Question 1

Maureen Kimble owns a firm that sells products to the auto, aerospace, and defense industries. Maureen is currently evaluating a set of opportunities that he feels his firm is capable of pursuing. According to the textbook, Maureen is evaluating his firm's:

Accepted Answer

Maureen is evaluating a set of opportunities, which indicates that he is assessing his firm's productive opportunity set. This refers to the range of opportunities that are available to a firm based on its expertise, resources, and capabilities.

Question 2

Emily Wills owns a commercial printing company. Emily has more business than she wants, in fact, she is presently turning away exciting new business opportunities because it is expensive to hire new employees, and she knows that if she did hire new employees it would take time for the new employees to be trained and to be socialized into the culture of her firm. Emily's inability to take advantage of the new business opportunities that are coming her way is due largely to the:

Accepted Answer

The answer of Emily Wills owns a commercial printing company....

Question 3

According to the textbook, a well-managed business that finds its products and services are mature often:

Accepted Answer

When a business finds its products and services are mature, it means that they have reached their peak and are no longer growing. Therefore, the best choice is to look for partnering or acquisition opportunities to breathe new life into the firm by expanding the business, offering new products, and finding new markets. This can help the company to stay competitive and sustain growth. Looking for licensing opportunities, replacing the board of directors, and finding new managerial talent may not necessarily create substantial growth or revitalization. International business opportunities may be a viable option but may not be the best choice since it may require significant investments and resources, and success may not be guaranteed.

Question 4

According to Penrose, ________ generate new market, product and service ideas, while ________ administer the routine functions of the firm and facilitate the profitable execution of new opportunities.

Accepted Answer

Penrose identifies two types of services: entrepreneurial services, which generate new market, product, and service ideas, and managerial services, which administer routine functions of the firm and facilitate the profitable execution of new opportunities. Therefore, the best choice is C, which matches these two types of services to their respective functions.

Question 5

When a firm's managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the:

Accepted Answer

The question specifically mentions "managerial resources" and "new product and service opportunities," indicating a need for capable management to handle these opportunities. Choice C refers directly to a "managerial capacity problem," which fits the scenario presented in the question. A, B, D, and E do not accurately describe the situation presented.

Question 6

Megan owns a company that makes specialized components for the auto industry. Her most important customer is a company that is growing at a rate of 25% per year. Megan 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 examples illustrates the reason for growth referred to as:

Accepted Answer

The reason for growth referred to in the example is the need to accommodate the growth of a key customer. Megan's company needs to grow in order to keep up with the demand from their most important customer, which is growing at a rate of 25% per year. This is an example of the importance of growth for the purposes of meeting customer demand and maintaining customer relationships.

Question 7

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

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 8

The Savvy Entrepreneurial Firm feature in Chapter 13 focuses on Timbuk2, a company that makes urban shoulder bags. The lesson provided by the feature is:

Accepted Answer

Its more important to bag the right customer rather than the biggest one

Question 9

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

Accepted Answer

The sentiment of wanting to advertise as "Number 1" in the industry is driven by the need for market leadership, which implies dominance and superiority over competitors. This can give a firm a competitive advantage and attract more customers. It does not necessarily relate to economies of scale or scope, accommodating key customers, or influence or power.

Question 10

The main challenges for a business in the introduction stage of the organizational life cycle is to:

Accepted Answer

In the introduction stage, the focus is on ensuring the initial product or service meets market needs and starting to establish a foundation for future growth.

Question 11

According to Penrose, the set of opportunities a firm feels it is capable of pursuing is referred to as the:

Accepted Answer

Penrose refers to the set of opportunities a firm feels it is capable of pursuing as the productive opportunity set.

Question 12

According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle.

Accepted Answer

The answer of According to the textbook, the toughest decisions...

Question 13

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

Accepted Answer

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

Question 14

The author of the book titled "The Theory of the Growth of the Firm," which is referred to in Chapter 13, is:

Accepted Answer

"The Theory of the Growth of the Firm" was written by Edith Penrose.

Question 15

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

Accepted Answer

The five stages in the organizational life cycle are introduction, early growth, maturity, decline, and death/renewal. "Scale" is not a stage in the organizational life cycle.

Question 16

Market leadership occurs when:

Accepted Answer

Market leadership is typically defined as being the number one or number two firm in an industry or niche market in terms of sales volume. Option E correctly reflects this definition. Option A is incorrect because net profits are not a reliable indicator of market leadership. Option B is incorrect because being in the top five does not necessarily equate to market leadership. Option C and D are incorrect because being twice as profitable or selling twice as much as a competitor does not necessarily mean a firm is a market leader.

Question 17

According to the textbook, it is:

Accepted Answer

The textbook states that it is not inevitable that a business enter the decline stage of the organizational life cycle. This is because businesses can take proactive measures to prevent decline, such as adapting to changes in the environment and innovating new products or services.

Question 18

________ are similar to economies of scale, except the advantage comes through the scope (or range) of a firm's operations rather than from its scale of production.

Accepted Answer

Economies of scope refer to the advantage gained by a firm from the range of its operations. This can be through diversification of products or services, sharing of resources, or cross-selling to existing customers. It results in lower costs and increased efficiency, similar to economies of scale.

Question 19

For a business to be successful in the early growth stage of the organizational life cycle, two important things must happen:

Accepted Answer

The transition from hands-on supervisor to a more managerial role is necessary for the growth of the business, allowing the founder/owner to focus on strategic planning and decision making rather than day-to-day operations. Increased formalization, such as implementing standard operating procedures and job descriptions, also helps to improve efficiency and scalability. The other options are also important considerations, but do not address the necessary steps for success in the early growth stage.

Question 20

________ means that as the number of employees a firm need increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

Accepted Answer

Adverse selection refers to the situation where one party in a transaction has information that the other party lacks, resulting in an unfair advantage for the informed party. In the context of the given statement, it means that as a firm needs more employees, it becomes harder to find qualified and suitable candidates, and the firm may have to settle for less skilled or appropriate candidates. This can lead to a decrease in the quality of work performed and an increase in the cost of supervision and training, making it an adverse selection hazard.

Quiz 13: Preparing for and Evaluating the Challenges of Growth