Family Business Management
Exam Materials
Course Introduction
Family Business Management explores the unique dynamics, challenges, and opportunities involved in businesses owned and operated by families. This course examines the structures, governance, succession planning, and conflict resolution strategies critical to sustaining family firms across generations. Students will learn about balancing family values and business objectives, professionalizing operations, and navigating interpersonal relationships, alongside case studies highlighting both successful and struggling family enterprises. The curriculum equips participants with practical tools and frameworks to support effective decision-making and long-term growth within the context of family-owned organizations.
Recommended Textbook
Essentials of Entrepreneurship and Small Business Management 9th Edition by
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17 Chapters
1957 Verified Questions
1957 Flashcards
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Page 2
Norman M. Scarborough
Chapter 1: The Foundations of Entrepreneurship
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) Which of the following is not a characteristic of a successful working relationship between copreneurs?
A)A clear definition of one partner as "boss" and the other as "subordinate."
B)Compatible business and life goals.
C)Complementary business skills.
D)A clear division of roles and authority based on each partner's skills and abilities.
Answer: A
Q2) Serial entrepreneurs repeatedly start businesses and grow them to a sustainable size before striking out again.
A)True
B)False
Answer: True
Q3) Research has isolated a set of characteristics that can predict who will succeed as an entrepreneur.
A)True
B)False
Answer: False
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Chapter 2: Ethics and Social Responsibility: Doing the Right Thing
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) According to the ________, one should "choose the option that offers the greatest good for the greatest number of people."
A)television test
B)utilitarian principle
C)family test
D)golden rule
Answer: B
Q2) Which of the following is not something that a small business owner should do to manage a culturally diverse workforce successfully?
A)Learn to recognize and correct other's biases and stereotypes.
B)Avoid making invalid assumptions.
C)Concentrate on communication.
D)Continue to adjust your company to your workers.
Answer: A
Q3) Few other stakeholders are as important to a business as its employees.
A)True
B)False
Answer: True
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Chapter 3: Creativity and Innovation: Keys to Entrepreneurial Success
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) Creative people are not prolific thinkers.
A)True
B)False Answer: False
Q2) Failure is an important part of the creative process, as it provides a chance to learn how to succeed.
A)True
B)False Answer: True
Q3) Creative people see problems as springboards for new ideas.
A)True
B)False
Answer: True
Q4) Steps in the patent process include ________.
A)establishing whether it is a novelty
B)documenting and verifying the date the idea was first conceived
C)searching existing patents
D)All of the above
Answer: D
Page 5
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Chapter 4: Conducting a Feasibility Analysis and Designing a Business Model
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Generally, an industry is more attractive when companies in the industry have ________ switching costs to go from one supplier to another.
A)high
B)moderate
C)significant
D)low
Q2) Which of the following is not a barrier to entry?
A)Capital requirements
B)Large number of buyers
C)Specialized knowledge
D)Access to distribution channels
Q3) An idea assessment is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn that idea into a business.
A)True
B)False
Q4) The ideal size of a focus group is 20-25.
A)True
B)False
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Chapter 5: Crafting a Business Plan and Building a Solid Strategic Plan
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Which of the following is not a recommended method of collecting competitive intelligence?
A)Attend trade shows and collect competitors' sales literature.
B)Buy competitors' products or services and assess their quality and features, benchmarking their products and services against yours.
C)Pay competitors' employees to become informants about their companies' strategies, markets, and trade secrets.
D)Watch for employment ads from competitors to determine the types of workers they are hiring.
Q2) Small companies' core competencies are often the result of benefits such as agility, speed, closeness to customers, superior service, and innovative ability - all of which are size advantages that allow them to do things that their larger competitors cannot.
A)True
B)False
Q3) The mission statement addresses the first question of any business venture: "What business am I in?"
A)True
B)False
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Chapter 6: Forms of Business Ownership
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) Would you recommend Duke establish an S corporation? What conditions would he have to meet?
Q2) Outline the incorporation process.
Q3) Which of the following generally is not required by a Certificate of Incorporation?
A)The names and the addresses of the incorporators.
B)A statement of the corporation's purpose.
C)A statement of how stock proceeds will be used.
D)The corporation's bylaws.
Q4) What factors should an entrepreneur consider when choosing a form of ownership?
Q5) There is no limit to the number of general partners a partnership may have, but it must have at least one general partner.
