MGMT 472 T/F

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The best way for manufacturers to control quality is by arranging for products to be inspected at the end of the production process.

FALSE

The common practice of outsourcing the upstream activities of the business¾raw materials, manufacturing, assembly, and inventory¾provides many advantages with little risk to the entrepreneur.

FALSE

The emerging players in outsourcing are Russia, Nicaragua, and Botswana.

FALSE

The mission statement loosely identifies the company's objectives.

FALSE

The principal advantage of a public offering is that it provides the offering company with a tremendous source of interest-bearing capital for growth and expansion, paying off debt, or product development.

FALSE

The venture capital firm invests in a growing business through the use of debt and equity instruments to achieve long-term appreciation on the investment within a specified period of time, typically five to seven years.

FALSE

Today it is much easier than it used to be for a new venture to achieve total in-house control of its value chain.

FALSE

Today, product/service warranties are not a competitive marketing tool.

FALSE

Traditional advertising¾a push strategy¾consists of print and broadcast media.

FALSE

When entrepreneurs expand their businesses by investing in or acquiring products or businesses outside their core competencies and industries, they are employing a network growth strategy.

FALSE

Management processes, business processes, and support processes are the three major processes that must be aligned in a company if quality is going to be the outcome.

TRUE

Market penetration is a common growth strategy for new ventures because it allows entrepreneurs to work in familiar territory and grow while they are getting their systems and controls firmly in place.

TRUE

Meeting ethical expectations is part of social responsibility.

TRUE

Nearly all valuation techniques rely on the analysis of the future market for the company's products.

TRUE

Over half of family-owned businesses do not continue into the second generation.

TRUE

Product-focused organizations generally are highly decentralized so that they can respond better to market demands.

TRUE

Promotion tends to be more price-focused or incentive-focused and therefore is usually considered a push strategy.

TRUE

Risk management is a set of policies and decision-making processes that reduce or eliminate risks associated with having employees.

TRUE

Simply changing the definition of the business unit so that it more closely represents the value customers want can be enough to make a significant difference in a business.

TRUE

Small Business Innovative Research (SBIR) grants provide small businesses with up to $150,000 during the concept stage and feasibility phase of Phase I.

TRUE

Strategies are the plans for achieving the goals, and ultimately the mission, of the company.

TRUE

Strategies deal with the needs of the customer and what is being offered to satisfy those needs.

TRUE

Studies have found that among all the factors affecting growth, the most critical in a slowdown or failure appears to be the inability to understand and respond to the business's environment.

TRUE

Tactics include the media, channels, and delivery mechanisms used to reach the customer and create brand awareness.

TRUE

The U.S. Chamber of Commerce reports that piracy costs the United States alone over $250 billion annually and 750,000 lost jobs every year.

TRUE

The United States is divided into Standard Metropolitan Statistical Areas (SMSAs), which are geographic areas that include a major metropolitan area.

TRUE

The consolidation play has become a way for many small business owners to realize the wealth they created in their business.

TRUE

The economic base of a region or community is simply the major source of income for the area.

TRUE

The number of shares authorized when a corporation is formed is purely arbitrary.

TRUE

The term sheet is a letter of intent that spells out the terms the VC is prepared to accept.

TRUE

There is probably no single best organizational structure for all types of ventures in all situations.

TRUE

VCs often want both equity and debt¾equity because it gives them an ownership interest in the business, debt because they will be repaid more quickly.

TRUE

When venture capitalists scrutinize a new opportunity, they typically evaluate the market, management, and technology in that order.

TRUE

The Small Business Administration (SBA) micro loan program guarantees it will repay up to 50 percent of the loan to a commercial lender should the business default.

FALSE

The Small Business Innovation Development Act of 1982 was designed to stimulate technological innovation by small businesses in the global market place.

FALSE

The Yellow Pages do not effectively generate awareness of new products/services in the early stages.

FALSE

A franchise agreement is a grant to someone else to use the company's intellectual property and exploit it in the marketplace by manufacturing, distributing, or using it to create a new product.

