Exam 13: Preparing for and Evaluating the Challenges of Growth

What are the primary day-to-day challenges involved with growing a firm? Briefly describe each challenge.

The What Went Wrong? feature in Chapter 13 focuses on Meetro, a location-aware instant messaging platform, that was launched on June 1, 2005, but eventually failed. The main lesson conveyed by the feature is that:

________ means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.

Which of the following was not identified in the textbook as one of the day-to-day challenges involved with growing a firm?

JGoods, the company profiled in the opening feature for Chapter 14, sells customized shoes and kits for customizing shoes. JGoods would like to sell its kits through boutiques and craft stores, but will have to convince the retailers to sign on. One thing JGoods has learned is that the trick to getting boutiques and retailers to sign on is to:

Growth usually decreases rather than increases the challenges involved with cash flow management.

________ means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours or may even try to avoid hard work.

Economies of scope are generated when increasing production lowers the average cost of each unit produced.

Which of the following statement is not true regarding the day-to-day challenges of growing a firm?

Betty Harrington owns a floor covering firm. Recently, her market research is telling her that she is taking business away from the large home improvement stores in her trade area. One thing that Betty is worried about is that the large stores might fight back by lowering their prices, which hurt everyone except the consumer. The day-to-day challenge of firm growth that this example is referring to is:

According to Penrose, ________ generate new market, product and service ideas, while ________ administer the routine functions of the firm and facilitate the profitable execution of new opportunities.

Tiffany Smith owns a barbeque restaurant. One expense that Tiffany watches closely is the cost of propane, which she uses to heat her ovens. The more barbeque food Tiffany sells, the more it cost her for propane on a monthly basis. For Tiffany, the cost of propane is a:

Megan owns a company that makes specialized components for the auto industry. Her most important customer is a company that is growing at a rate of 25% per year. Megan is working hard to grow her firm, because she knows that unless her company continually grows it will not be able to keep pace with the growth of its most important customer. This examples illustrates the reason for growth referred to as:

According to the textbook, it is:

The Partnering for Success feature in Chapter 13 focuses on Zazzle and its partnership with MySpace, which will enable Zazzle to manage the MySpace stores of musicians who want to sell merchandise, such as customized t-shirts, through their online stores. The primary focus of the case is to illustrate:

Jeremy Rhodes leases a manufacturing facility that produces computer keyboards. Jeremy tries to keep production high, because his lease payments are $6,200 a month, regardless of whether he produced one computer keyboard a month or 10,000. Jeremy's lease payment is a:

According to the textbook, a well-managed business that finds its products and services are mature often:

The majority of businesses go through a discernable set of stages referred to as the organizational life cycle.

Do most firms want to grow or are they reluctant to grow? What are the advantages of growth?

Adverse selection means that as the number of employees a firm needs increases, it becomes increasingly difficult for it to find the right employees, place them in appropriate positions, and provide adequate supervision.