Question 1

Outline the "best practices" for the management of a family firm.

Accepted Answer

The text identified the following list o

Question 2

To avoid a stifling atmosphere for nonfamily employees in a family business, the owner should

Accepted Answer

A)  promote only nonfamily members. 
B)  avoid all special consideration for family members. 
C)  make clear the extent of opportunity for nonfamily members. 
D)  minimize discussion about future management changes. 
A)  promote only nonfamily members. 
B)  avoid all special consideration for family members. 
C)  make clear the extent of opportunity for nonfamily members. 
D)  minimize discussion about future management changes.

Question 3

One of the most common problems for a founder in passing the business on to a son or daughter is

Accepted Answer

A)  introducing the child to outsiders such as bankers. 
B)  finding a suitable position for the son or daughter within the business. 
C)  arranging the transition from part-time to full-time employment. 
D)  deciding whether the child has the necessary temperament and ability. 
A)  introducing the child to outsiders such as bankers. 
B)  finding a suitable position for the son or daughter within the business. 
C)  arranging the transition from part-time to full-time employment. 
D)  deciding whether the child has the necessary temperament and ability.

Question 4

Family business constitutions are sometimes synonymous with _____ but the latter are usually more comprehensive.

Accepted Answer

A)  business plans 
B)  by-laws 
C)  family protocols 
D)  succession plan 
A)  business plans 
B)  by-laws 
C)  family protocols 
D)  succession plan

Question 5

Family members who join the business because of a concern that they might not be able to reach career success on their own display a _____ - based commitment.

Accepted Answer

A)  desire-based 
B)  obligation-based 
C)  need-based 
D)  cost-based 
A)  desire-based 
B)  obligation-based 
C)  need-based 
D)  cost-based

Question 6

A nonfamily employee of a family business is concerned about competing with family members for future career opportunities. To protect her personal interests, the nonfamily employee should

Accepted Answer

A)  align herself with the CEO. 
B)  ask that the manager clarify the extent of opportunities. 
C)  seek assurances that she will receive first consideration for promotion, ahead of family members. 
D)  leave the firm and seek employment in a nonfamily business. 
A)  align herself with the CEO. 
B)  ask that the manager clarify the extent of opportunities. 
C)  seek assurances that she will receive first consideration for promotion, ahead of family members. 
D)  leave the firm and seek employment in a nonfamily business.

Question 7

In considering the role of younger family members, the best philosophy is to recognize that

Accepted Answer

A)  a child should have a right to a job in the business if he or she desires. 
B)  no family member should be hired at any level. 
C)  children should have a right to prove themselves. 
D)  second-generation managers are doomed to failure. 
A)  a child should have a right to a job in the business if he or she desires. 
B)  no family member should be hired at any level. 
C)  children should have a right to prove themselves. 
D)  second-generation managers are doomed to failure.

Question 8

Two major factors involved in grooming a son or daughter to enter the family business are the child's aptitude and the child's right to choose a career.

Accepted Answer

A) True 
 B)False

Question 9

One sibling dilemma in a family business has been labeled the predator/parasite conflict.

Accepted Answer

A) True 
 B)False

Question 10

A nonfamily employee of a family business complains that the recent promotion of a family member was unfair. The owner should

Accepted Answer

A)  enter into a discussion of the roles and opportunities for both family members and outsiders. 
B)  point out the fact that family members always have the inside track, even though this is disappointing to the bypassed employee. 
C)  get the employee to think more positively by describing other attractive features of the employee's job. 
D)  shrug his shoulders and acknowledge that a tension always exists and that it can never be satisfactorily dealt with. 
A)  enter into a discussion of the roles and opportunities for both family members and outsiders. 
B)  point out the fact that family members always have the inside track, even though this is disappointing to the bypassed employee. 
C)  get the employee to think more positively by describing other attractive features of the employee's job. 
D)  shrug his shoulders and acknowledge that a tension always exists and that it can never be satisfactorily dealt with.

Question 11

A 2007 survey of family business owners conducted by Mass Mutual Financial Group, Kennesaw State University and the Family Firm Institute concluded that the overlap between individual and organizational values may result in increased levels of employee loyalty, commitment and organizational citizenship behavior.

