Deck 11: Preparing For And Attaining Growth: Strategies For Building Lasting Success

Question 1

Which of the following firms is most likely to have an edge over a local entrepreneur in terms of economies of scale?

A) Porky's Pizza: open for 9 months.
B) Kim's Hair and Salon: open for 3 years.
C) Domino's Pizza: open for 15 years.
D) Corn Krib: open for 10 months.
E) Mike's Sports Bar and grill: open for 6 months.

Answer 1

C

Question 2

"Scalable business model" refers to the idea that new increased revenues cost less to deliver than current revenues.

Answer 2

True

Question 3

Acquisition is defined as one company purchasing another.

Answer 3

True

Question 4

Which of the following statements is most logical?

A) A new product always results in being profitable.
B) A new product always results in a loss for the inventing company.
C) If an entrepreneur cannot protect his or her intellectual property related to a new product, then the entrepreneurial firm does not have an advantage in being better than established firms in product development.
D) Entrepreneurial firms are generally more efficient than are established firms.
E) Entrepreneurial firms are generally better at marketing than are established firms.

Question 5

One reason that a new business might not grow is because of limited managerial capacity.

Question 6

One reason for growing a business is that as it grows,average cost per product can go down.

Question 7

The term "gazelles" refers to companies that are not growing.

Question 8

Research shows that growth of a new business is always related to long-term financial success.

Question 9

Growth of a new business might distract it from its original intention.

Question 10

A larger company might have more financial resources than a smaller one.

Question 11

Founders of new high growth companies tend to be low on self-efficacy.

Question 12

High-growth companies are more likely to get involved in relationships with other companies than are low-growth companies.

Question 13

An acquisition occurs when two companies join together by mutual agreement.

Question 14

A merger is a form of an internal strategy.

Question 15

Normally,founders of high growth companies show a high passion for their work and their companies.

Question 16

High growth companies tend to not set specific goals for growth;growth tends to just happen.

Question 17

Because of economies of scale,established firms can produce products at lower per unit costs than can new firms.

Question 18

High-growth companies have been shown to be more associated with practices that meet customers' needs than low-growth companies.

Question 19

Given a certain level of fixed costs,if more sales are made,the average fixed cost per product will decrease.

Question 20

High-growth companies probably are more selective in hiring than are low-growth companies.

Question 21

An entrepreneur started a new business. The first several years were very challenging. However,the entrepreneur believed that the challenges could be met and the business would be successful. This entrepreneur shows

A) economies of scale.
B) tenacity.
C) new resource skills.
D) character licensing.
E) the idea of lowering variable costs.

Question 22

Founders of high growth companies tend to have tenacity. That means

A) they know where they want the company to go.
B) they know how to find and attract new resources.
C) they set specific goals.
D) they have low self-efficacy.
E) they tend not to give up and continue to try even after major setbacks.

Question 23

Costs related to the building and equipment of a business are referred to as

A) economies of scale.
B) variable costs.
C) fixed costs.
D) joint costs.
E) scalable costs.

Question 24

Which of the following types of companies tend to meet customers' needs better?

A) Chemical companies.
B) Sole proprietorships.
C) High-growth companies.
D) Partnerships.
E) Licensed companies.

Question 25

Because a new business has grown considerably,it can now purchase larger quantities of a certain raw material. Purchasing in larger quantities allows the company to get a lower price per pound of the raw material. Which of the following is related to this situation?

A) Average fixed costs will decrease.
B) Average variable costs will decrease.
C) This is the idea of purchasing by licensing.
D) Average managerial capacity will increase.
E) Cash flow will decrease.

Question 26

An inventor obtained a patent on a product and licensed the right to use the knowledge related to this patent to another company. This represents a

A) merger.
B) technology license.
C) merchandise license.
D) trademark.
E) internal strategy.

Question 27

Why might a new business seek to grow?

A) To gain economies of scale.
B) To gain market leadership.
C) To gain a scalable business model.
D) All of the above (a, b, and c) are correct.
E) A and C are correct.

Question 28

After initial success with her business,an entrepreneur studied the current customers and found that they would like a certain feature on a product that is not being offered by anyone now. She incorporated the new feature on the product for her customers. She has used what type of strategy?

A) External.
B) Global.
C) Innovative business practice.
D) Goal-setting.
E) Passion.

Question 29

Developing a new product is an example of which of the following strategies?

A) Advertising.
B) Internal.
C) Low-growth.
D) External.
E) Managerial capacity.

Question 30

Economies of scale means

A) that average fixed costs are rising.
B) the economy is favorable for a new business to sell scales that measure weight.
C) as a firm produces and sells more products, the average cost of each product decreases.
D) the company has better managerial capacity.
E) the intellectual value of the business is increasing.

Question 31

Two entrepreneurs saw that they both could gain by combining their separate companies into one. They would re-name the company and both would be managers in it. This represents

A) a merger.
B) an acquisition.
C) a buy-out.
D) a noncompete agreement.
E) a low-growth strategy.

