Ch3 Complete Test Bank Family Business

Chapter 3- Family Business

True/False

1. Almost 75% of the S&P and Fortune 500 firms are family-controlled firms

Response: See 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. Family businesses contribute to about 40-50% of the GDP and more than 80% of private-sector employment

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. A large majority of family businesses in U.S. are small

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. For private family firms, significant ownership by family members means owning 5% or more shares of the firm

Response: See section 3.1.1

Level: Easy

Learning Objective: Explain what a family business is

1. According to the systems theory approach, the family business is made of up of three independent yet overlapping sub-systems: family, business, and family members learning stages

Response: See section 3.1.2

Level: Easy

Learning Objective: Explain what a family business is

1. All family firms tend to have a short-term view of the business

Response: See section 3.2.1

Level: Easy

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. There are no unresolved conflicts in family-owned businesses

Response: See section 3.2.2

Level: Easy

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. The succession process is one of the biggest challenges in family businesses

Response: See section 3.2.2

Level: Medium

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. The complex family, complex business is a family business where the business is highly diversified, but ownership stays within the same family over the years

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. A complex family, complex business is a business where there is a minimum conflict among family members

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. The two dimensions of simplicity-complexity and family-business yields three types of family firms

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. The three-generation syndrome is uncommon in family businesses

Response: See section 3.4

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. The 90 percentage of family-owned family business turns into fourth-generation businesses successfully

Response: See section 3.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. The family businesses succession improves in the subsequent generations

Response: See section 3.4

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. In North America, the three-generation rule is described by the adage “from shirtsleeves to shirtsleeves” in three generations

Response: See section 3.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. One of the characteristics of enduring family businesses is that they tend to offer products and services that satisfy basic human needs

Response: See section 3.4.1

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. Family unity is a bedrock principle for those who want the business to survive for the long term

Response: See section 3.4.1

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. One of the ways to manage family conflicts in family firms is to bring in an influential unbiased mediator

Response: See section 3.4.2

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. Family firms that want to survive for the long-term need to prioritize the family over the their business

Response: See section 3.4.2

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. One can prepare the next generation to enter in the family-owned business is by putting children in roles and responsibilities they aren’t well suited for

Response: See section 3.4.2

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. The best way to prepare children to enter in the family business is by presenting the business as an obligation to them

Response: See section 3.4.2

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. In an absence of a qualified heir, one of the exit options for family business owner is to sell the business

Response: See section 3.4.3

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. In family businesses, succession has historically been biased by gender

Response: See section 3.4.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. In Japan, it is uncommon to have son-in-law as a successor of a family business

Response: See section 3.4.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. Family business succession works best when the son is the successor

Response: See section 3.4.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

Multiple Choice Questions

1. Schoedinger Funeral and Cremation Service in Ohio is now in its ________generation of family ownership
2. First and second
3. Second and third
4. Fifth and six
5. Third and fourth

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. Which of the following is NOT in America’s Wealthiest Families list
2. Koch family
3. Mars family
4. Walton family
5. TATA family

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. A ________business is the one in which multiple members of the same family are involved as major owners or managers, either contemporaneously or over time
2. Family
3. Small
4. Lone founder firm
5. Large

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. Which of the following is NOT a characteristic of a family-owned business?
2. Family members have a strategic influence on the management of the firm
3. Family members have a significant ownership control
4. Two or more members of the family are involved as owners or managers
5. One founder is involved, with no relatives in the business

Response: See section 3.1

Level: Easy

Learning Objective: Explain what a family business is

1. Which of the following is an advantage of family-owned businesses?
2. Lack of interest among family members
3. Family conflict
4. Leadership stability for several years
5. Nepotism

Response: See section 3.2

Level: Medium

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. Ballon d’Or, the prestigious award for soccer players, is made by a ___family firm
2. French
3. American
4. Japanese
5. Chinese

Response: See section 3.2

Level: Easy

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. Which of the following is a drawback of family businesses?
2. High level of personal commitment
3. Long-term view of the business
4. Leadership stability
5. Nepotism

Response: See section 3.2

Level: Medium

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. George runs a small family business. He has his two sons, Timothy and Clark, involved in the business. Timothy and Clark often have conflicts with each other on the business issues. Consequently, employees have started complaining to George about his sons. What do you think George should do?
2. He should ignore the matter
3. He should pit Clark against Timothy
4. He should talk to Timothy and Clark about their conflicts
5. He should publicly criticize them

