Deck 13: Strategies for Growth and Managing the Implication of Growth

Question 1

As a firm grows,higher volume increases production efficiency and increases its bargaining power with suppliers.

Answer 1

True

Question 2

When a manufacturer buys a chain of retail stores that carry its products,it is an example of backward integration.

Answer 2

False

Question 3

Employee turnover for part-time workers is lower than that for full-time workers.

Answer 3

False

Question 4

Most new ventures need a human resource department from the first day of operations.

Question 5

Time management is the process of improving an individual's productivity through more efficient use of time.

Question 6

Market development strategies involve selling the firm's existing products to a new group of customers,such as a new geographic market.

Question 7

If employees are spread too thin because of growth,the firm will face problems of employee morale and increased employee turn over.

Question 8

Many entrepreneurs find that as they grow they need to change their management style.

Question 9

Most entrepreneurs could benefit from implementing time management techniques.

Question 10

The value-added chain is usually available only to large national firms.

Question 11

Horizontal integration occurs at the same level of the value-added chain but simply involves a different,but complementary,value-added chain.

Question 12

Product development strategies use customers' experiences to develop new products for existing customers.

Question 13

Forward integration is taking a step back on the value chain toward the raw materials.

Question 14

If employees are involved in the decision-making process,they are more motivated to implement the decided course of action.

Question 15

One of the most successful diversification strategies is to diversify into unrelated products or unrelated markets to spread the risk.

Question 16

A product development strategy relies on taking market share from competitors.

Question 17

Using a penetration strategy,the entrepreneur attempts to encourage existing customers to buy more of the firm's current products.

Question 18

When a retail tire store buys a tire wholesaler this is an example of horizontal integration.

Question 19

To prevent pressures on the financial resources created by growth,the venture should avoid resource slack.

Question 20

To implement participative management the entrepreneur should have open communication with employees.

Question 21

Entrepreneurs who possess both the necessary abilities to make the transition to a more professional management approach and the aspiration to grow their businesses are the most likely to achieve firm growth.

Question 22

Transport mode selection can be important in inventory management.

Question 23

The principle of prioritized planning requires the entrepreneur to categorize his or her tasks by their degree of importance and then to allocate time to tasks based on this categorization.

Question 24

One advantage of leasing equipment is that lease payments represent an expense and can be used as a tax deduction.

Question 25

Effective time management can increase an entrepreneur's job satisfaction.

Question 26

Even if there is a belief that the pursuit of growth will improve firm performance and
enhance personal wealth,some entrepreneurs will still avoid growing their business.

Question 27

The grocery and pharmaceutical industries have developed a computerized system to link chain members together and manage demand,distribution,and marketing.

Question 28

The principle of reanalysis requires the entrepreneur to categorize his or her tasks by their degree of importance and then to allocate time to tasks based on this categorization.

Question 29

Even when cash flow problems are discovered,the pro forma budgeted amounts should never be changed.

Question 30

A cash sensitivity analysis is used to provide a pessimistic and an optimistic cash estimate.

Question 31

Most life-style entrepreneurs eagerly pursue firm growth.

Question 32

Growing ventures tie up more cash in their inventory than in any other part of the business.

Question 33

A recognition of the need to change personal attitudes and habits regarding the allocation of time is known as the principle of desire.

Question 34

When compared to the costs of carrying excess inventory,the cost of lost sales is insignificant and should be ignored.

Question 35

In managing fixed assets the entrepreneur should buy,instead of lease,whenever possible.

Question 36

Developing standardized forms and procedures for recurring events would be an example of the principle of reanalysis.

Question 37

The principle of reanalysis requires the entrepreneur to focus on the most important issues,even when under pressure.

Question 38

In order to better serve customers,all customer information should be stored in the memory of individual salespeople.

Question 39

The principle of teamwork states that an entrepreneur spends too much time with employees and should try to become less accessible to them in order to increase their efficiency.

Question 40

The entrepreneur is required to withhold federal and state taxes for employees and then deposit payments monthly or quarterly.

Question 41

______ are used to characterize potential customers based upon their income,education,age,sex,and so forth.

A)Demographics
B)Development strategies
C)Democracies
D)Diversifications

Question 42

The Maxwell's company,PowerBar,was purchased by what company?

