Question 1

For a business to be successful in the early growth stage of the organizational life cycle, two important things must happen:

Accepted Answer

A)  the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role and increased formalization must take place 
B)  a decision must be made whether the owner-manager and the current management team is capable of taking the business further and the organization must start laying the groundwork for future growth 
C)  increased formalization must take place and the business must achieve price stability 
D)  a decision must be made whether the owner-manager or the current management team is capable of taking the business further and business partnerships must be established 
E)  the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role and the business must be cash flow positive 
A)  the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role and increased formalization must take place 
B)  a decision must be made whether the owner-manager and the current management team is capable of taking the business further and the organization must start laying the groundwork for future growth 
C)  increased formalization must take place and the business must achieve price stability 
D)  a decision must be made whether the owner-manager or the current management team is capable of taking the business further and business partnerships must be established 
E)  the founder or owner of the business must start transitioning from his or her role as the hands-on supervisor to a more managerial role and the business must be cash flow positive

Question 2

According to a study sponsored by the SBA Office of Advocacy, only ________ of all firms are "gazelles" or rapid growth firms at any given time.

Accepted Answer

A)  3% 
B)  7% 
C)  12% 
D)  19% 
E)  27% 
A)  3% 
B)  7% 
C)  12% 
D)  19% 
E)  27%

Question 3

In regard to firm growth, evidence shows that:

Accepted Answer

A)  relatively few firms generate sustained and profitable growth 
B)  the majority of firms generate sustained and profitable growth 
C)  an equal number of firms generate sustained and profitable growth than firms that don't 
D)  firms in the manufacturing sector are more likely to achieve sustained and profitable growth than firms in the service sector 
E)  firms in the service sector are more likely to achieve sustained and profitable growth than firms in the manufacturing sector 
A)  relatively few firms generate sustained and profitable growth 
B)  the majority of firms generate sustained and profitable growth 
C)  an equal number of firms generate sustained and profitable growth than firms that don't 
D)  firms in the manufacturing sector are more likely to achieve sustained and profitable growth than firms in the service sector 
E)  firms in the service sector are more likely to achieve sustained and profitable growth than firms in the manufacturing sector

Question 4

________ are similar to economies of scale, except the advantage comes through the scope (or range) of a firm's operations rather than from its scale of production.

Accepted Answer

A)  Economies of reach 
B)  Economies of span 
C)  Economies of capacity 
D)  Economies of range 
E)  Economies of scope 
A)  Economies of reach 
B)  Economies of span 
C)  Economies of capacity 
D)  Economies of range 
E)  Economies of scope

Question 5

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:

Accepted Answer

A)  commercial capacity problem 
B)  entrepreneurial aptitude problem 
C)  managerial capacity problem 
D)  business capacity problem 
E)  business aptitude problem 
A)  commercial capacity problem 
B)  entrepreneurial aptitude problem 
C)  managerial capacity problem 
D)  business capacity problem 
E)  business aptitude problem

Question 6

Sustained growth is defined as growth in both revenues and employees over an extended period of time.

Accepted Answer

A) True 
 B)False

Question 7

Market leadership occurs when:

Accepted Answer

A)  a firm is the number one or the number two firm in an industry or niche market in terms of net profits 
B)  a firm is one of the top five firms in an industry or market niche in terms of sales volume 
C)  a firm earns twice as much as its closest competitor 
D)  a firm sells twice as much as its closest competitor 
E)  a firm is the number one or the number two firm in an industry or niche market in terms of sales volume 
A)  a firm is the number one or the number two firm in an industry or niche market in terms of net profits 
B)  a firm is one of the top five firms in an industry or market niche in terms of sales volume 
C)  a firm earns twice as much as its closest competitor 
D)  a firm sells twice as much as its closest competitor 
E)  a firm is the number one or the number two firm in an industry or niche market in terms of sales volume

Question 8

According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that:

Accepted Answer

A)  solve a significant problem or have a major impact on their customers' productivity or lives 
B)  are cost leaders and promote themselves aggressively 
C)  have a major impact on their customers' lives and sell high quality products 
D)  take advantage of environmental trends and are cost leaders 
E)  solve a significant problem or sell high quality products 
A)  solve a significant problem or have a major impact on their customers' productivity or lives 
B)  are cost leaders and promote themselves aggressively 
C)  have a major impact on their customers' lives and sell high quality products 
D)  take advantage of environmental trends and are cost leaders 
E)  solve a significant problem or sell high quality products

Question 9

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

Accepted Answer

A)  introduction 
B)  launch 
C)  ramp-up 
D)  early growth 
E)  continuous growth 
A)  introduction 
B)  launch 
C)  ramp-up 
D)  early growth 
E)  continuous growth

Question 10

Moral hazard 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.

Accepted Answer

A) True 
 B)False

Question 11

________ 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.

Accepted Answer

A)  Difficult hazard 
B)  Adverse hazard 
C)  Adverse selection 
D)  Moral selection 
E)  Moral hazard 
A)  Difficult hazard 
B)  Adverse hazard 
C)  Adverse selection 
D)  Moral selection 
E)  Moral hazard

Question 12

Business success doesn't always scale.

Accepted Answer

A) True 
 B)False

Question 13

According to the basic model of firm growth articulated in Chapter 13, the ability to increase managerial services to facilitate growth is not friction free but is constrained and limited. Which of the following selections is not one of the factors that constrains or limits a firm's ability to increase its managerial services?

