A family business is a combination of all of the following except: (Points : 1.25) The dream (possib

A family business is a combination of all of the following
except: (Points : 1.25)
The dream
(possibility) of continuity across generations
control (15%+) by two or more members of a family or a partnership of families
Concern for
family relationships
No strategic
influence by family members on the management of the firm

Question 2.2. The economic impact of family businesses is
significant. How many businesses in the
world’s free economies are family businesses? (Points : 1.25)
80 – 98%

Question 3.3. The main reason why family-owned and
family-controlled companies fail relates to: (Points : 1.25)
differences between family members
break down in
communication between family members
failure in
succession planning

Question 4.4. In the systems theory model of family
business: (Points : 1.25)
Employment in
the business is a birthright
Commitment to
continuity depends on the agendas of individual family members
The firm is a
dynamic system in which integration is achieved by adjustments between family,
management, and ownership subsystems.
time horizons and perceived risk are the most significant issues

Question 5.5. In a management first business all of the
following are true except: (Points : 1.25)
Employment is
on the basis of qualifications – family is discouraged from working in the
Performance of
employed family members is reviewed in the same manner as the performance of
nonfamily managers
between family members is usually all business
Perks that
transfer from the business to family members are often extensive

Question 6.6. In the Stewardship Theory: (Points : 1.25)
perspective claims that founding family members view the firm as an extension
of themselves and view the continuing health of the enterprise as connected
with their own personal well-being
capabilities or resources of family firms are converted into competitive
agency costs
can be controlled or avoided through the use of certain managerial and
governance practices
Family members
are encouraged to work outside the business to get experience

Question 7.7. All of the following about zero-sum dynamics
are true except: (Points : 1.25)
they are
characterized by exchanges in which one party’s perceived gain is the other
party’s perceived loss
the us-and-the
dynamic can be triggered by any perceived difference including male-female,
older-younger, richer-poorer, etc.
considers the
family to be the building block of emotional life
the absence of
growth in the family business is fertile ground for zero-sum dynamics

Question 8.8. When making policy for a family business:
(Points : 1.25)
Focus on the
future and let go of the past
involve as many family members as are relevant to the particular policy being
experienced facilitators to help the family business focus on the future and
benchmark your drafts of policies against those of other successful family
owned companies
All of the
above are important guidelines for policy making.

Question 9.9. Family meetings can be beneficial for the
success of a family business. Which of
the following is a main benefit? (Points : 1.25)
meetings offer a safe haven in which to teach family members about the various
rights and responsibilities that accompany being a business owner and manager
meetings should not include discussion of controversial information including
financial performance.
Should only
include the top management and outside board members.
meetings have been found to have no impact on the the ultimate success of a
family business.

Question 10.10. Family emotional intelligence: (Points : 1.25)
Is concerned
with the capacity to recognize our own feelings and those of others and the
ability to manage our emotions and relationships with others
Leads to the
ability to handle feelings with skill and harmony so that better decisions can
be made and family unity thrive
Has not been
linked to greater success in family business performance
A and B only

Question 11.11. Unhealthy family cultures including secrecy,
lack of information, etc., result from: (Points : 1.25)
A founding
culture that supported autocratic leadership
The family’s
belief in the benefits of open communicationa
None of the

Question 12.12. All of the following responsibilities of
shareholders to the Company except: (Points : 1.25)
Define and
then demand what are reasonable returns on shareholder equity or invested
Provide the
values and principles of doing business and ensure they remain instilled in the
Evaluate the
performance of top management only and decide upon performance bonuses for
these top managers.
Define the
owning family’s strategy and communicate owning family priorities

Question 13.13. Buy-Sell Agreements have many advantages for
family businesses with shareholders including all of the following except:
(Points : 1.25)
the buy-sell
agreement allows some family member to remain patient shareholders while
providing liquidity to family members with other interests or goals
provides a
means through which family shareholders can realize value from their highly
illiquid and unmarketable wealth – company stock
used by
family-business owners to facilitate an orderly exchange of stock in the
corporation for cash

were ruled
illegal by the Securities and Exchange Commission in 2015 causing a major gap
in family business operations

Question 14.14. All of the following are components of
family governance except: (Points : 1.25)
board of
directors members
family offices
all of the
above are components of family governance

Question 15.15. Investing sweat equity in disseminating
information to family members and encouraging multiple avenues of participation
leads to positive results for a family business including all of the following
except: (Points : 1.25)
develops a
spirit of trust
diminishes a
spirit of service
develops a
sense that everyone is in the same boat on the same long journey
develops a
spirit of service

Question 16.16. One way in which a family business can help
keep a sense of entitlement from growing as family wealth increases and also
promote a family’s legacy is: (Points : 1.25)
older generation family members to remove themselves from active participation
in the family business
Involve more
outside members of on the board of directors

Buy back all
family owned stock.

