MIMEntrepreneurshipReview for final

Professor Jerry Tepfer

1. The _________ element of the marketing mix involves decisions as to what is the most appropriate channel. A. productB. priceC. distributionD. promotion

 2. Which of the following is (are) not a key element in the pricing strategy? A. CostB. Margin or markupC. CompetitionD. Distribution 3. The _________ is the written statement of marketing objectives, strategies, and activities to be followed in the business plan. A. marketing planB. marketing mixC. marketing systemD. marketing structure

4. Which of the following is an internal environmental variable? A. The economyB. TechnologyC. Industry demandD. Financial resources

5. Financial resources and the management team are both examples of the: A. external environment.B. marketing mix decision variables.C. internal environment.D. feedback system.

6. The four variables that affect short-term marketing decisions are referred to as the: A. marketing mix.B. market segment.C. marketing plan.D. marketing system. 

7. The marketing mix consists of: A. product, price, research, and promotion.B. product, research, distribution, and promotion.C. product, price, distribution, and promotion.D. product, price, distribution, and research.

8. The __________ is the specific group of potential customers toward which a venture aims its marketing plan. A. target marketB. external environmental factorC. channel of distributionD. consumer market

9. Market segmentation is the process of: A. describing market conditions.B. dividing the market into smaller homogeneous groups.C. presenting future opportunities.D. exploring new market opportunities.

10. In business-to-business which advertising and promotion method would be the least likely to be used? A. Trade magazinesB. Direct salesC. Trade showsD. TV ads

11. The final price of a product or service is the sum of total cost plus profit margin. True    False

12. Unrealistic goals are a common reason for failure of the marketing plan. True    False

13. The marketing mix consists of the following variables: external environmental factors, internal environmental factors, and marketing strategy. True    False

14. When making decisions about pricing strategy, the entrepreneur should consider only costs directly associated with the product and ignore overhead. True    False

15. Liability is one of the most critical reasons for establishing a: A. limited liability company.B. corporation.C. partnership.D. sole proprietorship.

16. In a limited partnership, the limited partners: A. are liable only for the amount of their capital contributions.B. share the amount of personal liabilities equally.C. have only insurance as protection against liability suits.D. are allowed to decide on the amount of individual liabilities.

17. Which type of ownership is the least expensive to start? A. CorporationB. General partnershipC. Limited partnerD. Sole proprietorship

18. Which type of ownership is the most expensive to start? A. CorporationB. General partnershipC. Limited partnerD. Sole proprietorship

19. In which form of organization does the owner have greatest control? A. Sole proprietorshipB. Limited partnershipC. General partnershipD. Corporation

20. The board of directors: A. lacks voting authority.B. has responsibilities to represent all shareholders.C. is less objective than the entrepreneur.D. are always volunteers and need not be compensated.

21. Investors usually insist that the management team not operate the business as a part-time venture. True    False

22. The corporation is considered a legal person that is taxable and absorbs liability. True    False

23. When a business grows beyond stage one, submanagers are hired to coordinate aspects of the business. True    False

24. Since a corporation is recognized as a separate tax, it has the advantage of being able to take many deductions and expenses that are not available to the proprietorship or partnership. True    False

25. A board of advisors has less decision making authority than a board of directors does. True    False

26. Which of the following would be considered a variable expense? A. RentB. Raw materialsC. InterestD. Insurance

27. Fixed expenses: A. are incurred regardless of sales volume.B. can be estimated by taking into consideration the production.C. includes labor, raw materials, and commissions.D. must be linked to strategy in the business plan.

28. Fixed operating expenses include all of the following except: A. RentB. UtilitiesC. Raw MaterialsD. Depreciation

29. ______ is (are) the major source of revenue. A. Borrowing from banksB. Outside investors' contributionsC. SalesD. Dividends

30. Cash flow: A. results from the differences between cash receipts and cash payments.B. is the result of subtracting expenses from sales.C. is the same as profit.D. is the sum total of all sales at a point in time.

