Chapter 14

Question 1

Diversification

Answer 1

The addition of product or service offerings beyond a business’s core product or service

Question 2

Licensing

Answer 2

renting your brand or other intellectual property to increase sales

Question 3

Replication Strategy

Answer 3

A way for a business to obtain money by letting others copy its success formula for a fee

Question 4

Line extension

Answer 4

Using different established brand to promote different kinds of products

Question 5

Advantages of being a franchisor

Answer 5

Growth with minimal capital investment

Lower marketing and promotional costs

Question 6

Disadvantages of being a franchisor

Answer 6

The potential for a tarnished franchise reputation

Payment issues of franchises fail

Difficulty getting qualified franchisees

Question 7

Harvesting

Answer 7

The act of selling, taking public, or merging to yield proceeds for the owners

Question 8

Fair market value

Answer 8

The price at which a property or business is valued by the marketplace

Question 9

Book Value

Answer 9

Value of Assets- Liabilities

Question 10

Harvesting Options

Answer 10

Merger- Joining two companies together

Question 11

EXxit Strategy

Answer 11

1. Acquisition
2. Earn-Out-
3. Debt/Equity change
4. Merge