mgmt 440 final

T/F Small firm owners/managers are usually very open and trusting about their businesses and the decisions that affect them.

False

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

False

T/F There are only two viewpoints from which a business plan should be written: the entrepreneur's and the financial source

False

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

False

T/F A SWOT analysis refers to analyzing strengths, weaknesses, opportunities, and threats.

True

T/F Adjusted tangible book value is a popular method of valuation.

True

T/F Affiliate marketing is along game in which you are trying to build trust with your prospects.

True

T/F An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.

True

T/F: Wealth creation occurs at the intersection of entrepreneurial and strategic actions.

True

Closely held ventures usually suffer from which of the following shortcomings? a. a lack of management depth b. insufficient controls c. overcapitalization d. internal conflict

a. a lack of management depth

Pick _______ and choose a range of product areas that fit in it. a. a niche b. one single product c. area d. multiple niches

a. a niche

The entrepreneur must be a. able to handle questions from the evaluators. b. interesting and humorous. c. able to criticize the evaluators. d. able to deftly avoid answering certain questions.

a. able to handle questions from the evaluators.

The reason many small business managers lack expertise is that they are a. generalists b. specialists c. optimists d. subordinates

a. generalists

How much revenue did Facebook raise with its initial public offering (IPO) in 2012? a. $10 billion b. $50 billion c. $16 billion d. $150 billion

b. $50 billion

A growth-oriented mind-set values a. growth b. flexibility c. internal political problems d. environmental uncertainty

b. flexibility

Which of the following is the first step in the traditional pricing formula? a. Determine the average annual net earnings. b. Discount future earnings. c. Estimate potential annual earnings of the buyer. d. Determine the adjusted tangible net worth.

d. Determine the adjusted tangible net worth.

T/F The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim

false

T/F Planning is not essential to the success of an undertaking

false

Formation of long-range plans for effective management in light of a venture's strengths and weaknesses is referred to as _____ planning. a. operational b. tactical c. strategic d. dimensional

c. strategic

The price/earnings ratio is a method of valuation that is mostly used a. for small corporations. b. with publicly held corporations. c. when competition is high. d. for sensitive market conditions.

b. with publicly held corporations.

In the context of buying a business, a known commodity may command a higher price for which of the following reasons? a. Historical projections have intrinsic value. b. The value of a founder's stock decreases over time. c. Avoiding start-up costs has value. d. Property values are variable.

c. Avoiding start-up costs has value.

In an entrepreneurial culture, strategic orientation is driven by a. coordination of activity b. controlled resources c. a perception of opportunity d. employment of required resources

c. a perception of opportunity

If cash flow is deemed to be the most important consideration in buying a business, which of the following valuation methods is likely to be used? a. high equity/low debt b. adjusted tangible assets c. discounted future earnings d. price/earnings

c. discounted future earnings

Which of the following is part of the marketing segment? a. plans for specific tv ads b. plans for gaining shelf space c. entry barriers d. the competitive analysis

d. the competitive analysis

The secondary source of knowing what products and tools to sell on your website should come from ______________. a. competitor analysis b. various sources c. your website analytics d. industry leading products

c. your website analytics

_____ refers to conducting a thorough analysis of every facet of an existing business. a. Industry capitalization b. Knowledge acquisition c. Risk assessment d. Due diligence

d. Due diligence

_____ gives investors some protection against founders selling their interest to a third party. a. a registration right b. right of first refusal c. a voting right d. a co-sale right

d. a co-sale right

Unique managerial concerns of growing ventures encompass all of the following except a. time-management issues. b. the one-man-band syndrome. c. community pressures. d. agency problems

d. agency problems

Which of the following statements may be the most important in new venture creation? a. pro forma balance sheet b. income statement c. profit statement d. cash-flow statement

d. cash-flow statement

New venture managers lack knowledge in the strategic planning process because they a. attempt to implement actions too quickly. b. are overconfident. c. refuse to learn new things. d. have minimal exposure to the planning process.

d. have minimal exposure to the planning process.

In the entrepreneurial strategy matrix, the creation of something new and different is categorized as a(n) a. psychological commitment b. time lag c. risk d. innovation

d. innovation

An indicator of the planning pitfall of "no realistic goals" is a. excessive procrastination b. missed appointments c. lack of desire to invest personal money d. lack of timetable to accomplish things

d. lack of timetable to accomplish things

The past is the best predictor of the future according to the _____ mind-set. a. entrepreneurial b. cognitive c. risk-averse d. managerial

d. managerial

A business plan a. provides a foolproof "blueprint" for a small business. b. forces the venture capitalist to prepare an effective strategy to use in case of trouble. c. is a loan application d. may help an entrepreneur avoid a project that is "doomed" from the start.

d. may help an entrepreneur avoid a project that is "doomed" from the start.

