Question 1

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

Accepted Answer

As businesses grow, the demands on the entrepreneur change and they may need to adapt their management style to effectively lead their team and meet the needs of their growing company.

Question 2

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

Accepted Answer

Horizontal integration involves combining businesses at the same level of the value-added chain, meaning they are in the same industry or market. However, the businesses may have different but complementary value-added chains, allowing them to expand their reach and capabilities.

Question 3

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

Accepted Answer

Most new ventures do not require a full-fledged human resource department from day one, as they usually start with a small team and may outsource HR functions or handle them yourself. As the company grows and hires more employees, it may become necessary to establish a dedicated HR department.

Question 4

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

Accepted Answer

Horizontal integration refers to the acquisition of a company that operates at the same level of the value chain as the acquiring firm. In this scenario, the retail tire store and the tire wholesaler are operating at different levels of the value chain (i.e., retail vs. wholesale), making it an example of vertical integration rather than horizontal integration.

Question 5

If the existing product is being sold to teenagers in one country and new entry involves selling the existing product to teenagers in a new country then this represents a new product use.

Accepted Answer

Selling the same product to a new market segment (teenagers in a new country) does not represent a new product use, as the product itself remains the same. It is a new market entry or expansion.

Question 6

In a value-added chain,value is added only at the first stage of the chain.

Accepted Answer

Value can be added at multiple stages in a value-added chain, not just the first stage. Each stage of the chain can add value through processes such as design, manufacturing, marketing, and distribution.

Question 7

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

Accepted Answer

Product development strategies often involve gathering feedback from existing customers to identify their needs and preferences, which is then used to create new or improved products that better meet their needs.

Question 8

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

Accepted Answer

Market development strategies involve expanding the customer base by selling existing products to new markets or segments, geographies, or distribution channels.

Question 9

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

Accepted Answer

This statement is generally false. Employee turnover rates depend on a variety of factors such as job satisfaction, work-life balance, benefits, and job security. Part-time workers may not receive the same benefits and job security as full-time workers, which could lead to higher turnover rates. However, there may be specific industries or companies where this statement holds true.

Question 10

The four growth strategies outlined in the text are: penetration strategy,customer development strategy,service development strategy,and diversification strategy.

Accepted Answer

The four growth strategies typically outlined are market penetration, market development, product development, and diversification. Customer development and service development are not commonly listed as separate strategies within this framework.

Question 11

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

Accepted Answer

This is an accurate statement. A penetration strategy involves increasing sales of existing products to existing customers. It can be achieved through various tactics such as pricing incentives, promotions, and improving the product's value proposition.

Question 12

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

Accepted Answer

Diversifying into unrelated products or markets can spread risk but is often less successful than related diversification because it may stretch resources too thin and the company may lack expertise in the new areas. Related diversification, where the new products or markets are connected to the company's existing operations, tends to leverage core competencies and is generally seen as a more effective strategy.

Question 13

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

Accepted Answer

Resource slack can actually be beneficial for a venture, especially in its growth phases, as it provides a buffer that allows the company to absorb unforeseen expenses or invest in new opportunities without jeopardizing its financial stability.

Question 14

Forward integration occurs when the firm acquires one of its suppliers.

Accepted Answer

Forward integration occurs when a firm acquires or merges with a company that is closer to the final consumer in the supply chain, such as a distributor or retailer, not a supplier. Acquiring a supplier is known as backward integration.

Question 15

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

Accepted Answer

A product development strategy focuses on introducing new or improved products to satisfy customer needs, rather than solely taking market share from competitors. Other strategies such as market penetration or market development may focus more on taking market share from competitors.

Question 16

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

Accepted Answer

Forward integration is the step taken downwards towards the customers or end-users, and not towards the raw materials.

Question 17

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

Accepted Answer

When employees are involved in the decision-making process, they feel a sense of ownership and responsibility towards the decision and are more likely to feel motivated to implement it. Their involvement also leads to better communication and understanding of the decision, which helps in its effective implementation.

Question 18

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

Accepted Answer

This is because as the volume of production increases, the fixed costs can be spread across more units, leading to a lower cost per unit. Additionally, suppliers may be willing to offer discounts or other benefits to larger customers.

Question 19

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

Accepted Answer

When employees are spread too thin due to growth, they may become stressed and overwhelmed with work, leading to low morale and potentially leaving the company for better opportunities elsewhere.

Question 20

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

Accepted Answer

This is an example of forward integration, as the manufacturer is moving closer to the end consumer by acquiring retail outlets. Backward integration would involve acquiring suppliers or producers of raw materials.

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