Accepted Answer

A) True 
 B)False

Question 12

Explain the role of the entrepreneur's spouse as it affects a family business and show how it can be made most effective.

Accepted Answer

The spouse's role is often described as

Question 13

A family retreat is the start of a process of connecting family members.

Accepted Answer

A) True 
 B)False

Question 14

Tom is taking over the family business because it was what his parents told him all his life that they wanted him to do. Tom is showing _____ commitment.

Accepted Answer

A)  cost-based 
B)  obligation-based 
C)  desire-based 
D)  need-based 
A)  cost-based 
B)  obligation-based 
C)  desire-based 
D)  need-based

Question 15

In-laws create complications in a family business

Accepted Answer

A)  rarely, since they only married into the family. 
B)  only if they are employed in the firm. 
C)  only if they are directly competing against another family member for a promotion. 
D)  because the more family members become involved in the firm (even indirectly), the more difficult the fairness issue becomes. 
A)  rarely, since they only married into the family. 
B)  only if they are employed in the firm. 
C)  only if they are directly competing against another family member for a promotion. 
D)  because the more family members become involved in the firm (even indirectly), the more difficult the fairness issue becomes.

Question 16

Billy Newton works part time in his mother's garden supply wholesaling business. According to the results of Sue Birley's survey of the children of owner-managers of family businesses, how likely is Billy to work somewhere else before entering his mother's business?

Accepted Answer

A)  25 percent 
B)  40 percent 
C)  55 percent 
D)  70 percent 
A)  25 percent 
B)  40 percent 
C)  55 percent 
D)  70 percent

Question 17

The process of preparing a successor for leadership in a family business can take more than a decade.

Accepted Answer

A) True 
 B)False

Question 18

Describe the model of succession in a family business, giving particular attention to its stages.

Accepted Answer

Leadership succession in a family busine

Question 19

Bequeathing equal shares of ownership to children in a family business will probably create havoc in the future functioning of the business.

Accepted Answer

A) True 
 B)False

Question 20

Bequeathing equal amounts of ownership to all heirs, including those outside the business, is obviously the fairest and probably the most efficient way to perpetuate a family firm.

Accepted Answer

A) True 
 B)False

Exam 5: The Family Business

Outline the "best practices" for the management of a family firm.

To avoid a stifling atmosphere for nonfamily employees in a family business, the owner should

One of the most common problems for a founder in passing the business on to a son or daughter is

Family business constitutions are sometimes synonymous with _____ but the latter are usually more comprehensive.

Family members who join the business because of a concern that they might not be able to reach career success on their own display a _____ - based commitment.

A nonfamily employee of a family business is concerned about competing with family members for future career opportunities. To protect her personal interests, the nonfamily employee should

In considering the role of younger family members, the best philosophy is to recognize that

Two major factors involved in grooming a son or daughter to enter the family business are the child's aptitude and the child's right to choose a career.

One sibling dilemma in a family business has been labeled the predator/parasite conflict.

A nonfamily employee of a family business complains that the recent promotion of a family member was unfair. The owner should

Explain the role of the entrepreneur's spouse as it affects a family business and show how it can be made most effective.

A family retreat is the start of a process of connecting family members.

Tom is taking over the family business because it was what his parents told him all his life that they wanted him to do. Tom is showing _____ commitment.

In-laws create complications in a family business

Billy Newton works part time in his mother's garden supply wholesaling business. According to the results of Sue Birley's survey of the children of owner-managers of family businesses, how likely is Billy to work somewhere else before entering his mother's business?

The process of preparing a successor for leadership in a family business can take more than a decade.

Describe the model of succession in a family business, giving particular attention to its stages.

Bequeathing equal shares of ownership to children in a family business will probably create havoc in the future functioning of the business.

Bequeathing equal amounts of ownership to all heirs, including those outside the business, is obviously the fairest and probably the most efficient way to perpetuate a family firm.

The Entrepreneurial Life

Entrepreneurial Integrity and Ethics

Getting Started

Franchises and Buyouts

The Business Plan: Visualizing the Dream

The Marketing Plan

The Human Resources Plan: Managers, Owners, Allies, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Business

Professional Management in the Entrepreneurial Firm

Managing Human Resources

Managing Operations

Managing the Firms Assets

Managing Risk in the Small Business

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