FALSE

According to Inc. magazine's annual survey for 2010, the highest rates of growth were sustained in environmental services and technology products.

FALSE

Advertising and promotion are both used to create awareness of the company's products, services, and pricing to influence customers to buy.

FALSE

An antidilution provision ensures that the selling of stock at a later date will increase the economic value of the venture capitalist's investment.

FALSE

An economic base is the region from which the entrepreneur expects to draw customers.

FALSE

E-commerce minimizes conflicts of interests.

FALSE

Entrepreneurs need to start thinking about the cost of operations when their products and services have become commoditized.

FALSE

Entrepreneurs should wait until the venture is profitable before making an investment in social responsibility.

FALSE

Equity investors are guaranteed return of their investment and protection against loss.

FALSE

Ethical issues are the same for managers and leaders regardless of the size of the company.

FALSE

Following the Golden Rule that says "Do unto others as you would have them do unto you," is a comprehensive answer to ethical dilemmas in the workplace.

FALSE

For most entrepreneurs, making a big financial investment in advertising and promotion makes sense.

FALSE

Formal processes are independent and improve the functions of a department.

FALSE

Intensive growth strategies focus on exploiting a niche market fully¾that is, expanding the market share to the greatest extent possible.

FALSE

Most startup ventures meet the criteria that venture capitalists use to define high-growth and high-return companies.

FALSE

Offshore manufacturing is appropriate for all products.

FALSE

PERT is an acronym for Program Establishment and Response Testing.

FALSE

Private placement is a more costly, more time-consuming process than a public offering.

FALSE

Risk is a fact of life, but a company's exposure to risk decreases as the venture grows.

FALSE

Savings and loan associations, banks, insurance companies, and foreign companies can all file for bankruptcy protection.

FALSE

The Family and Medical Leave Act provides for up to 12 weeks of paid leave for employees who are dealing with family issues.

FALSE

Intrinsic value is the perceived value arrived at by interpreting balance sheet and income statements through the use of ratios, discounting cash flow projections, and calculating liquidated asset value.

TRUE

It is extremely difficult to calculate with any degree of accuracy the probability that a given risk will occur.

TRUE

Launch objectives are the key goals for the marketing campaign.

TRUE

A company's core values derive from the personal values and beliefs of the founder.

TRUE

An effective ethics program may protect a company from criminal penalties.

TRUE

Angels are a good source of seed or startup capital.

TRUE

Banks are not normally a readily available source of either working capital or seed capital to fund a startup venture.

TRUE

Bootstrapping involves begging, borrowing, or leasing everything needed to start a venture.

TRUE

Building brand equity requires that customers form an emotional attachment to a brand.

TRUE

Commercial finance companies make loans based on the quality of the assets of the business.

TRUE

Companies that rely heavily on Internet-based systems will want to get advice about securing a cyber insurance policy.

TRUE

Comparable companies are those that are similar to the new venture in value characteristics such as risk, rate of growth, capital structure, and the size and timing of cash flows.

TRUE

Early in the operation of the business, it is important to identify a qualified attorney familiar with the industry to handle any potential product liability claims.

TRUE

Ethics derives from the cultural, social, political, and ethnic norms with which we were raised as children.

TRUE

Expansion is a natural by-product of a successful startup.

TRUE

Following the IPO registration statement, an advertisement called a "tombstone" announces the offering in the financial press.

TRUE

Founder's stock at issuance is probably valued at the lowest level it will ever be, relative to an investor's stock value.

TRUE

Franchises generally come in three types: dealerships, service franchises, and product franchises.

TRUE

Giving customers something for nothing makes sense in an environment where it is hard to get customers' attention.

TRUE

Harvest entrepreneurs start and build a venture for the purpose of selling it.

TRUE

Horizontal integration is a way to grow a business within the current industry by buying up competitors or starting a competing business by selling the same product under another label.

TRUE

ISO 9000 is a series of international quality standards with a certification process.

TRUE

Identifying all the tasks in the production process makes it easier to determine what equipment and supplies are needed for completing the task.

TRUE


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