Srine21 Faicy Business, Minter Exam \- independent directors in family firms should be: ‘A. Any person with an MBA and a good understanding of accounting and management, B. A person not directly related to the CEO of the company, but may be a shareholder in the company. C. Any person with no relations to the owning family either by blood or marriage. ea your father requests you to quit your job and join the family business, then you agree to do so to be an obedient child and to make him happy. Then your motive for joining the family firm is based on: A. SQHHMIEREISOES) B. Affective reasons C. Correct reasons D. Calculative reasons Note: (CH4 NOT INCLUDED) J - The practice of inclusive decision making and transparency in dealings are vital for maintaining harmony and unity among owners of a family business especially during the sibling generation onwards. This statement means that: A. The CEO (family business leader) should hold democratic votes on all major decisions, and follow the decision of the majority at all times. P Flag question _ ‘The CEO (family business leader) should maintain unity of the family even if he has to take some decisions that are not in the best interest of the company. D. The CEO (family business leader) should consult all the family members before taking any decisions. .Amoeaon cones anon ings we net amy snes A v B. High levels of emotional intelligence of the CEO. C. Not keeping business information secret. D. All the siblings not being properly educated, @ 5+ Which of these statements is true about family controlled businesses? A B. Family firm owners give priority to the goals of the nonfamily stakeholders. « XS Je They are more professionally managed than non-family firms. ¥ D. f a canScamars tins ey!WA Heirs of the family firm should learn early that family business means stewardship and responsibility. The word stewardship is best resembled by which of the following? A. A. Stewards encourage nepotism in selection and recruitment of employees. B. C. Stewards sacrifice their own needs in order to make other family members happys D. Stewards agree to give priority to family members in terms of compensations and _/ promotions compared to non-family employees yf ‘One way of addressing rivalry and conflicts about leadership among sibling and cousins in a family business is by: A. Ensure that independent nonfamily advisors select the next CEO. B. Setting a policy that the eldest male child will be the next CEO. + C. Set up an office of the president where the several senior executives among the siblings and cousins take decisions together. tity a . J Which of these statements is not true about family businesses? A Fam rm bel whee chil aon bi ecto ma he B. Family firms emphasize both socioemotional wealth and economic wealth. C. They are the most dominant forms of business organizations around the world, D. Most family firms fail to survive beyong the first generation. ae important responsibility of the family firm CEO or leader is to educate and inform - other far : members. To educate means B. To provide online courses on financial and business education to the other family members C. To make sure that all the adult family members, have at least a university degree. D. To provide regular financial statements and activity reports to the other family members. 10- All of the following are true about the benefits of family meetings, exc A. Facing cn ner vr hie Th pt Pots, Family meetings can be used to legitimize the power and authority of the family firm leaders. C. Family meetings can address frustration over alienation or lack of inclusion D. Family meetings can provide a forum for minimizing the potential for conflict and addressing the troublesome problems that confront multigenerational families. canScamars tins ey!* Research shows that cultures that follow primogeniture in selecting their next family business leader have: Shown a general decline in business performance, often leading to failure of sale the company B, Led to product innovation C. Shown remarkable suecess in the growth of the family firm D. Managed the family business very effectively Note: (CH4 NOT INCLUDED) (2-When the next generation of business leaders in a family firm, decide to radically change the business policies of their predecessors, they are being D. Wavering we Family council meetings in family firms can be useful for the following reason: A, To develop an organizational char B. Tedazmncon to ese my ash ne sins ots af so C. To determine a line of succession for future CEO selection of the company. D. To conduct performance appraisal of employees. & ‘A family council can be useful to formulate the following policies, except: A. Board service and family council service policies B. C. Employment and subcontractor pdlicies D. Dividend and liquidity policies 16- One of the challenges for later generation family members being involved in the family business is known as the endowment effect. Which of the following statement closely resembles this term? ie) A. The next generation have to be endowed with knowledge and experience. B. The next generation is overwhelmed by the towering shadow of the previous generation, C. The next generation expects special endowments for being related to the founders of the family firm, ‘The next generation focuses on preserving what the previous generation has achieved, rather than moving the organization forward NOTE: (CH4 NOT INCLUDED) focused on: ~ V 3 17-In sone irst business system, the key decision makers in the company are canScamars