Family Business Management
Practice Questions
Course Introduction
Family Business Management explores the unique challenges and opportunities faced by family-owned enterprises, focusing on issues such as succession planning, governance, conflict resolution, and the balance between family and business interests. Students learn strategies to sustain growth and competitiveness across generations, examine real-life case studies, and develop skills in managing relationships within the family business context. The course also addresses professionalization, innovation, and ethical considerations, preparing future leaders to navigate the complexities of running and evolving family businesses in a global marketplace.
Recommended Textbook
Entrepreneurship Theory Process and Practice 9th Edition by Donald F. Kuratko
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15 Chapters
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Page 2
Chapter 1: Entrepreneurship: Evolutionary
Development-Revolutionary Impact
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Sample Questions
Q1) Describe entrepreneurs and entrepreneurship in today's marketplace.
Answer: Entrepreneurs are individuals who recognize opportunities where others see chaos, or confusion. They are aggressive catalysts for change within the marketplace. They have been compared to Olympic athletes challenging themselves to break new barriers, to long distance runners dealing with the agony of the miles, to symphony orchestra conductors who balance the different skills and sounds into a cohesive whole, or to top-gun pilots who continually push the envelope of speed and daring. Whatever the passion, because they all fit in some way, entrepreneurs are the heroes of today's marketplace. They start and create jobs at a breathtaking pace. Entrepreneurship is an integrated concept that permeates an individual's business in an innovative manner. It is this perspective that has revolutionized the way business is conducted at every level and in every country. The revolution has begun in an economic sense, and the entrepreneurial perspective is the dominant force.
Q2) Entrepreneurs are aggressive catalysts for change within the marketplace.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics
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Sample Questions
Q1) Today's entrepreneurs are faced with few ethical decisions because the legal system imposes greater penalties on wrongdoers.
A)True
B)False
Answer: False
Q2) One of the most important reasons firms want to adhere to a high moral code is that doing so protects free markets and is good business.
A)True
B)False
Answer: True
Q3) For entrepreneurs, vision describes
A) where the entrepreneur wants to go.
B) eyesight.
C) people.
D) the future.
Answer: A
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Chapter 3: The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship
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Sample Questions
Q1) Trust from the company is one key element to successful corporate entrepreneurship.
A)True
B)False
Answer: True
Q2) Not all corporate entrepreneurial behavior is good for the organization. Why?
Answer: The encouragement of corporate entrepreneurship can and often does result in counterproductive rogue behavior. The senior manager's task is not simply to build an organizations whose core qualities are conducive to innovation but to design and develop innovation-facilitating and control-facilitating mechanisms that complement one another.
Q3) Corporate entrepreneurial activity takes place _____ the firm.
A) only with outside suppliers to
B) with anyone outside
C) both inside and outside
D) inside
Answer: D
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Page 5
Chapter 4: Social Entrepreneurship and the Global
Environment for Entrepreneurship
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Sample Questions
Q1) Methods for going international include all of the following except
A) importing
B) exporting
C) licensing
D) foreign reclamation
Q2) In 2011, the largest U.S. trading partners included
A) Canada, China, and Mexico
B) China, Mexico, and Turkey
C) Canada, Mexico, and India
D) China, India, and South Korea
Q3) Social entrepreneurship is rarely a vehicle for sustainable development.
A)True
B)False
Q4) In the context of benefit corporations, what does transparency refer to?
Q5) Why is global thinking important to today's entrepreneurs?
Q6) List some activities that have come to be associated with social entrepreneurship.
Q7) The three Ps of the triple bottom line are people, planet, and profits.
A)True
B)False
Page 6
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Chapter 5: Innovation: The Creative Pursuit of Ideas
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Sample Questions
Q1) Entrepreneurs are always looking for unique opportunities to fill needs or wants.
A)True
B)False
Q2) Truly creative people are always geniuses.
A)True
B)False
Q3) The incubation process involves which of the following?
A) working harder
B) letting the subconscious work
C) talking with friends
D) changing jobs
Q4) Which of the following statements is True with regards to creativity?
A) People's approach will remain the same, but their process will change.
B) People's process will remain the same, but their approach will change.
C) People's approach and process will both remain the same.
D) People's approach and process will both change.
Q5) Describe the innovation process.
Q6) List and briefly explain each of the phases in the creative process.
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Chapter 6: Assessment of Entrepreneurial Opportunities
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Sample Questions
Q1) Solid analysis and evaluation of the feasibility of the product/service idea are critical tasks in starting a new business.
A)True
B)False
Q2) Rapid technological advances in many industries cause a concern for in new venture development.
A) faulty product performance
B) rapid product obsolescence
C) inadequate awareness of competitive pressures
D) undercapitalization
Q3) In determining the potential market, one should look _____ into the future.
A) one year
B) three to five years
C) ten years
D) three months
Q4) What sorts of legal issues can be overlooked when assessing an entrepreneurial opportunity?
Q5) Timing has little to do with the success or failure of a new venture.
A)True
B)False
8
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Chapter 7: Pathways to Entrepreneurial Ventures
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Q1) The most important area to examine prior to purchasing a business is company profitability.
A)True
B)False
Q2) Which of the following costs add to the cost of franchising?
A) insurance
B) payroll
C) legal and professional fees
D) all of the above
Q3) An agreement not to compete is also known as
A) a trade restriction clause.
B) a legal restraint of trade.
C) a waiver of competition clause.
D) a deferential sale of business clause.
Q4) Which is not a key question to ask when buying a business?
A) Why is the business being sold?
B) Is the building heated with gas or electricity?
