Q&A Hero

Q: Which of the following is NOT an advantage of a virtual company? A) speed B) total control over every aspect of the organization C) specialized management expertise D) low capital investment E) flexibility

Q: The harvesting process encompasses more than just selling and leaving a business. a. True b. False

Q: A private placement sale can be more flexible in structure to meet an entrepreneurs needs even though the entrepreneur can not sell stock immediately. a. True b. False

Q: While investors always think ahead about how to exit an enterprise, the entrepreneur should focus on daily operational strategies more than the exit strategy. a. True b. False

Q: The Japanese concept of a company coalition of suppliers is: A) poka-yoke. B) kaizen. C) keiretsu. D) dim sum. E) illegal.

Q: Investors in a startup company are mainly interested in the new firms growth and are not particularly interested in an exit plan. a. True b. False

Q: Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called? A) kanban B) keiretsu C) samurai D) poka-yoke E) kaizen

Q: Many entrepreneurs successfully grow their firms, but fail to develop an effective exit plan. a. True b. False

Q: A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) keiretsu

Q: Harvesting is the method entrepreneurs and investors use to grow their firms. a. True b. False

Q: Vertical integration appears particularly advantageous when the organization has: A) a very specialized product. B) a large market share. C) a very common, undifferentiated product. D) little experience operating an acquired vendor. E) purchases that are a relatively small percent of sales.

Q: With a private equity placement, the firm's equity is sold in public equity markets, but the transaction is handled by a private investment banker. a. True b. False

Q: A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) job expansion

Q: The opportunity to exit a business is triggered by an interested seller. a. True b. False

Q: Which of the following best describes vertical integration? A) sell products to a supplier or a distributor B) develop the ability to produce products that complement the original product C) produce goods or services previously purchased D) develop the ability to produce the specified good more efficiently than before E) build long-term partnerships with a few suppliers

Q: Which of the following is NOT a condition that favors the success of vertical integration? A) availability of capital B) availability of managerial talent C) sufficiently high demand D) small market share E) All of the above favor the success of vertical integration.

Q: Discuss reasons a business would lease as opposed to purchasing equipment.

Q: Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? A) suppliers have a learning curve that yields lower transaction and production costs B) suppliers are more likely to understand the broad objectives of the end customer C) less vulnerable trade secrets D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise

Q: Discuss business traits that business angels look for in prospective investments. What are typical motivations?

Q: Which sourcing strategy is particularly common when the products being sourced are commodities? A) few suppliers B) many suppliers C) keiretsu D) vertical integration E) virtual companies

Q: Discuss two methods of selling stock.

Q: A disadvantage of the "few suppliers" sourcing strategy is: A) the risk of not being ready for technological change. B) the lack of cost savings for customers and suppliers. C) possible violations of the Sherman Antitrust Act. D) the high cost of changing partners. E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer.

Q: Gina owns a clothing resale store in a low-income neighborhood. Since opening, the store has hired five employees and is making a small profit. The store is the only business in her area and often sponsors fundraisers at the location. Since the store is in need of expansion capital, what type of funding should Gina to and why?

Q: Which one of the following is NOT one of the six sourcing strategies? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies

Q: Allie is starting a purse business and has been approached by Renee, a business angel, about investing in the company. Discuss items Allie should consider before going into business with Renee.

Q: Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration.

Q: A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

Q: What key terms should an entrepreneur understand so as to be prepared for loan negotiation?

Q: Vertical integration, whether forward or backward, requires the firm to become more specialized.

Q: List the "5 C's of Credit" and explain their impact on borrowing ability.

Q: With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.

Q: Janice loves to cook and go backpacking, and she had an idea for a backpacking cookbook that would combine ultralight ingredients into interesting and appetizing meals. However, she needs the money to research and test the recipes as well as cover printing and marketing expenses. How could Janice use the different crowdfunding options, donations, rewards, pre-purchase, or equity-based, to finance her cookbook?

Q: Violets Catering is growing rapidly. A new customer has requested the company cater a retirement luncheon for 500 persons resulting in Violets Catering needing a large order from the companys primary food vendor. Although the company is experiencing growth, cash flow is a concern. What would be the best financing option?

Q: Transferring to external vendors a firm's activities that have traditionally been internal is known as ________.

Q: What should an entrepreneur do before approaching an investor?

Q: The ________ decision involves choosing between producing a component or a service internally and purchasing it externally.

Q: Frankie is looking for sources of financing for his new tour company. At this time, he would like to keep his financing close to home but eventually apply for bank financing. What are Frankies financial support options?

