Business Model And Plan Test Bank Docx Chapter.11 1e

Chapter 11: Business Model and Plan

= Correct answer

Multiple Choice/Fill in the Blank

1. Which of the following is the most common business model and involves one-sided actors?

A. ad-based

B. direct

C. marketplace

D. multi-sided

Difficulty: Easy

1. Why do most businesses fail within the first few years?

A. cash flow issues

B. lack of leadership

C. poor product/service

D. too much debt

Difficulty: Moderate

1. Coca-Cola’s brand-line extension with Cherry Coke and Coca-Cola with Lime is an example of ________.

A. disruptive innovation

B. incremental innovation

C. market innovation

D. radical innovation

Difficulty: Moderate

1. Which of the following is a new addition to the market or a novel change in an existing product or service?

A. advancement

B. innovation

C. invention

D. market addition

Difficulty: Easy

1. 3-D printing is an example of what type of innovation?

A. advanced

B. disruptive

C. incremental

D. market

Difficulty: Difficult

1. Which of the following improve the performance of established products through characteristics that mainstream customers adopt?

A. disruptive technologies

B. innovative technologies

C. radical technologies

D. sustaining technologies

Difficulty: Moderate

1. Why will a disruptive technology fail in most instances?

A. because it is not tested in the marketplace

B. because customers are not early adopters

C. because there is lack of funding for the technology

D. because a different business model will be needed

Difficulty: Difficult

1. When an existing business fundamentally changes their approach to the business, it is called ________.

A. business model innovation

B. disruptive model innovation

D. incremental innovation

C. market adjusted innovation

Difficulty: Easy

1. The ________ statement summarizes the benefits customers can expect from the product/service.

A. business purpose

B. innovation statement

C. market position

D. value proposition

Difficulty: Easy

1. The business model canvas has ________ key components.

A. two

B. four

C. six

D. nine

Difficulty: Easy

1. Which type of canvas is most typically used by entrepreneurs?

C. financial canvas

A. innovation canvas

D. lean canvas

B. market canvas

Difficulty: Moderate

1. How does an entrepreneur create a unique value proposition?

A. Find the intersection between customer problems and your solution.

B. Sell a cheap product that many people will purchase.

C. Bring to the market a novel product no one has thought of before.

D. Use an existing product and make changes to it incrementally.

Difficulty: Moderate

1. What is the purpose of the customer empathy map?

A. find out what problems the customers have

B. accurately portray the target market for the product/service

C. quantify the number of customers in the target market

D. narrow the customer field to one or two groups

Difficulty: Difficult

1. Which of the following is used to help determine whether to continue with the venture?

A. customer empathy map

B. feasibility study

C. innovation study

D. market analysis

Difficulty: Easy

1. Why should the focus first be on the right side of the business model canvas?

A. These are the easier steps to implement.

B. These can be accomplished with little to no funding.

C. These require the least amount of data collection and research.

D. These are the most critical aspects of starting a new venture.

Difficulty: Moderate

1. With the lean model canvas, which of the following is added?

A. customer relationships

B. key partners

C. key activities

D. problem block

Difficulty: Moderate

1. Which part of the feasibility pyramid asses the capability of management and the sufficiency of resources to bring the product to market?

A. financial feasibility

B. innovative feasibility

C. market feasibility

D. organizational feasibility

Difficulty: Easy

1. The quality of the labor pool refers to which part of the feasibility analysis?

A. financial sufficiency

B. management sufficiency

C. market sufficiency

D. resource sufficiency

Difficulty: Moderate

1. Financial analysis typically includes ________.

A. a 10-year profit projection

B. a breakeven calculation

C. bank loan quotes

D. only startup expenses

Difficulty: Easy

1. The target market segment is known as a(n) ________.

A. MVP

B. SAM

C. SVP

D. TAM

Difficulty: Easy

1. Why is direct labor considered a variable cost?

A. because it can fluctuate with sales revenues

B. because employee wages can change

C. because they must be paid each week

D. because it does not fluctuate with production

Difficulty: Difficult

1. What is a major purpose for using the business plan externally?

A. as an investment tool

B. to generate customer interest

C. to share at a competition

D. as a way to protect your idea

Difficulty: Difficult

True/False

1. True or false? A business plan only serves external purposes.

Difficulty: Moderate

1. True or false? The business plan should begin with an executive summary.

Difficulty: Easy

1. True or false? The executive summary should include a funding request.

Difficulty: Easy

1. True or false? In the business plan document, you should not address any competitors in the industry.

Difficulty: Easy

1. True or false? When creating the competitive analysis, you should keep the focus on the entrepreneur’s ideas and desires rather than the key elements of the customers.

Difficulty: Difficult

1. True or false? Fixed costs do not change regardless of production or sales.

Difficulty: Easy

1. True or false? Seventy-five percent of business venture-backed startups succeed.

Difficulty: Easy

1. True or false? A mobile app is an example of a direct business.

Difficulty: Moderate

1. True or false? Disruptive innovations create new markets.

Difficulty: Difficult

1. True or false? Disruptive innovations are more advantageous to existing firms rather than new entrants.

Difficulty: Moderate

1. True or false? Job creation is a financial measure of value.

Difficulty: Easy

1. True or false? The business model, at the very least, must include revenue streams, a value proposition, and customer segments.

Difficulty: Moderate

1. True or false? The breakeven point is when sales are greater than expenses.

Difficulty: Easy

1. True or false? The business model canvas is designed to not be revised.

Difficulty: Easy

1. True or false? Customer frustrations with existing product packaging are addressed in the customer empathy map.

Difficulty: Moderate

1. True or false? Adaptability is about addressing the assumptions that will create customer value.

Difficulty: Difficult

1. True or false? Most business fail because of a lack of proper understanding of the problem from the beginning of the venture.

Difficulty: Difficult

Short Answer

1. Describe the following common business model types: direct, multisided, and marketplace. Give an example of each.

Difficulty: Easy

1. Discuss the concept of innovation and how disruptive innovations create new markets. Give an example.

Difficulty: Moderate

1. What is business model innovation?

Difficulty: Easy

1. Using a business idea that you have, develop the value proposition for the product or service.

Answers will vary based on the student’s idea. Their answer should include a full discussion of the benefits to the customer from the product/service. The answer could also include Maurya’s value proposition formula.

Difficulty: Difficult

1. Discuss the components of the business model canvas.

Difficulty: Easy

1. Compare and contrast the business model canvas to the lean business model canvas.

Difficulty: Moderate

1. Develop a customer empathy map for a product/service that you are familiar with.

Students’ responses will vary based on the product or concept. The empathy map should address the following components: see, say, do, hear, and think.

Difficulty: Difficult

1. Outline the components of a feasibility analysis.

Difficulty: Easy

1. Discuss the various purposes of the business plan.

Difficulty: Moderate

1. What should be included in the competitive analysis section of the business plan?

Difficulty: Easy

1. Differentiate between fixed and variable costs. Using a business idea that you have, discuss some expected fixed and variable costs.

For the idea of an organic pet food store and online outlet, there are several fixed costs to consider. First, you will need to cover the retail space which would include rent, utilities, and routine maintenance costs. Other fixed costs would be insurance, website hosting, and some staff costs. Variable costs would be those that are directly related to the organic pet food that you are producing. This could include all the materials needed to make the food in addition to the labor costs to make and package the product, packaging materials, and shipping costs.

Difficulty: Difficult

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