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

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

False

Question 4

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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 22

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

Question 23

Most entrepreneurs could benefit from implementing time management techniques.

Question 24

Transport mode selection can be important in inventory management.

Question 25

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

Question 26

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

Question 27

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

Question 28

Financial reporting to shareholders,bankers,and other investors give the marketing cost for each product and highlight the performance of managers in controlling costs.

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

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

Question 36

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

Question 37

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 38

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

Question 39

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

Question 40

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

Question 41

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 42

________ 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 43

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 44

________ 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 45

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

Question 46

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

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

Question 47

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 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

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 51

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 52

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

A) backward
B) forward
C) horizontal
D) side

Question 53

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 54

Which of the following is not one of the growth strategies outlined in the text

A) Product development strategy
B) Customer development strategy
C) Diversification strategy
D) Market development strategy

Question 55

________ 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 56

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 57

Most lifestyle entrepreneurs eagerly pursue firm growth.

Question 58

Even though some entrepreneurs may way to grow their business,they lack the ability to do so.

Question 59

Entrepreneurs that have a high ability to institute professional management practices but have low growth aspirations have "little potential" for growth.

Question 60

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 61

The principle of ________ provides information to the entrepreneur about how time is currently being allocated,which will also highlight inefficient or inappropriate investments of time.

A) analysis
B) effectiveness
C) prioritized planning
D) reanalysis

Question 62

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 63

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 64

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 65

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 66

________ 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 67

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 68

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 69

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 70

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 71

The most effective use of the interim ________ is to establish cost standards and compare the actual amount with the budgeted amount for that time period.

A) cash flow statement
B) inventory analysis
C) balance sheet
D) income statement

Question 72

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 73

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 74

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 75

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 76

Entrepreneurs who have the necessary abilities for the transition to more professional management practices and the aspiration to grow their business:

A) have little potential for firm growth.
B) will achieve growth only if the entrepreneur replaces himself or herself with a professional manager.
C) are the most likely to achieve growth.
D) usually form lifestyle firms.

Question 77

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 78

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 79

The most often used method of transporting goods is:

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

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)