Ch14: Chapter 14: Entrepreneurial Growth
True/False
1. As the organization grows, managerial skills substitute entrepreneurial skills.
Ans: False
2. Essentially customer needs do not change, therefore you need to identify them and stick to your
knitting.
Ans: False
3. Managers should constantly develop the firm’s entrepreneurial capability.
Ans: True
4. The opportunity domain is one of the four driving forces in the growth stages of any firm.
Ans: True
5. A typical acquisition gives the owner 50% in cash and 50% in the acquiring company’s stock.
Ans: False
6. It is always best to appoint a CEO from the employees who were with the company from the very
beginning.
Ans: False
7. Businesses with less risk and complexity are the most wanted candidates for acquisitions.
Ans: False
,8. At the core of the growth model lies execution.
Ans: True
9. Stockholders have the largest impact on a firm’s growth potential.
Ans: False
10. During the early growth, the entrepreneur needs to focus on the company’s strategy.
Ans: True
11. Execution has the most direct link to profits.
Ans: True
12. The most critical first task in transitioning beyond startup is to sustain an entrepreneurial
organization.
Ans: False
13. Managing cash is one of the key objectives of a control system.
Ans: True
14. You should try to implement a complex system of control from the early stages of growth.
Ans: False
15. Rapidly growing administrative and selling expenditures are often appropriate.
Ans: True
,16. Performance measures in an early-stage company are designed more for helping in
entrepreneurial decision-making than for evaluating current performance.
Ans: True
17. Performance measures for a growing firm should be simple and inexpensive to track.
Ans: True
18. The Cash Cycle shows the relationship between three key ratios: days in payables, assets
turnover, and days sales are outstanding.
Ans: False
19. It is possible to have a negative cash conversion period.
Ans: True
20. Diversifying opportunities in early stages of the company gives better results than crafting only
one.
Ans: False
21. The company should be driven only by opportunities that leverage current capabilities.
Ans: False
22. Bootstrapping policy should not be discontinued once the company is successful.
Ans: True
23. Key people in the organization are hired professional managers.
, Ans: False
24. The best management team consists of both internally promoted and externally hired people.
Ans: True
25. As the company grows, bureaucracy has to be increasingly instilled to help coordinate different
departments.
Ans: False
Multiple Choice
1. What does entrepreneurship begin with?
a) Leadership
b) Loan
c) Challenge
d) Opportunity
e) Management team
Ans: d
2. What is the least likely to lead to failing to manage a company’s growth?
a) Having limited time and resources to spend on organization building
b) Spending a lot of time on day-to-day operations
c) Chasing a lot of opportunities
d) Spending lots of time on planning
e) Not having a strong management team
Ans: d
3. What skills are becoming increasingly important at later stages of a company?
a) Marketing
b) Managerial
c) Organizational
d) Entrepreneurial
True/False
1. As the organization grows, managerial skills substitute entrepreneurial skills.
Ans: False
2. Essentially customer needs do not change, therefore you need to identify them and stick to your
knitting.
Ans: False
3. Managers should constantly develop the firm’s entrepreneurial capability.
Ans: True
4. The opportunity domain is one of the four driving forces in the growth stages of any firm.
Ans: True
5. A typical acquisition gives the owner 50% in cash and 50% in the acquiring company’s stock.
Ans: False
6. It is always best to appoint a CEO from the employees who were with the company from the very
beginning.
Ans: False
7. Businesses with less risk and complexity are the most wanted candidates for acquisitions.
Ans: False
,8. At the core of the growth model lies execution.
Ans: True
9. Stockholders have the largest impact on a firm’s growth potential.
Ans: False
10. During the early growth, the entrepreneur needs to focus on the company’s strategy.
Ans: True
11. Execution has the most direct link to profits.
Ans: True
12. The most critical first task in transitioning beyond startup is to sustain an entrepreneurial
organization.
Ans: False
13. Managing cash is one of the key objectives of a control system.
Ans: True
14. You should try to implement a complex system of control from the early stages of growth.
Ans: False
15. Rapidly growing administrative and selling expenditures are often appropriate.
Ans: True
,16. Performance measures in an early-stage company are designed more for helping in
entrepreneurial decision-making than for evaluating current performance.
Ans: True
17. Performance measures for a growing firm should be simple and inexpensive to track.
Ans: True
18. The Cash Cycle shows the relationship between three key ratios: days in payables, assets
turnover, and days sales are outstanding.
Ans: False
19. It is possible to have a negative cash conversion period.
Ans: True
20. Diversifying opportunities in early stages of the company gives better results than crafting only
one.
Ans: False
21. The company should be driven only by opportunities that leverage current capabilities.
Ans: False
22. Bootstrapping policy should not be discontinued once the company is successful.
Ans: True
23. Key people in the organization are hired professional managers.
, Ans: False
24. The best management team consists of both internally promoted and externally hired people.
Ans: True
25. As the company grows, bureaucracy has to be increasingly instilled to help coordinate different
departments.
Ans: False
Multiple Choice
1. What does entrepreneurship begin with?
a) Leadership
b) Loan
c) Challenge
d) Opportunity
e) Management team
Ans: d
2. What is the least likely to lead to failing to manage a company’s growth?
a) Having limited time and resources to spend on organization building
b) Spending a lot of time on day-to-day operations
c) Chasing a lot of opportunities
d) Spending lots of time on planning
e) Not having a strong management team
Ans: d
3. What skills are becoming increasingly important at later stages of a company?
a) Marketing
b) Managerial
c) Organizational
d) Entrepreneurial
