Deck 17: Planning for Growth and Change

Question 1

Today, the question for a growth-oriented company is not "When should we go global?"

Answer 1

False

Question 2

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

Answer 2

True

Question 3

Which of the following is NOT a step in the process for addressing risk assessment?

A) Identify the potential risks associated with a venture.
B) Calculate the probability that identified risks will occur.
C) Assign a level of importance to the losses.
D) Calculate the overall loss risk.
E) Secure a knowledgeable attorney.

Answer 3

E

Question 4

All of the following are leadership tendencies that seem to be a problem for entrepreneurs attempting to manage growing organizations EXCEPT

A) failing to see the need for change.
B) too much focus on details.
C) not enough loyalty to the original founding team.
D) working in isolation.
E) too much focus on the destination.

Question 5

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

Question 6

To prepare for the possible unexpected loss of a key employee like the CEO or CFO, it is a good idea to

A) purchase key-person insurance.
B) prepare a harvest and exit plan.
C) purchase business liability insurance.
D) develop a buffer strategy.
E) prepare a business continuity plan.

Question 7

With a(n) _____ strategy, either a company gains control of some or all of its suppliers or the company becomes its own supplier by starting another business from scratch or acquiring an existing supplier that has a successful operation.

A) buffer
B) f orward
C) b ackward
D) e xpansion
E) process improvement

Question 8

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

A) s upply chain
B) prime d istributor
C) m arketing plan
D) c ustomer base
E) i ntellectual property

Question 9

Typically, an alliance involves more interaction and coordination than a merger but less than a license agreement.

Question 10

In recent times, the consolidation play has become a way for many small business owners to realize the wealth they have created in their businesses.

Question 11

Smaller businesses for sale often use the services of _____, whereas high-growth ventures are more likely to employ the services of _____.

A) investment banks; business brokers
B) investment advisors; financial attorneys
C) financial attorneys; business brokers
D) business brokers; investment banks
E) investment banks; financial attorneys

Question 12

The common practice of outsourcing the upstream activities of a business - raw materials, manufacturing, assembly, and inventory-presents advantages with no risk to an entrepreneur.

Question 13

One of the most popular ways to expand a market geographically is to franchise, because this approach is generally less costly than setting up a national distribution system.

Question 14

During startup, an entrepreneur's main concerns are to acquire sufficient capital, _____, and design a way to deliver a product or service.

A) a dd human resources
B) validate his or her customers and business model
C) diversify
D) m anage cash flow
E) i nnovate

Question 15

The factors that affect the success of an entrepreneur's growth strategy can be grouped into three major areas: (1) market and industry factors, (2) management factors, and (3) technology factors.

Question 16

_____ are used to protect a company against potential risk that can't be prevented.

A) Buffer strategies
B) Process improvement strategies
C) Consumer demand strategies
D) Integrative growth strategies
E) Succession plans

Question 17

Agreeing to manufacture a product under a different label is an example of a(n) _____ strategy.

A) vertical integration
B) horizontal integration
C) buffer
D) process improvement
E) alliance

Question 18

The term born global usually denotes a company that generates at least _____ percent of its sales in the first _____ from the international marketplace and that derives a competitive advantage from outsourcing and selling in several countries.

A) 50; six months
B) 25; five years
C) 25; three years
D) 75; two years
E) 50; five years

Question 19

Serial entrepreneurs start businesses and then sell them or let others run them over and over again throughout their lives.

Question 20

With very few exceptions, most entrepreneurs do not scale-meaning they have a difficult time moving from the entrepreneur role to the executive role.

Question 21

According to Pasmore and Torres, the second step in succession planning is

A) announcement of the process.
B) transition.
C) execution of the search.
D) situation assessment.
E) delegation of duties.

Question 22

If a business relies heavily on Cloud-based systems, the entrepreneur will want to get advice about securing an insurance policy that protects the company against liability for all of the following EXCEPT

A) crisis management.
B) the cost associated with restoring information that has been corrupted.
C) lost sales.
D) business interruption.
E) security breaches.

Question 23

_____ purchase a product at a discount off list price and then sell it and handle collections themselves, thus solving the problem of cultural differences and the related difficulties in these transactions.

A) Wholesalers
B) Agents
C) Strategic acquirers
D) Export lenders
E) Venture capitalists

Question 24

"What skills and experience does the second generation need to acquire?" and "What is the second generation's expectation for the future of the business, and is it congruent with the company's vision?" are two of the questions that should be examined to start the process of _____ planning.

