Entrepreneurship A - Unit 3
False
Vertical integration involves combining forces with another company, whereas horizontal integration is about internally increasing the depth of an existing company.
merger
Which of these is the term for the joining of two companies of similar size and type in order to make one joint entity?
initial public offering
Which of these is the very first sale of stocks (shares) by a company to the public?
wholesaler
Which part of the business supply chain is missing from the list? manufacturer > ___ > retailer > consumer
retailer
Which sequence in the business supply chain is missing from the list? manufacturer > wholesaler > ___ > consumer
critical expenses
Which type of expense is essential to the success of a venture?
False
While some loans, or borrowed money, require interest to be paid, most do not.
Groups; Teams
_____ can be organized to accomplish goals, but can only do this through individual and independent contributions. _____, on the other hand, must rely on interdependence to accomplish specific goals.
Critical; Optional
_____ expenses are those that are essential to the success of a venture. _____ expenses are those that are not necessary to the success of a venture.
Startup costs
_____ include any expenses needed to start a new business venture, such as employee payroll, office rentals, supplies, permits, and marketing costs.
Business finance
_____ is a field of business that includes a wide range of activities focusing on the management of money for an organization.
Horizontal integration
_____ is a strategy for business growth in which an organization acquires or merges with another business operating in the same industry for the purpose of speeding up the expansion process.
Capital
_____ is another term for wealth in the form of assets, typically that of money.
Interdependence
_____ is the harmonious dependence between two or more people focused on a common goal.
People
_____ is/are the most fundamental asset to organizations.
Capital
_____ is/are wealth in the form of assets, typically that of money.
Interdependence
______ is the harmonious dependence between two or more people focused on a common goal.
Sales volume
______ is the number of sales of a particular good or service over a period of time.
hierarchy
A manager oversees his employees; a regional manager presides over her managers; an executive supervises his regional managers. These relationships are an example of which of the following?
the future value of a company
A sales forecast is important to investors because it helps determine _____.
break-even point
A(n) _____ is a highly important metric in a financial plan.
hierarchy
A(n) _____ is a system in an organization in which people or groups are ranked one above the other according to authority or status, as in a government, business, church, etc.
hierarchy
A(n) _____ is a system in an organization in which people or groups are ranked one above the other according to authority or status.
financial plan
A(n) _____ is an evaluation and projection of an organization's financial state meant to predict future income and losses of potential business ventures.
budget
A(n) _____is an estimation of costs, expenditures, and potential income over a period of time for a particular venture.
True
An accurate sales forecast is usually broken down into base units such as number of products sold, customers acquired, memberships obtained, or services rendered.
chart
An organizational _____ is a diagram depicting an organizational structure including the ranks of departments and organizations.
False
Assets is another term for shareholders' equity.
equity crowdfunding capital reserves lenders crowdfunding
Bunji Apps decided to sell 30% of its company in an IPO to raise $100,000 of funding. crowdfunding Shoes Plus is a brand-new startup offering a pair of its running shoes to anyone willing to invest $50 or more on the initial round. capital reserves Cardinal Farms, Inc., wants to start growing and selling asparagus. Fortunately, its owners have $100,000 saved to buy the necessary land and begin cultivating. lenders Mike's Koffee Shop sought a local bank for a $50,000 loan for expansion. crowdfunding Epic Films, Inc., wants to fund a new independent film. To do so, its founders asked the general public to give small donations. If a supporter gives more than $2,000, she can actually spend a day on set watching the filming of the movie.
True
Crowdfunding typically involves marketing one's venture and exchanging some good or service for funding dollars.
False; People are a business's greatest asset.
Capital (money) is the most fundamental and important asset of any business.
vertical integration
Chicken Wings 'n' BBQ is a restaurant chain that has decided to manufacture its own barbeque sauce and supply various retail stores to increase profits.
