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Indicate whether the statement is true or false.
1. The maximum number of employees who can be supervised effectively by a capable manager is four.
a. True
b. False
2. A positive solution should be pursued in negotiations whenever it is feasible to do so.
a. True
b. False
3. Top-level executives in a large corporation have a distinct advantage over the leader of a small business in exerting
their influence.
a. True
b. False
4. Company planning helps clarify issues and how these issues can be faced, provides focus, and increases credibility with
outsiders.
a. True
b. False
5. Many owner-managers seldom work more than 40 hours a week.
a. True
b. False
6. Someone with a charismatic personality will make a more effective leader.
a. True
b. False
7. The formal organization stage of business growth is a turning point because the entrepreneur must learn to rise above
direct management and work through an intermediate level of managers.
a. True
b. False
8. Periodic performance review sessions for a company following two-way communication would discuss employee
ideas, questions, complaints, and job expectations.
a. True
b. False
9. The SCORE program offers entrepreneurs management advice for a small fee.
a. True
b. False
10. When a firm reaches Stage 2, the entrepreneur engages extensively in both the coordination of the efforts of others as
well as performing basic work activities.
a. True
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b. False
11. The greatest time saver is the effective use of time.
a. True
b. False
12. A consultant beginning to ask employees for their marketing ideas illustrates empowerment.
a. True
b. False
13. A manager who grants subordinates the right to act or make decisions is delegating authority.
a. True
b. False
14. A small business always has greater constraints in cash flow and employee expertise than found in larger corporations.
a. True
b. False
15. Individuals who are launching promising startups need to have a “tolerance for ambiguity”.
a. True
b. False
16. Owner-managers of small businesses typically overdo the amount of planning.
a. True
b. False
17. As a firm moves from Stage 1 to Stage 4, the entrepreneur becomes less of a manager and more of a doer.
a. True
b. False
18. Entrepreneurs who follow a win-win negotiating strategy seek a solution that will satisfy at least the basic interests of
both parties.
a. True
b. False
19. A small company’s culture unfolds over the lifetime of the business..
a. True
b. False
20. Budgets are usually prepared for five years in advance using quarterly figures.
a. True
b. False
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21. Some colleges and universities offer training directly to aspiring small business owners.
a. True
b. False
22. Stage 4 of small business growth involves the use of budgets, personnel policies, organizational charts, and
computerization.
a. True
b. False
23. Most very small firms use a single chain of command.
a. True
b. False
24. Small firms that hesitate to acquire professional management often limit growth.
a. True
b. False
25. Professional managers often have more sophisticated methods of management than entrepreneurs.
a. True
b. False
26. A small business that has expanded beyond the comfort zone of its entrepreneur will end in bankruptcy.
a. True
b. False
27. Compared to empowerment, work teams require a lower level of employee participation.
a. True
b. False
28. SBDCs are affiliated with colleges and universities and provide counseling solely through a group of retired
executives.
a. True
b. False
29. It is critical for entrepreneurs to set aside time to work undisturbed.
a. True
b. False
30. Preparing a daily written plan of activities is useful in deciding which tasks deserve highest priority.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
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31. Kathleen believes she could be more efficient inthe use of her time. To determine where improvemenst can be made,
Kathleen should first:
a. list long term objectives.
b. record time spent on various activities during the day.
c. list projects that need attention.
d. assign priorities to unfinished tasks.
32. Which time management suggestion would be the most critical for a small business owner?
a. Set aside time to work undisturbed.
b. Have a daily written plan and highlight priorities.
c. E-mail, cell phones and the Internet should be used to save time, not be a distraction.
d. Complete trivial tasks first to have something completed.
33. Small business service organizations that are patterned after the Agricultural Extension Service are known as
a. student consulting team programs.
b. Small Business Development Centers.
c. business incubators.
d. SCORE.
34. To improve employee morale, an industrial distribution business might consider __________.
a. employee empowerment.
b. formulating policies after gaining employee thoughts.
c. soliciting employee input on the adoption of budgets.
d. the establishment of control standards.
35. SCORE refers to
a. the grade assigned to a small firm by the SBA.
b. the management knowledge possessed by an entrepreneur.
c. a group of retired executives who act as consultants to small firms.
d. an alliance of small firms for the purpose of bidding on government contracts.
