Question 1

The majority of businesses go through a discernable set of stages of growth referred to as the ________.
A) business rotation cycle
B) business existence cycle
C) organizational sequence
D) business life cycle
E) organizational life cycle

Accepted Answer

The answer of The majority of businesses go through a...

Question 2

________ costs are the costs a company incurs as it makes sales.
A) Static
B) Irregular
C) Balanced
D) Variable
E) Flexible

Accepted Answer

Variable costs are the costs that vary directly with the level of production or sales volume, such as the cost of raw materials and direct labor. As the company sells more products, variable costs increase accordingly. Therefore, option D is the best choice.

Question 3

Some firms feel that they can better appeal to their customers if they can advertise that they are the "Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled ________.
A) economies of scope
B) need to accommodate the growth of key customer
C) economies of scale
D) market leadership
E) influence, power, and survivability

Accepted Answer

The sentiment of wanting to advertise as the "Number 1 firm" in their industry is motivated by the desire for market leadership, which involves being recognized as the top firm in the market and having a greater influence, power, and survivability in the industry. Economies of scale and scope and accommodating the growth of key customers may also be factors in driving growth, but they are not directly related to the desire for market leadership.

Question 4

________ costs are costs that a company incurs whether it sells something or not. ________ costs are the costs a company incurs as it generates sales.
A) Preset; Marginal
B) Variable; Fixed
C) Set; Marginal
D) Fixed; Variable
E) Marginal; Set

Accepted Answer

Fixed costs are incurred regardless of sales volume, such as rent or salaries, while variable costs are incurred as sales are generated, such as raw materials or commissions.

Question 5

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.
A) introduction
B) launch
C) ramp-up
D) early growth
E) continuous growth

Accepted Answer

The introduction stage of the organizational life cycle is the startup phase, where a business identifies its core strengths and capabilities and begins selling its initial product or service.

Question 6

Katlyn Williams owns a company that makes specialized components for the aerospace industry. Her most important customer is a company that is growing at a rate of 33% per year. Katlyn is working hard to grow her firm, because she knows that unless her company continually grows it will not be able to keep pace with the growth of its most important customer. This example illustrates the reason for growth referred to as ________.
A) capturing economies of scope
B) executing a scalable business model
C) market leadership
D) influence, power, and survivability
E) need to accommodate the growth of a key customer

Accepted Answer

The example given clearly states that Katlyn's company needs to continually grow to keep pace with the growth of its most important customer. Thus, the reason for growth here is the need to accommodate the growth of a key customer, which is option E.

Question 7

Which of the following is not one of the five stages in the organizational life cycle?
A) Introduction
B) Early growth
C) Scale
D) Maturity
E) Decline

Accepted Answer

The five stages in the organizational life cycle are Introduction, Early growth, Maturity, Decline, and Death. "Scale" is not one of the stages.

Question 8

A firm's pace of growth is the rate at which it is growing compared to its main competitors.

Accepted Answer

A firm's pace of growth refers to the rate at which it is expanding or growing in terms of revenue, market share, or other financial metrics, not necessarily compared to its main competitors.

Question 9

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 10

________ costs are costs that a company incurs whether it sells something or not.
A) Fixed
B) Consistent
C) Steady
D) Variable
E) Regular

Accepted Answer

Fixed costs remain constant and must be paid regardless of whether the company sells anything or not. Examples of fixed costs include rent, salaries, insurance, and property taxes.

Question 11

London Simpson owns a company that makes smartphone accessories. She is trying to increase her sales, primarily because she knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is ________.
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

Accepted Answer

London Simpson is trying to increase sales so that she can lower the average cost of each unit produced, indicating a desire to take advantage of economies of scale.

Question 12

Market leadership occurs when a firm holds the number one or number two position in an industry or niche market in terms of sales volume.

Accepted Answer

Market leadership is defined as holding the top one or two positions in an industry or niche market in terms of sales volume.

Question 13

Karen West owns a barbecue restaurant. One expense that Karen watches closely is the cost of propane, which she uses to heat her ovens. The more barbecue food Karen sells, the more it costs her for propane on a monthly basis. For Karen, the cost of propane is a(n) ________ cost.
A) variable
B) secondary
C) resultant
D) fixed
E) irregular

Accepted Answer

Karen's cost of propane is directly related to the amount of barbecue food she sells, making it a variable cost.