False
Crowdfunding is the practice of funding a venture by soliciting small loans from backers who will be repaid with interest.
break even
Determining just how long it will take a venture to _____ is a critical step in financial planning.
crowdfunding equity capital reserves lenders
DigiSwag offers its brand-new product, digital jackets, to any investor who puts in $250 or more. Capital Free, Inc., issues 15% of its company to investors who pay $150,000 for part ownership in the form of shares. Tom's BBQ Chophouse has $200,000 in money set aside to invest in expanding its size. Valeria's Floral Shop, Inc., sought out Chase® Bank for a business loan of $75,000 to help build initial inventory.
processes
Effective organizational growth comes down to the effective management and control of the three components of business: people, resources, and _____.
horizontal integration
Enlightened, Inc.'s film department decides that Venture Pictures would be an excellent organization to combine with in order to produce superior media, so they perform a merger.
True
Entrepreneurship is typically associated with startups; however, whenever a company ventures into growth, the spirit of entrepreneurship is surely present.
True
Loans always require interest, or a percentage of a loan that is repaid as a fee for receiving the credit.
True
Generally, when the individual sale of a business occurs, someone with more skill, experience, time, or passion assumes ownership and leadership of the organization to bring it a level of success the previous owners could not.
True
Groups can be organized to accomplish goals, but usually only do so through individual and independent contributions. Teams, on the other hand, must rely on interdependence to accomplish specific goals.
independence; interdependence
Groups rely on ______, but teams rely on ______.
True
Hierarchies can exist in companies, governments, teams, nonprofits, churches, or societies.
startup costs
Hiring employees and paying for office rental expenses, office supplies, permits, and marketing costs are all examples of potential _____.
merger and acquisition
If Company A buys out Company B because it will increase Company A's potential profitability, it is an example of which kind of exit strategy?
$230 million
If a corporation has $220 million in liabilities and $450 million in assets, what is its shareholders' equity?
making it a cash cow
If an entrepreneur empowers a trustworthy manager to fully operate her business while maintaining profitability, it is an example of which kind of exit strategy?
selling to a friendly individual
If an entrepreneur trusts another businessperson and offers his company to that person, it is an example of which kind of exit strategy?
liquidating and closing
If an entrepreneur's company is showing early signs of failure and she decides to sell all her assets and get out of the business, it is an example of which kind of exit strategy?
initial public offering
If an organization desires to raise additional financing by selling a portion of its ownership in the form of stocks, it is an example of which kind of exit strategy?
$70,000
If an organization has $150,000 worth of assets and $80,000 worth of liabilities, what is its shareholders' equity?
$70,000
If an organization has $150,000 worth of assets and $80,000 worth of liabilities, which of these is its shareholders' equity?
-$1.5 million
If an organization has $2.5 million in assets but $4 million in liabilities, which of these is its shareholders' equity?
True
In the liquidating process, the business owner(s) attempt(s) to sell as much of the organization's assets as possible, hoping to recoup the invested capital.
loans
Interest is a fee applied to _____ because of the value of receiving the credit.
liquid
Inventory is an example of a highly _____ asset because it can often be converted into cash relatively easily.
divisional structure functional structure flatarchy structure matrix structure
Janet's, Inc., is a scrapbooking and stationery manufacturing company. It has over 150 individual product lines. Because of the company's manufacturing size, it has divided its teams based on products. Ceramics PLUS is a kitchenware manufacturing company. It has clearly defined positions and departments, including a marketing, sales, purchasing, and mechanics departments. Martinez Landscaping is a relatively new lawn and garden company. Because of its size and the fact that it hires highly skilled employees, Martinez Landscaping is able to give significant autonomy to its employees. Gordon's Food Services helps local restaurants with their food service needs. Gordon's empowers regional employees to fill multiple roles in their own branches. Thus, its workers need to be skilled in several areas, such as sales, purchasing, and training.
horizontal; vertical
Large, successful retail chains maintain competitive prices partly because of their aggressive _____ and _____ integration.
False; Mergers involve the joining of two businesses of a similar size, not the outright purchase of one by the other.
Mergers generally involve the outright purchase of one organization by another because the merging companies are typically close in size.
flatarchy
Of the four common types of organizational structures, the _____ structure is the newest to the business world.
matrix
Of the four organizational structures, the _____ structure is the least used and often most confusing.