C) What is the condition of the inventory?
D) How many of the employees will remain?
Q5) Why did the Federal Trade Commission enact the Franchise Rule?
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Chapter 8: Sources of Capital for Entrepreneurs
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Sample Questions
Q1) Criteria that venture capitalists use in evaluating new venture proposals include:
A) the entrepreneur's education.
B) the entrepreneur's travel expenses.
C) the characteristics of the product or service.
D) when they will be paid back in full.
Q2) There is no way for the venture capitalist adequately to evaluate a new venture.
A)True
B)False
Q3) Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?
A) Is the person someone with whom the entrepreneur can work?
B) Is the person a close relative?
C) Is the person wealthy?
D) Is the person a college graduate?
Q4) Frugality is deemed a bootstrapping technique.
A)True
B)False
Q5) What is the potential future of social lending with respect to entrepreneurs?
Q6) How does a public offering differ from a private placement?
10
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Chapter 9: Legal Challenges of Entrepreneurial Ventures
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Q1) Which of the following falls under Chapter 7 bankruptcy?
A) The debtor surrenders most property to a court trustee.
B) The debtor fails to file income taxes.
C) The debtor is relieved of obligations.
D) The debtor is arrested.
Q2) Which of the following are not trademarks?
A) symbols
B) mottos
C) names
D) generic words
Q3) Legal protection is granted to computer programs in what form?
A) patent
B) trademark
C) copyright
D) service mark
Q4) Which of the following is a way in which a trademark may be invalidated?
A) cancellation proceeding
B) a competitor's lawsuit
C) consumer loss of interest
D) once a trademark is established, no legal action can invalidate it
Page 11
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Chapter 10: Marketing Challenges for Entrepreneurial Ventures
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Sample Questions
Q1) Which of the following is not a method of collecting primary data?
A) review of government publications
B) telephone
C) mail survey
D) observation
Q2) Marketing research involves the gathering of information about a particular market, followed by analysis of the information.
A)True
B)False
Q3) The purpose of marketing research is __________.
A) to gain customers
B) to identify customer
C) to fulfill customer needs
D) to develop new products
Q4) Explain the new marketing concept?
Q5) Inhibitors to marketing research include all of the following except:
A) cost
B) irrelevancy
C) complexity
D) distribution
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Chapter 11: Financial Preparation for Entrepreneurial Ventures
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Sample Questions
Q1) A variable cost
A) changes in the same direction and in inverse proportion to changes in operating activity.
B) changes in the opposite direction and in direct proportion to changes in operating activity.
C) changes in the same direction and in direct proportion to changes in operation activity.
D) is synonymous with labor costs
Q2) Which of the following are forms of pro forma statements?
A) income statements
B) balance sheets
C) costs of goods sold
D) a and b
Q3) The principal objective of capital budgeting is to maximize the value of the firm.
A)True
B)False
Q4) Horizontal analysis looks at financial statements over time.
A)True
B)False
Page 13
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Chapter 12: Developing an Effective Business Plan
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Q1) An entrepreneur should include a three- to five-year financial projection so that the financial source can adequately evaluate the venture.
A)True
B)False
Q2) An investment prospectus is the same as a business plan.
A)True
B)False
Q3) One thing that should be included in the business description is
A) the name of each investor.
B) industry background.
C) potential disadvantages of the venture.
D) a list of suppliers.
Q4) The pro forma balance sheet is used in the critical risk segment of the business plan. A)True
B)False
Q5) What is the basic structure of a business plan?
Q6) The major purpose of a business plan is its utilization as a working document. A)True
B)False
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Chapter 13: Strategic Entrepreneurial Growth
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Sample Questions
Q1) In administrative cultures, there is a need for clearly defined authority and responsibility.
A)True
B)False
Q2) The reason many small business managers lack expertise is that they are
A) optimists.
B) specialists.
C) subordinates.
D) generalists.
Q3) The entrepreneurial strategy matrix measures:
A) risk and security.
B) commitment and time.
C) risk and innovation.
D) opportunity and time.
Q4) A reason for lack of strategic planning has been found to be
A) lack of preference.
B) time sharing.
C) lack of expertise.
D) lack of dominance.
Q5) Does strategic planning pay off?
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Chapter 14: Valuation of Entrepreneurial Ventures
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Sample Questions
Q1) One reason to keep projections in perspective is
A) long histories.
B) fluctuating markets.
C) certain environments.
D) both a and b
Q2) What does a post-money valuation include that a pre-money valuation does not?
A) market value
B) replacement value
C) excess earnings
D) venture capital investment
Q3) Besides the purchase price, what else should be considered when buying a business?
A) new inventory and living expenses
B) three months' operating expenses and sales tax
C) none of the above
D) all of the above
Q4) Brazil's human, mineral, and agricultural resources are on par with those of the United States.
A)True
B)False
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Chapter 15: Harvesting the Entrepreneurial Venture
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Sample Questions
Q1) There are two types of succession pressures: family and nonfamily.
A)True
B)False
Q2) Besides the eight steps in the harvest strategy, the other implications that the entrepreneur should be aware of when selling out are
A) tax implications arising from the sale of a business.
B) interest implications arising from the sale of a business.
C) security interests arising from the sale of a business.
D) home improvement implications arising from the sale of a business.
Q3) Research shows that many privately held firms go out of business within
A) one year.
B) 25 years.
C) two years.
D) 10 years.
Q4) Barriers to successful succession planning, discussed in the text, include which of the following?
A) nobody wanting to own the firm.
B) lack of a final will.
C) dilemma of choice.
D) lack of profits.
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