31. Negative cash flow: A. results when cash receipts exceed cash payments.B. can cause a firm to fail.C. is included in the pro forma income statement.D. is common for a business during its phase of expansion.

32. Pro forma cash flow is A. cash flow based on the actual.B. calculated from subtracting assets from liabilities.C. cash flow calculated on past receipts and expenses.D. projected cash inflow and outflow.

33. ________ represent(s) money that is owed to creditors. A. AssetsB. Cash flowC. Owner equityD. Liabilities

34. Current liabilities are: A. those liabilities due for payment within a year.B. everything owed to creditors.C. everything of value owned by the company.D. those liabilities that represent the excess over all assets.

35. Equipment would be included on the balance sheet in which section? A. current assetsB. fixed assetsC. retained earningsD. owner's equity

36. ________ is the amount owners have invested and/or retained from the venture operations: A. cash flowB. retained earningsC. profitD. owner's equity

37. Profit from the business would be included on the balance sheet in which section? A. AssetsB. LiabilitiesC. Owners equityD. Assets or liabilities

38. The formula for break-even analysis is: A. total fixed costs divided by selling price minus variable cost per unit.B. total variable costs divided by marginal contribution.C. total sales divided by selling price plus variable cost per unit.D. total fixed costs divided by selling price plus marginal contribution.

39. Break-even is that volume of sales at which there are neither profits nor losses. True    False

40. Cash flow is the same thing as profit. True    False

41. Many profitable firms fail because of lack of cash. True    False

42. Large positive cash flows usually occur in the first months of a new venture. True    False

43. As long as the selling price is less than the variable cost per unit, some contribution will be made to cover fixed costs. True    False

44. Typically, debt financing requires: A. an asset as collateral.B. a degree of ownership in the firm.C. reduction of short-term assets.D. reduction of working capital.

45. _______ financing entails obtaining funds for the company in exchange for ownership. A. BootstrapB. EquityC. DebtD. Commercial

46. In a factoring arrangement, the factor: A. takes no risk and sustains no losses.B. "buys" the accounts receivables of a firm.C. receives no interest payment.D. pays a premium for the firm's assets.

47. When borrowing from friends and family, the entrepreneur should avoid putting agreements in writing to avoid future disagreements. True    False

48. Debt financing requires the entrepreneur to repay the amount borrowed plus interest. True    False

49. In a factoring arrangement, the bank lends the business money using inventory as collateral. True    False

50. Venture capital firms prefer to invest in: A. high-potential ventures.B. conventional small businesses.C. privately-held middle market firms.D. ventures during the early stages.

51. Early stage financing is typically: A. easier to obtain than expansion financing.B. called seed or start-up capital.C. where venture capitalists are highly involved.D. used as working capital to support initial growth.

52. The informal risk-capital market is made up of: A. angels.B. stockbrokers.C. venture capitalists.D. commercial banks.

53. The largest percentage of venture capital funding is invested in: A. seed capital.B. start-up capital.C. expansion funds.D. acquisition funds.

54. Which section of the business plan is used for initial screening and provides the starting point for the venture-capital process? A. The executive summaryB. The industry and market analysisC. The mission statementD. Strategic plan

55. Venture capital firms expect returns in the range of: A. 15-20%.B. 25-35%.C. 40-60%.D. 100%.

56. Which factor in valuing your company is the most important? A. Future earnings capacityB. Book valueC. Outlook of the economyD. Market price of similar companies' stocks

57. The least liquid current asset, _____, is eliminated when calculating the acid test ratio. A. cashB. accounts receivableC. inventoryD. land

58. To attract venture capital funding, an investment must have significant capital appreciation potential. True    False

59. For the venture capitalist, the executive summary is the most important part of the business plan. True    False

60. Financial ratios are control mechanisms to test the financial strengths of a new venture. True    False

61. Angel investors typically finance firms that are close to their homes. True    False

62. There is more risk involved in financing a business's early operations, therefore, higher rates of return are expected. True    False

63. The inventory turnover ratio measures the efficiency of the venture in managing its inventory. True    False

64. ______ are used to characterize potential customers based upon their income, education, age, sex, and so forth. A. DemographicsB. Development strategiesC. DemocraciesD. Diversifications

65. The strategy for growth in which the entrepreneur encourages existing customers to buy more of the firm's current product is a: A. penetration strategy.B. product development strategy.C. market development strategy.D. diversification strategy.