A)True
B)False
Q6) Most states do not require a Certificate of Incorporation or a charter to be filed for a new corporation.
A)True
B)False
Q7) Should Duke incorporate or should he remain a proprietorship? Why?
8
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Chapter 7: Buying an Existing Business
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) Earn-out is when the seller agrees to accept a percentage of the sales price and stays on to manage the business for a few more years under the new owner.
A)True
B)False
Q2) When buying a business, an entrepreneur can usually purchase equipment and fixtures at prices well below their book value.
A)True
B)False
Q3) What is the "hidden market?"
Q4) Discounted future earnings is the most common business valuation method.
A)True
B)False
Q5) The primary focus of the self-audit is to identify the type of business that you will be happiest and most successful owning.
A)True
B)False
Q6) What should the new owner do to avoid a bumpy transition?
Q7) What is the market approach to business valuation?
Page 9
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Chapter 8: Franchising and the Entrepreneur
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) The principle of placing smaller franchise units directly in the paths of potential customers is referred to as intercept marketing.
A)True
B)False
Q2) McDonald's is an example of a ________ franchise.
A)conversion forms
B)trade name
C)product distribution
D)pure
Q3) A significant advantage a franchisee has over an independent business is the participation in the franchisor's ________ largely due to the ________ the franchise offers.
A)centralized buying power; buying insight
B)centralized buying power; brand protection
C)centralized buying power; economies of scale
D)economies of scale; territorial protection
Q4) One of the first lessons in franchising is, "Do your homework before you get out your checkbook."
A)True
B)False
Page 10
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Chapter 9: Building a Powerful Bootstrap Marketing Plan
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) Which of the following is not a suggestion for using time compression management (TCM)to turn speed into a competitive advantage?
A)Instill speed in the company's culture.
B)Use technology to find shortcuts wherever possible.
C)Pay workers more if they do their jobs the same way - only faster.
D)Set aggressive goals for time reduction and stick to them.
Q2) Which of the following is not one of the objectives a bootstrap marketing plan should accomplish?
A)Determine customer needs and wants through market research.
B)Determine how the company will be able to serve all customers.
C)Analyze the firm's competitive advantages and build a marketing strategy around them.
D)Create a marketing mix that meets customer needs and wants.
Q3) A "shotgun approach" to marketing is the small business' secret to competing successfully with larger rivals and their bigger marketing budgets.
A)True
B)False
Q4) How can Marvin develop "stellar" customer service?
Q5) What marketing potential does the Internet offer small business owners?
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Chapter 10: E-Commerce and the Entrepreneur
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) It is important that customers trust the Web sites they visit and one study reports that 89 percent of consumers worry about their privacy online.
A)True
B)False
Q2) Click-through rate measures the proportion of people who see an online ad and actually click on it to reach the company's Web site.
A)True
B)False
Q3) ________ percent of Pinterest users are women.
A)81
B)74
C)67
D)61
Q4) Successful e-tailers have discovered that these factors enhance their reputations for online customer service ________.
A)comprehensive FAQ pages and e-mail order confirmation with shipment notices
B)visible telephone and e-mail contact information
C)quick responses to questions with meaningful information
D)All of these factors enhance a Web-based reputation.
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Chapter 11: Pricing and Credit Strategies
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) When a small business owner does not want to make a pricing decision, he can use a suggested retail pricing strategy.
A)True
B)False
Q2) A technique that involves selling a product for a low price and charging a higher price for the accessories that accompany it is called ________ pricing.
A)multiple-unit
B)optional product
C)captive-product
D)by product
Q3) One of the requirements to be able to offer ________ credit is to make certain that the firms' cash position is ________.
A)installment; positive
B)installment; strong enough to support the additional pressure
C)trade; positive
D)trade; strong enough to support the additional pressure
Q4) The average credit card holder in the United States has 3.75 credit cards.
A)True
B)False
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Chapter 12: Creating a Successful Financial Plan
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Pro forma financial statements show a company's most recent financial position.
A)True
B)False
Q2) The net profit to asset ratio measures ________.
A)the owner's rate of return on investment
B)how much profit a company generates for each dollar of assets that it owns
C)a company's profit per dollar of sales
D)a company's ability to generate sales in relation to its asset base
Q3) Line T is the ________ line, while line S is the ________ line.
