MGT 241 final - Flashcards

question

Planning is not essential to the success of an undertaking.

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false

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Factors that must be addressed when planning a new venture include setting realistic goals, determining milestones, making a commitment, and having flexibility.

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true

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One of the indicators of the failure to anticipate roadblocks is a lack of priorities.

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false

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A lack of demonstrated experience, no clear market niche, a failure to anticipate roadblocks, no realistic goals set, and a lack of commitment are pitfalls or common points of failure that occur before an entrepreneur ever gets a plan reviewed.

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true

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Lack of any time frame to accomplish things is an indicator of the pitfall known as no realistic goals.

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true

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The easiest way to avoid the pitfall of no commitment or dedication is to designate that the venture is a hobby or a whim.

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false

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An investment prospectus is the same as a business plan.

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true

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The major purpose of a business plan is its utilization as a working document.

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false

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A business plan must illustrate the current status of the venture but not the projected results.

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false

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The business plan is the entrepreneur's road map for a successful enterprise.

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true

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One of the benefits of a business plan for a financial source is that it forces the source to view the plan for miscalculations.

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false

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An entrepreneur is much better off preparing his or her own business plan rather than hiring someone else, even if more experienced, to prepare it.

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true

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A business plan should be no more than 150 pages.

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false

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Because of the competition for funding, an entrepreneur's business plan needs to capture the reader's interest right away by stating the uniqueness of the venture.

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true

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There are only two viewpoints from which a business plan should be written, the entrepreneur's and the financial source.

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false

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An entrepreneur should include a three- to five-year financial projection so that the financial source can adequately evaluate the venture.

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true

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A summary gives a brief overview of what is the follow, helps us put all of the information into perspective, and should be no longer than ten pages.

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false

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A "niche" is a homogeneous group with common characteristics (i.e., all the people who have a need for a newly proposed product or service).

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true

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The manufacturing segment of the business plan should identify key personnel, their responsibilities and their positions, and career experience that qualifies them for those particular roles.

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false

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The pro forma balance sheet is used in the critical risk segment of the business plan

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false

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One suggestion for helping to recall key examples, visual aids, and other details when presenting the business plan is to utilize key words in the outline.

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true

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The entrepreneur should expect to encounter a friendly and supportive audience when presenting the business plan to potential financial sources.

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false

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The entrepreneur's professionalism and how well he or she handles the venture capitalist is far more important than being well organized and prepared.

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false

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In preparing a business plan for oral presentation, the entrepreneur should scan the outline once or twice.

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false

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A common mistake is business planning is to purge all acronyms and technical jargon from the plan

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false

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Every business plan should provide information about future harvest strategies.

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true

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After delivering a pitch, it is not acceptable to question venture capitalists who turn down a funding opportunity.

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false

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Planning entails the information of ______ and ______ for the future of a venture

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goals;directions

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In planning, there are a number of critical factors that must be addressed. On that the textbook mentions is

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commitment

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Which of the following is not a critical factor that should be addressed in planning a venture?

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specific profit goals

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The comprehensive business plan should be the result of

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reflections on the direction of the venture

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Which of the following is a pitfall to avoid in planning, according to the textbook author?

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Lack of priorities

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To avoid the pitfall of "no market niche" (segment), do what?

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clearly target a niche

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A business plan should illustrate

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the projected needs of the new business

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An indicator of the planning pitfall of "failure to anticipate roadblocks" is

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making no admission of possible flaws in the plan

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An indicator of the planning pitfall of "no commitment or dedication" is

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excessive procrastination

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An indicator of the planning pitfall of "no realistic goals" is

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lack of timetable to accomplish things

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Sometimes a business plan is referred to as

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a loan proposal

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The major thrust of the business plan, as defined in the textbook, is

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to encapsulate the strategic development of the project in a comprehensive document

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A business plan is

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a written document that details the proposed venture

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In some professional areas, the business plan is referred to as

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and investment prospectus

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Which of the following statements about a business plan is true?

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It is the minimum document required by financial sources

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A business plan

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may help an entrepreneur avoid a project that is "doomed" from the start

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To an entrepreneur, one of the benefits of a business plan is

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both a and b a. the development of operating strategies for outside evaluators. b. benchmarks for comparing forecasts with actual results

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It is important that an entrepreneur

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prepare his or her own plan

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The completed business plan provides the entrepreneur with

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a tool for communicating with financial sources

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Which of the following is not an important aspect of an entrepreneurial venture?

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family support

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Which of the following would be a benefit gained by financial sources from a business plan?

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The venture's ability to service debt of provide an adequate return on equity

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Which of the following is the most common viewpoint in business plans?

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the entrepreneur's viewpoint

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Which of the following is not one of the steps in reading a business plan discussed in the text?

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the thorough reading of each section

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A business plan _________ potential financial backers.

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establishes a first impression of the company and its principles on

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Which of the following describes advantages of the business plan for financial sources?

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the plan identifies critical risks

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It is recommended that the final copy of the business plan be

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put in a plastic folder

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The cover page should bear

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the name of the company

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An important guideline in putting the plan together is

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to identify the target market

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How can entrepreneurs best orient their plans towards the future?