tins ey!A. Wellbeing of the family members. B. C. Wellbeing of the employees. Growth of the company through new products and innovations. A. rari ‘commitment is a type of motivation to join the family business based on: A, To join the family firm because it is a secure place to work. \B. Desire to do the right thing by showing sense of responsibility to the family C. To make sure that there is no loss of opportunity cost of not joining the family busines: D. To be part of an organization that fulfills emotional and social needs, NOTE: (CH4 L NOT INCLUDED) J Which of the following is a proper example of procedural justice in a family business? A. Non-family employees receive equal salary as family members working in the company. B, Senior level positions are only open to family members working in the company, C. Rewards and compensations are equally distributed among all employees. D. Sysemant pn lol bye soma mon ev and / 20- Successors of family businesses join their family firms for various personal motivations. / ‘The most desirable motivation for joining by a next generation member of the family is: (A. Affective commitment B. Normative commitment C. Personal dependence D,Calculative commitment NOTE: (CH4 NOT INCLUDED) = The reason why family conflicts over business appears mostly in the cousin generation, is because A. After the cousins get married, they become more selfcentred about their own family needs. . Itis not possible for the company to provide employment to so many people. D. In the cousin-generation there are just too many people that need to be kept happy. 22- Regular shareholder meetings are essential in family firms due to the following reasons: A. To inform the shareholders about the policies of the family that controls the firm. B. Allow for sharing of information with shareholders on competitive strategies of the mpan’ D. To inform the shareholders about new products features. 23,The following statement is not true about joint optimization approach in managing the // systems in tamity firms: canScamars tins ey!A. Family employment policy guides the employment of family members B. Some family members are employees; others are responsible shareholders C. The performance of employed family members reviewed in the same manner as that of nonfamily managers D. / 24-Which of the following represents Zero Sum Dynamics? A. The failure to bring unity to the family members leads to net zero outcome for the vusines: b C. Family dynamics dictates success of the family firm. 15-A family firm that maintains distributive justice would: A. Pay the same salary to all its’ employees, B. Ensure that dividends are given to shareholders every year. c D, Distribute bonuses to both non-family employees and family employees equally. /. 26- The founder generation should set the family governance and business policies of a (/ ‘amily frm, because: A B.. Subsequent generations do not possess the same capabilities as the founders. The founders created the company, and therefore it their absolute right to do so The founders have the greatest legitimacy and authority compared to any other generation. he Research about family firm performance shows that family owned businesses have been found to outperform non-family firms. Which of the following is the least likely reason for this finding: A. Next generation of family business leaders have the unique opportunity to learn management and governance matters related to the family firm from a young age. B. C. The interaction between family goals and business goals creates competitive advantages for the firm, D. Family members working in the organization are more committed to the success of the business since the reputation of the family is at stake. 28- Which of the following family business circumstances indicate that there is lack of V’ sutficient emotional bonding between family members, yet the business is likely to (7S, attract next generation members that are opportunistic u | W\ G) Pained hearts and deep pockets ° J 57 B. Pained hearts and empty pockets w% canScamars tins ey!C. Warm hearts and deep pockets D, Warm hearts and empty pockets NOTE: (CH4 NOT INCLUDED) Which of the following is the most important role of independent directors in family firms: A. They provide insider information to shareholders. B. They monitor the activities of the CEO. c hyve eee amy fm ones he nay soln he D. They monitor the activities of the family members. jo Family firms are known as a combination of several subsystems. When the focus of the family is not quite clear, it is known as a: A yaa in the family business means: A. B. There must be transparency in all dealings among the family firm employees. €. Accounting methods should be computerized : Successful transfer of power is about: ‘A. Transfer of power and control to dependable family member B_ Transfer of control and leadership to the next successor Transfer it and ia to next successor 33- The CEO as an architect of governance in family firm, means that: ‘A. The CEO must deal with the blurred boundaries B. The CEO ensures that problem solving is diminished and agency costs are incurred a C. The CEO should create institutions of governance for clear guidelines on family and business relationshi D. The CEO has to design the business model of the firm 34- Which of these meetings related to family business management can be informal ‘A. Meeting ofa family members B. Meeting of shareholders of the company C. Meeting of the family council D. Meeting of the board of directors canScamars tins ey!