Verified Test Bank Building Business Models Ch.5

Test Bank

Chapter 5: Building Business Models

Multiple Choice

1. A ______ describes the rationale of how a new venture creates, delivers, and captures value.

a. business model

b. business plan

c. mission

d. vision

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

2. The practice of hypothesizing, testing, and validating to create a business model is called ______.

a. scientific entrepreneurship

b. evidence-based entrepreneurship

c. business planning

d. customer value planning

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

3. How do business models help entrepreneurs create value?

a. by fulfilling unmet needs in an existing market

b. by ensuring profits will be made

c. by guaranteeing the stock will be valued

d. by providing an interview template for new customers

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

4. Fulfilling unmet customer needs using an existing product or service is called ______.

a. durability

b. adaptation

c. differentiation

d. viability

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

5. What is the relationship between the business plan and the business model?

a. The business model will not be possible without a business plan.

b. A business plan is more of an exercise while a business model is a formal structure.

c. Business plan is another term for business model.

d. A business model is a journey to gather evidence while a business plan is a formal document.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

6. It is typically easier for new businesses to change their business model because new businesses ______.

a. have the capital to fund such changes

b. have not yet formulated a business plan

c. have no competitors

d. tend to be smaller and more agile

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

7. BlackBerry, which gained significant market share in the early 2000s in the business, government, and consumer markets, lost market share because ______.

a. demand for smartphones declined

b. competitors offered smartphones with better designs and more features

c. competitors lowered prices to undercut BlackBerry

d. its advertising was not focused on new customers

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Application of knowledge

8. Given that startups can be flexible in their business model, what general guide should they follow?

a. Existing models should not be changed.

b. Existing models should be replaced frequently.

c. Existing models should be prepared to adjust as markets change.

d. Existing models require annual updating.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

9. What are the four parts of a business model?

a. target customers, employees, founders, investors

b. financing, infrastructure, employees, customers

c. offering, customers, infrastructure, financial viability

d. financing, customers, product, service

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Four Parts of a Business Model

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

10. The offering includes which of the following?

a. the investment

b. the customer value proposition

c. the market segment

d. the return on investment

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Offering

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

11. Within a business model, customers refer to ______.

a. people who express loyalty to your brand

b. people who have purchased your product or service

c. the people who populate the segments of the market your offering intends to serve

d. the people in the geographic reach of the business

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Comprehension

Answer Location: The Customers

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

12. The infrastructure generally includes ______.

a. all the resources that are needed to deliver the CVP

b. only technological resources that are needed to deliver the CVP

c. only financial resources that are needed to deliver the CVP

d. only human resources that are needed to deliver the CVP

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Infrastructure

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

13. Which of the following would be included when describing the infrastructure?

a. financial viability

b. customers

c. facilities

d. the offering

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Comprehension

Answer Location: The Infrastructure

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

14. The revenue and the cost structures would be included in which of the four parts of the business model?

a. the offering

b. infrastructure

c. financial viability

d. the customers

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: Financial Viability

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

15. Which of the following is necessary for an effective customer value proposition (CVP)?

a. It must not have any direct competition.

b. It must offer better value than the competition.

c. It must cost less than the competition.

d. It must offer the exact same value as the competition.

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: The Customer Value Proposition (CVP)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

16. A CVP requires that you think about your business from the perspective of what group?

a. the employees

b. the investors

c. the customers

d. the operations team

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: The Customer Value Proposition (CVP)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

17. The first step in creating your CVP is ______.

a. persuading customers to purchase your product or service

b. persuading customers to sign up for your marketing emails

c. discovering your customers’ contact information

d. uncovering what your customer really needs

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

18. What problem did IKEA solve for customers in its CVP?

a. lack of attractive low-cost furniture

b. lack of do-it-yourself furniture

c. lack of European designs

d. lack of antique furniture

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Easy

AACSB Standard: Application of knowledge

19. What problem did FedEx solve for customers in its CVP?

a. the lack of easy, door-to-door, overnight delivery of packages

b. the lack of ways to obtain customer signatures for received goods

c. the lack of variety in shipping options

d. the lack of prepackaged envelopes

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Medium

AACSB Standard: Application of knowledge

20. To develop a good CVP, products must not only fulfill a need but also ______.

a. have a technological component

b. fit into customers’ lifestyles

c. fill a large market

d. appeal to affluent customers

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

21. Which of the following allowed Tata Motors to be successful?

a. its low-cost cars

b. its small cars

c. its self-parking cars

d. its line of attractively designed scooters

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Knowledge

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Easy

AACSB Standard: Application of knowledge

22. What are the four major categories of problems customers typically experience?

a. lack of access, lack of support, lack of money, lack of friends

b. lack of money, lack of contacts, lack of interest, lack of time

c. lack of skill, lack of knowledge, lack of support, lack of money

d. lack of time, lack of money, lack of skill, lack of access

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: Four Problems Experienced by Customers