False; Giving away a share of one's company is not a benefit, but rather a disadvantageous aspect of equity since it requires surrendering a measure of control.
One benefit of equity is that it requires that one gives a piece of one's company away.
True
One con of trying for a loan is that loans can be very difficult to obtain.
True
One way in which horizontal integration can be effective is because organizations can benefit from each other's strengths.
True
Organizational structure defines who has what role, what his responsibilities are, and to whom he can delegate responsibility.
True
Rarely do the organizational charts of two companies look exactly the same.
False; Resource management is the effective and efficient use of a business's resources, such as land, labor, and capital.
Resource management is the effective and efficient use of information resources.
True
Responsible entrepreneurs actually plan strategies for exiting their venture in case it fails.
False
Responsible entrepreneurship is more about planning for success rather than planning how to fail if necessary.
vertical integration
Retail giant FoodMart decided that if it produced its own line of food products, it could drastically increase its profit margins, so that is precisely what it did.
True
Supply chain management, or the business process of controlling materials, information, and financing, is used to transform raw materials into products and get these products into the hands of customers.
bottom
The _____ line is the final income (or loss) of a company for a given period of time.
functional
The _____ organizational structure is by far the most common type found in companies.
matrix
The _____ structure is the least common and potentially most confusing organizational structure.
horizontal integration
The automotive manufacturer Titan Co., being far larger than Faraday, Inc., decides to acquire Faraday in order to expand its own product line.
financing
The business process of finding the capital that is needed in order to pay for various ventures in a company is known as _____.
vertical integration
The expansion of a company by means of introducing another production stage within the company is called _____.
False; The final line of a profit and loss statement is called the bottom line.
The final line in a profit and loss statement that expresses the final income (or loss) for a given period of time is known as the ultimate line.
False
The most commonly used organizational structure is the divisional structure.
people
The most fundamental and important asset of any business is _____.
True
The most fundamental and important asset of any business is people.
False
The organizational charts of most companies typically look the same
True
The reason large retail chains like Walmart are able to keep costs so low for customers is because of their aggressive horizontal and vertical integration.
horizontal integration
The struggling organization Fildex, Inc. was facing bankruptcy until the Amtrigger Corporation came along and purchased it through a hostile takeover.
horizontal integration horizontal integration vertical integration vertical integration vertical integration horizontal integration
The struggling organization Fildex, Inc., was facing bankruptcy until the Amtrigger Corporation came along and purchased it through a hostile takeover. The automotive manufacturer Titan Co., being far larger than Faraday, Inc., decides to acquire Faraday in order to expand its own product line. Total Candles specialized in supplying its products to various retail chains in malls. However, the company decided to open its own retail space in an attempt to generate greater revenue. Chicken Wings 'n' BBQ is a restaurant chain that has decided to manufacture its own barbeque sauce and supply various retail stores to increase profits. Retail giant FoodMart decided that if it produced its own line of food products, it could drastically increase its profit margins, so that is precisely what it did. Enlightened, Inc.'s film department decides that Venture Pictures would be an excellent organization to combine with in order to produce superior media, so they perform a merger.
the bottom line
The ultimate goal of the profit and loss statement is to determine _____ regarding profit or loss over a period of time.
Create a budget.
There are four key steps in determining a startup or venture's financial requirements. Which of these is one of those key steps?
Acquisitions can substantially increase profit margins.
There are four primary reasons vertical integration can be an effective growth strategy. Which of these is NOT one of those reasons?
Determine a ten-year success plan.
There are four steps to calculating the financial requirements for a venture. Which is NOT one of those requirements?
Determine a ten-year success plan.