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by developing trends and forecasts that describe what the venture intends to do

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Which of the following statements is not part of the "five-minute reading" by venture capitalists?

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Determine the strengths and weaknesses of the entrepreneur

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The recommended length of a business plan is

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about 20 to 25 pages

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Which of the following statements would not be an appropriate guideline for successful business plan development?

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Orient the plan to the present

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One thing that should be included in the business description is

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industry background

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A critical point to be included in the business description is

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the potential advantages then new venture has over the competition

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The second section of a business plan is

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the business description

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Which of the following is part of the marketing segment?

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the competitive analysis

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Which of the following is a critical factor to be considered in the management segment?

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organizational structure

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Which of the following statements may be the most important in new venture creation?

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the cash flow statement

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Blueprints, sketches, drawings, and models are often important features to be placed in what section of the business plan?

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research, design and development segment

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Which of the following is a critical factor that should be discusses in the management segment?

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board of directors and consultants

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The textbook recommends which of the following devices to help in the oral presentation of a business plan

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keywords on an outline

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Which of the following is something an entrepreneur should not do when preparing for the oral presentation of a business plan?

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make the presentation rigid

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Which of the following questions should an entrepreneur ask when a business plan is turned down?

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"If you were in my position, how would you proceed?"

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The entrepreneur must be

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able to handle questions from the evaluators

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Should a business plan/venture be turned down the first time, the entrepreneur should

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revise, rework, and improve the plan

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The day of the presentation, the entrepreneur should arrive early to

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set up, test any equipment, and organize notes and visual aids

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What is the significance of a harvest strategy segment in a business plan?

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It is important for the entrepreneur to designate how the business will recruit new talent to the enterprise.

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The actual need for systematic planning will vary with the nature, size, and structure of the business.

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true

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Formal planning can be divided into strategic and nonstrategic.

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false

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A "SWOT" analysis refers to analyzing strengths, weaknesses, opportunities, and threats.

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true

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The "best" strategic plan will be influenced by the abilities of the entrepreneur, the complexity of the venture, and the nature of the industry.

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true

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Participation by subordinates in a strategic plan is never appropriate.

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false

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Most entrepreneurs are unfamiliar with planning information sources.

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true

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Strategic planning is not an easy task for new ventures.

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true

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Research has shown a distinct lack of planning on the part of new ventures.

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true

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Small firm owners/managers are usually very open and trusting about their businesses and the decisions that affect them.

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false

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Lack of expertise has never been considered a reason for the lack of strategic planning in new ventures.

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false

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Many research studies suggest that strategic planning influence's a venture's survival.

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true

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Improved performance is often the result of better planning.

answer

true

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High - and low-performing firms have many similarities and differences in their long-range planning effort.

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true

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Misunderstanding industry attractiveness can be a fatal flaw in strategic planning.

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true

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The entrepreneurial strategy matrix measures risk and innovation.

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true

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Wealth creation occurs at the intersection of entrepreneurial and strategic actions.

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true

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In principle, incumbents and entrepreneurs face the same challenges in finding new strategic positions. In practice, incumbents often have an edge.

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false

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New ventures rarely exhibit a typical life cycle.

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false

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During the growth stage of a venture, entrepreneurs shift into a managerial style.

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true

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In administrative cultures, there is a need for clearly defined authority and responsibility.

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true

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Emerging ventures that are rapidly expanding with constantly increasing personnel size and market operations will need

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to formalize planning because there is a great deal of complexity

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Formation of long-range plans for effective management in light of a venture's strengths and weaknesses is referred to as

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strategic planning

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In many new small ventures planning is often

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lacking

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Analysis of a firm's external and internal environments provides the firm with the information to develop

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strategic intent and strategic mission

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A "SWOT" analysis refers to

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strength, weaknesses, opportunities, and threats.

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Which of the following factors would not be considered a key dimension that shapes the strategic management activities of a growing firm?

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lack of knowledge

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A reason for lack of strategic planning has been found to be

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lack of expertise

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The reason many small business managers lack expertise is that they are

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generalists

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Which is not perceived as a difficulty in long-range planning?

answer

arranging vacation time

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New ventures are important to the economy in terms of

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both a and b a. innovation b. employment

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Which of the following is not a reason for the lack of planning in new ventures?

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lack of dominance

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A reason new venture managers lack knowledge in the strategic planning process is because

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they have minimal exposure to the planning process

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Small business owners are often guarded about their business, which leads to

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distrust of others when formulating a strategic plan

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When it comes to strategic planning, most small firms

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really do not engage in true strategic planning

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Which of the following would be considered fatal mistakes in strategic planning, according to researcher Micheal E. Porter?

answer

a and c only a. no real competitive advantage c. compromising strategy for growth

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The entrepreneurial strategy matrix measures:

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risk and innovation

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In the entrepreneurial strategy matrix, the probability of a major financial loss is categorized as

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a risk

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In the entrepreneurial strategy matrix, the creation of something new and different is categorized as

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an innovation

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In the strategy matrix model, innovation is defined as

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something new and different

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All of the following are characteristic of administrative cultures except:

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need to reduce risk

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All of the following are characteristic of entrepreneurial cultures except:

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hierarchy

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Which is not a distinct form of tolerance for failure?