Response: See section 3.2

Level: Medium

Learning Objective: Identify the advantages and disadvantages of joining a family business

1. George R. Ruhl & Son company is an example of
2. Simple family, complex business
3. Simple family, simple business
4. Complex family, simple business
5. Complex family, complex business

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. According to the text, Hyundai is an example of ______
2. Simple family, complex business
3. Simple family, simple business
4. Complex family, simple business
5. Complex family, complex business

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. _____ are family businesses where the business is highly diversified, but ownership stays within the same family over the years
2. Simple family, complex business
3. Simple family, simple business
4. Complex family, simple business
5. Complex family, complex business

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. Which of the following is NOT a source of conflict in family businesses?
2. Ownership
3. Lack of shared vision and values
4. Finances
5. Mutually agreed succession plan

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. Marriott International is an example of
2. Complex family enterprise
3. Public-owned family corporation
4. Family-owned business
5. Founder-owned family-involved businesses

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. According to the typology based on ownership and development stage of the firm, the final stage in the life of a family business is the ______
2. Public-owned family corporation
3. Complex family enterprise
4. Founder-owned family-involved businesses
5. Family-owned business

Response: See section 3.3

Level: Easy

Learning Objective: Distinguish between different types of family firms

1. ______is when the family firm’s ownership is in the hands of the public, with the family holding significant stock in the public corporation
2. Complex family enterprise
3. Public-owned family corporation
4. Founder-owned family-involved businesses
5. Family-owned business

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. ______is when the business is a multigenerational, cousin-involved company
2. Complex family enterprise
3. Public-owned family corporation
4. Founder-owned family-involved businesses
5. Family-owned business

Response: See section 3.3

Level: Medium

Learning Objective: Distinguish between different types of family firms

1. Which of the following is NOT a reason why succession planning fails in many family firms
2. Business is run like a monarchy
3. Negligence by an owner
4. Lack of confidence in the next generation
5. Productive communication between family members about succession planning

Response: See section 3.4

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. The percentage of family-owned family business that successfully transit from the second to the third generation is :
2. 30
3. 50
4. 12
5. 4

Response: See section 3.4

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. Which ________club in Britain has membership open only to companies that have survived more than 300 years?
2. The Henokiens Associations
3. The Tercentenarian Club
4. Centuries of Success
5. Avedis Zildjian

Response: See section 3.4

Level: Hard

Learning Objective: Describe succession Planning in family firms

1. _______refers to a business owner’s act of unwittingly killing off the business by failing to provide a clear continuity of an organization
2. Endeuthanasia
3. Rareeuthanaisa
4. Corporeuthanasia
5. Ineuthanasia

Response: See section 3.4

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. Which of the following is NOT a characteristic of an enduring family business?
2. Harmony
3. Commitment to continue the legacy
4. Offers products that cater to basic human needs
5. Forcing values and traditions of the family in the next generation

Response: See section 3.4.1

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. Which of the following is an essential element for the longevity of family businesses?
2. Conflict resolution
3. Family first, business second
4. Hire all family members regardless of their interests
5. Hire an incompetent family member

Response: See section 3.4.2

Level: Easy

Learning Objective: Describe succession Planning in family firms

1. How can the next generation be prepared to enter a family-owned business?
2. Let the family business dictate your young child’s life
3. Give your children roles and responsibilities they aren’t well-suited for
4. Encourage education that is relevant to the business, and emphasize practical learning
5. Present the business as an “obligation” they have

Response: See section 3.4.2

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. Which of the following is NOT the best way to prepare the next generation to enter a family-owned business?
2. Let the family business dictate your young child’s life
3. Involve children in the business as they grow up
4. Encourage education that is relevant to the business, and emphasize practical learning
5. Present the business as an opportunity

Response: See section 3.4.2

Level: Medium

Learning Objective: Describe succession Planning in family firms

1. George operates a small family business. He wants his daughter, Katie, to lead the business in future. He believes that Katie is currently incompetent of running the business? Katie has also shown her interest in getting involved in the business. What do you think George should do?
2. Open another business for Katie to lead it
3. Let Katie work elsewhere first before joining the business
4. Hire Katie in the business even though she is incompetent
5. He should publicly criticize Katie for being incompetent

Response: See section 3.4.4

Level: Hard

Learning Objective: Describe succession Planning in family firms