66. The penetration growth strategy: A. focuses on developing new products for the existing market.B. relies on taking market share from competitors.C. expands the firm's product offering with complementary products.D. aims to take new products into new markets.

67. ______ strategies involve selling a new product to a new market. A. PenetrationB. Market developmentC. Product developmentD. Diversification

68. The _________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers. A. value chainB. inventoryC. electronic data interchangeD. market accounting system

69. ____________ refers to a diversification strategy that involves taking a step back (up) on the value chain toward the raw materials. A. Horizontal integrationB. Backward integrationC. Forward integrationD. Conglomerate integration

70. ____________ refers to a diversification strategy that involves taking a step forward (down) on the value-added chain toward the customers. A. Backward integrationB. Horizontal integrationC. Forward integrationD. Conglomerate integration

71. A computer company buys a hard-drive manufacturer. This is an example of: A. Backward integrationB. Horizontal integrationC. Forward integrationD. Conglomerate integration

72. A firm that manufactures washing machines starts to manufacture detergent illustrates _______ integration. A. BackwardB. ForwardC. HorizontalD. Side

73. Inventory control: A. is not necessary for small firms.B. eliminates the need to carry inventory.C. balances the cost of carrying inventory with the cost of lost sales.D. requires a computerized inventory system.

74. Forward integration is taking a step back on the value chain toward the raw materials. True    False

75. As a firm grows, higher volume increases production efficiency and increases its bargaining power with suppliers. True    False

76. Market development strategies involve selling the firm's existing products to a new group of customers, such as a new geographic market. True    False

77. Horizontal integration occurs at the same level of the value-added chain but simply involves a different, but complementary, value-added chain. True    False

78. Many entrepreneurs find that as they grow they need to change their management style. True    False

79. When compared to the costs of carrying excess inventory, the cost of lost sales is insignificant and should be ignored. True    False

80. Entrepreneurs who possess both the necessary abilities to make the transition to a more professional management approach and the aspiration to grow their businesses are the most likely to achieve firm growth. True    False

81. The person offering the franchise is known as the: A. franchisor.B. endower.C. franchisee.D. franchise.

82. The person who purchases the franchise is the: A. business architect.B. franchisor.C. franchisee.D. franchise.

83. The most common type of joint venture is: A. international joint ventures.B. created for cooperative research.C. an industry-university agreement.D. between two or more private sector companies.

84. Which of the following is not an advantage of franchising? A. No entry costB. Availability of management expertiseC. Product acceptanceD. Knowledge of the market

85. A _________ is a separate entity that involves a partnership between two or more active participants. A. mergerB. franchiseC. joint ventureD. leveraged buyout

86. Joint ventures are sometimes called: A. mergers.B. strategic alliances.C. acquisition.D. leveraged buyout.

87. One method of expanding a business is the purchase of an entire company or part of it so that the entity is completely absorbed and no longer exists as a separate company. This is called: A. a joint venture.B. an acquisition.C. a subsidiary.D. take over.

88. The concept that "the whole is greater than the sum of its parts" is known as: A. the price earnings ratio.B. synergy.C. the bargaining zone.D. integration.

89. A ________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash. A. leveraged buyoutB. mergerC. franchise agreementD. integrated task

90. Franchising involves payment of royalties in exchange for exclusive distribution rights. True    False

91. One advantage of franchising is that the entrepreneur usually enters into a business that has an accepted name and product. True    False

92. Franchising allows the franchisor to benefit from economies of scale in purchasing. True    False

93. Cultural differences between international joint venture partners can create management difficulties. True    False

94. To be successful the partners in a joint venture should have symmetry. True    False

95. A two to three year plan to sell a business to employees is: A. an ESOP.B. an acquisition.C. succession.D. the most popular method of exit.