Question 17.17. Benefits of key nonfamily members in the top
management team include: (Points : 1.25)
help set high
standards for work ethic
they send a
strong signal of professionalization
help promote
merit-based decision making
all of the

Question 18.18. All of the following can lead to the erosion
of the entrepreneurial culture of a family business except: (Points : 1.25)
focusing inside of the firm and not looking outside at the new competitive
family interactions
in later generations become a cost in terms of the loss of agility
continues to be celebrated and a source of strength
all of the

Question 19.19. The Next Generation partnership is
responsible for all of the following but: (Points : 1.25)
provides the
customer-driven vision tht promotes innovation and regenerates the company
engage in a
lifelong journey of preparation for leadership rather than “rushing to the
Presidency” and then act as stewards of the family and its wealth
Keeps the
business healthy and successful
Creates a
partnership with many stakeholder including other family members, key nonfamily
management, board of directors, and the new members of the ever-changing supply

Question 20.20. Centennial family companies have survived
due to their ability to manage change and continually take advantage of the
unique competitive advantages using all of the following techniques except:
(Points : 1.25)
communication using family councils and family meetings
influential and independent boards
Development of
business and strategic planning processes
Refusing to
hire and retain nonfamily employees in top management

Question 21.21. When there is little differentiation of the
assumptions that go into decision making on the basis of it being a family, an
ownership, or a management issue this is called: (Points : 1.25)
Inner harmony
Cultural blur

Question 22.22. Successful successors embody all of the
following except: (Points : 1.25)
they have good
relationships and the ability to
accommodate others
they want to
lead and serve
they know
themselves well and are strong leaders because they have worked in the family
business since graduating from high school
they know the
business well, and ideally, they like, or even love, the nature of the business

Question 23.23. Challenges for Latter-Generation Family
Members include: (Points : 1.25)
Leading in the
shadow of the founder
Need to prove
merit vs. nepotism
questions about the ability to run the business
All of the
above are challenges

Question 24.24. The CEO must establish common goals,
carefully create different posts with clearly differentiated roles, reflect
these roles in an organizational chart, develop processes that support teamwork
and disciplined communication for a __________ is selected for the leadership
position. (Points : 1.25)
non family
team of
siblings or cousins
CEO spouse

Question 25.25. The monarch CEO exit style: (Points : 1.25)
doesn’t leave
until forced out
holds on to
their diplomatic or representational duties on behalf of the corporation
leaves the
office reluctanty and plots a return
takes a key
position in another enterprise

Question 26.26. The governor CEO exit style: (Points : 1.25)
active leadership during the succession process
returns to
development activiities
allows others
to learn the business first- hand and then eventually manage it
ensures their successor will be trained
and ready

Question 27.27. All of the following factors influence the
role adopted by the CEO spouse except: (Points : 1.25)
Perception of
Knowledge of
and interest in the business
Popularity rather than ability to perform the
needed leadership role
Commitment to
continuity of family participation

Question 28.28. The Free Agent CEO spouse: (Points : 1.25)
feels that the
CEO loves the business so much it is his or her first priority
Is often aware
of both family and business matters, but chooses to grow and develop a separate
often has no
visible role in the business, enhancing respect and influence
none of the

Question 29.29. All of the following are implications of CEO
exit styles except: (Points : 1.25)
monarchs and
generals are the worst enemies of succession
monarchs and
generals may be the reason why the average tenure of CEOs in family-owned
businesses is more than double that of CEOs in management-controlled companies
general is the
best form of CEO exit because they are always nearby to step back in to run the
company if the successor falls short and fails
other exit
styles allow for a generational transition to be planned and eventually

Question 30.30. An Interim CEO spouse is necessary when:
(Points : 1.25)
Key nonfamily
employees are deemed not capable of the
key leadership role or of performing to the standards of an owner-manager
the spouse has
to compete with the business for the CEO’s recognition, affection, financial
resources and time
helps children
the importance of business to family and nurtures a love for the business
all of the

Question 31.31. The Chief Trust Officer: (Points : 1.25)
Feels that the
CEO loves the business so much it is his or her first priority.
Acts as a
healer, mediator, facilitator, and communication conduit for the family
Helps children
understand the importance of business to family and nurtures a love for the
Is usually
available for consultation and advice during challenging times in the life of
the family and the business

Question 32.32. The Business Partner (Points : 1.25)
Is critical to
the start-u[ and early stages of business through their financial investment or
professional, technical, or administrative skills
May be the
lineal descendant of the owning family or may be a large shareholder
Provides the
glue that keeps everyone united through the predictable challenges faced by
families who work together
Both A and B

Question 33.33. Leaders of a culture change must: (Points :
dissatisfaction with the status quo
have an
external (customer/competition) perspective
have the
capacity to forge a new direction
all of the

Question 34.34. All of the following are states involved in
the change process except: (Points : 1.25)

Question 35.35. New digital technologies allow: (Points :
companies can deepen their traditionally strong customer relationships
companies can restructure channel dynamics
companies can put more distance between the end customer
A and B only

Question 36.36. Competencies that are difficult to replicate
and offer family companies a greater likelihood of creating a sustainable
competitive advantage over time are called: (Points : 1.25)
disadvantage tools
value chain

Question 37.37. In the present state of the change process:
(Points : 1.25)
must include an evaluation of readiness for the particular change that is being
family, and customer satisfaction suvveys are assessment approaches that can be
open ear
meetings with sections of the organization can be used as an assessment
all of the

Question 38.38. Activity often driven by new products,
product line extensions, new markets for existing products, exports, joint
ventures, or strategic alliances with other members of the value chain is known
as: (Points : 1.25)

applied business
none of the

Question 39.39. Next generation leaders have to be both:
(Points : 1.25)
leaders of
change and growth and stewards of culture and values
leaders of
culture and stewards of values
resistance to
change and stewards of values
none of the

Question 40.40. These two governance bodies that are
uniquely qualified to institutionalize the evolutionary process and provide
continued governance in family business
relationships include: (Points : 1.25)
a board with
independent outsiders and frequent family meetings
a board with
family members only and frequent family meetings
A and B
none of the