There are four steps to calculating the financial requirements for a venture. Which of these is NOT one of those requirements?
human resources
This business department hires new employees, trains them, and makes sure they are satisfied.
asset
To a farmer, a tractor is an example of a(n) ______.
vertical integration
Total Candles specialized in supplying its products to various retail chains in malls. However, the company decided to open its own retail space in an attempt to generate greater revenue.
someone you can trust to fully manage it
Turning a business into a cash cow really only works when you have _____.
flatarchy structure functional structure matrix structure divisional structure
WebTech Inc., is a startup company with four employees. It specializes in offering web development services to local small-to medium-sized clients. Because of its size and the fact that it hires highly skilled employees, WebTech Inc., is able to give significant autonomy to its employees. Professionals Plus is a medium-sized heating and cooling organization that has operated for 20 years. It has clearly defined positions and departments consisting of a marketing, sales, purchasing, and mechanics department. Food Help and Staffing, Inc., is a unique organization specializing in the food service industry. It empowers regional employees to fill multiple roles within their own branches. Thus, Food Help's workers need to be skilled in several areas, such as sales, purchasing, and training. Office Haven is an office supply manufacturing company. It has over 150 individual product lines. Because of the company's manufacturing size, its leadership has decided to divide teams based on the products themselves.
organizational structure
What is a business system consisting of policies that outline how roles and responsibilities are delegated and controlled?
a hostile takeover
When AOL acquired Time Warner because the latter was facing bankruptcy and had no other options, this was an example of _____.
an acquisition
When AT&T, a larger communications conglomerate, purchased BellSouth, this mutual agreement was an example of _____.
a merger
When Exxon joined with Mobil, a company of relatively equal size, in order to increase market force, this was an example of _____.
liabilities
Which of these are financial debts or obligations that are incurred during the course of business?
people, resources, processes
Which of these are the three areas of business that, if managed and controlled well, ensure effective growth?
all costs associated with starting a new venture
Which of these describes startup costs?
Adding retail or manufacturing to an organization's business model can increase revenue.
Which of these is NOT an example of a situation in which horizontal integration can be an effective growth strategy?
A merger can be highly profitable.
Which of these is NOT an example of a situation in which vertical integration can be an effective growth strategy?
loan
Which of these is a borrowed sum of money expected to be paid back with interest?
exit strategy
Which of these is a contingency plan executed by a business leader or entrepreneur in order to liquidate a venture or company should certain predetermined criteria be met?
organizational chart
Which of these is a diagram depicting an organizational structure including the ranks of departments and organizations?
supply chain
Which of these is a sequence of processes used to create and distribute a product?
forward integration
Which of these is a vertical integration strategy in which an organization gains control over an area of business previously held by its customers?
backward integration
Which of these is a vertical integration strategy in which an organization gains control over an area of business previously held by its suppliers?
financial plan
Which of these is an evaluation and projection of an organization's financial state meant to predict future income and losses of potential business ventures?
interdependence
Which of these is harmonious dependence between two or more people focused on a common goal?
capital reserves
Which of these is liquid cash sitting in checking or savings accounts that can easily be accessed to fund ventures?
equity
Which of these is ownership in a company that is typically tied to a set number of shares, or the units of ownership of a company?
equity
Which of these is ownership in a company that is typically tied to a set number of shares?
hostile takeover
Which of these is the acquisition of another company that does not want to be acquired?
a sequence of processes used to create and distribute a product
Which of these is the definition of a supply chain?
liquidity
Which of these is the ease with which an asset can either be quickly sold or converted into cash?
crowdfunding
Which of these is the funding of a product or service accomplished by soliciting small amounts of money from numerous backers over the internet?
financing
Which of these is the process of finding the necessary capital to fund a venture?
acquisition
Which of these is the purchase of a smaller company by a larger company?
human resources
Which of these is the term for the department of business responsible for hiring, administrating, and training employees?