Accepted Answer

A)  the time required to socialize new managers 
B)  how motivated entrepreneurs and/or managers are to grow the firm 
C)  adverse selection 
D)  moral hazard 
E)  benchmarking 
A)  the time required to socialize new managers 
B)  how motivated entrepreneurs and/or managers are to grow the firm 
C)  adverse selection 
D)  moral hazard 
E)  benchmarking

Question 14

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

Accepted Answer

A)  Fixed 
B)  Consistent 
C)  Steady 
D)  Variable 
E)  Regular 
A)  Fixed 
B)  Consistent 
C)  Steady 
D)  Variable 
E)  Regular

Question 15

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produces one computer keyboard a month or 10,000. Jeremy's lease payment is a:

Accepted Answer

A)  variable cost 
B)  secondary cost 
C)  fixed cost 
D)  marginal cost 
E)  tangible cost 
A)  variable cost 
B)  secondary cost 
C)  fixed cost 
D)  marginal cost 
E)  tangible cost

Question 16

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

Accepted Answer

Most entrepreneurial firms want to grow.

Question 17

According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle.

Accepted Answer

A)  introduction 
B)  early growth 
C)  continuous growth 
D)  maturity 
E)  decline 
A)  introduction 
B)  early growth 
C)  continuous growth 
D)  maturity 
E)  decline

Question 18

According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are:

Accepted Answer

A)  not all businesses have the potential to be aggressive growth firms, business success scales, and business growth is a top priority of most entrepreneurial firms 
B)  business growth is a top priority of most entrepreneurial firms, a business can't grow too fast, and businesses that price their products aggressively grow the fastest 
C)  a business's valuation increases with its growth, a business can grow too fast, and business growth is a top priority of most entrepreneurial firms 
D)  the majority of businesses have the potential to be aggressive growth firms, a business can't grow too fast, and business success scales 
E)  not all businesses have the potential to be aggressive growth firms, a business can grow too fast, and business success doesn't always scale 
A)  not all businesses have the potential to be aggressive growth firms, business success scales, and business growth is a top priority of most entrepreneurial firms 
B)  business growth is a top priority of most entrepreneurial firms, a business can't grow too fast, and businesses that price their products aggressively grow the fastest 
C)  a business's valuation increases with its growth, a business can grow too fast, and business growth is a top priority of most entrepreneurial firms 
D)  the majority of businesses have the potential to be aggressive growth firms, a business can't grow too fast, and business success scales 
E)  not all businesses have the potential to be aggressive growth firms, a business can grow too fast, and business success doesn't always scale

Question 19

According to Penrose, managerial services generate new market, product, and service ideas, while entrepreneurial services administer the routine functions of the firm and facilitate the proper execution of new opportunities.

Accepted Answer

A) True 
 B)False

Question 20

Some firms feel that they can better appeal to their customers if they can advertise that they are "the Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled:

Accepted Answer

A)  economies of scope 
B)  need to accommodate the growth of key customer 
C)  economies of scale 
D)  market leadership 
E)  influence, power, and survivability 
A)  economies of scope 
B)  need to accommodate the growth of key customer 
C)  economies of scale 
D)  market leadership 
E)  influence, power, and survivability

For a business to be successful in the early growth stage of the organizational life cycle, two important things must happen:

According to a study sponsored by the SBA Office of Advocacy, only ________ of all firms are "gazelles" or rapid growth firms at any given time.

In regard to firm growth, evidence shows that:

________ are similar to economies of scale, except the advantage comes through the scope (or range) of a firm's operations rather than from its scale of production.

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:

Sustained growth is defined as growth in both revenues and employees over an extended period of time.

Market leadership occurs when:

According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that:

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

Moral hazard 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.

________ 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.

Business success doesn't always scale.

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

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produces one computer keyboard a month or 10,000. Jeremy's lease payment is a:

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

According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle.

According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are:

According to Penrose, managerial services generate new market, product, and service ideas, while entrepreneurial services administer the routine functions of the firm and facilitate the proper execution of new opportunities.

Some firms feel that they can better appeal to their customers if they can advertise that they are "the Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled:

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Strategies for Firm Growth

Franchising

Filters

Exam 13: Preparing for and Evaluating the Challenges of Growth

For a business to be successful in the early growth stage of the organizational life cycle, two important things must happen:

According to a study sponsored by the SBA Office of Advocacy, only ________ of all firms are "gazelles" or rapid growth firms at any given time.

In regard to firm growth, evidence shows that:

________ are similar to economies of scale, except the advantage comes through the scope (or range) of a firm's operations rather than from its scale of production.

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:

Sustained growth is defined as growth in both revenues and employees over an extended period of time.

Market leadership occurs when:

According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that:

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

Moral hazard 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.

________ 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.

Business success doesn't always scale.

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

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produces one computer keyboard a month or 10,000. Jeremy's lease payment is a:

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

According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle.

According to the textbook, there are three issues about business growth that entrepreneurs should appreciate. These issues are:

According to Penrose, managerial services generate new market, product, and service ideas, while entrepreneurial services administer the routine functions of the firm and facilitate the proper execution of new opportunities.

Some firms feel that they can better appeal to their customers if they can advertise that they are "the Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled:

Introduction to Entrepreneurship

Recognizing Opportunities and Generating Ideas

Feasibility Analysis

Writing a Business Plan

Industry and Competitor Analysis

Developing an Effective Business Model

Preparing the Proper Ethical and Legal Foundation

Assessing a New Ventures Financial Strength and Viability

Building a New Venture Team

Getting Financing or Funding

Unique Marketing Issues

The Importance of Intellectual Property

Strategies for Firm Growth

Franchising

Filters