Q&A Hero

Q: To be realistic, an entrepreneur should project profits only one year into the future. a. True b. False

Q: The cost of goods sold are always fixed. a. True b. False

Q: Marcia like to use other peoples money when financing her business. In this way she does more with less by controlling resources without actually owning them. a. True b. False

Q: Profits that are retained within the company rather than being distributed to the owners are referred to as retained income. a. True b. False

Q: Many small firms have a tendency to underestimate the amount of capital the business requires when beginning operations. a. True b. False

Q: After pro forma statements are prepared, they should be checked against actual results every month so projections can be modified. a. True b. False

Q: Pro forma financial statements are statements that have been prepared in the proper format by a CPA. a. True b. False

Q: The CEO is the individual with primary responsibility for effective strategic leadership within an organization. a. True b. False

Q: The conventional measure of liquidity is the current ratio, which compares the current assets to current liabilities on a relative basis. a. True b. False

Q: Because Liams new restaurant had a high volume of sales, his inventory needs increased illustrating that a firms asset needs are the primary force driving sales. a. True b. False

Q: As the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage. a. True b. False

Q: The percentage-of-sales technique is an effective method for a new company to estimate asset requirements because asset-to-liabilities ratios tend to be relatively constant within an industry. a. True b. False

Q: Strategic control focuses on the content of strategic actions rather than their outcomes. a. True b. False

Q: An emphasis on strategic controls encourages managers to be risk averse. a. True b. False

Q: In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm. a. True b. False

Q: Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing the entrepreneurial mind-set. a. True b. False

Q: Strategic leaders are most likely to integrate ethical values into their decisions when the company has explicit ethics codes that are integrated into the business through extensive ethics training. a. True b. False

Q: Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm, but its development is so subtle and poorly understood that top managers cannot influence its content. a. True b. False

Q: The firm's core ideology motivates the firm's employees through the company's heritage. a. True b. False

Q: For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit. a. True b. False

Q: Criteria such as asset utilization improvements and changes in employee turnover rates are part of the internal business processes perspective of the balanced scorecard. a. True b. False

Q: Horace is reviewing a document that shows the results of his firm's operations over a period of one year. Horace is looking at the: a. income statement b. balance sheet c. statement of cash flow d. statement of financial position

Q: For Webster to understand how his company performed during calendar year 2012, he must begin with firms financial position on: a. January 1, 2012. b. July 1, 2013. c. September 30, 2010. d. June 30, 2011.

Q: Fatima borrowed money from the bank to expand her business. She plans to repay the loan within 12 months. How is this reflected on the cash flow statement? a. As an increase in owners equity and an increase to cash. b. As an increase to cash. c. As a decrease to cash. d. As an increase to current liabilities.

Q: Walter knows the result of the equation Sales-Expenses = Profits can be found on the: a. cash flow b. income statement c. retained earnings d. balance sheet

Q: Total assets less short-term debt equals ownership equity. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: Depreciation is the cost of a firms land and building allocated over its useful life. a. True b. False

Q: Liquidity represents the degree to which a firm can meet maturing short-term debt obligations with available working capital. a. True b. False

Q: To determine the debt ratio, the total debt is divided by the total income. a. True b. False

Q: The balance sheet shows a firm's assets, liabilities, and owners' equity at a specific point in time. a. True b. False

Q: The terms earnings, profits and income refer to different amounts on the income statement. a. True b. False

Q: Jane is determining the overall financial situation for her business. Since she has to report to a group of investors, she should just give them the income statement. a. True b. False

Q: The Renault Nissan alliance (Chapter 9 Mini Case) is an example of a _______ created to gain economies of scope by sharing resources and capabilities. a. diversifying strategic alliance b. vertical complementary alliance c. synergistic strategic alliance d. nonequity-based horizontal complementary alliance

Q: Why are alliances in the airline industry unstable? a. Unstable industries make for unstable alliances. b. The potential for firms to take opportunistic actions is too widespread. c. The industry is declining and profits are not sufficient to divide among alliance partners. d. The alliances require cooperation among firms that must also compete with one another.

Q: To increase the likelihood of success between partners assuming that trust exists, ____ approach(es) should be used to manage cooperative strategies. a. the cost minimization b. the opportunity maximization c. both the cost minimization and opportunity maximization d. None of the these options are correct.

Q: McDonald's, Hilton International, and Subway all heavily rely on the ____ strategy. a. transnational b. network cooperative c. cross-border alliances d. franchising cooperative

Q: In the franchising strategy, the most important competitive advantage for the franchisee is the franchisor's: a. brand name. b. capital resources. c. access to a consolidated market. d. geographic locations.

Q: The risks of being accused of collusion are MOST likely under what type of alliance? a. Equity-based vertical complementary alliance b. Equity-based horizontal complementary alliance c. Nonequity-based vertical complementary alliance d. Nonequity-based horizontal complementary alliance

Q: Burgess Corp. manufactures a line of heavy construction equipment. The company has announced a contractual relationship with FS Electronics whereby FS will supply Burgess with advanced GPS navigation and guidance systems. These systems will be an option on all bulldozers, dump trucks, and road graders Burgess produces. What type of alliance is this? a. Joint venture b. Equity strategic alliance c. Nonequity strategic alliance d. Competition reduction alliance

Q: A strategic alliance in which the partners own different percentages of the new company they have formed is called a(n): a. equity strategic alliance. b. joint venture. c. nonequity strategic alliance. d. cooperative arrangement.