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

False

T/F Financial sources benefit from the prospective financial statements found in a business plan because it allows them to locate any miscalculations.

False

T/F Finding products to promote is one thing - getting approved to promote is easy.

False

T/F Four specific managerial actions are necessary during the growth stage: control, responsibility, intolerance of failure, and change.

False

T/F Knowing a venture's pre-money valuation is not possible.

False

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

False

T/F Many new ventures find strategic planning difficult because entrepreneurs are typically specialists.

False

T/F Participation by subordinates in a strategic plan is never appropriate.

False

T/F Since we're on the other side, we know what people are willing to pay for and can accurately gauge this because we know where these people stand in terms of their finances, personal goals, and lifestyle.

False

T/F When a company is liquidated, preferred stockholders receive a certain fixed amount after assets are distributed to common stockholders.

False

T/F An investment prospectus is the same as a business plan.

True

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

True

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

True

T/F Every business plan should provide information about future harvest strategies.

True

A new venture's lack of strategic planning can be the result of a. lack of expertise. b. time sharing c. lack of dominance d. lack of preference

a. lack of expertise.

Which of the following would be considered a fatal mistake in strategic planning, according to researcher Michael E. Porter? a. no real competitive advantages b. no real innovation c. no real financial forecasts for business d. no real objectives

a. no real competitive advantages

______________ are some of the top-selling affiliate products that you can promote online. a. online courses b. skin care products c. hair care products d. tickets to sporting events

a. online courses

Which of the following is a critical factor to be considered in the management segment? a. organizational structure b. location of the plant c. suppliers d. product design

a. organizational structure

When comparing and contrasting major competitors along core competitive dimensions, you should include a. product, technology, and distribution. b. profits, price, and product. c. profits, sales, and operating ratios. d. employees, suppliers, and competitors.

a. product, technology, and distribution.

Surprisingly, entrepreneurs frequently forget to include _________ in the business plan. a. the name of the company b. the month and year the plan is issued c. the return address or phone number d. a customer endorsement

a. the name of the company

A business plan should illustrate a. the projected results of the new business. b. changes in borrowing practices. c. the desires of competitors. d. the current status of a related enterprise.

a. the projected results of the new business.

Which of the following should be done to avoid the pitfall of "no market niche" (segment)? a. Analyze the expected needs of the new business. b. conduct a market analysis c. clearly target a niche d. create a market niche

c. clearly target a niche

T/F Entrepreneurs should try to be as objective as possible in determining the fair market value of their enterprise.

True

T/F High- and low-performing firms have many similarities and differences in their long-range planning efforts.

True

Which of the following is not a pitfall that should be addressed in planning a venture? a. milestones b. specific profit goals c. flexibility d. realistic goals

b. specific profit goals

Entrepreneurs can best orient their plans toward the future by a. identifying opportunities for future investment b. informing investors of how wealthy they will be in five years. c. planning 20 years ahead. d. developing trends and forecasts that describe what the venture intends to do.

d. developing trends and forecasts that describe what the venture intends to do.

Which of the following is not a distinct form of tolerance for failure? a. uncontrollable failure b. moral failure c. personal failure d. experimental failure

d. experimental failure

Which of the following is not an underlying issue when determining proper valuation of the venture set to be acquired? a. the reasons for the acquisition b. the emotional bias of the seller c. the amount of risk involved in an acquisition d. the differing goals of a buyer and seller

c. the amount of risk involved in an acquisition

T/F Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

True

T/F Lack of any time frame to accomplish things is an indicator of the pitfall known as no realistic goals.

True

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

True

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

True

T/F Research indicates that strategic planning enhances a firm's performance.

True

T/F Talk to the people in your life to get an idea of what affiliate products to promote.

True

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

True

T/F The actual need for systematic planning will vary with the nature, size, and structure of the business.

True

T/F The entrepreneurial strategy matrix measures risk and innovation.

True

T/F You could save yourself thousands of dollars on advertising and research by tapping into what others have already done.

True

T/F Online tools such as SurveyMonkey or a simple WordPress plugin like WPPolls is all you need to begin pulling out incredible information about what your market wants.