Q: The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is: A) a standard use of the make-or-buy decision. B) not allowed by the ethics code of the Supply Management Institute. C) offshoring. D) outsourcing. E) keiretsu.

Q: Describe four different loan covenants that a bank may impose on a loan

Q: Outsourcing: A) transfers traditional internal activities to outside vendors. B) utilizes the efficiency that comes with specialization. C) allows the outsourcing firm to focus on its key success factors. D) All of the above are true of outsourcing. E) None of the above is true of outsourcing.

Q: Discuss suggestions for an entrepreneur who is considering asking family or friends for financing.

Q: The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.

Q: What are the four basic factors that determine how a firm is financed?

Q: Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

Q: What are the tradeoffs between profitability, risk, and control that should be considered when choosing between debt and equity?

Q: Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

Q: Luke has a new company and is considering equity financing. Currently, Luke is the only owner and source of equity for the business and makes all executive decisions for daily operations. What effect could the addition of other investors have?

Q: A company is deciding where to assign its summer intern. The manager estimates that the intern can save the company $10,000 in supply chain costs. Given the table below, what increase in sales (revenue) by the intern is required to show an equal profit? Supply Chain costs Variable Costs (materials) Profits % of current sales (revenue) 35 25 40

Q: A company is deciding where to assign its summer intern. The manager estimates that the intern can save $10,000 in the supply chain or increase sales (revenue) by $25,000. If sales (revenue) is divided into the three categories shown in the table, where should the manager assign the intern to maximize profits? Supply Chain Costs Production Costs Profits % of current sales (revenue) 35 25 40

Q: Marla runs a not-for-profit daycare center in her home located in a rural area. She is in need of $10,000 to purchase inventory, supplies and equipment. What Small Business Administration program would be the best fit for Marlas situation and why?

Q: The process of raising very small investments from a large number of investors via the Internet

Q: A grocery chain is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 4% is profit, 50% is spent in the supply chain, and the remaining 46% is evenly divided between fixed and production costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (27% profit margin combined now).

Q: A loan for which items of inventory or other movable property serve as collateral

Q: How does the pursuit of a response strategy impact the supply chain decisions of: (1) primary supplier selection criteria, (2) supply chain inventory, (3) distribution network, and (4) product design characteristics?

Q: The sale of a firms capital stock to select individuals

Q: As the corporate and operations management strategies vary from low cost to response to differentiation, how does this impact the criteria used for selecting suppliers?

Q: ________ describes the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer.

Q: The issuance of stock to be traded in public financial markets

Q: A very large payment required about halfway through the term over which payments were calculated, repaying the loan balance in full

Q: Which of the following statements is true regarding the leverage of supply chain savings? A) Supply chain leverage is about the same for all industries. B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain leverage depends only upon the percent of sales spent in the supply chain. E) None of the above is true.

Q: For which corporate strategy(ies) should supply chain inventory be minimized? A) low cost B) response C) differentiation D) low cost and response E) low cost and differentiation

Q: A long-term loan with real property held as collateral

Q: Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? A) product development skills B) cost C) capacity D) speed E) flexibility

Q: Bank-imposed restrictions on a borrower that enhance the chance of timely repayment

Q: Among which of the following industries are purchasing costs the LOWEST percentage of sales? A) automobiles B) petroleum C) restaurants D) lumber E) chemicals

Q: Private individuals who invest in others entrepreneurial ventures

Q: Obtaining cash by selling accounts receivable to another firm

Q: In most manufacturing industries, which of the following would likely represent the largest cost to the firm? A) transportation B) purchasing C) insurance D) financing E) advertising

Q: The interst rate charged by London banks on loans to other London banks Match the term with its definition. a. Balloon payment b. Business angels c. Chattel mortgage d. Crowdfunding e. Factoring f. Initial public offering g. Loan covenants h. Private placement i. Real estate mortgage j. Venture capitalist

Q: Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? A) suppliers B) distributors C) wholesalers D) retailers E) landscaping contractors

Q: A line of credit secured by working capital assets

Q: Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? A) supplier qualification B) product tracking C) independent audits D) refrigeration E) just-in-time delivery

Q: The interest rate chareged by commercial banks on loans to their most creditworthy customers

Q: Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.

Q: Supply chain decisions are not generally strategic in nature, because purchasing is not a large expense for most firms.

Q: Obtaining cash from a lender who, for a fee, advances the amount of the borrowers cost of goods sold for a specific customer order

Q: A firm that employs a response strategy should minimize inventory throughout the supply chain.

Q: 1/100th of 1 percent when quoting an interest rate

Q: An installment loan from a seller of machinery used by a business

Q: Savings in the supply chain exert more leverage as the firm's net profit margin decreases.