Chapter 13: Preparing for and Evaluating the Challenges of Growth (L11)

1) Which of the following statements regarding firm growth is incorrect?

• A) Most entrepreneurial firms want to grow.

• B) Growth in sales revenue is a poor indicator of an entrepreneurial firm's potential to survive today and be successful tomorrow.

• C) Firm growth is exciting.

• D) Many entrepreneurial firms have grown quickly, producing impressive results for their employees and owners.

• E) Growing a business successfully requires preparation, good management, and an appreciation of the issues involved.

2) According to the textbook, most entrepreneurial firms ________.

• A) are ambivalent about growth

• B) want to grow

• C) do not want to grow

• D) want to grow if the economy is strong but do not want to grow if the economy is weak

• E) want to grow if they are a service firm but do not want to grow if they are a manufacturing firm

3) According to the textbook, the three important things that a business can do to prepare for growth are ________.

• A) plan for growth, adopt a growth-oriented business model, and stay committed to a core strategy

• B) appreciate the nature of business growth, stay committed to a core strategy, and plan for growth

• C) develop a viral marketing campaign, stay committed to a core strategy, and adopt a growth-oriented business model

• D) develop business partnerships, diversify beyond the company's core strategy, and appreciate the nature of business growth

• E) retain or hire one or more business growth consultants, diversify beyond the company's core strategy, and plan for growth

4) According to the textbook, the businesses that have the potential to grow the fastest over a sustained period of time are ones that ________.

• A) solve a significant problem or have a major impact on their customers' productivity or lives

• B) are cost leaders and promote themselves aggressively

• C) have a major impact on their customers' lives and sell high quality products

• D) take advantage of environmental trends and are cost leaders

• E) solve a significant problem or sell high quality products

5) Growth in both revenues and profits over a length of time is called ________ growth.

• A) limited

• B) normal

• C) abnormal

• D) sustained

• E) expected

6) ________ are(is) generated when increasing production lowers the average cost of each unit produced.

• A) Business scalability

• B) Economies of scale

• C) Reaching for scale

• D) Market leadership

• E) Economies of scope

7) Economies of scale occur when ________.

• A) increasing production lowers the average cost of each unit produced

• B) increasing production increases the average cost of each unit produced

• C) decreasing production lowers the average cost of each unit produced

• D) decreasing production increases the average cost of each unit

• E) increasing production increases the fixed cost of doing business

8) ________ costs are costs that a company incurs whether it sells something or not.

• A) Fixed

• B) Consistent

• C) Steady

• D) Variable

• E) Regular

9) Which of the following is NOT one of the five stages in the organizational life cycle?

• A) Introduction

• B) Early growth

• C) Scale

• D) Maturity

• E) Decline