A)total revenue; total expense
B)total expense; total revenue
C)fixed cost; variable cost
D)variable cost; fixed cost
Q4) Refer to the income statement and balance sheet. Prepare a ratio analysis for Bowden Brake Service. In addition, use the following industry statistics for firms like Jim's to explain and interpret what these ratios mean.
Q5) Suppose that a market survey indicates that Anthony's proposed business is likely to generate only $190,000 in sales. What net profit should Anthony expect to earn?
Q6) Calculate Harry's break-even point.
Page 14
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Chapter 13: Managing Cash Flow
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) A cash budget ________.
A)is based on the cash method of accounting
B)is a "cash map," showing the amount and the timing of cash flowing into and out of the business over a given period of time
C)will never be completely accurate since it is based on forecasts
D)All of the above
Q2) Identify the "big three" of cash management. As a small business consultant, what would you recommend your clients do to control the "big three" more effectively?
Q3) The objectives of cash management are to adequately meet the cash demands of the business, to avoid retaining unnecessarily large cash balances, and to stretch the profit-generating power of each dollar the business owns.
A)True
B)False
Q4) Most small businesses conduct a thorough credit investigation before selling to a new customer.
A)True
B)False
Q5) What steps can a small business owner take to minimize bad debt losses?
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Chapter 14: Choosing the Right Location and Layout
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Zoning is a system that divides a city or country into small cells or districts to control the use of land, buildings, and sites.
A)True
B)False
Q2) One of the key factors in choosing a location for a convenience store is finding a location with high traffic volume and easy accessibility.
A)True
B)False
Q3) Discuss the various sources of information available to the small business owner for deciding in which region of the country to locate her/his business.
Q4) Few decisions are as important for retailers as the choice of a location.
A)True
B)False
Q5) One element of the location decision common to all businesses is the need to locate where customers want to do business.
A)True
B)False
Q6) List and explain the main location criteria for retail and service businesses.
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Chapter 15: Sources of Financing: Equity and Debt
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) The primary disadvantage of equity capital is that the entrepreneur ________.
A)must repay it at some point with interest
B)must give up some (perhaps most)of the ownership in the business to outsiders
C)experiences the disadvantage of the risk/return tradeoff in the form of higher interest rates
D)B and C above
Q2) Entrepreneurs basically "borrow from themselves" by pledging their ________ as collateral for the loans they receive in a ________.
A)business; commercial loan
B)business assets; home equity loan
C)home; home equity loan
D)big ticket items; floor loan
Q3) Term loans impose restrictions called ________.
A)conditions
B)limits
C)rules
D)covenants
Q4) Explain how a typical SBA loan guarantee works. What interest rates do these loans normally carry?
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Chapter 16: Global Aspects of Entrepreneurship
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) Some of the strategic options entrepreneurs have when deciding to go global include the Web, joint ventures, and franchising.
A)True
B)False
Q2) Although franchising is a popular way to do business in the United States, it is not a popular strategy in international markets.
A)True
B)False
Q3) The most frequently encountered impediment to international trade for small and medium-sized service firms is ________.
A)foreign sales are not sufficiently profitable
B)transportation and shipping costs
C)language and cultural barriers
D)foreign regulations
Q4) When two small businesses in the target nation form an alliance, they have formed a foreign joint venture.
A)True
B)False
Q5) Identify and discuss the international barriers to trade.
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Chapter 17: Building a New Venture Team and Planning for the Next Generation
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) The concept of empowering employees is based on the principle of job enrichment. A)True
B)False
Q2) Which of the following techniques would you not recommend to a company desiring a stronger recruiting strategy?
A)Look inside the company first - a promotion-from-within policy serves as an incentive for existing workers to upgrade their skills.
B)Encourage employee referrals - reward employees for successful referrals.
C)Ensure that your recruitment efforts are known - whether in traditional media, the Internet, or on college campuses.
D)Avoid hiring retired workers - they too often fail to have anything to offer.
Q3) What tools would you suggest to Carol to minimize the estate taxes involved in passing the business on to Ralph and Cooper? Explain the advantages and disadvantages of at least three choices and explain why you make the final recommendation that you do.
Q4) Why is developing a management succession plan so important to the founder of a family business? Identify and briefly describe the steps of a successful plan.
Q5) Are job descriptions necessary in a restaurant?
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