Question 1

An entrepreneur can best build social capital by

Accepted Answer

The answer of An entrepreneur can best build social capital...

Question 2

Ricardo has a new startup and has hired his brother and nephew as part of the management team. Which of the following is one of the possible disadvantages of this arrangement?

Accepted Answer

Hiring family members may lead to a lack of diversity in skills and perspectives, as family members tend to share similar backgrounds and experiences. This can result in a team that lacks complementary strengths, which can be a disadvantage for the success of the startup. Choices A, B, and D do not apply or do not represent a disadvantage of hiring family members as part of the management team.

Question 3

Typically strategic alliances are harder to set up than to maintain.

Accepted Answer

Strategic alliances often require significant effort to maintain due to the need for ongoing coordination, trust-building, and alignment of objectives between the partnering organizations, which can be more challenging than the initial setup.

Question 4

After working together for a few months, disputes begin to arise between two of the young company's leaders. Their differences seem to be irreconcilable. The owner's best action is to

Accepted Answer

If the disputes between the leaders seem irreconcilable, it is best for the owner to let one or both of the individuals go. This will ensure that the company can function smoothly without any internal conflicts affecting its operations. Bringing in an arbitrator or forming a strategic alliance with a larger company may not necessarily solve the underlying issues between the leaders, while selling the business may not be necessary if the rest of the company is functioning well.

Question 5

Vicenzo is the sole owner and manager of a startup company. As the business grows, he finds it more difficult to fulfill the needs of all the management positions. Although he is the creative genius behind the company, he lacks experience in other areas. At this point, Vicenzo should

Accepted Answer

Hiring a management team with expertise in complementary areas will allow Vicenzo to delegate responsibilities and focus on his strengths, while also ensuring that the company has the necessary expertise to handle different aspects of the business. Seeking the advice of an investment banker or forming an alliance with another startup company may not necessarily address Vicenzo's current management needs, and encouraging advisors to take an active role in managing the company may not be enough to meet the demands of a growing business.

Question 6

An advisory board functions like a board of directors does, except that the members are compensated for their services and the company must have directors and officers liability insurance.

Accepted Answer

An advisory board is a group of individuals who provide advice and support to a company, but they are not involved in the day-to-day management of the business. They are typically not compensated for their services, and the company is not required to have directors and officers liability insurance for them.

Question 7

The number of small business owners who are choosing to go it alone is increasing significantly because this option has been made increasingly manageable by

Accepted Answer

Emerging technologies have made it increasingly manageable for small business owners to go it alone. This allows entrepreneurs access to a range of affordable online tools for marketing, accounting, and communication, which results in lower operating costs and increased profitability.

Question 8

Startup owners may increase their chances for success by seeking _____ over a management team with family and friends.

Accepted Answer

While a good CPA, outstanding law firm, and business consultant team can all be helpful resources for a startup, the most important factor in increasing the chances for success is assembling a management team with a balance of expertise. This means seeking out individuals with different skill sets and backgrounds who can contribute unique perspectives and experiences to the company. While family and friends can be a part of this team, it's important not to rely exclusively on them and to look for individuals who can bring specific knowledge and expertise to the table.

Question 9

Max chose to operate his production studio as a sole proprietorship even though his attorney cautioned that he was

Accepted Answer

As a sole proprietor, Max is personally responsible for all debts and legal obligations of his business. This means that if the business is sued or incurs debt, Max's personal assets (such as his savings account or car) are also at risk. By choosing a sole proprietorship, Max is exposing himself to unlimited personal liability.

Question 10

Webster is reviewing résumés looking for candidates for leadership positions in his very young company. Webster is putting together his:

Accepted Answer

Webster is specifically looking for candidates for leadership positions in his company, which would be part of his management team. Business plans, advisory boards, and boards of directors do not necessarily involve the hiring of individuals for specific leadership roles.

Question 11

Reciprocation is

Accepted Answer

Reciprocation refers to the social norm of feeling obligated to repay what has been done for you. It is a powerful tool in building relationships and trust, and is important in both personal and business contexts. It is not necessarily a response to a competitor's marketing efforts, nor is it only important once a business is established.

Question 12

Robbie's financial advisor referred a customer to Robbie's new business. Under the concept of _____, Robbie is now obligated to return the favor.

Accepted Answer

The concept described is reciprocation, which refers to the moral obligation to return a favor or kindness that has been received. This principle is often applied in business relationships and networking.

Question 13

By utilizing the experience of a board of directors, the chief executive of a small corporation may have to relinquish active control of its operations.

Accepted Answer

The chief executive can utilize the board's experience without necessarily relinquishing control, as the board typically provides guidance and oversight rather than direct operational control.

Question 14

The key to strong management in a new firm is

Accepted Answer

Balance is important in a new firm because each member has strengths and weaknesses. By ensuring that each member has competence in at least one area, the team can complement each other and work towards the success of the firm. Financial competence of the chief executive and a strong marketing manager who understands financial statements are also important, but they alone may not ensure strong management in a new firm. Close friendship among all members of the team may actually be detrimental if it leads to favoritism or lack of objectivity in decision making.

Question 15

In a B corporation, shareholders can sue directors if the company falls short of its stated social mission.

Accepted Answer

B corporations have a legal obligation to fulfill their social and environmental mission, and shareholders can hold the directors accountable if the company deviates from this mission through a process of "benefit enforcement litigation."

Question 16

Sometimes, small business board members are given company stock in lieu of compensation.

Accepted Answer

This is true. Small business board members may receive company stock as a form of compensation or incentive for their work on the board.

Question 17

As it relates to new businesses, one function of a social network is to

Accepted Answer

Social networks can help new businesses connect to a wider range of resources through their contacts. This includes potential investors, suppliers, and customers. Building a strong social network can provide access to valuable information and opportunities that can help a new business grow and succeed.

Question 18

Unlimited liability for business debts is imposed on

Accepted Answer

Sole proprietors are the only option given that have unlimited liability for business debts. A sole proprietor is a business owner who operates as an individual and is personally responsible for all debts and legal obligations of the business.

Question 19

For the best success, strategic alliance partners should structure contracts to ensure growth, including an "easy out" clause if the alliance does not go well.

Accepted Answer

It is important for strategic alliance partners to structure contracts that promote growth and also include an "easy out" clause in case the alliance does not work out as intended. This allows both parties to reassess and potentially avoid future losses.

Question 20

The board of directors is elected by the stockholders of a corporation.

Accepted Answer

The board of directors of a corporation is elected by the stockholders.

Quiz 8: The Organizational Plan: Teams, Legal Structures, Alliances, and Directors