96. The majority of bankruptcies are: A. corporate bankruptcies.B. partnership bankruptcies.C. S Corporation bankruptcies.D. individual bankruptcies.

97. Given the cultural climate of the U.S., business failure and bankruptcy: A. mean the entrepreneur can never hope to start over.B. carry such a stigma that the entrepreneur is disgraced and ostracized.C. do not have to be the end for the entrepreneur.D. means that there would be a change in the outlook of the people.

98. From the chapter on the characteristics of an entrepreneur, we know that after the failure of a business entrepreneurs are likely to: A. continue starting new ventures.B. look for a position working for someone else.C. go to work for the government.D. try again and fail.

99. Bankruptcy can be used as a bargaining chip with creditors to allow the venture to voluntarily reorganize. True    False

100. About 75 percent of family firms successfully make the transition to the third generation. True    False

 

final 2 Key

1. (p. 242) The _________ element of the marketing mix involves decisions as to what is the most appropriate channel. A. productB. priceC. distributionD. promotion

2. (p. 241-242) Which of the following is (are) not a key element in the pricing strategy? A. CostB. Margin or markupC. CompetitionD. Distribution 3. (p. 234) The _________ is the written statement of marketing objectives, strategies, and activities to be followed in the business plan. A. marketing planB. marketing mixC. marketing systemD. marketing structure  

4. (p. 235) Which of the following is an internal environmental variable? A. The economyB. TechnologyC. Industry demandD. Financial resources

5. (p. 235) Financial resources and the management team are both examples of the: A. external environment.B. marketing mix decision variables.C. internal environment.D. feedback system.

6. (p. 236) The four variables that affect short-term marketing decisions are referred to as the: A. marketing mix.B. market segment.C. marketing plan.D. marketing system.

7. (p. 236) The marketing mix consists of: A. product, price, research, and promotion.B. product, research, distribution, and promotion.C. product, price, distribution, and promotion.D. product, price, distribution, and research.

8. (p. 237) The __________ is the specific group of potential customers toward which a venture aims its marketing plan. A. target marketB. external environmental factorC. channel of distributionD. consumer market

9. (p. 238) Market segmentation is the process of: A. describing market conditions.B. dividing the market into smaller homogeneous groups.C. presenting future opportunities.D. exploring new market opportunities.

10. (p. 245) In business-to-business which advertising and promotion method would be the least likely to be used? A. Trade magazinesB. Direct salesC. Trade showsD. TV ads

11. (p. 242) The final price of a product or service is the sum of total cost plus profit margin. TRUE

12. (p. 246) Unrealistic goals are a common reason for failure of the marketing plan. TRUE

13. (p. 236) The marketing mix consists of the following variables: external environmental factors, internal environmental factors, and marketing strategy. FALSE

14. (p. 241) When making decisions about pricing strategy, the entrepreneur should consider only costs directly associated with the product and ignore overhead. FALSE

15. (p. 258) Liability is one of the most critical reasons for establishing a: A. limited liability company.B. corporation.C. partnership.D. sole proprietorship.

16. (p. 259) In a limited partnership, the limited partners: A. are liable only for the amount of their capital contributions.B. share the amount of personal liabilities equally.C. have only insurance as protection against liability suits.D. are allowed to decide on the amount of individual liabilities.

17. (p. 260) Which type of ownership is the least expensive to start? A. CorporationB. General partnershipC. Limited partnerD. Sole proprietorship

18. (p. 260) Which type of ownership is the most expensive to start? A. CorporationB. General partnershipC. Limited partnerD. Sole proprietorship

19. (p. 262) In which form of organization does the owner have greatest control? A. Sole proprietorshipB. Limited partnershipC. General partnershipD. Corporation

20. (p. 273-274) The board of directors: A. lacks voting authority.B. has responsibilities to represent all shareholders.C. is less objective than the entrepreneur.D. are always volunteers and need not be compensated.