sales forecast
a projection of the amount of sales an organization will accomplish over a given period of time, usually one to three years
supply chain
a sequence of processes used to create and distribute a product
loan
a borrowed sum of money expected to be paid back with interest
profit and loss statement
a business document outlining an organization's revenues and expenses in order to determine profit (or loss) over a period of time
cash flow statement
a business document that carefully tracks the movement of cash, both paid in and paid out, usually on a per-month basis
cash flow statement sales forecast balance sheet profit and loss statement
a business document that carefully tracks the movement of cash, both paid in and paid out, usually on a per-month basis a projection of the amount of sales an organization will accomplish over a given period of time, usually one to three years a snapshot of an organization's financial position, including assets, liabilities, and shareholders' equity a business document outlining an organization's revenues and expenses in order to determine profit (or loss) over a period of time
cash flow statement sales forecast balance sheet profit and loss statement shareholders' equity
a business document that carefully tracks the movement of cash, both paid in and paid out, usually on a per-month basis a projection of the amount of sales an organization will accomplish over a given period of time, usually one to three years a snapshot of an organization's financial position, including assets, liabilities, and shareholders' equity a business document outlining an organization's revenues and expenses in order to determine profit (or loss) over a period of time a company's total value, calculated by removing total liabilities from total assets
horizontal integration
a business growth strategy in which a company acquires or merges with another organization within the same industry in order to accelerate expansion
organizational structure
a business system consisting of policies that outline how roles and responsibilities are delegated and controlled
liabilities
a business's financial debt or obligations that arise to help fund ventures
shareholders' equity
a company's total value, calculated by removing total liabilities from total assets
exit strategy
a contingency plan executed by a business leader or entrepreneur in order to liquidate a venture or company should certain predetermined criteria be met
organizational chart
a diagram depicting an organizational structure including the ranks of departments and organizations
business finance
a field of business that includes a wide range of activities focusing on the management of money for an organization
Sell to a friendly individual. Make it a cash cow. Initiate a merger and acquisition. Offer an initial public offering. Liquidate and close it.
a means to "cash out," make quick money, and pay off potential up-front investors creating a self-sustaining business that takes little attention but makes money for the founder(s) a strategy involving being bought by a larger company or combining with a similar organization exiting by issuing an initial sale of stocks to the public considered the worst-case scenario since it involves selling off the remainder of an organization's assets to recoup invested capital
interest
a percentage of a loan that is repaid as a fee for receiving the credit
supply chain hierarchy resource management organizational structure human resources supply chain management organizational chart interdependence
a sequence of processes used to create and distribute a product a system in an organization in which people or groups are ranked one above the other according to authority or status the effective and efficient use of an organization's resources, including land, labor, and capital a business system consisting of policies that outline how roles and responsibilities are delegated and controlled the department of business responsible for hiring, administrating, and training employees the business process of controlling the materials, information, and finances necessary to get raw materials manufactured into products and into the hands of the customer a diagram depicting an organizational structure including the ranks of departments and organizations harmonious dependence between two or more people focused on a common goal
balance sheet
a snapshot of an organization's financial position, including assets, liabilities, and shareholders' equity
hierarchy
a system in an organization in which people or groups are ranked one above the other according to authority or status
forward integration
a vertical integration strategy in which an organization gains control over an area of business previously held by its customers
backward integration
a vertical integration strategy in which an organization gains control over an area of business previously held by its suppliers
budget
an estimation of costs, expenditures, and potential income over a period of time for a particular venture
financial plan
an evaluation and projection of an organization's financial state meant to predict future income and losses of potential business ventures
functional structure
an organizational system that divides a company based on the specializations of its workforce
divisional structure
an organizational system that divides leadership teams based on projects, product lines, or company divisions that they operate
flatarchy structure
an organizational system that has a "flattened" hierarchy in which employees are given significant autonomy over business and product decisions
matrix structure
an organizational system that has employees fulfilling multiple roles across multiple departments
capital
another term for wealth in the form of assets, typically that of money
startup costs
any costs required for a startup or new business venture
divisional structure matrix structure flatarchy structure functional structure
divides leadership teams based on projects, product lines, or other company divisions a structure in which employees fulfill multiple roles across multiple departments a structure in which employees are given significant autonomy over business and product decisions generally divides firms by clear departmental lines