36. A corporate marketing executive is moving to a managerial position in a small firm, where she may logically expect to
find
a. adequate financial resources and adequate staff.
b. inadequate financial resources and inadequate staff.
c. adequate financial resources and inadequate staff.
d. inadequate financial resources and adequate staff.
37. Frequent and flagrant disregard of the chain of command undermines the position of the
a. founder.
b. operative employee.
c. staff specialist.
d. bypassed manager.
38. Marcia, owner of Drapes by Design, has groups of employees in production and installation. If she decides to use
work teams as part of her leadership approach, she may be able to:
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a. earn more in quarterly profits.
b. decrease the number of supervisors.
c. improve product quality.
d. reduce total compensation.
39. The use of written policies, budgets, and job descriptions is most closely associated with which stage of growth?
a. Formal organization
b. Intermediate supervision
c. One-person operation
d. Player-coach
40. A budget is prepared as part of a
a. strategic plan.
b. short-range plan.
c. organizational plan.
d. long-range plan.
41. Leadership in small firms is more ____ in comparison to the leadership in large corporations.
a. haphazard
b. impersonal
c. personalized
d. skillful
42. Entrepreneurs can get management assistance from peers through
a. outside consultants.
b. SCORE advisors.
c. volunteer work in the community.
d. networking.
43. Scott, a printing shop owner, believes that his business is running rather haphazardly and wants to get it under control.
The first step he should take is to
a. take corrective action.
b. set standards.
c. increase inspection.
d. increase two-way communication.
44. A small firm’s basic path to the future is spelled out in a document called a
a. feasibility study.
b. short-range plan.
c. budget.
d. strategic plan.
45. What type of leadership style focuses on creating emotional bonds?
a. team builder
b. visionary
c. coach
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d. general
46. For small businesses, the most likely form of organizational structure is
a. functional.
b. line.
c. line-and-staff.
d. committee.
47. If a company successfully creates properly functioning self-managed teams among employees, the supervisors will
a. feel threatened by her leadership approach to teams.
b. likely become fewer in number.
c. may attempt to delegate mundane tasks to the teams.
d. need to maintain closer supervision.
48. Marvin has just launched a consulting business. Business has been slower than expected. What advice would you
give Marvin?
a. Post an ad in the local newspaper.
b. Tap into his personal and professional network.
c. Find a different line of work.
d. Take a full-time position with a company while he builds his business part-time.
49. The organizational structure of small companies is often characterized by
a. economy.
b. clarity.
c. practicality.
d. use of staff positions.
50. Susan has seen her retail shop grow to the point that she has designated supervisors for the office and two selling
areas. Her shop’s stage of growth is
a. formal organization.
b. intermediate supervision.
c. one-person operation.
d. player-coach.
51. The consulting resources of universities are made available to small business firms by
a. student consulting team programs.
b. SCORE.
c. business incubators.
d. management consultants.
52. Margaret has launched a new event planning company with four employees. With the growth in sales and personnel,
the next step of growth will involve
a. increased direct supervision.
b. improved quality management.
c. intermediate supervision.
d. more formal policies.
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53. Vivian would like to improve two-way communication with her subordinates. Which of these ideas would be most
helpful her?
a. Post daily updates on the bulletin board.
b. Announce daily production requirements over the public address system.
c. Engage employees in conversations to discuss their ideas and problems
d. Manage by walking around.
54. Linda’s high standards and expectations of employee excellence is typical of ____ leaders.
a. team builder
b. general
c. populist
d. paragon
55. James is talking to another supervisor about the number of employees who report directly to him. James is talking
about his:
a. span of control.
b. informal organization.
c. organizational structure.
d. chain of command.
56. A hesitancy by an entrepreneur to move through the various organizational stages can
a. limit the rate of business growth.
b. be interpreted as evidence of creativity.
c. normally provide a competitive edge to the firm.
d. provide a spark to the business because of the spontaneity it introduces.
57. Nancy just added her eighth employee, a human resource manager who will be responsible for all future hiring,
training, retaining, and firing decisions. The company is in a ________ organizational structure.
a. delegated
b. line-and-staff
c. line
d. span of control
58. Barry’s expectation that employees will complete his requests immediately is typical of ______ leaders.
a. populist
b. general
c. paragon
d. team builder
59. The owner of a rapidly growing small business needs to talk to a lender for additional financing. Which document
would increase the company’s credibility?
a. control standards
b. human resource guidelines
c. strategic plan
d. All of the above would be needed.