Question 32

An entrepreneur whose business sold wood products approached another small business owner whose company made decorative pieces for homes. The two started a new company together that would use the wood products from the one company to make decorative pieces by the other. This new business is known as

A) a licensed business.
B) a spin-in company.
C) a joint venture.
D) a global alliance.
E) a self-efficacy company.

Question 33

The phrase "Listen to your customers. They tell you what they want and you find a way to provide it." refers to which type of strategy?

A) External.
B) Comprehensive.
C) Internal.
D) Dynamic.
E) Variable cost.

Question 34

A strategic alliance between two companies that involves cooperating in research and development is known as

A) a dynamic capability.
B) a technological alliance.
C) an acquisition.
D) a spin-in.
E) an internal strategy.

Question 35

Which of the following is a good internal strategies for growth?

A) Go into markets that are different from the ones already served.
B) Develop new products or services that are different from the ones now offered.
C) Set a low price on products.
D) Maintain quality.
E) Reduce quality so more products can be produced with the same money.

Question 36

Increased new revenues cost less to deliver than current revenues applies to the idea of

A) scalable business model.
B) Food and Drug Administration.
C) dynamic capabilities.
D) internal strategies.
E) a milestone.

Question 37

An entrepreneur wants his business to grow. He is trying to make that happen by focusing on developing new products that can use the same production and marketing facilities and skills that the company already has. This represents what type of strategy?.

A) First mover.
B) Quality.
C) Self-efficacy.
D) Internal.
E) External.

Question 38

Which of the following characteristics is usually not associated with founders of high growth companies?

A) High passion for their work.
B) Tenacity.
C) Growth vision.
D) See setting specific goals as too confining.
E) New resource skill.

Question 39

Recently,Google purchased several companies and made them part of the overall company. This is known as

A) an acquisition.
B) a merger.
C) an internal strategy for growth.
D) a license for intellectual property.
E) joint venture.

Question 40

An entrepreneur started a management consulting company. The first several years were very challenging in finding potential clients and building relationships with them,in developing the services that the company would sell to clients,and just "getting known" as a management consulting company. These years required considerable money,but there were few sales. After several years,the company became known and now has many clients and large sales,all the while,expenses are lower than in the first years. This represents the idea of

A) a joint venture.
B) global expansion.
C) an external strategy.
D) a merger.
E) a scalable business model.

Question 41

The skill and experiences that are necessary for an entrepreneur to have in order to make a business grow successfully are known as

A) growth skills.
B) human resource practices.
C) global expansion.
D) managerial capacity.
E) external strategy.

Question 42

Explain how "dynamic capabilities" can help a small business grow and be successful.

Question 43

Why is developing new products or services that are related to the ones a company already offers a better way to grow than to get involved in products or services that are quite different?

Question 44

Define tenacity and explain how it tends to be related to growing a company.

Question 45

Explain why established firms are usually more efficient than are new firms.

Question 46

Explain why high-growth companies tend to get into relationships with other companies more so than slow-growth companies.

Question 47

Which of the following tend to be related to successful high growth of a new business?

A) Human resource practices.
B) Characteristics of the founder.
C) Attributes of the company.
D) All of the above are correct.
E) Only choices a and b are correct.

Question 48

Which of the following tend to be associated with entrepreneurs of high-growth companies?

A) Tenacity.
B) Growth vision.
C) High self-efficacy.
D) All of the above are correct (a, b, and c).
E) Choices a and c are correct.

Question 49

Fixed costs

A) are costs that are not directly linked to sales.
B) depend upon the amount of a product sold.
C) are represented by equipment in a business.
D) Choices a and b are correct.
E) Choices a and c are correct.

Question 50

Internal strategies for growth include

A) new product development.
B) license a patent to another company.
C) merge with another company.
D) acquire another company.
E) None of the above are internal strategies for growth.

Question 51

Explain why managerial capacity might limit a company's growth.

Question 52

Which of the following statements is not true?

A) High-growth companies are more committed to growth than slower-growing companies.
B) High-growth companies provide products or services that customers cannot get elsewhere more so than slower-growing companies.
C) High-growth companies adopt practices such as profit sharing that tend to motivate employees more so than do slower-growing companies.
D) All of the above statements (a, b, and c) are not true.
E) All of the above statements (a, b, and c) are true.

Question 53

Two companies are producing breakfast cereal. One company produces 10,000 boxes at an average cost of $1 per box. The other company produces 100,000 boxes at an average cost of $.75 per box. This example demonstrates the concept of

A) external strategies.
B) self-efficacy.
C) economies of scale.
D) geographic expansion.
E) growth vision.

Question 54

A pharmaceutical company spends large amounts of money in developing new prescription drugs. Once the new drug is approved for use,it frequently can be produced and marketed for considerably less money than it took to develop,so the profit margins are large if one considers only the money spent during production and marketing. This situation represents the idea of

A) external strategies.
B) scalable business model.
C) managerial capacity.
D) geographical expansion.
E) new resource skills.