Chp 13-15

Which of the following is(are) not an advantage of an international joint venture?

Complimenting governmental policies

Which of the following would be an advantage of an acquisition?

Existing employees

If a franchise looks good as an investment, the entrepreneur may request a franchise package from the franchisor at no cost, which usually contains a draft franchise agreement or contract.

False

Often, when a business changes hands, key employees move into the acquiring company.

False

Which of the following are not factors in the success of joint ventures according to the text?

Finance and education.

Which of the following was not a recommended method of evaluating the potential market for a new franchise in the text?

Hire a marketing firm to survey foot traffic near the proposed location

Which of the terms in a franchise agreement is the most likely cause of a lawsuit?

Termination

Many entrepreneurs find that as they grow they need to change their management style.

True

A market development strategy would not involve:

selling new products to consumer's purchasing the firm's existing products.

A key concern in any merger or acquisition is the legality of the purchase.

true

A recognition of the need to change personal attitudes and habits regarding the allocation of time is known as the principle of desire.

true

An acquisition is the purchase of a company, or part of a company, in which the acquired company ceases to exist independently.

true

Cultural differences between international joint venture partners can create management difficulties.

true

Entrepreneurs who possess both the necessary abilities to make the transition to a more professional management approach and the aspiration to grow their businesses are the most likely to achieve firm growth.

true

Franchising involves payment of royalties in exchange for exclusive distribution rights.

true

One advantage to an acquisition is that there is an established customer base.

true

The two most common means of acquisition are the entrepreneur's direct purchase of the firm's entire stock or assets or the bootstrap purchase of these assets.

true

A product development strategy relies on taking market share from competitors.

false

For the franchisor, the capital required to expand a venture quickly is more than it would be without franchising.

false

One of the most successful diversification strategies is to diversify into unrelated products or unrelated markets to spread the risk.

false

In a horizontal diversification strategy, growth:

involves opportunities unrelated to the existing value-added chain.

The disclosure document provided by the franchisor:

is required by the FTC.

A _________ is a separate entity that involves a partnership between two or more active participants.

joint venture

A(n) ________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash.

leveraged buyout

The debt to capital ratio for most _____ usually exceeds the equity by a factor of 5:1.

leveraged buyouts

A common procedure to determine the value of a merger candidate is to estimate the present value of discounted cash flows and the expected after-tax earnings attributable to the merger. This can be done on all of the following levels except:

Logical scenarios.

Product innovation, diversification, protection against market encroachment are some of the reasons why a company would opt for this:

Merger.

Which statement about capital requirements in franchising is not true?

Newsletters and other publications reflecting new ideas and developments are continuously sent to franchisees.

Which of the following is not an advantage of franchising?

No entry cost

A potential franchisee should seek answers to all of the following questions while assessing the financial stability of the franchisor, except:

What are the chances of further expansion of the company?

Joint ventures can involve a wide variety which include:

all of the above.

One method of expanding a business is the purchase of an entire company or part of it so that the entity is completely absorbed and no longer exists as a separate company. This is called:

an acquisition.

The most common type of joint venture is:

between two or more private sector companies.