Difficulty Level: Easy

AACSB Standard: Application of knowledge

23. As presented in the text, what major customer problem did ThedaCare hospital system solve in their CVP?

a. lack of time

b. lack of access

c. lack of skill

d. lack of money

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Knowledge

Answer Location: Lack of Time

Difficulty Level: Medium

AACSB Standard: Application of knowledge

24. Andrew owns a popular but expensive Chinese restaurant. In order to introduce more people to his brand, he offers a series of one-time “taste fairs” in which he brings his recipes to a locally sponsored event. Customers are able to pay modest amounts for small servings of his creations while not paying for the ambiance of the famous restaurant. What problem is Andrew addressing?

a. customers’ lack of time

b. customers’ lack of money

c. customers’ lack of skills

d. customers’ lack of networks

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Application

Answer Location: Lack of Money

Difficulty Level: Medium

AACSB Standard: Application of knowledge

25. Genetic testing services like 23andMe offer DNA analysis based on a saliva sample submitted by mail. Based on the discussion in the text, what need is 23andMe addressing in their CVP?

a. a lack of benefits

b. a lack of skill

c. a lack of access

d. a lack of money

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Application

Answer Location: Lack of Access

Difficulty Level: Medium

AACSB Standard: Application of knowledge

26. Which term refers to the CVP approach that involves listing all the advantages of your product or service without comparing it to others?

a. product-market fit

b. all-benefits approach

c. resonating-focus approach

d. points-of-difference approach

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Value Propositions

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

27. Christine has obtained a job pitching a product at a local state fair. Her job is to demonstrate cookware, highlighting its features and demonstrating its use as she prepares food for visitors who can watch her cook and try samples. Christine will be selling the cookware based on which CVP type?

a. resonating-focus approach

b. points-of-difference approach

c. all-benefits approach

d. product-market fit approach

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Value Propositions

Difficulty Level: Medium

AACSB Standard: Application of knowledge

28. What is the key feature of the resonating-focus approach to CVP?

a. It focuses on why people will like your product.

b. It describes all the features of the product relative to the competition.

c. It tells customers why they should buy your product.

d. It describes all the positive features of your product.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Comprehension

Answer Location: Types of Value Propositions

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

29. Which of the following is considered the “gold standard” for CVPs?

a. all-benefits approach

b. points-of-difference approach

c. resonating-focus approach

d. low-cost advantage approach

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Value Propositions

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

30. What type of target market do toilet paper manufacturers target?

a. niche

b. segmented

c. multisided

d. mass

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Analysis

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Application of knowledge

31. Which of the following best defines the term mass market?

a. a generic group outside the target market

b. a large crowd of nondiscriminating consumers

c. a large group of customers with similar needs or problems

d. a global market

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

32. A ______ market is a small market segment comprised of customers with specific needs and requirements.

a. mass

b. niche

c. multisided

d. diversified

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

33. Gift Prescriptions is a company that offers small gifts that can be left behind in doctors’ offices. Gift Prescriptions sells their gifts to pharmaceutical companies and medical supply stores who want to leave doctors a small gift in appreciation for their time. Gift Prescriptions’ market segment would be described as a ______ market.

a. mass

b. niche

c. segmented

d. diversified

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

34. Breaking customers into groups according to their different needs and problems would create which of the following market types?

a. segmented

b. niche

c. mass

d. diversified

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

35. Which of the following offers a variety of products to two or more customer segments with different needs, even if the resulting markets are unrelated to one another?