21. (p. 257) Investors usually insist that the management team not operate the business as a part-time venture. TRUE

22. (p. 258) The corporation is considered a legal person that is taxable and absorbs liability. TRUE

23. (p. 269-270) When a business grows beyond stage one, submanagers are hired to coordinate aspects of the business. TRUE

24. (p. 265) Since a corporation is recognized as a separate tax, it has the advantage of being able to take many deductions and expenses that are not available to the proprietorship or partnership. TRUE

25. (p. 274) A board of advisors has less decision making authority than a board of directors does. TRUE

26. (p. 283) Which of the following would be considered a variable expense? A. RentB. Raw materialsC. InterestD. Insurance

27. (p. 283) Fixed expenses: A. are incurred regardless of sales volume.B. can be estimated by taking into consideration the production.C. includes labor, raw materials, and commissions.D. must be linked to strategy in the business plan.

28. (p. 283) Fixed operating expenses include all of the following except: A. RentB. UtilitiesC. Raw MaterialsD. Depreciation

29. (p. 285) ______ is (are) the major source of revenue. A. Borrowing from banksB. Outside investors' contributionsC. SalesD. Dividends

30. (p. 288) Cash flow: A. results from the differences between cash receipts and cash payments.B. is the result of subtracting expenses from sales.C. is the same as profit.D. is the sum total of all sales at a point in time.

31. (p. 289) Negative cash flow: A. results when cash receipts exceed cash payments.B. can cause a firm to fail.C. is included in the pro forma income statement.D. is common for a business during its phase of expansion.

32. (p. 291) Pro forma cash flow is A. cash flow based on the actual.B. calculated from subtracting assets from liabilities.C. cash flow calculated on past receipts and expenses.D. projected cash inflow and outflow.

33. (p. 293) ________ represent(s) money that is owed to creditors. A. AssetsB. Cash flowC. Owner equityD. Liabilities

34. (p. 293) Current liabilities are: A. those liabilities due for payment within a year.B. everything owed to creditors.C. everything of value owned by the company.D. those liabilities that represent the excess over all assets.

35. (p. 293) Equipment would be included on the balance sheet in which section? A. current assetsB. fixed assetsC. retained earningsD. owner's equity

36. (p. 294) ________ is the amount owners have invested and/or retained from the venture operations: A. cash flowB. retained earningsC. profitD. owner's equity

37. (p. 294) Profit from the business would be included on the balance sheet in which section? A. AssetsB. LiabilitiesC. Owners equityD. Assets or liabilities

38. (p. 294) The formula for break-even analysis is: A. total fixed costs divided by selling price minus variable cost per unit.B. total variable costs divided by marginal contribution.C. total sales divided by selling price plus variable cost per unit.D. total fixed costs divided by selling price plus marginal contribution.

39. (p. 294) Break-even is that volume of sales at which there are neither profits nor losses. TRUE

40. (p. 288) Cash flow is the same thing as profit. FALSE

41. (p. 289) Many profitable firms fail because of lack of cash. TRUE

42. (p. 290-291) Large positive cash flows usually occur in the first months of a new venture. FALSE

43. (p. 294) As long as the selling price is less than the variable cost per unit, some contribution will be made to cover fixed costs. FALSE

44. (p. 309) Typically, debt financing requires: A. an asset as collateral.B. a degree of ownership in the firm.C. reduction of short-term assets.D. reduction of working capital.

45. (p. 309) _______ financing entails obtaining funds for the company in exchange for ownership. A. BootstrapB. EquityC. DebtD. Commercial

46. (p. 313) In a factoring arrangement, the factor: A. takes no risk and sustains no losses.B. "buys" the accounts receivables of a firm.C. receives no interest payment.D. pays a premium for the firm's assets.

