Entrepreneurship Test 3

risk and innovation

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

dividing market price of common stock by earnings per share.

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

the acquisition and merging of small companies in the same market

What is a rollup? a. the acquisition and merging of small companies in the same market b. of a dissolution of a partnership c. a product-line acquisition d. the amount of risk involved in an acquisition

high equity/low debt

Traditional valuation methods includes all of the following except: a. adjusted tangible book value b. price/earnings ratio c. high equity/low debt d. discounted earnings

ownership positions.

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.

which facilities are owned versus leased.

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

lack of knowledge

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

agency problems

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

technology

Which of the following is not a contextual aspect to be considered in an effective succession plan? a. technology b. time c. environmental factors d. type of venture

lack of dominance

Which of the following is not a reason for the lack of planning in new ventures? a. time scarcity b. lack of trust c. lack of dominance d. lack of knowledge

skills specifically required by the business are developed.

One advantage of an early-entry strategy for the younger generation succeeding the older generation of a family business is a. normal mistakes are viewed as incompetence. b. perspective of the environment is broadened. c. successor's skills are judged with more objectivity. d. skills specifically required by the business are developed.

only 16 percent make it to a third generation

Research on family firms demonstrates which of the following facts? a. only 16 percent make it to a third generation b. many family firms cease to exist after one month c. only nine out of ten make it to a second generation d. only 3 percent make it to the next generation

is net profit divided by investment.

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

distrust of others when formulating a strategic plan

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

profits, sales, and operating ratios.

Specific factors of a venture being offered for sale that should be examined include a. age, trends, and future. b. profits, sales, and operating ratios. c. employees, suppliers, and competitors. d. profits, price, product.

when family members want to keep and manage the business.

Succession pressure inside the firm exists a. when the founder wants to give up authority. b. when family members want to keep and manage the business. c. nonfamily employees don't want the business. d. competition-is hurting the business.

the challenges and responsibilities of the entrepreneur are over.

"Harvest" does not mean a. family members agree about the business. b. that any profits will be reaped. c. that the firm continues to exist. d. the challenges and responsibilities of the entrepreneur are over.

strength, weaknesses, opportunities, threats

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

defines when and how business owners will realize a cash return on investment.

A harvest plan a. is similar to a will. b. defines when and how business owners will realize a cash return on investment. c. leaves the business to the next generation. d. is simple to implement.

lack of expertise

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

they have minimal exposure to the planning process.

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

death

A typical example of a forcing event is a. death. b. a natural disaster. c. an IRS audit. d. a slow business year.

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 Oakland Scavenger case is profound to owners of family businesses in that a. conceivably, the owner can be sued for not giving equal treatment to a son as to a daughter. b. 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. c. conceivably, the owner can be sued for not declaring a family member his or her successor. d. the owner can be fined for not declaring his or her first son the heir to the business.

24 years.

The average life expectancy of a privately held firm is a. 24 years. b. 10 years. c. and indefinite number of years. d. 50 years.

potential earning power.

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

entrepreneurial successor

A type of successor who is high in ingenuity, creativity, and drive would be considered a(n) a. managerial successor. b. entrepreneurial successor. c. opportunistic successor. d. all of the above.

managerial successor.

A type of successor who is interested in efficiency, internal control, and effective use of resources would be considered a(n) a. managerial successor. b. entrepreneurial successor. c. opportunistic successor. d. family successor.

hierarchy

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

strategic intent and strategic mission

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

a lack of management depth

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

to formalize planning because there is a great deal of complexity.

Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need a. less formal planning because of constant changes. b. to formalize planning because there is a great deal of complexity. c. to establish a pattern of subordinate participation. d. to evaluate company strengths and weaknesses.

increase the valuation

Emotional bias is likely to have what effect on a seller's valuation of a business? a. increase the valuation b. decrease the valuation c. have no net effect on the valuation d. none of the above

strategic planning

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

discounted earnings

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

avoiding start-up costs has value

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

something new and different.

In the strategy matrix model, innovation is defined as a. an invention. b. something new and different. c. copying and improving on competitor's products. d. using practical milestones.

pressure from a family member to start his/her own business

Which of the following is not an example of pressures or interests from within a firm that affect succession issues? a. rivalry among various branches of the family b. pressure from a family member to start his/her own business c. employee wanting a percentage of the business in the owner's will d. pressure on the owner/manager to designate an heir

Value the business

Which of the following steps should be carried out third when deciding to sell a business? a. Publicize the offer to sell. b. Value the business. c. Finalize the prospective buyers. d. Time the sale appropriately.

a and c only

Which of the following would be considered fatal mistakes in strategic planning, according to researcher Michael E. Porter? a. no real competitive advantage b. pursuing a solid competitive position c. compromising strategy for growth d. a and c only

due diligence

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

a successor's skills are judged with greater objectivity.

One advantage of the delayed-entry strategy for the younger generation succeeding the older generation of a family business is that a. a successor's skills are judged with greater objectivity. b. strong relationships are readily established. c. normal mistakes are viewed as incompetence. d. knowledge of the environment is limited.

historical finances

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

personal expenses

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

failure to delegate

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

family and business cultural issues

Which is an influencing factor in succession? a. family and business cultural issues b. government regulation c. current economic conditions d. the competition