Question 1

Family business consultants typically advise parents to

Accepted Answer

A)  subtly, rather than openly, push a child toward a career in the family business. 
B)  let a child work outside the family business, for a time at least, to prove he or she can make it without help from the family. 
C)  introduce children to the family business at a later age. 
D)  never bring siblings into the family business as this will more than likely create competition and conflict. 
A)  subtly, rather than openly, push a child toward a career in the family business. 
B)  let a child work outside the family business, for a time at least, to prove he or she can make it without help from the family. 
C)  introduce children to the family business at a later age. 
D)  never bring siblings into the family business as this will more than likely create competition and conflict.

Question 2

In a family business, the business's goal is to

Accepted Answer

A)  create value for family members. 
B)  create value for customers. 
C)  emphasize competition, flexibility, and unity. 
D)  emphasize stability, diversity, and flexibility. 
A)  create value for family members. 
B)  create value for customers. 
C)  emphasize competition, flexibility, and unity. 
D)  emphasize stability, diversity, and flexibility.

Question 3

Even if family members lack the capability to run the business, an entrepreneur should always select a successor from this pool of talent.

Accepted Answer

A) True 
 B)False

Question 4

The recruiter from IBM made William an offer almost too good to be true. The problem was William's dad, who always expected William to join him in running the family business. William's difficulty in accepting IBM's offer may be based on the fear of

Accepted Answer

A)  failure. 
B)  success. 
C)  commitment. 
D)  disappointing his father. 
A)  failure. 
B)  success. 
C)  commitment. 
D)  disappointing his father.

Question 5

Devon works at his family's hardware store. He is expected to take over leadership when his father retires. Devon is developing a personal action plan. At this stage, he should seriously assess whether which of the following questions is answered?

Accepted Answer

A)  What are my core values? 
B)  Who am I? 
C)  What are the most important areas of my personal and professional life that I should work on? 
D)  All of these are correct. 
A)  What are my core values? 
B)  Who am I? 
C)  What are the most important areas of my personal and professional life that I should work on? 
D)  All of these are correct.

Question 6

A common problem for a founder in passing the business on to a daughter or son is

Accepted Answer

A)  introducing the child to outsiders such as bankers. 
B)  finding a suitable position for the son or daughter within the business. 
C)  arranging the transition from part-time to full-time employment. 
D)  giving little thought to the child's talent, aptitude, and temperament. 
A)  introducing the child to outsiders such as bankers. 
B)  finding a suitable position for the son or daughter within the business. 
C)  arranging the transition from part-time to full-time employment. 
D)  giving little thought to the child's talent, aptitude, and temperament.

Question 7

Which of the following usually occurs in the first several meetings of a family council?

Accepted Answer

A)  A board of directors is elected. 
B)  A code of ethics is generated. 
C)  A family constitution is generated. 
D)  All of these are correct. 
A)  A board of directors is elected. 
B)  A code of ethics is generated. 
C)  A family constitution is generated. 
D)  All of these are correct.

Question 8

Match the term to its definition.
-A pattern of behaviors and beliefs that characterize a particular firm

Accepted Answer

A) co-preneurs 
B) cousin consortium 
C) family 
D) family business 
E) family business constitution
F)family council
G)family retreat
H)nepotism
I)organizational culture
J)owner-managed business
K)sibling partnership
L)socioeconomic wealth
M)transfer of ownership 
A) co-preneurs 
B) cousin consortium 
C) family 
D) family business 
E) family business constitution
F)family council
G)family retreat
H)nepotism
I)organizational culture
J)owner-managed business
K)sibling partnership
L)socioeconomic wealth
M)transfer of ownership

Question 9

Federal law permits companies from having policies against hiring family members.

Accepted Answer

A) True 
 B)False

Question 10

Liam's mentor had worked with him for several months to prepare him for the promotion. Now that the offer has been made, Liam is hesitant. His hesitation is likely based on a fear of

Accepted Answer

A)  failure. 
B)  success. 
C)  commitment. 
D)  disappointing his mentor. 
A)  failure. 
B)  success. 
C)  commitment. 
D)  disappointing his mentor.

Question 11

Jim, the founder of a family business specializing in real estate, is contemplating turning the business over to his five children. One possibility, the founder believes, is to divide ownership equally among the children. This action would

Accepted Answer

A)  be next to impossible because gaining consensus from that many people is difficult. 
B)  be inherently unfair if any of the children work in the company. 
C)  potentially be inconsistent with the future successful operation of the business. 
D)  require a possible change in corporate structure because the company deals in real estate. 
A)  be next to impossible because gaining consensus from that many people is difficult. 
B)  be inherently unfair if any of the children work in the company. 
C)  potentially be inconsistent with the future successful operation of the business. 
D)  require a possible change in corporate structure because the company deals in real estate.

Question 12

Which of the following statements about family retreats is true?

Accepted Answer

A)  A family retreat should use the founding entrepreneur as a communication facilitator. 
B)  A family retreat should avoid discussing sensitive issues for best results. 
C)  The talk at a family retreat should solely focus on business. 
D)  A family retreat should be one of the first steps implemented for building a healthy family-to-business relationship. 
A)  A family retreat should use the founding entrepreneur as a communication facilitator. 
B)  A family retreat should avoid discussing sensitive issues for best results. 
C)  The talk at a family retreat should solely focus on business. 
D)  A family retreat should be one of the first steps implemented for building a healthy family-to-business relationship.