47. (p. 312) When borrowing from friends and family, the entrepreneur should avoid putting agreements in writing to avoid future disagreements. FALSE

48. (p. 309) Debt financing requires the entrepreneur to repay the amount borrowed plus interest. TRUE

49. (p. 313) In a factoring arrangement, the bank lends the business money using inventory as collateral. FALSE

50. (p. 336) Venture capital firms prefer to invest in: A. high-potential ventures.B. conventional small businesses.C. privately-held middle market firms.D. ventures during the early stages.

51. (p. 336) Early stage financing is typically: A. easier to obtain than expansion financing.B. called seed or start-up capital.C. where venture capitalists are highly involved.D. used as working capital to support initial growth.

52. (p. 337) The informal risk-capital market is made up of: A. angels.B. stockbrokers.C. venture capitalists.D. commercial banks.

53. (p. 345) The largest percentage of venture capital funding is invested in: A. seed capital.B. start-up capital.C. expansion funds.D. acquisition funds.

54. (p. 349) Which section of the business plan is used for initial screening and provides the starting point for the venture-capital process? A. The executive summaryB. The industry and market analysisC. The mission statementD. Strategic plan

55. (p. 349) Venture capital firms expect returns in the range of: A. 15-20%.B. 25-35%.C. 40-60%.D. 100%.

56. (p. 353) Which factor in valuing your company is the most important? A. Future earnings capacityB. Book valueC. Outlook of the economyD. Market price of similar companies' stocks

57. (p. 354) The least liquid current asset, _____, is eliminated when calculating the acid test ratio. A. cashB. accounts receivableC. inventoryD. land

58. (p. 349) To attract venture capital funding, an investment must have significant capital appreciation potential. TRUE

59. (p. 349) For the venture capitalist, the executive summary is the most important part of the business plan. TRUE

60. (p. 353) Financial ratios are control mechanisms to test the financial strengths of a new venture. TRUE

61. (p. 339-340) Angel investors typically finance firms that are close to their homes. TRUE

62. (p. 347-348) There is more risk involved in financing a business's early operations, therefore, higher rates of return are expected. TRUE

63. (p. 354) The inventory turnover ratio measures the efficiency of the venture in managing its inventory. TRUE

64. (p. 382) ______ are used to characterize potential customers based upon their income, education, age, sex, and so forth. A. DemographicsB. Development strategiesC. DemocraciesD. Diversifications

65. (p. 381) The strategy for growth in which the entrepreneur encourages existing customers to buy more of the firm's current product is a: A. penetration strategy.B. product development strategy.C. market development strategy.D. diversification strategy.

66. (p. 381) The penetration growth strategy: A. focuses on developing new products for the existing market.B. relies on taking market share from competitors.C. expands the firm's product offering with complementary products.D. aims to take new products into new markets.

 67. (p. 383) ______ strategies involve selling a new product to a new market. A. PenetrationB. Market developmentC. Product developmentD. Diversification 

68. (p. 383) The _________ captures the steps it takes to develop raw materials into a product and get it into the hands of customers. A. value chainB. inventoryC. electronic data interchangeD. market accounting system

69. (p. 383) ____________ refers to a diversification strategy that involves taking a step back (up) on the value chain toward the raw materials. A. Horizontal integrationB. Backward integrationC. Forward integrationD. Conglomerate integration

70. (p. 383) ____________ refers to a diversification strategy that involves taking a step forward (down) on the value-added chain toward the customers. A. Backward integrationB. Horizontal integrationC. Forward integrationD. Conglomerate integration

71. (p. 383) A computer company buys a hard-drive manufacturer. This is an example of: A. Backward integrationB. Horizontal integrationC. Forward integrationD. Conglomerate integration

72. (p. 384) A firm that manufactures washing machines starts to manufacture detergent illustrates _______ integration. A. BackwardB. ForwardC. HorizontalD. Side

73. (p. 392) Inventory control: A. is not necessary for small firms.B. eliminates the need to carry inventory.C. balances the cost of carrying inventory with the cost of lost sales.D. requires a computerized inventory system.

