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33) James Williams is the Chief Operating Officer of a startup in the health food industry. He is
also a member of his firm’s board of directors. In board of directors terminology, James is a(n)
________ director.
A) inside
B) outside
C) expert
D) junior
E) senior
34) Adam Miller is a general partner in a venture capital firm that just funded Gold Coast
Software, a software firm in Santa Barbara, California. Gold Coast Software is incorporated, and
Adam has taken a seat on the firm’s board of directors. In board of directors terminology, Keith
is a(n) ________ director.
A) subordinate
B) senior
C) distant
D) inside
E) outside
35) A board of directors’ three formal responsibilities are to ________.
A) periodically update the firm’s business plan, declare dividends, and write the firm’s marketing
plan
B) appoint the officers of the firm, declare dividends, and oversee the affairs of the corporation
C) write the firm’s strategic plan, declare dividends, and conduct the annual meeting
D) appoint the officers of the firm, conduct the annual meeting, and submit the firm’s annual
report to the Securities & Exchange Commission
E) provide funding to the firm, write the firm’s strategic plan, and submit the firm’s annual report
to the Securities & Exchange Commission
36) A board of directors’ three formal responsibilities are to appoint the officers of the firm,
oversee the affairs of the corporation, and ________.
A) conduct the annual meeting
B) provide funding for the firm
C) submit the firm’s annual report to the stockholders
D) declare dividends
E) write the firm’s strategic plan
37) A board of directors’ three formal responsibilities are to appoint the officers of the firm,
declare dividends, and ________.
A) write the firm’s strategic plan
B) conduct the annual meeting
C) provide funding for the firm
D) represent the firm in public relations activities
E) oversee the affairs of the corporation
38) Which of the following statements is incorrect regarding boards of directors?
A) If a new venture organizes as a corporation, it is not legally required to have a board of
directors, but it is strongly recommended.
B) A board is typically made up of both inside and outside directors.
C) The board is responsible for declaring dividends.
D) Most boards meet formally three or four times a year.
E) The boards for publicly-traded companies are required by law to have audit and compensation
committees.
39) According to the textbook, although a board of directors has formal governance
responsibilities, its most useful role is to ________.
A) provide guidance and support to the firm’s managers
B) submit papers on behalf of the firm to the SEC
C) represent the firm in public relations activities
D) conduct the firm’s annual meeting
E) provide funding to the firm
40) Liz Zackery just launched a firm in the sporting goods industry. On the day the company was
launched, Liz issued a press release, indicating that the vice president of New Balance, a highly
respected athletic shoe and sports apparel company, had agreed to serve on her board of
directors. Liz knows that such a high quality appointment will send an important message to her
potential clientele. This phenomenon is referred to as ________.
A) championing
B) signaling
C) profiling
D) indicating
E) trumping
41) Melissa Jones just launched a firm in the wireless communications industry. Shortly after the
company was launched, Melissa announced that a prominent Silicon Valley venture capitalist
had agreed to serve on her board of directors. Melissa knows that such a high quality
appointment will send an important message to her potential business partners and clientele. This
phenomenon is referred to as ________.
A) trumping
B) championing
C) profiling
D) signaling
E) indicating
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42) Which of the following was NOT identified in the textbook as an attribute of an effective
board of directors?
A) Homogeneous set of experiences and talents
B) Customer-focused point of view
C) Ability and willingness to stand up to the CEO and top managers of the firm
D) Strong communication with the CEO
E) Decisiveness
43) Which of the following was NOT identified in the textbook as an attribute of an effective
board member?
A) Strong personal and professional networks
B) Unknown in their field
C) Investment and/or operating experience
D) Ability and willingness to mentor the CEO and the top managers of the firm
E) Pattern recognition skills
44) A new venture team is the group of founders, key employees, and advisers that move a new
venture from an idea to a fully functioning firm.
45) Studies show that more than one individual starts 50 to 70 percent of all new firms.
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46) It is generally believed that new ventures started by an individual have an advantage over
those started by a team.
47) Founding teams that have worked together before, as opposed to teams that are working
together for the first time, have an edge.
48) Homogeneous teams are diverse in terms of their abilities and experiences.