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60. Mario has just begun to personally supervise employees. His firm likely to be in the ____________ stage of growth.
a. formal organization
b. intermediate supervision
c. one-person operation
d. player-coach
61. In a line-and-staff organization, which division is a line activity?
a. Production
b. Legal
c. Human Resources
d. Accounting
62. As a firm grows, the small business owner needs to fill key positions with persons who
a. could be future managers.
b. can complement weaker areas of the entrepreneur.
c. are able to survive in the culture.
d. All of the above are true.
63. Having more than one supervisor is a violation of the:
a. span of control
b. delegating
c. controlling
d. chain of command
64. Controlling is the managerial function that involves the managerss
a. thinking through issues confronting a firm and developing a plan to increase productivity.
b. keeping track of performance and investigating when results deviate from the plan.
c. developing an atmosphere of cooperation and teamwork.
d. keeping an optimum number of people under supervision.
65. The fact that the daily “brush fires” of doing business tend to push aside planning until it is forgotten is the message of
a. Parkinson’s Law of Planning.
b. the Peter Principle.
c. the Tyranny of the Urgent.
d. Murphy’s Law of Strategic Action.
66. If Elizabeth, who just hired her first employee, desires to create an innovative cultural environment within the
business, what should she do?
a. Support experimentation while eliminating unnecessary penalties for failure
b. Maintain tight control of all aspects of the business.
c. Reject employee ideas.
d. Treat all employees the same.
67. Stage 3 in the growth of a business is characterized by
a. a one-person operation.
b. hands-off management practices.
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c. multi-layered organization.
d. the entrepreneur as a player-coach.
68. Workers who act on their own and to make decisions about the processes they’re involved with are considered to be
a. “beginning” or nascent managers.
b. empowered employees.
c. policy-capable subordinates.
d. work-team ready.
69. Founders are least likely to be described as a(n)
a. creative.
b. good organizational member.
c. innovative.
d. risk-taking.
70. A monthly production schedule is prepared as part of the
a. operational plan.
b. short-range plan.
c. strategic plan.
d. tactical plan.
71. John, a small business operations manager, is confronted with a quality problem. A typical small business handicap
that will hamper his efforts to solve the problem is a lack of
a. time.
b. chain of command.
c. accounting data.
d. specialized staff assistance.
72. Effective time management requires
a. firmly established priorities.
b. self-discipline.
c. using a good time management system.
d. All of the above are required.
73. LaToya, as the owner of a minority firm, should look to which organization first for assistance?
a. SBDC
b. SCORE
c. sponsorship of student consulting team projects
d. virtual incubators
74. Leadership roles differ greatly, depending on the size of the business and its
a. stage of development.
b. product and service offerings.
c. marketing efforts.
d. industry in which the company operates.
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Match the term with its definition. Some terms may not be used.
a. Budget
b. Chain of command
c. Delegation of authority
d. Empowerment
e. Long-range plan
f. Professional manager
g. Self-managed work teams
h. Short-range plan
75. The official, vertical channel of communication in an organization
76. A firm’s overall plan for the future
77. A document that expresses future plans in monetary terms
78. Authorization of employees to make decisions or take actions on their own
79. A plan that governs a firm’s operations for one year or less
80. Groups of employees with freedom to function without direct supervision but with responsibility for results
81. Granting to subordinates the right to act or make decisions
Match the term with its definition. Some terms may not be used.
a. Line organization
b. Line-and-staff organization
c. Negotiation
d. Networking
e. Professional manager
f. Service Corps of Retired Executives
g. Small business development centers
h. Span of control
82. The process of developing and engaging in mutually beneficial relationships
83. A manager who uses systematic, analytical methods of management
84. The process of developing workable solutions through discussions or interactions
85. An SBA-sponsored group of people who give free advice to small business owners
86. An organizational structure that includes staff specialists who assist management
87. The number of employees who are supervised by one manager
88. A simple organizational structure in which each person reports to one supervisor
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89. The personal shopper business Jeff and Christy have developed has grown so they are busy 50 hours weekly. This
schedule leaves little time for them as a couple. They have decided to hire outside employees to take over some of their
business responsibilities. What suggestions should they follow to ease this transition?
