Exam 13: Preparing for and Evaluating the Challenges of Growth

Market leadership occurs when a firm ________.

Which of the following options was NOT identified in the textbook as an appropriate reason for growth?

What is the organizational life cycle and why is it important?

MATI Energy, the company profiled in the opening feature of Chapter 13, sells energy drinks based on guayusa, a Latin American plant. With respect to growth, ________ is the hallmark of MATI.

Which of the following is NOT one of the five stages in the organizational life cycle?

According to Chapter 13, business success doesn't always scale. What is meant by this statement?

Most entrepreneurial firms are reluctant to try to grow.

Fixed costs are the costs a company incurs as it generates sales.

When a firm's managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the ________ problem.

Kelly Andrews owns a company that makes office furniture. Recently, a favorable article was written about Kelly's company in a business magazine, and as a result, Kelly has seen a spike in his orders. Although Kelly is grateful for the additional orders, he is worried about one thing. An increase in activity means that his firm must handle more service requests and paperwork and contend with more customers, stakeholders, and vendors. Kelly knows that if he doesn't handle this increased activity properly, the workmanship of his products could decline. The day-to-day challenge of firm growth that this example illustrates is ________.

Karen West owns a barbecue restaurant. One expense that Karen watches closely is the cost of propane, which she uses to heat her ovens. The more barbecue food Karen sells, the more it costs her for propane on a monthly basis. For Karen, the cost of propane is a(n) ________ cost.

Adverse selection means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work.

Which of the following statements is NOT true regarding the day-to-day challenges of growing a firm?

According to Penrose, entrepreneurial services generate new market, product, and service ideas.

________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

________ costs are costs that a company incurs whether it sells something or not.

Paul Mason's firm sells medical equipment to heart surgeons. The company fields a direct sales force that travels the country demonstrating its equipment to heart surgeons and hospital administrators. Recently, Paul's company started producing equipment for eye surgeons, partly to maximize the value of his sales force, which can now call on both heart surgeons and eye surgeons when it makes hospital visits. Paul's firm is attempting to capture economies of ________ through this strategy.

Jeremy Westbrook owns an organic food company which has increased both its profits and revenues over an extended period of time. Jeremy's firm is experiencing ________ growth.

Which of the following is NOT an appropriate reason for firm growth?

Do most firms want to grow or are they reluctant to grow? What are the advantages of growth?