49) Prior entrepreneurial experience, relevant industry experience, and networking are attributes
that strengthen the chances of a founder’s success.
50) Prior entrepreneurial experience is a poor predictor of future entrepreneurial performance.
51) Networking is building and maintaining relationships with people whose interests are similar
or whose relationship could bring advantages to a firm.
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52) A skills profile is a chart that depicts the most important skills that are needed and where
skills gaps exist.
53) A virtual assistant is a freelancer who provides administrative, technical, or creative
assistance to clients remotely from a home office.
54) Although a board of directors has formal governance responsibilities, its most useful role is
to provide guidance and support to the firm’s managers.
55) Are more firms started by individuals or founding teams? What are the advantages to
founding a firm as a team rather than as an individual?
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56) What is the difference between a heterogeneous and a homogeneous founding team? Which
type of team has the advantage?
57) What is a skills profile and what is it used for?
58) A(n) ________ is a panel of experts who are asked by a firm’s managers to provide counsel
and advice on an ongoing basis.
A) consultation board
B) idea panel
C) counseling panel
D) advisory board
E) suggestion panel
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59) Shelly Cook recently launched a social network for chefs. One thing Shelly is thinking about
creating is a panel of experts who can provide her ongoing direction and advice regarding the
future of her business. Shelly is thinking about creating a(n) ________.
A) analysis panel
B) discussion board
C) advisory board
D) suggestion panel
E) accountability panel
60) Kelly Andersen founded a technology consulting firm several years ago. Her firm has grown
rapidly and is financially successful. One thing that Kelly attributes her success to is that early on
she assembled a panel of experts who provided her ongoing direction and advice about her
business. What Kelly created is called a(n) ________.
A) consultation panel
B) suggestion panel
C) idea board
D) accountability panel
E) advisory board
61) Which of the following statements about advisory boards is incorrect?
A) The fact that a corporation has a board of directors does not preclude it from establishing one
or more advisory boards.
B) An advisory board can be established for general purposes or can be set up to address a
specific issue or need.
C) Similar to a board of directors, an advisory board has legal responsibility for the firm in
certain areas.
D) An advisory board is a panel of experts who are asked by a firm’s managers to provide
counsel and advice on an ongoing basis.
E) A growing number of startups are forming advisory boards.
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62) Which of the following statements about advisory boards is incorrect?
A) If a firm has a board of directors, it is not permitted to have an advisory board.
B) Many people are more willing to serve on a company’s board of advisors than its board of
directors because it requires less time and there is no potential legal liability involved.
C) Most boards of advisers have between 5 and 15 members.
D) A growing number of startups are forming advisory boards.
E) An advisory board can be established for general purposes or can be set up to address a
specific issue or need.
63) According to the textbook, most boards of advisers have between ________ and ________
members.
A) 5; 15
B) 2; 4
C) 10; 18
D) 2; 3
E) 4; 7
64) An advisory board is a panel of experts who are asked by a firm’s managers to provide
counsel and advice on an ongoing basis.
65) Similar to a board of directors, an advisory board possesses legal responsibility for the firm.
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66) An advisory board can be established for general purposes or can be set up to address a
67) The fact that a corporation has a board of directors precludes it from having a board of
advisors.
68) Most boards of advisers have between 3 and 5 members.
69) More people are willing to serve on a company’s board of directors than on its board of
70) A business ________ is an individual who gives professional or expert advice, on a volunteer
or fee basis.
A) consultant
B) intern
C) employee
D) virtual assistant
E) mentor
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71) Which of the following is incorrect regarding the typical role of consultants in business
startups?
A) Give professional advice
B) International consulting firms (e.g., Accenture and Bearing Point) are financially beyond the
reach of most small firms.
C) Consultants fall into two categories—paid consultants and consultants who are made
available for free.
D) Give expert advice
E) Help manage the day-to-day activities of the firm
72) Consultants fall into two categories—paid consultants and consultants who are made
available for free or at a reduced rate through a nonprofit or government agency.
73) SCORE is a for-profit organization that provides consulting services to small businesses.
74) All consultants are paid consultants.
75) What is SCORE? What is its role in helping a firm fill out its new venture team?