EEE 2023 Exam 2
A(n) _____ is a panel of individuals elected by a corporation's shareholders to oversee the management of the firm.
board of directors
itemized forecasts of a firm's income, expenses and capital requirements
budgets
A ___ is a written narrative, typically between 25 and 35 pages long, that describes what a new business intends to accomplish and how it intends to accomplish it.
business plan
How productively a firm uses its assets relative to its revenue and profits
efficiency
A(n) _____ industry is one in which standard operating procedures have yet to be developed.
emerging
A written report that describes a firm's health from a quantitative perspective
financial statement
A(n) ________ advantage is a sometimes insurmountable advantage gained by the first company to establish a significant position in a new market.
first-mover
Juiced Up determined that the $11,000 per month rent for their store in Manhattan, New York was a cost the company had to pay whether it sold something or not. For Juiced Up, the rental cost was a _______ cost.
fixed
Predictions of a firm's future sales, expenses, income, and capital expenditures
forecast
estimates of a firm's future sales, income, expenses, and capital expenditures based on its past performance, current situation and its future plans
forecasts
If the _____ of a firm have similar areas of expertise, it can be problematic.
founders
An industry characterized by a large number of firms approx. equal in size
fragmented industry
Billy Stamos is self-employed, works on his own time with his own tools and equipment, and performs computer services for a number of clients. Billy Stamos is a(n) _________.
freelancer
The three-member founding team at OnTime Cleaning Services consists of Tom, who has 14 years of operations experience, Billy, an accountant with 2 years of experience and Jane, a marketer with 22 years of work experience. The founding team at OnTime Cleaning Services is ________.
heterogeneous
Members with diverse abilities and experiences
heterogenous founding team
statements that reflect past performance -- prepared on a quarterly and annual basis (required by the SEC)
historical financial statements
members who are very similar to one another
homogenous founding team
Reflects the results of a firm's operations over a specified period of time
income statement
Freelancers and virtual assistants are considered _______.
independent contractors
The five forces model looks at forces that determine _____ profitability.
industry
______ refers to the fact that companies often falter because the people who start them aren't able to adjust quickly enough to their new roles and because the firm lacks a "track record" with outside buyers and suppliers.
liability of newness
Tom, Sam, and Pete run a business, the Argyle Food Center. Each has invested $100,000 in the venture. If Tom and Sam have unlimited liability but Pete is liable only up to $100,000, what is the organizational form of this venture?
limited partnership
The ability of a company to meet or satisfy its short-term obligations
liquidity
In analyzing the pharmaceutical industry for a prospective business launch, Nicole Turco, a Ph.D. in pharmacology, concluded that the industry was attractive because the threat of substitutes is ___________.
low
The consumer milk industry in the United States over the last few years is characterized by slow growth, repeat (rather than new) customers, and limited product innovation. This industry is an example of a(n) ______ industry.
mature
Prior entrepreneurial experience, relevant industry experience, and ____ are the attributes that strengthen the chances of a founder's success.
networking
Prevents an individual from competing against a former employer for a specified period of time
noncompete agreement
All research scientists at Apex Biotechnology are required to sign a ________ agreement that binds the employee to not disclose a company's trade secrets.
nondisclosure
A promise made by an employee or another party (such as a supplier) not to disclose a company's trade secrets
nondisclosure agreement
In contemplating the launch of her seafood restaurant, Paige Graham concluded that suppliers of seafood had an advantage in bargaining power over restaurant owners in her market. Paige's conclusion is likely to have happened because there were __________ suppliers to provide a critical product to a large number of restaurants.
only a few
A firm's _____ is an analysis of its fixed versus variable costs.
operating leverage
A(n) ______ chart is a graphic representation of how authority and responsibility are distributed within the company.
organization
a method for expressing each expense item as a percentage of sales
percent-of-sales
The results of research studies somewhat consistently suggest that _______ is one of the most consistent predictors of future entrepreneurial performance.
prior entrepreneurial experience
projections for expected performance in future periods -- forecasts for 2-3 years into the future (not required by the SEC)
pro forma financial statements
The ability of a firm to earn a profit
profitability
Return on assets is an example of a(n) _____.
ratio
Which of the following is an issue typically covered in a founders' agreement?
relative split of the equity among the founders of the firm
Economic trends, ____ trends, technological advances, and political and regulatory changes are the most important environmental trends for entrepreneurs to study.
social
In a _____, the person and the business are essentially the same.
sole proprietorship
The strength and vigor of the firm's overall financial standing
stability
the changes in a firm's cash position for a specified period of time and details why the changes occurred
statement of cash flows
Various people or groups form part of a new-venture team; however, _____ are(is) not one of them.
suppliers
Dollar Shave Club's "Shave Time, Shave Money" is an example of a(n) _____.
tagline
An ethical dilemma is a situation that involves doing something that is beneficial to oneself or the organization, but may be _____.
unethical
Which of the following is NOT an advantage of a C corporation?
Income is taxed at the corporate and shareholder levels
Which of the following is NOT a standard that a business must meet to qualify for status as a subchapter S corporation?
Its shareholders need not be U.S. citizens
Which of the following is NOT an advantage of a general partnership?
Liability on the part of each general partner is unlimited.
Securities and Exchange Commission
SEC
If a new venture organizes as a corporation, it is legally required to have _________.
a board of directors
The group of people who move a new venture from an idea to a fully functioning firm
a new-venture team
The board at Nuance Opticals offers help in providing direction and advice to the company, but it possesses no legal responsibility for the firm and gives nonbinding advice. The board at Nuance Opticals is a(n) ________.
advisory board
Defining the market size too broadly is ________ in a business plan.
an example of a red flag
A snapshot of a company's assets, its liabilities, and owners' equity
balance sheet
A _____ is a condition that creates a disincentive for a new firm to enter an industry.
barrier to entry
_____ refers to the process investors go through after they tentatively commit to an investment.
due diligence
What are the five forces in Porter's Five Force Model
1. threat of substitutes 2. threat of new entrants 3. rivalry among existing firms 4. bargaining power of suppliers 5. bargaining power of buyers
A code of conduct is also called a _______.
code of ethics
It is useful for a new venture to think about its position at both the _____ level and the product or service level.
company
A tool for organizing the information a firm collects about its competitors
competitive analysis grid
Jim's Handicrafts' main product sells for $100 and the cost of goods sold is $40. The $60 (the difference between the two) is called ______.
contribution margin
A buyback clause legally obligates the ____ to sell to the remaining founders their interest in the firm if the remaining founders are interested.
departing founders
