Deck 12: Considering New Ventures and Corporate Renewal

Question 1

The ultimate success of an organization depends solely on the lead entrepreneur.

Answer 1

False

Question 2

If a firm doesn't need to use an IPO to support its growth, it also doesn't need to migrate from visionary to professional leadership management practices.

Answer 2

False

Question 3

In established firms, entrepreneurial behavior faces the same growth-management problems as those faced by startup firms.

Answer 3

True

Question 4

In the music industry, products that are in low demand can collectively make up a market share that rivals the relatively few current bestsellers.

Question 5

Initial public offerings are the actual first sale of a company's stock to the public market.

Question 6

Strategic management has only limited importance to firms during the three phases of a firm's life cycle.

Question 7

According to the Editor-in-Chief of Wired magazine, the future of entertainment is in the "niche markets at the shallow end of the bit stream."

Question 8

Corporate renewal often does not prevent established firms from vanishing from the face of the competitive landscape.

Question 9

Strategies provide solutions to problems.

Question 10

New ventures face common problems whose solutions involve identifying new opportunities and developing organizational resources and capabilities.

Question 11

All of the tools of strategic management can be applied to problems arising from both new-venture creation and corporate renewal.

Question 12

Orthodoxies represent the status quo of an industry.

Question 13

The distribution and sales channel opportunities created by the Internet often enable businesses to successfully tap into the Long Tail market.

Question 14

The company that is helping artists and copyright owners sell their music directly to fans is SNOCAP.

Question 15

A new venture allows a firm to capitalize on its initial success and gain access to financial resources.

Question 16

Turnaround management is also known as corporate reconstruction.

Question 17

The five elements of a strategy are critical to any new or established firm that is engaged in entrepreneurial activity.

Question 18

The entrepreneurial process is an important aspect of all phases of a company life cycle.

Question 19

The "short tail" is the concept that selling many individual products that each have low sales volume can add up to huge total revenues.

Question 20

Ideologies are the deeply held and broadly shared beliefs about what drives success within an industry.

Question 21

Bootstrapping refers to exploiting a new business opportunity with limited funds.

Question 22

Key people are among the tangible resources and capabilities that distinguish the potential new venture as an opportunity.

Question 23

A business plan provides the entrepreneur with a vehicle for sharing goals and objectives with members of the entrepreneurial team.

Question 24

New-market disruption strategies involve identifying a business that will let a firm shift customers from a high-cost-to-serve to a low-cost-to-serve business model.

Question 25

Successful entrepreneurs are often people who challenge orthodoxies.

Question 26

Once the business plan has been drawn up, many entrepreneurs then launch the new product and secure start-up financing.

Question 27

Entrepreneurship is the outcome of the entrepreneurial process.

Question 28

The business plan is usually developed prior to the launch because its purpose is to obtain financing or to generate market interest.

Question 29

Large organizations often put too few resources into new ventures.

Question 30

The process of thinking through the steps of the business plan is probably more important than the business-plan document itself.

Question 31

The entrepreneurial model emphasizes a need to choose between opportunity or resources and capabilities.

Question 32

A business plan is helpful only as a necessary starting point to a new venture.

Question 33

New-venture activities are typically more predictable and are, therefore, less risky than those in which a firm traditionally engages.

Question 34

Within the executive summary section of a business plan, entrepreneurs would typically stress only the business concept and not the numbers.

Question 35

In the products and services section of a business plan, entrepreneurs would typically identify the need for the product, the extent of that need, who the customers will be, and why they will buy your product.

Question 36

Within the entrepreneurial firm, there is usually a significant overlap between the people element and the structure element.

Question 37

New-market-creation strategies are designed to eliminate, reduce, create, or raise some previously assumed dimension of product/market supply and demand.

Question 38

Corporate new venturing is the creation of new businesses by established firms.

Question 39

Many successful entrepreneurs suggest that access to too much money too early on in the process can do more harm than good.

Question 40

Entrepreneurs who depend on significant investor capital often find their flexibility considerably increased.

Question 41

Internal causes of organizational failure reflect trends and events that attack the business core.

Question 42

Good economic times often contribute to organizational problems.

Question 43

An unqualified opinion is a statement on the auditor's opinion that the audit reflects certain limitation, such as financial irregularities.

Question 44

External changes such as natural disasters and wars occur suddenly and unpredictably.

Question 45

Corporate new ventures are more likely to be successful when they test business models directly with potential users.

Question 46

The Bermuda Triangle of Management describes the region where firms are faced with the need to cross over from new ventures to IPOs.

Question 47

The performance of new-venture divisions is generally greater than that achieved by private equity venture capital firms.

Question 48

The new-venture process in an existing firm represents the beginning of a new organization.

Question 49

When economic level declines, the number of business failures will decline also.

Question 50

Professional management may come from executives experienced with running rapidly growing firms.

Question 51

The advantage of the structural approach is that it provides a system for investing in a team that's assigned specifically to new-venture creation.

Question 52

During the road show, there are restrictions on the people to whom managers can talk and on what they can talk about.

Question 53

All growing firms eventually go public.

Question 54

An IPO takes place when a firm offers ownership shares through a public stock market.

Question 55

Firms must balance the requirements of entrepreneurial ventures with the benefits of sustained linkage to the parent firm.

Question 56

Currently, the SEC requires companies to open road shows to all investors, including individuals and analysts.

Question 57

When a firm creates a climate that is supportive of entrepreneurship, the evolving characteristics of the new venture usually results in a unit that's complementary to the core businesses.

Question 58

Most all failures are caused primarily by economic factors.

Question 59

Corporate new ventures are more likely to succeed when they are based on radically different products and services.

Question 60

There is a common set of factors underlying most business failures.

Question 61

Underlying problems can be discovered by assessing financial ratios such as operating liquidity and debt ratios.

Question 62

Technology has increased the availability of information.

Question 63

When a firm tacitly adheres to orthodoxies to the point that it creates managerial rigidities, the difficulty of strategic changes is abated.

Question 64

The first step in regaining the confidence of bankers and creditors is to present a well-developed strategic plan.

Question 65

Most companies operate in an environment of static competition.

Question 66

PESTEL and scenario-analysis tools can be useful quantitative indicators of organizational decline.

Question 67

New goals developed during turnaround should be sequences and correspond directly to the staging facet of the strategy diamond.

Question 68

A key premise is that all business environments are in a state of change.

Question 69

In executing turnaround management, managers may use the strategic change framework because time is not a factor.

Question 70

The absolute amount of knowledge in the world remains absolute.

Question 71

Social trends are usually difficult to quantify.

Question 72

Social change is more obvious than other forms of external change.

Question 73

Executing strategy is a task best handled by senior-level managers.

Question 74

In response to price competition, incumbents often try to keep factories at near capacity production despite decreased demand.

Question 75

A weak finance function is often a reflection of larger management problems.

Question 76

Usually competitive change takes the form of price competition as competitors lower their prices in order to introduce new products to the market.

Question 77

To change, a firm must have a clear vision of the desired end state.

Question 78

The decline in U.S. manufacturing employment is a direct consequence of automation and importation.

Question 79

External causes of organizational failure are more common than internal causes.

Question 80

Competition from foreign countries is typically slower and more predictable.