74. (p. 383) Forward integration is taking a step back on the value chain toward the raw materials. FALSE

75. (p. 387) As a firm grows, higher volume increases production efficiency and increases its bargaining power with suppliers. TRUE

76. (p. 382) Market development strategies involve selling the firm's existing products to a new group of customers, such as a new geographic market. TRUE

77. (p. 384) Horizontal integration occurs at the same level of the value-added chain but simply involves a different, but complementary, value-added chain. TRUE

78. (p. 388) Many entrepreneurs find that as they grow they need to change their management style. TRUE

79. (p. 392) When compared to the costs of carrying excess inventory, the cost of lost sales is insignificant and should be ignored. FALSE

80. (p. 402-403) Entrepreneurs who possess both the necessary abilities to make the transition to a more professional management approach and the aspiration to grow their businesses are the most likely to achieve firm growth. TRUE

81. (p. 413) The person offering the franchise is known as the: A. franchisor.B. endower.C. franchisee.D. franchise.

82. (p. 413) The person who purchases the franchise is the: A. business architect.B. franchisor.C. franchisee.D. franchise.

83. (p. 422) The most common type of joint venture is: A. international joint ventures.B. created for cooperative research.C. an industry-university agreement.D. between two or more private sector companies.

84. (p. 415-417) Which of the following is not an advantage of franchising? A. No entry costB. Availability of management expertiseC. Product acceptanceD. Knowledge of the market

85. (p. 421) A _________ is a separate entity that involves a partnership between two or more active participants. A. mergerB. franchiseC. joint ventureD. leveraged buyout

86. (p. 421) Joint ventures are sometimes called: A. mergers.B. strategic alliances.C. acquisition.D. leveraged buyout.

87. (p. 424) One method of expanding a business is the purchase of an entire company or part of it so that the entity is completely absorbed and no longer exists as a separate company. This is called: A. a joint venture.B. an acquisition.C. a subsidiary.D. take over.

88. (p. 425) The concept that "the whole is greater than the sum of its parts" is known as: A. the price earnings ratio.B. synergy.C. the bargaining zone.D. integration.

89. (p. 429) A ________ occurs when an entrepreneur or an employee group uses borrowed funds to purchase an existing venture for cash. A. leveraged buyoutB. mergerC. franchise agreementD. integrated task

90. (p. 413) Franchising involves payment of royalties in exchange for exclusive distribution rights. TRUE

91. (p. 413) One advantage of franchising is that the entrepreneur usually enters into a business that has an accepted name and product. TRUE

92. (p. 415) Franchising allows the franchisor to benefit from economies of scale in purchasing. TRUE

93. (p. 423) Cultural differences between international joint venture partners can create management difficulties. TRUE

94. (p. 423) To be successful the partners in a joint venture should have symmetry. TRUE

95. (p. 446) A two to three year plan to sell a business to employees is: A. an ESOP.B. an acquisition.C. succession.D. the most popular method of exit.

96. (p. 448) The majority of bankruptcies are: A. corporate bankruptcies.B. partnership bankruptcies.C. S Corporation bankruptcies.D. individual bankruptcies.

97. (p. 455) Given the cultural climate of the U.S., business failure and bankruptcy: A. mean the entrepreneur can never hope to start over.B. carry such a stigma that the entrepreneur is disgraced and ostracized.C. do not have to be the end for the entrepreneur.D. means that there would be a change in the outlook of the people.

98. (p. 455) From the chapter on the characteristics of an entrepreneur, we know that after the failure of a business entrepreneurs are likely to: A. continue starting new ventures.B. look for a position working for someone else.C. go to work for the government.D. try again and fail.

99. (p. 451) Bankruptcy can be used as a bargaining chip with creditors to allow the venture to voluntarily reorganize. TRUE

100. (p. 443) About 75 percent of family firms successfully make the transition to the third generation. FALSE