divisional structure functional structure matrix structure divisional structure flatarchy structure matrix structure functional structure flatarchy structure
divides leadership teams based on projects, product lines, or other company divisions breaks up a company based on the specialization of its workforce a structure in which employees fulfill multiple roles across multiple departments works well for organizations with thousands of products and dozens of product lines a structure in which employees are given significant autonomy over business and product decisions may give an employee a role in marketing, sales, and manufacturing all at once generally divides firms by clear departmental lines often utilized by young startups in order to be aggressive and effective
critical expenses
expenses that are essential to the success of a venture
critical expenses liabilities balance sheet financing budget startup costs sales volume financial plan assets
expenses that are essential to the success of a venture a business's financial debt or obligations that arise to help fund ventures a snapshot of an organization's financial position, including assets, liabilities, and shareholders' equity the business process of finding the necessary capital to fund various ventures in an organization an estimation of costs, expenditures, and potential income over a period of time for a particular venture any costs required for a startup or new business venture the number of sales of a particular good or service over a period of time an evaluation and projection of an organization's financial state meant to predict future income and losses of potential business ventures property, equipment, or resources purchased for the production of a good or service
optional expenses
expenses that are not necessary to the success of a venture
interdependence
harmonious dependence between two or more people focused on a common goal
operations
larger jobs or tasks of an organization that are generally conducted in one location
capital reserves
liquid cash sitting in checking or savings accounts that can easily be accessed to fund ventures
equity
ownership in a company that is typically tied to a set number of shares
assets
property, equipment, or resources purchased for the production of a good or service
assets liabilities sales volume resource quantities
property, equipment, or resources purchased for the production of a good or service a business's financial debt or obligations that arise to help fund ventures the number of sales of a particular good or service over a period of time the amount of necessary resources, including raw materials, to produce a good or service
3 2 4 1
retailer wholesaler consumer manufacturer
hostile takeover
the acquisition of a company that does not want to be acquired
hostile takeover vertical integration exit strategy initial public offering acquisition horizontal integration merger
the acquisition of a company that does not want to be acquired the expansion of an organization accomplished by internally introducing another production stage a contingency plan executed by a business leader or entrepreneur in order to liquidate a venture or company should certain predetermined criteria be met the very first sale of stocks by a company to the public the purchase of another company a business growth strategy in which a company acquires or merges with another organization within the same industry in order to accelerate expansion the joining of two independent companies of similar size and type in order to make one joint entity
resource quantities
the amount of necessary resources, including raw materials, to produce a good or service
operations management
the business practice of controlling all tasks of an organization for the sake of creating as much efficiency as possible
supply chain management
the business process of controlling the materials, information, and finances necessary to get raw materials manufactured into products and into the hands of the customer
financing
the business process of finding the necessary capital to fund various ventures in an organization
human resources
the department of business responsible for hiring, administrating, and training employees
liquidity
the ease with which an asset can either be quickly sold or converted into cash
resource management
the effective and efficient use of an organization's resources, including land, labor, and capital
vertical integration
the expansion of an organization accomplished by internally introducing another production stage
bottom line
the final line in a profit and loss statement that expresses the final income (or loss) for a given period of time
bottom line shareholders' equity cash flow statement liquidity interest shares resource quantities capital
the final line in a profit and loss statement that expresses the profit (or loss) for a given period of time a company's total value, calculated by removing total liabilities from total assets a business document that carefully tracks the movement of cash, both paid in and paid out, usually on a per-month basis the ease with which an asset can either be quickly sold or converted into cash a percentage of a loan that is repaid as a fee for receiving the credit units of ownership in an organization making up a percentage of the organization as a whole the amount of necessary resources, including raw materials, to produce a good or service another term for wealth in the form of assets, typically that of money
crowdfunding
the funding of a product or service accomplished by soliciting small amounts of money from numerous backers over the internet
operations manager
the individual responsible for providing oversight to each business task, finding ways to increase effectiveness and efficiency
merger
the joining of two independent companies of similar size and type in order to make one joint entity
sales volume
the number of sales of a particular good or service over a period of time
acquisition
the purchase of another company
initial public offering
the very first sale of stocks by a company to the public
shares
units of ownership in an organization making up a percentage of the organization as a whole
