposure to the planning process.

Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need

to formalize planning because there is a great deal of complexity.

A "SWOT" analysis refers to analyzing strengths, weaknesses, opportunities, and threats.

true

Adjusted tangible book value is a popular method of valuation.

true

Although family members may not play an active role in the business, they still may want to inherit part of the business.

true

An exit strategy is defined as that component of the business plan where an entrepreneur describes a method by which investors can realize a tangible return on their investment.

true

Avoiding start-up costs is a factor to consider when valuing a business.

true

Business valuation is essential when attempting to buy out a partner.

true

Buyers and sellers assign different values to a business.

true

Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

true

Many research studies suggest that strategic planning influences a venture's survival.

true

Misunderstanding industry attractiveness can be a fatal flaw in strategic planning.

true

One of the most common reasons for acquiring a business is developing more growth-phase products.

true

Replacement value of a business is based upon the value of each asset if it had to be replaced at current cost..

true

Research has shown a distinct lack of planning on the part of new ventures.

true

Some entrepreneurs are easy to replace, and some cannot be replaced.

true

Sometimes a successor is needed because the business environment changes and a parallel change is needed at the top.

true

Tangible assets as well as intangible assets of a business need to be assessed for proper venture evaluation.

true

The "best" strategic plan will be influenced by the abilities of the entrepreneur, the complexity of the venture, and the nature of the industry.

true

The Oakland Scavenger Company case may have a major effect on the management succession plans of family business.

true

The basic rule for privately held businesses is this: The owner should develop a succession plan.

true

The entrepreneurial strategy matrix measures risk and innovation.

true

The liquidity event stands for positioning the venture for the realization of a cash return for the owners and investors.

true

The real value of any venture is its potential earning power.

true

There are two types of succession pressures: family members and nonfamily employees.

true

When looking ahead in choosing a successor from inside the organization, the founder often trains a team of executive managers consisting of both family and nonfamily members.

true

What does a post-money valuation include that a pre-money valuation does not?

venture capital investment

Succession pressure inside the firm exists

when family members want to keep and manage the business themselves

The price/earnings ratio (multiple of earnings) method is determined by dividing the market price of common stock by retained earnings.

false

One reason to keep projections in perspective is

fluctuating markets

Happenings that cause the replacement of the owner/manager of a family business are called

forcing events

Which of the following is not a shortcoming that many closely held ventures possess?

high equity and low debt

Emotional bias is likely to have what effect on a seller's valuation of a business?

increase the valuation

A reason for lack of strategic planning has been found to be

lack of expertise.

Which of the following factors would not be considered a key dimension that shapes the strategic management activities of a growing firm?

lack of knowledge

Price/earnings ratio is a method of valuation that is

mostly used with publicly held corporations

When considering management, the entrepreneur should be concerned about

ownership positions

Formation of long-range plans for effective management in light of a venture's strengths and weaknesses is referred to as

strategic planning.

A "SWOT" analysis refers to

strength, weaknesses, opportunities, threats

Which of the following is not a reason for the lack of planning in new ventures?

lack of dominance

Analysis of a firm's external and internal environments provides the firm with the information to develop

strategic intent and strategic mission

"Why is the business being sold?" is not an important question to ask when analyzing the viability of buying a business.

false

An entrepreneur does not need to know how to calculate the value of a competitor's operation.

false

An entrepreneurial successor is someone who is interested in efficiency and the effective use of resources.

false

Emotional bias is not an underlying issue in valuing a business.

false

External environmental factors do not have any effect on the succession issue.

false

Insufficient controls signify strength when analyzing the business being valued.

false

Lack of expertise has never been considered a reason for the lack of strategic planning in new ventures.

false

Only ten percent of all privately held enterprises make it to a third generation.

false

Participation by subordinates in a strategic plan is never appropriate.

false

Weaknesses in small, closely held businesses do not call for careful analysis of the business being valued.

false

When a company is liquidated, preferred stockholders received a certain fixed amount after assets are distributed to common stockholders.

false

Which of the following would be considered fatal mistakes in strategic planning, according to researcher Michael E. Porter?

a and c only - no real competitive advantage compromising strategy for growth

The idea of "selling out" should be viewed in

a positive sense

Book value of a firm is also known as the

balance sheet method

The managerial successor typically is not interested in

creativity

A harvest plan

defines when and how owners and investors will realize an actual cash return on their investment

Small business owners are often guarded about their businesses, which leads to

distrust of others when formulating a strategic plan

__________ refers to conducting a thorough analysis of every facet of an existing business.

due diligence

Goodwill, family members on the payroll, and planned losses are examples of

establishing the value of a firm

Depending on the situation, some qualities or characteristics a successor should possess are more important than others.

true

During the growth stage of a venture, entrepreneurs shift into a managerial style.

true

Entrepreneurs should try to be as objective as possible in determining the fair market value for their enterprise.

true

In administrative cultures, there is a need for clearly defined authority and responsibility.

true

In some cases, entrepreneurs may be in violation of the law if they employ too many family members.

true

The "timing" of projected income or cash flows is not a critical factor in establishing the value of a firm.

false

The extent of overlap between the family and business systems does not vary from family business to family business.

false