True

Which of the following is something an entrepreneur should not do when preparing for the oral presentation of a business plan? a. memorize the presentation b. practice the presentation c. develop an outline of the plan d. organize the presentation

a. Memorize the presentation

Which of the following is a critical factor that should be discussed in the management segment? a. board of directors and consultants b. competitive analysis c. unfavorable trends in the industry d. size of manufacturing operation

a. board of directors and consultants

Which of the following strategies is not included in the "I-r" section of the entrepreneurial strategy matrix? a. explore joint venture options b. move quickly c. protect innovation d. lock in investment costs

a. explore joint venture options

Which of the following is not an important aspect of an entrepreneurial venture that must be described in a business plan? a. family support b. current status c. projected results d. expected results

a. family support

All of the following are characteristics of entrepreneurial cultures except a. hierarchy b. flat c. many stages d. episodic use of required resources

a. hierarchy

Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid a. start-up costs. b. legal fees. c. earlier losses. d. previous profits.

a. start-up costs.

Goodwill, patents, deferred financing costs, and other intangible assets are considered when computing a. the adjusted tangible book value. b. capitalized earnings. c. inventory value. d. the fixed price value.

a. the adjusted tangible book value.

Which of the following is not one of the steps in reading a business plan? a. thorough reading of each section b. reading the latest balance sheet c. brief review of the history of the company d. establishment of the unique feature in this venture

a. thorough reading of each section

T/F After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

False

The major thrust of the business plan, as defined in the textbook, is to a. serve as a communication tool for the entrepreneur b. encapsulate the strategic development of the project in a comprehensive document. c. provide a working document for the venture. d. outline capital needs for the new venture.

b. encapsulate the strategic development of the project in a comprehensive document

Competitive analysis, advertising plan, and pricing policy are all part of the ________ segment. a. milestone schedule b. marketing c. financial plan d. research, design, and development

b. marketing

Which of the following hidden costs are involved when establishing the value of a firm? a. divergent expenses b. personal expenses c. travel expenses d. insufficient controls and costs

b. personal expenses

The discounted earnings method of valuation establishes a. expectancy of the business expenses. b. potential earning power. c. an appropriate rate for replacement. d. future profits.

b. potential earning power.

It is recommended that the final copy of the business plan be a. stapled b. spiral bound c. paper clipped d. professionally typeset and bound

b. spiral bound

A drawback to the price/earnings ratio method is that a. the stock of a private company is publicly traded. b. the stated net income of a private company may not truly reflect its actual earning power. c. it is relatively easy to find a truly comparable publicly held company, even in the same industry. d. it distorts profits earned.

b. the stated net income of a private company may not truly reflect its actual earning power.

When considering sales and distribution, the entrepreneur should be concerned about a. how many distributors are necessary. b. whether any sales are made on consignment. c. how many sales are internal. d. how sales vary with social demographics.

b. whether any sales are made on consignment.

Which of the followings venture valuation methods is the most effective if the business being valued needs to generate a return greater than investment? a. replacement value b. price/earnings c. discounted future earnings d. adjusted tangible assets

c. discounted future earnings

The price/earnings ratio is determined by a. dividing the average product price by overall earnings. b. multiplying market price of common stock by earnings per share. c. dividing market price of common stock by earnings per share. d. dividing market price of bonds by earnings per share.

c. dividing market price of common stock by earnings per share.

Which of the following is not perceived as a difficulty in long-range planning? a. inexperienced managers b. inadequately defined objectives c. favorable market conditions d. poor planning climate

c. favorable market conditions

In some professional areas, the business plan is referred to as a(n) a. proposal for economic development. b. proposal for organizational growth. c. investment prospectus d. strategic development project

c. investment prospectus

Return on investment a. is equal to the current prime rate. b. establishes a value for the business. c. is net profit divided by investment. d. provides a replacement value.

c. is net profit divided by investment.

It is important that an entrepreneur a. seek the assistance of outside professionals to prepare a business plan b. develop an entrepreneurial team to organize the plan c. prepare his or her own plan d. develop a rough business plan and then seek outside professional assistance

c. prepare his or her own plan

Cut to the chase and go directly to your source: ask your _________ what they want from your website. a. All of these are correct b. vendors c. readers d. suppliers

c. readers

The comprehensive business plan should be the result of a. investors' promises of capital b. continuous operations of the venture. c. reflections on the direction of the venture. d. the entrepreneur's best guesses.

c. reflections on the direction of the venture.

Which of the following management principles emanated from Steve Jobs? a. strive to reach practical milestones b. say yes to 1,000 things c. sell products, not dreams d. put a dent in the universe

d. put a dent in the universe

Analysis of a firm's external and internal environments provides the firm with the information to develop a. competitive strengths b. administrative experience c. a degree of uncertainty d. strategic intent and strategic mission

d. strategic intent and strategic mission