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innovation failure

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Which of the following management principles does not emanate from Steve Jobs?

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strive to reach practical milestones

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The past is the best predictor of the future, according to which mind-set?

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the managerial mind-set

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What is the one-person-band syndrome?

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failure to delegate

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The textbook describes three types of leadership of consequence to new ventures. What are they?

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visionary, strategic, and managerial

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Unique managerial concerns of growing ventures encompass all of the following except:

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agency problems

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Tangible assets as well as intangible assets of a business need to be assessed for proper venture evaluation.

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true

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"Why is the business being sold?" in not an important question to ask when analyzing the viability of buying a business.

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false

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An entrepreneur does not need to know how to calculate the value of a competitor's operation.

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false

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Business valuation is essential when attempting to buy out a partner.

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true

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Buyers and sellers assign different values to a business

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true

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Emotional bias is not an underlying issue in valuing a business

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false

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Entrepreneurs should try to be as objective as possible in determining the fair market value for their enterprise.

answer

true

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Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

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true

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One of the most common reasons for acquiring a business is developing more growth-phase products.

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true

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Insufficient controls signify strength when analyzing the business being valued.

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true

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Adjusted tangible book value is a popular method of valuation.

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true

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The price/earnings ratio (multiple of earnings) method is determined by dividing the market price of common stock by retained earnings.

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false

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The real value of any venture is its potential earning power.

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true

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The timing of projected income or cash flows is not a critical factor in establishing the value of a firm.

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false

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Replacement value of a business is based upon the value of each asset if it had to be replaced at a certain cost.

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true

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Avoiding start-up costs is a factor to consider when valuing a business.

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true

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Brazil's human, mineral, and agricultural resources are on par with those of the United States.

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true

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When a company is liquidated, preferred stock holders received a certain fixed amount after assets are distributed to common stock holders.

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false

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Knowing a venture's pre-money valuation is not possible.

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false

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On what occasion is a business valuation not usually essential?

answer

when hiring a new director of operations

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Specific factors of a venture being offered for sale that should be examined include

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profits, sales, and operation ratios

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Emotional bias is likely to have what effect on a seller's valuation of a business?

answer

increase the valuation

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What is a rollup?

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the acquisition and merging of small companies in the same market

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________ refers to conducting a thorough analysis of every facet of an existing business.

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Due diligence

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Closely held ventures usually suffer from which of the following shortcomings?

answer

a lack of management depth

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Besides the purchase price, what else should be considered when buying a business?

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all of the above a. new inventory and living expenses b. three months' operating expenses and sales tax

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Which of the following is not a shortcoming that many closely held ventures possess?

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high equity and low debt

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Traditional valuation methods including all of the following except:

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high equity/low debt

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If cash flow is deemed the most important consideration in buying a business, which valuation method is likely to be used?

answer

discounted earnings

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When considering sales and distribution, the entrepreneur should be concerned about

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whether any sales are made on consignment

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When considering employees, the entrepreneur should be concerned about

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total number of employees by function

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When considering physical facilities, the entrepreneur should be concerned about

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which facilities are owned vs. leased

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When considering management, the entrepreneur should be concerned about

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ownership positions

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Return on investment

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is net profit divided by investment

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The primary advantage of the price/earnings approach to valuation is that

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it is simple to use

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The discounted earnings method of valuation establishes

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potential earning power

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Price/earnings ratio is a method of valuation that is

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most common with public corporations

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When Facebook went public in May of 2012, what was its starting valuation?

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more than $100 billion but less than $150 billion

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A drawback to the price/earnings ratio method is that

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the stated net income of a private company may not truly reflect its actual earning power

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What hidden costs are involved when establishing the value of a firm

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personal expenses

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Goodwill, family members on the payroll, and planned losses are examples of

answer

establishing the value of a firm

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If you agree that the real value of a business venture is its potential earning power, which valuation method, more than the others, would best determine its true value?

answer

discounted earnings method

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Which of the following are considered methods for valuation of a venture?

answer

a and c are correct a. return on investment c. multiple of earnings

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Book value of a firm is also known as

answer

balance sheet method

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Which of the following methods of valuation was developed by the U.S Treasury to determine a firm's intangible assets?

answer

excess earnings

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What does a post-money valuation include that a pre-money valuation does not?

answer

venture capital investment

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An adjusted tangible book value method includes

answer

both a and b a. goodwill b. patents

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The price/earnings ratio is determined by

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dividing market price of common stock by earnings per share

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Potential earning power, which determines the true value of the firm, is best calculated using

answer

the discounted earnings method

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One reason to keep projections in perspective is

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fluctuating markets

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Some buyers are willing to pay more for a business than what valuation methods determine its worth to be. What are these buyers attempting to avoid?

answer

start-up costs

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Sales and earnings of a venture are projected from

answer

historical financials

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In the context of buying a business, a know commodity may command a higher price for what reason?

answer

avoiding start-up costs has value

question

When is the size of the labor force in Africa expected to top that of China?

answer

by 2040

MGT 241 final – Flashcards

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