AccountingQueen
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Test on Week 1 Reading
Multiple Choice & Multiple Select (1 point each)
Highlight your answers in yellow or blue.
___ out of 15 correct
In general, the most attractive industries for start-up businesses have all the following characteristics except:
a) They are large and growing.
b) They are older and established.
c) They are early rather than late in their life cycle
d) They are fragmented rather than concentrated.
e) They have high rather than low operating margins.
Which of the following could be sources of new business ideas? (Check all that apply.)
a) Technological advances
b) Unsolved problems
c) Migration of people from rural areas to cities
d) Aging of the population
e) Obamacare
All of the following are considered to be a barrier to entry for a new business except:
a) Patents and trademarks
b) Product differentiation
c) Economies of scale
d) Unique access to distribution channels
e) Growth potential of the target market
If you were to conduct a full feasibility analysis for your new business idea, you would conduct all the following activities except:
a) Formulate a financial plan.
b) Survey prospective customers.
c) Seek a business loan.
d) Study industry trends.
e) Talk to industry experts.
A high-potential business idea encompasses all the following characteristics except:
a) It falls within an open window of opportunity.
b) It provides utility for its buyer or end user in some appreciable way.
c) It requires a meaningful change in behavior.
d) It has prospective customers that are dissatisfied with current alternatives.
e) It conforms to industry, social, economic, or technological trends.
If you were asking such questions about your business idea as “Is this a good time to introduce the product or service to the market?” and “Is this something that a specific group of consumers will get excited about?”, you would most likely be analyzing _______ feasibility.
a) Product/service desirability
b) Product/service demand
c) Product/service buying intentions
d) Industry attractiveness
e) Target market attractiveness
In an organizational feasibility analysis, the initial management team should be evaluated on all the following characteristics except:
a) Prior entrepreneurial experience
b) Prior cash flow management experience
c) Prior grant writing experience
d) Whether the team members have college degrees
e) Whether the team members have relevant professional and social networks
To determine whether a proposed business has sufficient resources, sufficient management expertise, and sufficient owner competence to be launched successfully, the _______ feasibility analysis would be used.
a) Concept test
b) Product/service
c) Buying intentions
d) Organizational
e) Financial
Which of the following are techniques to generate new business ideas? (Check all that apply.)
a) Using a bug report
b) Using a first screen
c) Using a focus group
d) Using an idea sketch pad
e) Using a business model canvas
To gauge the viability of a product, entrepreneurs can build a functional model for potential customers to see it, test it, and use it. This functional model is called _______.
a) An in-home trial model
b) A prototype model
c) A windshield research model
d) A quantitative model
e) A qualitative model
_______ is a process to test a business model on a small scale before committing significant resources to launch a business that might not work.
a) Business prototyping
b) Minimal viable product creation
c) Product pivoting
d) Feasibility analysis
e) Porter’s Five Forces matching
All the following are potential revenue streams for entrepreneurial ventures except:
a) One-time sales
b) Ongoing fees
c) Service contracts
d) Public relations activities
e) Complementary products
The six forces in the macro environment of business include all the following except:
a) Demographic forces
b) Global forces
c) Economic forces
d) Sociocultural forces
e) Competitive environment forces
Fully functional driverless cars may soon become possible due to several recent technological breakthroughs; however, all the macro forces shaping the automobile industry must come into alignment for the driverless car to become a true market opportunity. Which of the following is not a macro force that would have an impact on driverless cars becoming a good market opportunity?
a) Software systems that control the operation of a car must meet the legal criteria of proving that they are free of bugs under any and all possible circumstances.
b) Advances in GPS, cameras, and other technology are available to enable driverless cars.
c) Baby boomers are aging, but when they reach the age where it’s no longer safe for them to drive, they may be a good demographic market to buy driverless cars.
d) Computers in driverless cars will be able to determine the shortest distances without traffic congestion and will drive at controlled speeds, which will improve fuel consumption and reduce the cost of owning the vehicle.
e) All of the above are macro forces that would have an impact on driverless cars becoming a good market opportunity.
15
True/False (1 point each)
___ out of 12 correct
T F Porter’s Five Forces model focuses on five threats in the business environment, which are the threat from potential laws, the threat from changes in the economy, the threat from globalization, the threat from tariffs, and the threat from trade embargoes.
T F Data collected from the U.S. Census Bureau, company reports, trade associations, market research reports, library research, and Internet research is called primary research data.
T F An attractive target market is large enough to produce a profit but small enough to avoid attracting larger competitors.
T F It is cheaper to serve a small number of loyal customers than to seek out new customers.
T F To complete a full feasibility analysis, both primary research and secondary research are necessary.
T F Customers of glass bottle manufacturers have switched to plastic containers, which are lighter, less subject to breakage, and less expensive to ship. This is an example of an industry being affected by the bargaining power of suppliers to that industry.
T F Most new businesses start by selling to broad markets and then narrow their target markets over time.
T F A common cause of business failure is running out of cash before the business breaks even and can support itself from the cash flow from operations.
T F If a business is making a profit, it is considered to be a successful business.
T F To create a strong value proposition, entrepreneurs should develop a list of key benefits by determining what they think prospective customers actually want and need.
T F Investors would rather invest in a weak product idea put forth by a strong founding team than a strong product idea put forth by a weak founding team.
T F A way to solicit feedback from prospective customers and industry experts about a new product or service concept is to conduct a buying intentions survey.
Short Answer (3 points each)
___ out of 9 points
1. Think about the problems that you encounter in your everyday life. Select one problem, and describe how solving the problem might represent the basis for a new business idea.
2. An entrepreneur just applied for a bank loan to finance a Greek-style restaurant she plans to open near a large Midwestern university campus. The banker asked the entrepreneur if she conducted any primary research to assess the feasibility of the restaurant. The entrepreneur replied that she spent countless evenings and weekends in the library and on the Internet collecting data on the feasibility of Greek-style restaurants, and that she is confident that her restaurant will be successful. She said the she even did careful research to make sure that Greek-style restaurants do well near large Midwestern university campuses. If you were the banker, how would you react to the entrepreneur’s statements?
3. Developing a failed business concept does not mean the entrepreneur has failed. How would you explain this to an entrepreneur facing a failed business concept?