MGMT440 ch12-14
The adjusted tangible book value includes all of the following except
common price
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?
discounted future earnings
Which of the following venture valuation methods is the most effective if the business being valued needs to generate a return greater than investment?
discounted future earnings
Which of the following strategies is not included in the "I-r" section of the entrepreneurial strategy matrix?
explore joint venture options
The one-person-brand syndrome is
failure to delegate
The reason many small business managers lack expertise is that they are
generalists
Which of the following stages of venture development requires major changes in entrepreneurial strategy?
growth
New venture managers lack knowledge in the strategic planning process because they
have minimal exposure to the planning process
Goodwill, family members on the payroll, and planned losses are examples of
hidden costs
In the entrepreneurial strategy matrix, the creation of something new and different is categorized as a(n)
innovation
In some professional areas, the business plan is referred to as a(n)
investment prospectus
In many new small ventures, planning is often
lacking
The past is the best predictor of the future according to the ___ mind-set.
managerial
If a business plan/venture is turned down the first time, the entrepreneur should
revise, rework, and improve the plan
In the entrepreneurial strategy matrix, the probability of a major financial loss is categorized as a
risk
Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need
to formulize planning because there is a great deal of complexity
The completed business plan provides the entrepreneur with a
tool for communicating with financial sources
The price/earnings ratio is a method of valuation that is mostly used
with publicly held corporations
How much revenue did Facebook raise with its initial public offering (IPO) in 2012?
$50 billion
Many closely held ventures are undercapitalized, which often indicates
a high level of debt
An indicator of the planning pitfall of "no realistic goals" is
lack of timetable to accomplish things
Weaknesses in small, closely held businesses do not call for careful analysis of the business being valued. T/F
False
Knowing a venture's pre-money valuation is not possible. T/F
False
Which of the following statements would not be an appropriate guideline for successful business plan development?
write the plan in first person
Which of the following should be done to avoid the pitfall of "no market niche" (segment)?
clearly target a niche
The business plan provides the details of the ___ potential of a business.
market
A business plan
may help an entrepreneur avoid a project that is "doomed" from the start
It is recommended that the final copy of the business plan be
spiral bound
One suggestion for helping to recall key examples, visual aids, and other details when presenting the business plan is to utilize keywords in the outline. T/F
True
Tangible assets as well as intangible assets of a business need to be assessed for proper venture evaluation. T/F
True
Potential earning power, which determines the true value of the firm, is best calculated using the ___ method.
discounted earnings
Which of the following is the first step in the traditional pricing formula?
determine the adjusted tangible net worth
Small business owners are often guarded about their businesses, which leads to
distrust of others when forumulating a strategic plan
Emotional bias is likely to have which of the following effects on a seller's valuation of a business?
increase the valuation
A new venture's lack of strategic planning can be the result of
lack of expertise
The entrepreneurial strategy matrix measures ___ and ___.
risk; innovation
A SWOT analysis refers to
strengths, weaknesses, opportunities, an threats
Which of the following statements may be the most important in new venture creation?
cash-flow statement
Return on investment
is net profit divided by investment
The manufacturing segment of the business plan should identify key personnel, their responsibilities and positions, and career experience that qualifies them for those particular roles. T/F
False
One of the most common reasons for acquiring a business is developing more growth-phase products. T/F
True
When comparing and contrasting major competitors along core competitive dimensions, you should include
product, technology, and distribution
Blueprints, sketches, drawings, and models are often important features to be placed in which of the following sections of the business plan?
research, design and development
Which of the following is not a pitfall that should be addressed in planning a venture?
specific profit goals
Surprisingly, entrepreneurs frequently forget to include ___ in the business plan.
the name of the company
A drawback to the price/earnings ratio method is that
the stated net income of a private company may not truly reflect its actual earning power
The entrepreneurial strategy matrix measures risk and innovation. T/F
True
Participation by subordinates in a strategic plan is never appropriate. T/F
False
Which of the following statements is not part of the "five-minute reading" by venture capitalists?
Determine the strengths and weaknesses of the entrepreneur
"Why is the business being sold?" is not an important question to ask when analyzing the viability of buying a business. T/F
False
A business plan must illustrate the current status of the venture, not the projected results. T/F
False
A business plan should be no more than 150 pages. T/F
False
An entrepreneur does not need to know how to calculate the value of a competitor's operation. T/F
False
Adjusted book value is a popular method of valuation. T/F
True
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. T/F
True
Avoiding start-up costs is a factor to consider when valuing a business. T/F
True
Because of the competition for funding, an entrepreneur's business plan needs to be capture the reader's interest right away by stating the uniqueness of the venture. T/F
True
High- and low-performing firms have many similarities and differences in their long-range planning efforts. T/F
True
In a management structure, there is a need for clearly defined authority and responsibility. T/F
True
Increasing market share by acquiring a firm in the company's industry is one reason for the aquisition. T/F
True
Many research studies suggest that strategic planning influences a venture's survival. T/F
True
Misunderstanding industry attractiveness can be a fatal flaw in strategic planning. T/F
True
Most entrepreneurs are unfamiliar with planning information sources. T/F
True
Unique managerial concerns of growing ventures encompass all of the following except
agency problems
Which of the following would be considered a fatal mistake in strategic planning, according to researcher Michael E. Porter?
no real competitive advantage
Goodwill, patents, deferred financing costs, and other intangible assets are considered when computing
the adjusted tangible book value
Which of the following is part of the marketing segment?
the competitive analysis
Planning is not essential to the success of an undertaking. T/F
False
Small firm owners/managers are usually very open and trusting about their businesses and the decisions that affect them. T/F
False
The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources. T/F
False
Many new ventures find strategic planning difficult because entrepreneurs are typically specialists. T/F
False
When calculating the toal amount needed to buy a business venture, which of the following would not be included?
employee retention
Business valuation is essential when attempting to buy out a partner. T/F
True
Copying the latest social media craze is an indication of not having realistic goals. T/F
False
In principle, incumbents and entrepreneurs face the same challenges in finding new strategic positions, whereas in practice, incumbents often have an edge. T/F
False
Insufficient controls are a strength for a small business and should be considered when the business is being valued. T/F
False
Lack of expertise has never been considered a reason for the lack of strategic planning in new ventures. T/F
False
There are only two viewpoints from which a business plan should be written: the entrepreneur's and the financial source. T/F
False
Buyers and sellers assign different values to a business. T/F
True
New ventures are important to the economy in terms of innovation and
employment
A major thrust of the business plan, as defined in the textbook, is to
encapsulate the strategic development of the project in a comprehensive document.
A business plan ___ potential financial backers.
establishes a first impression of the company and its principals on
Which of the following is a reason for buyers to keep projections in perspective?
fluctuating markets
Replacement value of a business is based upon the value of each asset if it had to be replaced at current cost. T/F
True
All of the following are characteristics of entrepreneurial cultures except
hierarchy
The text discusses all of the following important guidelines to follow when putting the plan together except
impressing with excessive detail
The primary advantage of the price/earnings approach to valuation is that it
is simple to use
Which of the following is a critical factor to be considered in the management segment?
organizational structure
A critical point to be included in the business description is
potential market advantages