Exam 13: Preparing for and Evaluating the Challenges of Growth

The What Went Wrong feature in Chapter 13 focuses on Wesabe, a Web-based company that was launched in 2006 to help people manage their personal finances. According to Marc Hedlund, one of Wesabe's cofounders, the company failed for two primary reasons. First, it didn't allow a partner to provide it with an essential service that it decided to build on its own. Second, it ________.

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

The ________ stage of the organizational life cycle is the startup phase, where a business determines what its core strengths and capabilities are and starts selling its initial product or service.

The majority of businesses go through a discernable set of stages of growth referred to as the ________.

Which of the following options was not identified in the textbook as an appropriate reason for growth?

Which of the following is not one of the 10 warning signs that a business is growing too fast?

As a business moves beyond its early growth stage and its pace of growth accelerates, the need for structure and formalization decreases.

________ costs are costs that a company incurs whether it sells something or not.

Sustained growth is defined as growth in both revenues and profits over an extended period of time.

All businesses have the potential to be aggressive growth firms.

According to Chapter 13, business success doesn't always scale. What is meant by this statement?

________ 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.

Most entrepreneurial firms are reluctant to try to grow.

Terry Wells owns a growing company that makes innovative kitchen appliances. One thing that Terry has to continually work at is to keep enough cash on hand to make sure she has sufficient liquidity to meet her payroll and cover her other short-term obligations. The day-to-day challenge of firm growth this example is referring to is ________.

The Savvy Entrepreneurial Firm feature in Chapter 13 focuses on Salesforce.com, a company that pioneered the idea of software as a service (SaaS). The main point of the case is that rather than remaining a niche product, Salesforce.com's product, which is an online software platform for salespeople, has ________ and appeals to mainstream customers.

Fixed costs are the costs a company incurs as it generates sales.

Define the term "market leadership." Why do firms work hard to obtain market leadership?

A firm's core strategy is largely determined by its core competencies, or what it does particularly well.

Which of the following statements regarding firm growth is incorrect?

What is the organizational life cycle and why is it important?