Question 14

Zack Shields leases a manufacturing facility that produces computer monitors. Zack tries to keep production high, because his lease payments are $10,500 a month, regardless of whether he produces one computer monitor a month or 10,000. Zach's lease payment is a ________ cost.
A) variable
B) secondary
C) fixed
D) marginal
E) tangible

Accepted Answer

The lease payment is a fixed cost because it remains the same regardless of Zack's level of production.

Question 15

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

Accepted Answer

Fixed costs are the costs that do not change with the level of sales. They are incurred regardless of the level of sales and include expenses such as rent, salaries, and insurance premiums.

Question 16

Paul Mason's firm sells medical equipment to heart surgeons. The company fields a direct sales force that travels the country demonstrating its equipment to heart surgeons and hospital administrators. Recently, Paul's company started producing equipment for eye surgeons, partly to maximize the value of his sales force, which can now call on both heart surgeons and eye surgeons when it makes hospital visits. Paul's firm is attempting to capture economies of ________ through this strategy.
A) reach
B) scope
C) capacity
D) range
E) scale

Accepted Answer

The company is attempting to capture economies of scope through this strategy. Economies of scope refer to the cost savings that a company can achieve by producing multiple products using the same resources or by using the same distribution channels to reach multiple customer segments. In this case, Paul's company is able to leverage its existing direct sales force to sell to a new customer segment (eye surgeons) without incurring significant additional costs. This allows the company to take advantage of the existing relationship with hospitals and their administrators, and also to reduce the cost of training new sales representatives.

Question 17

Sometimes firms are compelled to grow to accommodate the growth of a key customer.

Accepted Answer

When a firm has a key customer that is growing and demanding more products or services, the firm may need to grow in order to meet that demand and retain the customer. This can involve expanding production or hiring additional staff, among other growth strategies.

Question 18

________ are(is) generated when increasing production lowers the average cost of each unit produced.
A) Business scalability
B) Economies of scale
C) Reaching for scale
D) Market leadership
E) Economies of scope

Accepted Answer

Economies of scale are benefits that result from an increase in production. As production increases, the cost of producing each unit decreases, which can lead to lower prices for consumers or increased profits for the company. This is because fixed costs, like rent or equipment, are spread out over a larger number of units, making each unit cheaper to produce.

Question 19

Market leadership occurs when a firm ________.
A) is the number one or number two firm in an industry or niche market in terms of net profits
B) is one of the top five firms in an industry or market niche in terms of sales volume
C) earns twice as much as its closest competitor
D) sells twice as much as its closest competitor
E) is the number one or the number two firm in an industry or niche market in terms of sales volume

Accepted Answer

Market leadership occurs when a firm is the number one or the number two firm in an industry or niche market in terms of sales volume. Net profits and sales volume are important measures, but being ranked in the top two is the key factor. Therefore, choice E is the best option.

Question 20

Economies of scale occur when ________.
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

Accepted Answer

Economies of scale occur when increasing production lowers the average cost of each unit produced. This is because there are fixed costs (such as rent and salaries) that are spread over a larger number of units, reducing the cost per unit.

Quiz 13: Preparing for and Evaluating the Challenges of Growth

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

________ costs are the costs a company incurs as it makes sales.

Some firms feel that they can better appeal to their customers if they can advertise that they are the "Number 1 firm" in their industry. This sentiment is motivated by the reason for growth labeled ________.

costs are costs that a company incurs whether it sells something or not. costs are the costs a company incurs as it generates sales.

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

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

A firm's pace of growth is the rate at which it is growing compared to its main competitors.

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

________ costs are costs that a company incurs whether it sells something or not.

London Simpson owns a company that makes smartphone accessories. She is trying to increase her sales, primarily because she knows that increasing production lowers the average cost of each unit produced. The reason for growth illustrated in this example is ________.

Market leadership occurs when a firm holds the number one or number two position in an industry or niche market in terms of sales volume.

Karen West owns a barbecue restaurant. One expense that Karen watches closely is the cost of propane, which she uses to heat her ovens. The more barbecue food Karen sells, the more it costs her for propane on a monthly basis. For Karen, the cost of propane is a(n) ________ cost.

Zack Shields leases a manufacturing facility that produces computer monitors. Zack tries to keep production high, because his lease payments are $10,500 a month, regardless of whether he produces one computer monitor a month or 10,000. Zach's lease payment is a ________ cost.

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

Sometimes firms are compelled to grow to accommodate the growth of a key customer.

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

Market leadership occurs when a firm ________.

Economies of scale occur when ________.