90. Andrea designed a new household cleaning product that can be used on any surface, is environmentally friendly and
performs better than other current products. As the company grew, she added employees to produce the cleaner. Recently
a grocery store chain asked to sell the cleaner in a regional area. Should she continue as the CEO? At what level is the
company in its development? What factors should Andrea consider as the company continues to grow?
91. Describe the four stages of small business growth and how the owner would function.
92. Paul has decided to start a musical venue that also includes a restaurant and an art gallery. His brother suggested he
talk to a consultant to develop his business plan. What should Paul look for when searching? What issues should be
determined before the consultant is hired?
93. After identifying organizational structures of small businesses, explain how changing structures over time impact
managerial responsibilities.
94. Jenny is the owner-manager of a small accounting practice. She holds bi-weekly employee meetings to cover company
goals, focus points for the future and keep the employees updated on current tax changes. She has developed significant
bonds with the employees so they share work (and personal) problems with her more than in the past. Often Jenny can be
found assisting new clients and aiding in paperwork completion especially around April 15th. What type of leadership
style(s) does Jenny display and how?
95. Suggest solutions for better time management.
96. For six leadership styles, briefly state how each type of leader operates.
97. What type of counseling is available for an entrepreneur?
98. Discuss the use of employee empowerment and self-managed work teams in relation to how leaders shape an
innovative organizational culture.
99. Jo Ann serves as the CEO of her company and currently works 60 hours a week at a minimum. What issues does she
face?
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Answer Key
1. False
2. True
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26. False
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52. c
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77. a
78. d
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92. Paul should look for consultants who are knowledgeable in developing business plans. They need to have a history in
completing business plans. The consultant would ideally have expertise in retail as the operation has three areas (food,
music, art) all with separate needs. Paul would want to feel comfortable working with the consultant and that the
individual could work with others on his team (i.e. his designer, contractor, and other sources of assistance such as his
CPA, banker, and/or lawyer) if needed.
Issues to be determined before hiring the consultant would include exactly what assistance will be provided and at what
cost. A contract should be written and signed so that all parties know what is expected and how the business plan will be
completed.
93. In a very small company, an unplanned structure is typical but changes as the business begins to add employees.
While in the unplanned structure, employees may begin to perform certain functions.
With growth, the company may move to a line structure where each person has one supervisor to which they report. All
employees are engaged in multiple areas since these companies typically have fewer than 10 employees.
A line and staff organization occurs when staff specialists such as in human resources, quality control and an assistant to
the president/CEO are added to the company.
Each organizational structure requires different issues related to delegating authority, controlling operations and
communicating. The span of control will change as the company grows resulting in the delegation of authority based on
the comfort level of the owner. The control process broadens as an increased number of employees are involved.
However, no matter the size, communication should still be a two-way process with owners understanding the importance
of win-win situations for both the company and the employees.
94. –Visionary Leadership: By holding company meetings on business goals, Jenny displays this she has a shared clear
vision for the business.
–Affiliative Leadership: Since Jenny is involved enough with the employees that they share problems with her, an
emotional bond has been forged. Organizational harmony is strengthened with her working with clients when it is a busy
time for the company.
– Coaching Leadership: Jenny has developed close bonds with the employees to where they trust her when sharing their
problems. Since she also keeps them informed about changes, she also helps them become better at their jobs.
– Democratic Leadership: By working with the employees and having a willingness to participate in hands-on work,
Jenny displays democratic leadership.
95. 1. Analyze how much time is normally spent on activities.
2. Identify and limit chronic “time wasters”
3. Use a daily written plan with highlighted, firmly established priorities.
4. Use technology to save time, not to be a distraction.
5. Use a good time management system.
6. Try to make meetings more efficient.
7. Unsubscribe from magazines and catalogues that are never read.
8. Create a file folder for active projects.
9. Keep desk and office organized.
10. Use deadlines to promote focus.
11. Manage e-mail effectively.
12. Set aside time to work undisturbed.
96. 1. Visionary mobilizes people toward a shared vision.
2. Coach develops people, establishing a relationship and trust.
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