A)Proctor and Gamble
B)Nestle
C)Heinz
D)Pilsbury

Question 43

Using a large proportion of part-time workers:

A)provides the firm with flexibility.
B)makes building organizational culture easier.
C)improves worker commitment to the organization.
D)increases the overall productivity of the organization.

Question 44

The _________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers.

A)value chain
B)inventory
C)electronic data interchange
D)market accounting system

Question 45

A market development strategy would not involve:

A)selling the existing product in new locations.
B)offering the same product to a different demographic group.
C)using customer experience to develop new uses for the existing product.
D)selling new products to consumer's purchasing the firm's existing products.

Question 46

The penetration growth strategy:

A)focuses on developing new products for the existing market.
B)relies on taking market share from competitors.
C)expands the firm's product offering with complementary products.
D)aims to take new products into new markets.

Question 47

In a horizontal diversification strategy,growth:

A)involves taking a step back (up)the value-added chain.
B)occurs at the same level of the value-added chain.
C)involves taking a step forward (down)the value added chain.
D)involves opportunities unrelated to the existing value-added chain.

Question 48

___________ refers to a diversification strategy that involves taking a step back (up)on the value chain toward the raw materials.

A)Horizontal integration
B)Backward integration
C)Forward integration
D)Conglomerate integration

Question 49

The __________ strategy focuses on selling the firm's existing products to new groups of customers.

A)penetration
B)market development
C)product development
D)diversification

Question 50

Which of the following would NOT be a recommended diversification strategy?

A)Backward integration.
B)Horizontal integration.
C)Forward integration.
D)Integration into markets unrelated to existing products.

Question 51

Creating a positive organization culture involves:

A)not communicating all matters to key employees.
B)being more involved in every aspect of the task,and avoiding delegation.
C)establishing a "we" spirit,not a "me" spirit in meetings and memorandum.
D)being conservative in the training process.

Question 52

Involving employees in the decision-making process is:

A)a passive management style.
B)a participative management style.
C)an autocratic management style.
D)impossible for small businesses

Question 53

A firm that manufactures washing machines starts to manufacture detergent illustrates _______ integration.

A)Backward
B)Forward
C)Horizontal
D)Side

Question 54

___________ refers to a diversification strategy that involves taking a step forward (down)on the value-added chain toward the customers.

A)Backward integration
B)Horizontal integration
C)Forward integration
D)Conglomerate integration

Question 55

_______ strategies involve developing and selling new products to people who are already purchasing the firm's existing products.

A)Penetration
B)Product development
C)Market development
D)Diversification

Question 56

The strategy for growth in which the entrepreneur encourages existing customers to buy more of the firm's current product is a:

A)penetration strategy.
B)product development strategy.
C)market development strategy.
D)diversification strategy.

Question 57

_____ strategies involve selling a new product to a new market.

A)Penetration
B)Market development
C)Product development
D)Diversification

Question 58

A computer company buys a hard-drive manufacturer.This is an example of:

A)Backward integration
B)Horizontal integration
C)Forward integration
D)Conglomerate integration

Question 59

Growth of the venture:

A)lessens pressures on existing financial resources.
B)causes pressures on human resources.
C)lessens legitimacy of the firm.
D)lessens time spent on management decision making.

Question 60

Which of the following is not a benefit of time management?

A)Improvement of esprit de corps.
B)Decreased job satisfaction.
C)Increased productivity.
D)Less anxiety and tension.

Question 61

Discuss the three types of market development strategies and give examples of each.
A.New geographical market - This simply refers to selling the existing product in new locations.For example,a firm selling its products in Singapore could start selling its products in Malaysia,Thailand,and IndonesiA.This has the potential of increasing sales by offering products to customers who have not previously had the chance to purchase them.The entrepreneur must be aware of possible regional differences in customer preferences,language,and legal requirements that may necessitate a slight change in the product (or packaging).
B.New demographic market - Demographics are used to characterize (potential)customers based upon their income;where they live;their education,age,and sex;and so on.For an entrepreneur that is currently selling the firm's existing product to a specific demographic group,the business could grow by offering the same product to a different demographic group.For example,a studio currently produces and sells computer games (specializing in games on baseball and soccer)to males between the ages of 13 and 17.However,there is an opportunity for this company to expand its sales by also targeting males between the ages of 24 and 32 who are university educated,have high disposable incomes,and would likely enjoy the escapism of these computer game products.
C.New product use - An entrepreneurial firm might find out that people use its product in a way that was not intended or expected.This new knowledge of product use provides insight into how the product may be valuable to new groups of buyers.For example,when I moved from Australia to Chicago,I bought a baseball bat.I did not use the bat to play baseball;rather I kept it beside my bed for security against anyone who might break into my apartment.Another example is four-wheel-drive vehicles.The original producers of this product thought that it would be used primarily for off-road recreational driving but found that the vehicle was also popular among housewives because it was big enough to take the children to school and carry all their bags and sporting equipment.Knowledge of this new use allowed the producers to modify their product slightly to better satisfy customers who use the product in this way.An advantage from using a market development strategy is that it capitalizes on existing knowledge and expertise in a particular technology and production process.

