Ch3 Exam Questions Framing And Testing The Business Model

Chapter 3: Framing and Testing the Business Model

True/False

1. A business model provides a framework in which entrepreneurs can examine their business plans and explore alternative ways for their companies to function and grow profitably while building barriers to ward off competitors.
2. Because a small company may not have the resources or time to gain a share of a new market before its products, services, or even business models have become obsolete, partnering with large companies may accelerate a small company’s growth.
3. Capturing data on customer requirements and using it to create unique services or products can be a powerful way of adding value and keeping out competitors.
4. A business model based on information sharing can provide low barriers against competitors because the costs involved in integrating incompatible data and computer systems can be prohibitive.
5. Unfortunately, licensing and franchising are not valuable components of a business model.
6. Interestingly, some companies base their business models entirely on licensing and have no intention of producing or selling any product.
7. An entrepreneur should not seek to be a franchisee or build a business as a franchisor without seeking competent legal advice.
8. Due to the obvious benefits from partnerships between small innovative companies, such as larger corporations’ resources, contacts, reputation, and other things, rarely do the relationships become tense as cultural issues become dominant.
9. Building social networks into your business is a way of getting sales leads and new ideas for products or services from your customers
10. Large companies that have a complementary product or service sold alongside a small company’s product for mutual benefit is an example of corporate partnering.
11. In applying the business model canvas for a service-based organization, physical assets to produce the product are going to be critical resources.
12. The four steps in the MVP process in order are: identify minimum product features; define the essential customer experience; illustrate product’s ability to solve the problem; and measure the validity of this MVP version.
13. Small enterprises must be part of a supply chain, but large companies often undertake all the functions from start to finish that are required to deliver their end product.

Short Answer / Fill in the Blank

1. A(n) ________ provides a framework in which entrepreneurs can examine their business plans and explore alternative ways for their companies to function and grow profitably while building barriers to ward off competitors.
2. _____________are the reasons the customer segment(s) will use your products or services instead of a competitor.
3. A ______________ is that version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort.
4. If you can enter the market and build your customer base before anyone else, you achieve ____________ in which it becomes harder and harder for competitors to get into the market and convince your customers to switch.
5. Licensing and ________ refer to types of contracts between an issuing entity and a receiving entity.
6. A(n) _________ license provides just one licensee the rights stated in the agreement.
7. ____________ are paid as a percentage of net sales of products or services.
8. ___________ may prevent a licensee from just sitting on the rights and not trying to generate sales.
9. A(n) ____________ is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business.
10. The _________ allows a franchisee to participate in building a business together with other franchisees, under the rules stipulated by the franchisor and under certain conditions spelled out in the agreement.

Multiple Choice

1. Which of the following factors are not important when designing a business model?
   1. Understanding customers’ values
   2. Having Venture Capital Investment
   3. Analyzing current and potential customers
   4. Clearly identifying the markets that you will enter.
2. __________ are those non-customer relationships necessary to execute the business model.
   1. Key activities
   2. Revenue streams
   3. Key partnerships
   4. Key resources
3. A_______________________ is the way a company applies knowledge to capture value.
   1. business model
   2. value proposition
   3. channel
   4. revenue stream
4. It is recommended that the Business Model Canvas be used in _________ sessions.
   1. Individual
   2. Team
   3. Small
   4. Large
5. When seeking a product market fit, an entrepreneur should:
   1. Consider the customer’s problem, the customer’s challenges in resolving the problem, and the severity of the customer’s pain points within the process.
   2. Research the customer’s current solution to the problem and identify what the customer may “gain” from a better solution.
   3. Both a and b are parts of assessing product market fit.
   4. Neither a or b relate to assessing product market fit.
6. Which of the following is NOT a correct matching of business canvas model elements:
   1. Channels – the means with which you communicate with your customer segment(s) to deliver your value proposition.
   2. Revenue Stream – the physical, financial, intellectual or human assets needed to deliver your value proposition(s).
   3. Key Activities – critical actions needed to execute your business model.
   4. Cost Structure – the main costs incurred in order to execute your business model.
7. Data lock-ins inhibiting a move to a competitor can be found in which of the following?
   1. E-mail services
   2. Banking
   3. Health care services
   4. All of these.
8. The authors recommend that a small company restrict the number of licenses it issues to how many competitors?
   1. Three or four
   2. Five or six
   3. Two or three
   4. One or two
9. Which of the following is the term used to describe the fee that may be paid to initiate the contract?
   1. Running royalties
   2. Minimums
   3. Up-front
   4. Advances
10. _________may prevent a license from just sitting on the rights and not trying to generate sales.
    1. Running royalties
    2. Minimums
    3. Up-front fees
    4. Marketing
11. Which of the following is the term for a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business?
    1. License agreement
    2. Franchise
    3. Exclusive license
    4. Running royalty
12. Which is the best-known franchise organization?
    1. Wendy’s
    2. Arby’s
    3. Chick-Fil-A
    4. McDonald’s
13. The federal government has issued regulations that require franchisors to prepare an extensive disclosure document called _______.
    1. UFCO
    2. UFCC
    3. UFOC
    4. UFDC
14. A franchise agreement need not have the following conditions stated:
    1. Payments that must be made to the franchisor
    2. The location where the franchisee may operate
    3. Guidelines on using the franchisor’s brand
    4. The expiration date of the patent that is being franchised
15. For a franchise agreement, the typical length of agreement for initial period is around:
    1. 8 years
    2. 9 years
    3. 7 years
    4. 10 years
16. Limitations of franchise agreements include all of the following except:
    1. Treatment of confidentiality
    2. General legal requirements
    3. Non-compete stipulation
    4. Legal advice
17. ____________________is the ability to capture data on customer requirements and using it to create unique services or products can be a powerful way of adding value and keeping out competitors.
    1. Collaborative filtering
    2. Performance
    3. First-movers advantage
    4. Mining the long-tail
18. If you can enter the market and build your data-base before anyone else, you achieve ­­­­­­­­­­­­­­­­­­­­­­­­­

_______________in which it becomes harder and harder for competitors to get into the market and convince your customers to switch.

• 1. non-compete stipulation.
  2. first-movers advantage.
  3. data mining.
  4. mining the long tail

1. A ________________________ is an approach to test a product's alignment with customer needs and expectations and collect the maximum amount of validated learning about customers with the least effort.
   1. Revenue streams
   2. “tinyUpdates” Business Model Canvas.
   3. Minimum Viable Product
   4. Customer segmentation
2. ______________________________ are reasons the customer segment(s) will use your products or services instead of those from a competitor.
   1. Value propositions
   2. Key partnerships
   3. Channels
   4. Communication
3. Social networks are:
   1. Club members.
   2. Not-for-profit organizations.
   3. Missionaries.
   4. On-line communities sharing common interests
4. We live in a global economy where changes occur ____________.
   1. slowly
   2. primarily within borders of economy
   3. rapidly
   4. only with governmental intervention only
5. A large corporation can license rights to a small company’s _____________.
   1. intellectual property
   2. running royalties
   3. business profits
   4. networks
6. Which of the following is not one of the three steps process to build a MVP?
   1. Define the essential customer experience that the product needs to create.
   2. Decide on the best approach to illustrate the product’s ability to solve the customer’s problem.
   3. Develop a social network.
   4. Determine what measurements or metrics will be needed to validate the learning in this first MVP version.