A) long-range
B) short-range
C) succession
D) operational
E) contingency

Question 25

A successful franchise system will need to have all of the following characteristics EXCEPT

A) a business that cannot be systematized or easily replicated.
B) a registered trademark and a consistent image and appearance for all outlets.
C) an operations manual that details every aspect of running the business.
D) a product that can be sold in a variety of geographic regions.
E) site selection criteria and architectural standards.

Question 26

_____ is generally an integral and critical part of a team-based approach to organizational management.

A) Scaling
B) Vertical integration
C) C ross-training
D) Employee empowerment
E) Liquidating assets

Question 27

In a phased sale, the _____ specifies the amount of control the new owner can exert over the business before the sale has been completed and the amount of proprietary information that will be shared with the buyer between Phases 1 and 2.

A) consolidation plan
B) buy-sell agreement
C) harvest plan
D) succession plan
E) resource agreement

Question 28

The cost of employing an individual is becoming so prohibitive that many companies are solving the problem by

A) using automation.
B) subcontracting work.
C) hiring management consultants.
D) downsizing operations.
E) raising product or service prices.

Question 29

Failure is certainly part of any business life cycle, and, therefore, some entrepreneurs must exit their businesses through

A) liquidation.
B) restructuring regimes.
C) stocktaking.
D) easy outsourcing.
E) invoice financing.

Question 30

By focusing on what an entrepreneur does best and letting others do the rest, the _____ strategy helps the business grow more rapidly, keeps unit costs down, and turns out new products more quickly.

A) v ertical integration
B) a lliance
C) h orizontal integration
D) process improvement
E) circular integration

Question 31

A Chapter _____ reorganization under the bankruptcy code is a reorganization of the finances of a business so that it can continue to operate and begin to pay its debts.

A) 7
B) 9
C) 11
D) 4
E) 13

Question 32

Maintaining sufficient inventory is an example of a _____ strategy.

A) process improvement
B) market exploitation
C) vertical integration
D) buffer
E) horizontal integration

Question 33

The rapid growth stage is characterized by concerns about

A) customers .
B) distribution .
C) innovation .
D) resources .
E) marketing .

Question 34

The Conway Center for Family Business reports that about _____ of all family businesses survive the transition from first- to second-generation ownership.

A) a fourth
B) a third
C) half
D) three-fourths
E) 10 to 15 percent

Question 35

Once a business has successfully passed through the phase of rapid growth and the entrepreneur is able to effectively manage the financial gains of growth, the business will have reached

A) a  break-even state of revenues.
B) s table growth and maintenance of market share.
C) total revenue stabilization.
D) i ts maximum retained earnings and net income.
E) the g lobalized cash flow phase.

Question 36

To prepare the best defense against a cash flow crisis, an entrepreneur must do all of the following EXCEPT

A) leverage finances.
B) remain committed to producing exceptional-quality products.
C) control the cost of overhead.
D) make liquidity and positive cash flow the prime directive.
E) keep production costs down by subcontracting and being frugal about facilities.

Question 37

Most product liability insurance covers all of the following EXCEPT

A) costs of defense.
B) personal injury.
C) property damage.
D) the cost of product redesign.
E) N one of these are correct.

Question 38

The immediately precipitating cause that forces a company into bankruptcy is usually

A) the  failure to pay debt.
B) the  failure to assess risk.
C) union problems.
D) shifts in market demand.
E) supplier problems.

Question 39

When sales decline and positive cash flow starts looking like a memory, entrepreneurs often

A) tend to the demands of their customers.
B) use a new employee hiring program.
C) distribute money to their creditors.
D) go into a period of denial.
E) utilize succession planning.

Question 40

Acquirers can be categorized in which of the following two ways?

A) Financial and strategic
B) Business and industry
C) Strategic and operational
D) Market and industry
E) Financial and business

Question 41

List the steps involved in choosing an intermediary.

Question 42

List some events that cause a company to go bankrupt.

Question 43

Why is succession planning important?

Question 44

Identify the three major categories of growth strategies.

Question 45

List and briefly describe the four stages of growth in a new venture.

Question 46

In the context of the bankruptcy code, explain the two chapters that are relevant to entrepreneurs.

Question 47

Describe a phased sale.

Question 48

Briefly describe how franchising works. What risks are associated with franchising?

Question 49

Discuss the important questions that an effective contingency plan should answer.

Question 50

Briefly discuss some of the supply chain risks.