Question 62

Which principle requires the entrepreneur to focus on the most important issues,even when under pressure?

A)Principle of desire
B)Principle of reanalysis
C)Principle of effectiveness
D)Principle of prioritized planning

Question 63

The entrepreneur has which of the following responsibilities regarding taxes?

A)Withhold federal and state taxes for employees.
B)Pay state and federal unemployment taxes.
C)File end-of-year tax returns.
D)All of the above.

Question 64

Identify and describe the three major types of diversification growth strategies.

Question 65

Entrepreneurs in the _____________ quadrant of firm growth possess the abilities to grow but do not aspire to grow their businesses.

A)Constrained growth
B)Unused potential for growth
C)Actual growth
D)Little potential

Question 66

Conducting a(n)____ on cash flow involves assigning a + or - probability to the estimated value.

A)break even analysis
B)audit
C)distribution analysis
D)sensitivity analysis

Question 67

Acknowledgment that only a small amount of time is actually under one's control and that most of one's time is taken up by others is known as the:

A)principle of desire.
B)principle of teamwork.
C)principle of analysis.
D)principle of prioritized planning.

Question 68

Reviewing meetings to make sure they are being run effectively illustrates which of the following principles?

A)Principle of desire
B)Principle of reanalysis
C)Principle of effectiveness
D)Principle of prioritized planning

Question 69

Entrepreneurs in the _____________ quadrant of firm growth aspire to grow their businesses and possess the ability to do so.

A)Constrained growth
B)Unused potential for growth
C)Actual growth
D)Little potential

Question 70

Using a time sheet to record usage of time is part of the principle of:

A)desire.
B)effectiveness.
C)prioritized planning.
D)analysis.

Question 71

________ is the process of improving an individual's productivity through more efficient use of time.

A)Time management
B)Delegation
C)The principle of effectiveness
D)The principle of prioritized planning

Question 72

The _______ requires that the entrepreneur recognize that he or she is a time waster,that time is an important resource,and that there is a need to change personal attitudes and habits regarding the allocation of time.

A)principle of desire
B)principle of effectiveness
C)principle of analysis
D)principle of prioritized planning

Question 73

What benefits can an entrepreneur receive from better time management?

Question 74

An increase in supplier prices may require:

A)raising the price of products/services.
B)purchase of lesser inventory.
C)an increase in the purchasing budget.
D)reviewing all other expenses and perhaps institute tighter controls.

Question 75

The most often used method of transporting goods is:

A)air transport.
B)truck and rail transport.
C)barge transport.
D)tanker transport.

Question 76

Entrepreneurs in the _____________ quadrant of firm growth aspire to grow their businesses but do not possess the ability to do so.

A)Constrained growth
B)Unused potential for growth
C)Actual growth
D)Little potential

Question 77

Which principle states that the most important issues should be attended to during the time of day that an entrepreneur is most efficient?

A)Principle of desire
B)Principle of reanalysis
C)Principle of effectiveness
D)Principle of prioritized planning

Question 78

Inventory control:

A)is not necessary for small firms.
B)eliminates the need to carry inventory.
C)balances the cost of carrying inventory with the cost of lost sales.
D)requires a computerized inventory system.

Question 79

What are the 4 main growth strategies discussed in the text? Briefly define each.

Question 80

The computerized system developed by the grocery and pharmaceutical industry to link chain members is:

A)Efficient Computer Response (ECR)
B)Efficient Computer Distribution (ECD)
C)Electronic Demand Distribution (EDD)
D)Computerized Check Out Systems (CCOS)