Questions for Chapter 13
True/False
1. As the organization grows, managerial skills negate the importance of entrepreneurial skills. (pg.
412)
2. Essentially customer needs do not change, therefore you need to identify them and maintain
focus. (pg. 412)
3. Entrepreneurs should constantly develop the firm’s entrepreneurial capability. (pg. 412)
4. The opportunity domain is one of the four driving forces in the growth stages of any firm. (pg.
414)
5. A typical acquisition gives the owner 50% in cash and 50% in the acquiring company’s stock.
(pg. 413)
6. It is always best to appoint a CEO from the employees who were with the company from the very
beginning (pgs. 413-414)
7. Stockholders have the largest impact on a firm’s growth potential (pg. 415)
8. During the early growth, the entrepreneur needs to focus on the company’s strategy (pg. 415)
9. At the core of the growth model lays execution. (pg. 416)
10. Execution has the most direct link to profits (pg. 416)
11. The most critical first task in transitioning a business beyond the startup stage is to sustain an
entrepreneurial organization. (pg. 417)
12. Managing cash is one of the key objectives of a control system (pg. 418)
13. You should try to implement a complex system of control from the early stages of growth (pg.
417)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
(False)
14. Rapidly growing administrative and selling expenditures are often appropriate (pg. 418)
15. Performance measures in an early-stage company are designed more for helping in
entrepreneurial decision-making than for evaluating current performance (pg. 418)
16. Tracking performance is necessary to support quality decision making. (pg. 418)
17. The majority of your performance tracking efforts should be focused on your competition during
your initial growth stages. (pgs. 418-419)
18. Tracked items and metrics should be focused on supporting specifically anticipated decisions to
the greatest extent possible. (pgs. 418-419)
19. Performance measures for a growing firm should be simple and inexpensive to track (pg. 419)
20. The Cash Cycle shows the relationship between three key metrics: days in payables, assets
turnover, and days sales are outstanding (pg. 420)
21. It is possible to have a negative cash conversion period (pg. 421)
22. Diversifying opportunities in early stages of the company generates better results than crafting
only one (pg. 424)
23. Growing companies who choose to expand through acquisition do so by primarily looking
beyond their opportunity domain. (pg. 424)
24. The company should be driven only by opportunities that leverage current capabilities (pg. 424)
25. Bootstrapping policy should not be discontinued once the company is successful (pg. 426)
26. Financing for longer term investments that incur a higher degree of risk are often funded through
equity rather than bank loans. (pg. 427)
27. It will often be acceptable for an entrepreneur to find him/herself routinely doing portions of
other people’s jobs during growth. (pg. 430)
28. The best management team consists of both internally promoted and externally hired people (pg.
431)
29. Professional managers for companies in later growth stages are almost always internal
candidates because of their unique experience with the company. (pg. 432)
30. As the company grows, bureaucracy has to be increasingly instilled to help coordinate different
Multiple Choice
1. What does entrepreneurship begin with? (pg. 411)
2. What is the least likely to lead to a failure in growth management? (pg. 412)
3. What skills become increasingly important at later stages of development for a company? (pg.
412)
4. Which of the following is not a part of the driving forces in the growth stages? (pg. 412)
5. According to the chapter, 50% of businesses started today will not exist in how many years? (pg.
412)
6. What fraction of firms started today, according to the chapter, will still be growing and profitable
in eight years? (pg. 412)
7. What is NOT an option an entrepreneur must consider beyond startup? (pg. 413)
E) All of them are options
8. In a typical acquisition deal, what portion of the selling price does the entrepreneur receive in
cash? (pg. 413)
E) None of the above
10. Who or what has the largest impact on a firm’s growth potential? (pg. 415)
E) Competitors
11. What should an entrepreneur focus on during early growth? (pg. 415)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
C) Operations
D) Accounting
E) Networking
12. What is the core of the growth model? (pg. 416)
13. The chapter warns that which of the following can lead to poor coordination between different
activities within the company? (pg. 417)
14. Which of the following is not mentioned in the chapter as a key objective for a control system?
E) All of the above are mentioned
15. An effective control system includes all of following except: (pg. 417-418)
16. Which of the following is NOT characteristic of an effective performance tracking system? (pg.
418-419)
A) Determines where, when, and how to measure a key item, and who is responsible for measuring
17. After tracking key metrics in your company’s performance, what should alert you that it may be
time to consider making adjustments in your policies? (pg. 419)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
C) If the marketing expenditures are hard to predict.