Question 13

A negative often associated with family businesses is when

Accepted Answer

A)  nonfamily employees mistrust incompetent family employees. 
B)  nonfamily employees work longer hours than family employees. 
C)  extended family members share knowledge. 
D)  family members share a commitment to the firm. 
A)  nonfamily employees mistrust incompetent family employees. 
B)  nonfamily employees work longer hours than family employees. 
C)  extended family members share knowledge. 
D)  family members share a commitment to the firm.

Question 14

Bret first opened his hardware store in 1946. His sons took over when Bret retired, and now Bret's grandchildren run the store. This type of family business is known as a(n)

Accepted Answer

A)  sibling partnership. 
B)  franchise. 
C)  cousin consortium. 
D)  owner-managed business. 
A)  sibling partnership. 
B)  franchise. 
C)  cousin consortium. 
D)  owner-managed business.

Question 15

Which of the following actions is best for parents to decrease succession conflict among children active in the firm and those who are not?

Accepted Answer

A)  Let those not involved in the company have a larger portion of an inheritance outside of the company, and allow those involved in daily operations have more ownership of the business. 
B)  Let the next generation reach a consensus about management of the company. 
C)  Change the ownership of the company so common (voting) stock is only given to those active in the firm's management and others receive preferred (nonvoting) stock. 
D)  Make decisions based on tax considerations, not what is best for the next generation or the business. 
A)  Let those not involved in the company have a larger portion of an inheritance outside of the company, and allow those involved in daily operations have more ownership of the business. 
B)  Let the next generation reach a consensus about management of the company. 
C)  Change the ownership of the company so common (voting) stock is only given to those active in the firm's management and others receive preferred (nonvoting) stock. 
D)  Make decisions based on tax considerations, not what is best for the next generation or the business.

Question 16

The socioemotional commitment of family members to the firm occurs along all of the following dimensions EXCEPT

Accepted Answer

A)  continuity of the business's legacy. 
B)  identification of family members with the firm. 
C)  binding social ties. 
D)  emotional attachment of family members. 
A)  continuity of the business's legacy. 
B)  identification of family members with the firm. 
C)  binding social ties. 
D)  emotional attachment of family members.

Question 17

When transferring ownership of a business, tax considerations tend to favor gradual transfer of ownership to all heirs.

Accepted Answer

A) True 
 B)False

Question 18

Sibling rivalry in a family business

Accepted Answer

A)  rarely affects nonfamily members in the firm. 
B)  may create disagreements about business policy. 
C)  is unusual if roles are determined before the siblings join the business. 
D)  is often good because it spurs business competition within the organization. 
A)  rarely affects nonfamily members in the firm. 
B)  may create disagreements about business policy. 
C)  is unusual if roles are determined before the siblings join the business. 
D)  is often good because it spurs business competition within the organization.

Question 19

When a parent retires completely and turns the firm over to a son or daughter, the firm ceases to be a family business.

Accepted Answer

A) True 
 B)False

Question 20

In the family business, family considerations affect only members of the family.

Accepted Answer

A) True 
 B)False

Exam 5: The Family Business

Family business consultants typically advise parents to

In a family business, the business's goal is to

Even if family members lack the capability to run the business, an entrepreneur should always select a successor from this pool of talent.

The recruiter from IBM made William an offer almost too good to be true. The problem was William's dad, who always expected William to join him in running the family business. William's difficulty in accepting IBM's offer may be based on the fear of

Devon works at his family's hardware store. He is expected to take over leadership when his father retires. Devon is developing a personal action plan. At this stage, he should seriously assess whether which of the following questions is answered?

A common problem for a founder in passing the business on to a daughter or son is

Which of the following usually occurs in the first several meetings of a family council?

Match the term to its definition. -A pattern of behaviors and beliefs that characterize a particular firm

Federal law permits companies from having policies against hiring family members.

Liam's mentor had worked with him for several months to prepare him for the promotion. Now that the offer has been made, Liam is hesitant. His hesitation is likely based on a fear of

Jim, the founder of a family business specializing in real estate, is contemplating turning the business over to his five children. One possibility, the founder believes, is to divide ownership equally among the children. This action would

Which of the following statements about family retreats is true?

A negative often associated with family businesses is when

Bret first opened his hardware store in 1946. His sons took over when Bret retired, and now Bret's grandchildren run the store. This type of family business is known as a(n)

Which of the following actions is best for parents to decrease succession conflict among children active in the firm and those who are not?

The socioemotional commitment of family members to the firm occurs along all of the following dimensions EXCEPT

When transferring ownership of a business, tax considerations tend to favor gradual transfer of ownership to all heirs.

Sibling rivalry in a family business

When a parent retires completely and turns the firm over to a son or daughter, the firm ceases to be a family business.

In the family business, family considerations affect only members of the family.

The Entrepreneurial Lifethe Entrepreneurial Life

Integrity, Ethics, and Social Entrepreneurship

Starting a Small Business

Franchises and Buyouts

The Business Plan: Visualizing the Dream

The Marketing Plan

The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

The Location Plan

Understanding a Firms Financial Statements

Forecasting Financial Requirements

A Firms Sources of Financing

Planning for the Harvest

Building Customer Relationships

Product Development and Supply Chain Management

Pricing and Credit Decisions

Promotional Planning

Global Opportunities for Small Businesses

Professional Management and the Small Business

Managing Human Resources

Managing Small Business Operations

Managing the Firms Assets

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