Chapter 15
The textbook identifies four strategies that can be used in preparing a management succession policy. Which of the following is not one of these strategies?
The owner's family controls the management continuity strategy entirely.
An entrepreneurial successor is someone who
is ingenious, creative, and driven
Which of the following is not considered a step in the harvest strategy?
Looking for new venture to start up.
Which of the following statements about communication between the seller and buyer of a business is recommended?
Continue communication through the transition to new ownership.
Meeting with potential buyers
Which of the following steps should be carried out second when deciding to sell a business?
Promotion from within is
a morale-building philosophy
The idea of selling out should be viewed in
a positive sense.
One advantage of the delayed-entry strategy for the younger generation succeeding the older generation of a family business is that
a successor's skills are judged with greater objectivity.
The Oakland Scavenger Company case resulted in
an out-of-court settlement.
A reason for an entrepreneur to sell a venture is
boredom, lack of capital, age and health
Which of the following is not a contextual aspect to be considered in an effective succession plan?
cost
Barriers to successful succession planning, discussed in the text, include which of the following?
dilemma of choice.
One of the most recent legal challenges to management succession has charged
employment discrimination.
A type of successor who is high in ingenuity, creativity, and drive would be considered a(n)
entrepreneurial successor.
Happenings that cause the replacement of the owner-manager of a family business are called
forcing events.
Most privately held firms
lack a succession plan.
One advantage of an early-entry strategy for the younger generation succeeding the older generation of a family business is
skills specifically required by the business are developed.
Besides the eight steps in the harvest strategy, the other implications that the entrepreneur should be aware of when selling out are
tax implications arising from the sale of a business.
"Harvest' does not mean
the challenges and responsibilities of the entrepreneur are over.
The first source of succession often is
family and in-house personnel.
Each of the following are nonfamily elements under pressure and interest from outside the firm except
increased insurance rates.
A type of successor who is interested in efficiency, internal control, and effective use of resources would be considered a(n)
managerial successor.
Which of the following is an event that would require an entrepreneur to step aside and let someone else direct the operation?
nonterminal physical incapacitation
When selling a business all of the following is good advice except:
sell when profits are low.
Which is an influencing factor in succession?
family and business cultural issues
Which of the following is not an example of pressures or interests from within a firm that affect succession issues?
pressure from a family member to start his/her own business
Which of the following is not a step in developing a succession strategy?
undertaking forcing events
When considering financial difficulties, which of the following statements constitutes a forcing event?
A lender demands the removal of an owner-manager before lending the necessary funds.
Succession pressure inside the firm exists
when family members want to keep and manage the business.
The Oakland Scavenger case is profound to owners of family businesses in that
conceivably, the owner can be sued by an employee of a different ethnic origin based upon not being accorded the same treatment as a son or daughter.
The average life expectancy of a privately held firm is
24 years
Research shows that many privately held firms go out of business within
10 years
A typical example of a forcing event is
death
Which of the following is not a suggestion a tax accountant or lawyer might make concerning tax reduction?
Increase management's salaries and fringe benefits.
Which of the following is a true statement about seeking legal advice with respect to succession planning?
It is seldom crucial for legal advisors to design a plan for succession.
One of the most recent legal challenges to management succession came from the
Oakland Scavenger Company case.
Which of the following steps should be carried out last, when deciding to sell a business?
Publicize the offer to sell.
Which of the following is a true statement about the characteristics that successors should possess?
Some characteristics will be more important than others, depending on the situation.
The managerial successor typically is not interested in
creativity
A harvest plan
defines when and how business owners will realize a cash return on investment.
Research on family firms demonstrates which of the following facts?
only 16 percent make it to a third generation
A written succession strategy
prepares the entrepreneur for developing a management continuity strategy and policy.
Which of the following steps should be carried out third when deciding to sell a business?
Value the business.
Outside help in succession planning should be considered when
the entrepreneur's ego gets in the way of a succession plan
The textbook identifies which of the following as a key aspect to be considered in an effective succession?
the entrepreneur's vision
The entrepreneur who has to choose a successor with potential to develop the attributes necessary to run the business should consider which of the following aspects over the others?
the potential successor's drive and resourcefulness