Question 1

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

Accepted Answer

A)  need to accommodate the growth of key customers 
B)  influence, power, and survivability 
C)  economies of scale 
D)  market leadership 
E)  maintain the appearance that the firm is successful

Question 2

Define the term "market leadership." Why do firms work hard to obtain market leadership?

Accepted Answer

The answer of Define the term "market leadership." Why do...

Question 3

The majority of businesses go through a discernable set of stages of growth referred to as the:

Accepted Answer

A)  business rotation cycle 
B)  business existence cycle 
C)  organizational sequence 
D)  business life cycle 
E)  organizational life cycle

Question 4

Emily Wills owns a commercial printing company. Emily has more business than she wants, in fact, she is presently turning away exciting new business opportunities because it is expensive to hire new employees, and she knows that if she did hire new employees it would take time for the new employees to be trained and to be socialized into the culture of her firm. Emily's inability to take advantage of the new business opportunities that are coming her way is due largely to the:

Accepted Answer

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

Question 5

Barb Campbell owns an entertainment company which has increased both its profits and revenues over an extended period of time. Barb's firm is experiencing:

Accepted Answer

A)  resolute growth 
B)  unrelenting growth 
C)  sustained growth 
D)  unbroken growth 
E)  moderate growth

Question 6

Terry Wells owns a growing company that makes innovative kitchen appliances. One thing that Terry has to continually work at is to keep enough cash on hand to make sure she has sufficient liquidity to meet her payroll and cover her other short-term obligations. The day-to-day challenge of firm growth this example is referring to is:

Accepted Answer

A)  quality control 
B)  capital constraints 
C)  price stability 
D)  cash flow management 
E)  personnel issues

Question 7

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

Accepted Answer

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

Question 8

Maureen Kimble owns a firm that sells products to the auto, aerospace, and defense industries. Maureen is currently evaluating a set of opportunities that she feels her firm is capable of pursuing. According to the textbook, Maureen is evaluating her firm's:

Accepted Answer

A)  prolific potential 
B)  dynamic opportunity options 
C)  productive opportunity set 
D)  passionate opportunity set 
E)  creative field of potential

Question 9

The main challenges for a business in the introduction stage of the organizational life cycle is:

Accepted Answer

A)  beginning the process of transitioning the owner from a hands-on supervisor to a more managerial role and developing business partnerships 
B)  developing business partnerships and making sure the initial product or service is right 
C)  determining whether the owner of the business and the current management team is capable of taking the business further and developing systems and procedures 
D)  developing systems and procedures and beginning the process of transitioning the owner from a hands-on supervisor to a more managerial role 
E)  making sure the initial product or service is right and starting to lay the groundwork for building a larger organization

Question 10

Economies of scale occur when:

Accepted Answer

A)  increasing production lowers the average cost of each unit produced 
B)  increasing production increases the average cost of each unit produced 
C)  decreasing production lowers the average cost of each unit produced 
D)  decreasing production increases the average cost of each unit 
E)  increasing production increases the fixed cost of doing business

Question 11

The process of writing a business plan greatly assists in developing growth-related plans.

Accepted Answer

A) True 
 B)False

Question 12

All businesses have the potential to be aggressive growth firms.

Accepted Answer

A) True 
 B)False

Question 13

________ 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)  Difficult selection 
B)  Adverse hazard 
C)  Ethical selection 
D)  Productivity hazard 
E)  Moral hazard

Question 14

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

Accepted Answer

A)  As a firm grows, it requires a decreasing amount of cash to service its customers. 
B)  If firm growth comes at the expense of a competitor's market share, price competition can set in. 
C)  Most businesses, regardless of their industry, need capital from time to time to invest in growth-enabling projects. 
D)  Although most businesses are started fairly inexpensively, the need for capital is typically the most prevalent in the early growth and continuous stages of the organizational life cycle. 
E)  One of the most difficult challenges that businesses encounter as they grow is maintaining high levels of quality and customer service.

Question 15

Andy Dungy owns a company that makes Apple iPod, iPhone, and iPad accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Betty Harrington owns a floor covering firm. Her market research is telling her that she is taking business away from the large home improvement stores in her trade area. One thing that Betty is worried about is that the large stores might fight back by lowering their prices, which hurts everyone except the consumer. The day-to-day challenge of firm growth that this example is referring to is:

Accepted Answer

A)  quality control 
B)  price stability 
C)  capital constraints 
D)  cash flow management 
E)  benchmarking

Question 18

A business's early growth stage is generally characterized by increasing sales and heightened complexity.

Accepted Answer

A) True 
 B)False

Question 19

According to the textbook, a well-managed business that finds its products and services are mature often:

Accepted Answer

A)  replaces its board of directors to breathe new life into the firm 
B)  looks for licensing opportunities 
C)  looks for partnering or acquisition opportunities to breathe new life into the firm 
D)  looks for new managerial talent to breathe new life into the firm 
E)  looks for international business opportunities

Question 20

________ are(is) generated when increasing production lowers the average cost of each unit produced.

Accepted Answer

A)  Business scalability 
B)  Economies of scale 
C)  Reaching for scale 
D)  Market leadership 
E)  Economies of scope

Exam 13: Preparing for and Evaluating the Challenges of Growth

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

Define the term "market leadership." Why do firms work hard to obtain market leadership?

The majority of businesses go through a discernable set of stages of growth referred to as the:

Barb Campbell owns an entertainment company which has increased both its profits and revenues over an extended period of time. Barb's firm is experiencing:

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

Maureen Kimble owns a firm that sells products to the auto, aerospace, and defense industries. Maureen is currently evaluating a set of opportunities that she feels her firm is capable of pursuing. According to the textbook, Maureen is evaluating her firm's:

The main challenges for a business in the introduction stage of the organizational life cycle is:

Economies of scale occur when:

The process of writing a business plan greatly assists in developing growth-related plans.

All businesses have the potential to be aggressive growth firms.

________ 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?

Andy Dungy owns a company that makes Apple iPod, iPhone, and iPad accessories. He is trying to increase his sales, primarily because he knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is:

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

A business's early growth stage is generally characterized by increasing sales and heightened complexity.

According to the textbook, a well-managed business that finds its products and services are mature often:

________ are(is) generated when increasing production lowers the average cost of each unit produced.