Unit 4 Final Exam (entrepreneurship)

Which of the following factors would not be considered a key dimension that shapes the strategic management activities of a growing firm? a. internal political problems b. lack of knowledge c. speed of decision making d. environmental uncertainty

b. lack of knowledge

The entrepreneurial strategy matrix measures: a. opportunity and time. b. risk and innovation. c. commitment and time. d. risk and security

b. risk and innovation

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

c. an innovation

In the context of buying a business, a known commodity may command a higher price for what reason? a. the value of a founder's stock decreases over time b. property values are variable c. avoiding start-up costs has value d. historical projections have intrinsic value

c. avoiding start up costs has value

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

d. discounted future earnings

Which is not perceived as a difficulty in long-range planning? a. inexperienced managers b. arranging vacation time c. poor planning climate d. inadequately defined objectives

b. arranging vacation time

What is the one-person-band syndrome? a. an invention b. failure to delegate c. effective time management d. following a competitor's lead

b. failure to delegate

All of the following are characteristic of administrative cultures except a. coordination of activity. b. need to reduce risk. c. rent of required resources. d. inertia

b. need to reduce risk

What does a post-money valuation include that a pre-money valuation does not? a. replacement value b. venture capital investment c. excess earnings d. market value

b. venture capital investment

Which of the following is considered a method for valuation of a venture? a. variable price b. multiple of investment c. return on investment d. return on value

d. return on value

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

d. strategic planning

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

d. whether any sales are made on consignment

Which of the following is not a stage in venture development? a. initial expansion b. rationalization of resources c. knowledge gain d. expansion into new markets

c. knowledge gain

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

d. is net profit divided by investment

In many new small ventures planning is often a. well accomplished. b. overdone. c. overused. d. lacking

d. lacking

When Facebook went public in May of 2012, what was its starting valuation? a. more than $10 billion but less than $50 billion b. more than $50 billion but less than $100 billion c. more than $150 billion d. more the $100 billion but less than $150 billion

d. more the $100 billion but less than $150 billion

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

b. innovation failure

A reason for lack of strategic planning has been found to be a. time sharing. b. lack of preference. c. lack of expertise. d. lack of dominance

c. lack of expertise

Sales and earnings of a venture are projected from a. historical financials b. data on start-ups c. property values d. historical projections

a. historical financials

When considering management, the entrepreneur should be concerned about a. ownership positions. b. pension and profit sharing. c. total number of employees. d. employee benefits

a. ownership positions

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

a. personal expenses

The second stage of venture development is_________. a. start-up activities b. growth c. stabilization. d. realize cost savings, accurate forecasting, and increased sales

a. start up activities

Which of the following management principles does not emanate from Steve Jobs? a. Strive to reach practical milestones. b. Put a dent in the universe c. Sell dreams, not products. d. Say no to 1,000 things

a. strive to reach practical milestones

Small business owners are often guarded about their businesses, which leads to a. misunderstanding of the economic environment. b. distrust of others when formulating a strategic plan. c. lack of attention to the competition. d. a myopic viewpoint

b. distrust of others when formulating a strategic plan

Which of the following methods of valuation was developed by the U.S. Treasury to determine a firm's intangible assets? a. multiple of earnings b. excess earnings c. market value d. replacement value

b. excess earnings

Traditional valuation methods include all of the following except a. price/earnings. b. high equity/low debt. c. adjusted tangible assets. d. discounted future earnings

b. high equity/low debt

New ventures are important to the economy in terms of innovation and______. a. knowledge b. continuing the American way of life c. employment d. planning

c. employment

When considering employees, the entrepreneur should be concerned about a. total number of female employees. b. employee productivity. c. total number of employees by function. d. total number of single employees

c. total number of employees by function

In the entrepreneurial strategy matrix, the probability of a major financial loss is categorized as a. an innovation. b. a time lag. c. a psychological commitment. d. a risk

d. a risk

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

d. agency problems

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

d. no real competitive advantage

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

d. potential earning power

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

d. profits sales and operating ratios

When considering physical facilities, the entrepreneur should be concerned about a. facility upkeep. b. whether adequate capital is maintained. c. which facilities are used for production. d. which facilities are owned versus leased

d. which facilities are owned versus leased

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

a. the managerial mind set

Emotional bias is likely to have what effect on a seller's valuation of a business? a. no net effect on the valuation b. increase the valuation c. decrease the valuation d. an easier time negotiating

b. increase the valuation

On what occasion is a business valuation not usually essential? a. when selling a business division b. when hiring a new director of operations c. when going public d. when giving a gift of stock

b. when hiring a new director of operations

Book value of a firm is also known as the a. income statement method. b. capitalized earnings approach. c. fixed price method. d. balance sheet method

d. balance sheet method

An adjusted tangible book value method includes all of the following except a. goodwill. b. patents. c. deferred financing costs. d. common price

d. common price

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

c. mostly used with publicly held corporations

Goodwill, family members on the payroll, and planned losses are examples of a. underlying issues. b. analyzing the business. c. emotional bias. d. establishing the value of a firm

d. establishing the value of a firm

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

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

______ gives investors some protection against founders selling their interest to a third party. a. Co-Sale Right b. Registration Right c. First Refusal Right d. Voting Right

a. Co-Sale Right

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

a. Due diligence

The price/earnings ratio is determined by a. dividing market price of common stock by earnings per share. b. goodwill. c. deferred financing costs. d. patents

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

One reason to keep projections in perspective is a. fluctuating markets. b. vague histories. c. certain environments. d. start-up costs

a. fluctuating markets

Which of the following is not a shortcoming that many closely held ventures possess? a. high equity and low debt b. lack of management depth c. insufficient controls d. divergent goals

a. high equity and low debt

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

a. they have minimal exposure to the planning process

The textbook describes three types of leadership of consequence to new ventures. What are they? a. visionary, strategic, and managerial b. competitive, innovative, and visionary c. competitive, innovative, and strategic d. visionary, managerial, and competitive

a. visionary, strategic, and managerial

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

c. start up costs

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

c. strategic intent and strategic mission

A "SWOT" analysis refers to a. sound warnings of takeovers b. small, weak, ordinary, tact c. strength, weaknesses, opportunities, threats d. none of the above

c. strength, weaknesses, opportunities, threats

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

b. the amount of risk involved in an acquisition

Potential earning power, which determines the true value of the firm, is best calculated using a. the adjusted tangible book value method. b. the discounted earnings method. c. the adjusted tangible book value method. d. the price/earnings ratio method

b. the discounted earnings method

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

b. explore joint venture options

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

c. a lack of management depth

Which of the following should not be considered when buying a business? a. three months' operating expenses b. new inventory c. employee retention d. professional services

c. employee retention

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

c. generalists

All of the following are characteristic of entrepreneurial cultures except a. episodic use of required resources. b. multiple informal networks. c. hierarchy. d. action orientation

c. hierarchy

The primary advantage of the price/earnings approach to valuation is that a. it reflects "top value" of the firm. b. it assumes business begins operations. c. it is simple to use. d. it pays off assets and sells liabilities

c. it is simple to use

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

d. discounted future earnings