D) If your metrics require in-depth analysis.
E) If receivables collection period is more than 30 days.
18. Which of the following are signs that your venture may be growing too fast? (pgs. 419-420)
19. What does the cash conversion period show? (pg. 420)
20. A positive cash conversion period means that: (pgs. 420-421)
21. A series of steps showing the activities and entities that we need to coordinate in order for the
company to execute its product or service is called: (pg. 422)
E) None of the above.
23. What could identification of your firm’s range of value chain activities help you to detect? (pgs.
422-423)
24. Which of the following is not a source of financing for early growth? (pg. 427)
25. What best characterizes an entrepreneur? (pg. 429)
26. Which of the following may be a common error when an entrepreneur tries to transition to an
entrepreneurial leader (pick one). (pgs. 430-431)
27. Which of the following is a sign that an entrepreneur is delegating well. (pgs. 430-431)
28. What purpose should the board of directors serve as a company professionalizes? (pg. 432)
29. According to the Driving Forces of Growth Model, opportunity domain interacts with which of
the following? (pg. 432)
30. Which of the following is NOT an important factor is recruiting a board of directors? (pg. 432)
A) Willingness and ability to become key participants in the strategic planning process.
B) Whether or not the board member is a stakeholder with the ability to exert control over the firm.
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
C) Finding alternative perspectives and depth and breadth of experience.
D) The board member’s likely willingness to join the company as a senior manager in the
future.
E) None of the above
Open ended
1. Describe some of the reasons that entrepreneurs fail to manage their companies’
growth. (pg. 412)
2. Once a company has moved beyond the startup stage, what are the three main paths
that the founder can choose? What are some of the subordinate options within each of
those three paths? (pgs. 412-413)
3. What are the driving forces of growth? What is the core of the growth model? (pg. 414)
4. Why is a control system so important for a growing organization? What are the
features of a well-functioning control system? (pgs. 417-418)
5. Describe why performance measures must be linked to anticipated decisions. (pg. 418-
419)
6. What are some indicators that a company is growing at an uncontrollable rate? (pgs.
419-420)
7. What are the components of the cash cycle? How can the company improve its cash
conversion period? (pgs. 420-421)
8. What is the danger of chasing too many opportunities? Explain the significance of the
9. Name some of the sources of financing. What features do creditors look for in growing
organizations? (pg. 427)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
a. Sources of financing for early growth include: investment from key management,
founder loans, family and friends, angel investors, loans on assets, equipment leases,
trade credit, and credit cards
b. Investors typically want: a viable growth model, a strong management team, clear
opportunity
10. How should entrepreneurs form their management team? What common problems
might they face? (pgs. 431-432)
11. Describe the process of transition from entrepreneur to entrepreneurial leader. (pgs.
430-431)
12. What are the ways of nurturing entrepreneurs in an organization? (pg. 433)
13. Discuss some of the signs that reveal an organization has outgrown the entrepreneur’s
capacity. (pg. 430)
14. Discuss some options to support either the integration of outside managers into a
venture, or to prepare existing employees for management roles. (pgs. 431-432)
a. Consider having new managers spend time learning or performing some of the roles
of existing employees if those roles are unique to your organization or central to its
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
culture (e.g., Toyota executives work on the assembly line with front line factory
workers)
b. Identify employees with management potential, and invest in their development early
enough that they are ready to assume more responsibility before more management is
desperately needed. This could include formal schooling, or simply shadowing or
apprentice programs, where employees are gradually handed additional responsibility
as their capabilities grow.
15. Discuss some potential pitfalls of decentralization common to new leaders (pgs. 430-
431)