Q: Which of the following statements is TRUE? a. Most cooperative strategies are successful if the basic agreements are well written and include appropriate monitoring strategies. b. As many as 50 percent of cooperative strategies fail. c. Opportunistic behaviors are usually focused on gaining the use of the partner's manufacturing and financial resources. d. Problems with international cooperative strategies usually concern financial-system differences between the partners.

Q: A relatively young firm has developed a method of transferring photographic images of surface textures onto any type of hard surface. This potentially has a huge market in the home-decorating field as well as any hard surface that is typically painted, such as car bodies. The type of alliance partner this firm would be searching for would be one with: a. low-cost labor production facilities in another country. b. similar products who could help the firm establish economies of scale. c. access to franchises in new markets. d. excess resources for investing.

Q: Reduction of competition can be accomplished through all of the following EXCEPT: a. predatory alliances. b. explicit collusion. c. tacit collusion. d. mutual forbearance.

Q: A cooperative agreement between a hotel chain and a casino operator would be viewed as a horizontal complementary strategic alliance because as separate entities, the two firms would compete for the same customer. a. True b. False Indicate the answer choice that best completes the statement or answers the question.

Q: Research in the airline industry suggests that tacit collusion reduces service quality and on-time performance. a. True b. False

Q: Close monitoring, formal contracts, and constant vigilance against opportunism increase the probability of alliance success. a. True b. False

Q: Partners always share profits and losses equally. a. True b. False

Q: The primary responsibility of the franchiser is to transfer capital to the franchisee. a. True b. False

Q: Of the four business-level cooperative strategies, the competition-reducing strategy has the lowest probability of creating a sustainable advantage. a. True b. False

Q: A partnership agreement states explicitly the rights and duties of partners with each party assuming joint and several liability. a. True b. False

Q: A management team is often stronger than an individual entrepreneur because it provides a diversity of skills and assurance of continuity. a. True b. False

Q: Some cooperative strategies fail when it is discovered that a firm has misrepresented the competencies it can bring to the partnership. a. True b. False

Q: In the term "B corporation," the B stands for "business." a. True b. False

Q: Horizontal business-level strategic alliances have greater probability of creating sustainable competitive advantage than do vertical business-level strategic alliances. a. True b. False

Q: Nonequity strategic alliances are formed when one partner owns a much larger (or inequitable) share of the joint venture than do the remaining partner(s). a. True b. False

Q: There are no limits on the owner's personal liability in a sole proprietorship. a. True b. False

Q: Acquisitions are the most common cooperative strategy used in standard-cycle markets. a. True b. False

Q: Partners must contribute capital or assets to form a partnership. a. True b. False

Q: Sometimes small business board members are given company stock in lieu of compensation. a. True b. False

Q: International strategic alliances are less risky than domestic strategic alliances because of diversification across countries. a. True b. False

Q: The LLC differs from the C corporation in that the LLC avoids financial complications from double taxation. a. True b. False

Q: Strategic alliances have become the cornerstone of many firms' competitive strategy, particularly large global competitors. a. True b. False

Q: S corporations can have nonresident alien stockholders but no more than 50 stockholders. a. True b. False

Q: Incorporation will not protect a firms owners from liability if it is used to perpetrate a fraud, skirt a law, or commit some wrongful act. a. True b. False

Q: 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. a. True b. False

Q: A forecasting method in which all potential buyers in a target markets submarkets are identified and the estimated demand is added up

Q: A description of potential customers in a target market

Q: The basic product and/or service plus any extra or unsolicited benefits to the consumer that may prompt a purchase

Q: A forecasting method that begins with a large-scope variable and works down to the sales forecast

Q: The fundamental benefit or solution sought by customers

Q: The basic product and/or service that delivers customer benefits

Q: Trade secrets a. actual product/service b. augmented product/service c. benefit variables d. breakdown process e. buildup process f. core product/service g. customer-oriented philosophy h. customer profile

Q: The parameters used to distinguish one form of market behavior from another

Q: Business activities that direct the creation, development, and delivery of a bundle of satisfaction from the creator to the targeted user

Q: The belief that production and sales center on the consumer and his/her needs

Q: A strategy that defines the total market as the target market

Q: Quentin, a venture capitalist, is scanning Mildreds business plan to see if and when he can recoup his investment and make a profit. Quentin is looking for: a. a financial plan. b. a marketing plan. c. an investment plan. d. an exit strategy.

Q: A business plan is best described as a a. crystal ball picture. b. money plan. c. contingency plan. d. game plan.

Q: The primary outside users of business plans are a. employees. b. investors and lenders. c. customers. d. government agencies.

Q: Items such as marketing research studies and the resumes of key executives are placed in the __________ of the business plan a. appendix b. executive summary c. table of contents d. management team section