a. segmented market

b. niche market

c. mass market

d. diversified market

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

36. Which term describes two or more customer segments that are linked but independent of each other?

a. mass markets

b. diversified markets

c. matching markets

d. multisided markets

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

37. Which of the following is most likely to have a diversified market?

a. a hardware store that sells to contractors and nonprofessionals

b. a dollar store that promotes its low prices

c. a pet store that offers both supplies and small animals

d. a retail shop that sells goods aimed at expectant mothers and babies

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

38. In the business model canvas (BMC), what is covered under the offering?

a. the value proposition and customer segments

b. customer segments

c. the value proposition

d. customer segments and channels

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

39. In the business model canvas (BMC), what components are related to customers?

a. customer segments, channels, and customer relationships

b. customer segments and value proposition

c. customer segments and key activities

d. customer segments and channels

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

40. In the business model canvas (BMC), what components are included in infrastructure?

a. organizational design, facilities, and key resources

b. key assets, key resources, and channels

c. key activities, key resources, key partners

d. cost structure, channels, and key partners

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

41. In the business model canvas (BMC), what components are included in financial viability?

a. revenue streams and market size

b. cost structure and revenue streams

c. investment funds and revenue streams

d. revenue streams and growth projections

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

42. The answer to the question, “What are the different ways I can reach my customer?” will result in which component of the BMC?

a. customer segments

b. channels

c. value proposition

d. customer segments

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Comprehension

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

43. Which of the following is the BMC component most involved with building positive feelings about your business and customer loyalty?

a. value proposition

b. customer relationships

c. key activities

d. channels

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

44. What is the right side of the BMC focused on?

a. value delivery

b. value creation

c. idea generation

d. the value proposition

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

45. When entrepreneurs are figuring out suppliers, associates, and distributors, they are determining ______.

a. key resources

b. key partners

c. channels

d. revenue streams

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

46. What is the left side of the BMC focused on?

a. value delivery

b. value creation

c. idea generation

d. the value proposition

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

47. Jerry has stated that his business appeals to people 50 years of age and older who are restructuring their finances for retirement plans. What has Jerry defined?

a. a niche market

b. a segmented market

c. a mass market

d. a diversified market

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

48. Danielle will be offering a tool-sharpening service at her garden and landscaping store on the first Tuesday of every month. She believes that this fulfills a customer need and that customers will help spread the word about her location and services. On which BMC component is Danielle focusing?

a. value creation

b. customer relationships

c. market segmentation

d. key activities

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Application

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Application of knowledge

49. If an automobile manufacturer advertised an “automobile for all ages,” what market is it addressing?

a. a target market

b. a niche market

c. a mass market

d. a diversified market

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

50. The ______ approach to CVP involves identifying and promoting all the benefits of your product or service relative to the competition and recognizes your offering is unique and different from others in the market.

a. all-benefits

b. points-of-difference

c. resonating-focus

d. product-market fit

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

51. As described in the text, the UK-based nonprofit Wayfindr provides software that can be used by anyone who needs audio instructions to help them navigate public transportation. For vision-impaired public transportation users, the software addresses what problem?

a. lack of time

b. lack of money

c. lack of skills

d. lack of access

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

in further detail.

Cognitive Domain: Knowledge

Answer Location: Lack of Access

Difficulty Level: Easy

AACSB Standard: Application of knowledge

52. When determining your revenue streams, which of the following questions is among those you should ask yourself?

a. How do I establish and maintain relationships with customers?

b. How much are my customers willing to pay?

c. What are the most important costs inherent in the business model?

d. What resources are the most expensive to get?

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Comprehension

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

53. When determining your cost structure, which of the following questions is among those you should ask yourself?

a. How do I establish and maintain relationships with customers?

b. How much are my customers willing to pay?

c. What activities can be outsourced?

d. What resources are the most expensive to get?

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Comprehension

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

54. As described in the text, entrepreneurs Carlton and Hazel Solle created Bioscarf as an alternative to common filtration masks. This is an example of a ______ market.

a. mass

b. niche

c. segmented

d. diversified

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

55. A common feature in the stories in the text about IKEA, FedEx, and Tata Motors is that ______.

a. they all sell unique products to a limited number of peer customers

b. each company has created its own processes and resource models to suit its CVP and industry

c. distribution occurs in a different way from traditional services

d. interactions are business to business

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Application of knowledge

True/False

1. Business models generally discourage experimentation.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

2. An entrepreneur’s business model must be flexible in order to respond to new information.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

3. Entrepreneurs should try to address every potential customer in a market.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Comprehension

Answer Location: The Customers

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

4. The infrastructure of the business model does not include people--only technology and facilities.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Infrastructure

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

5. For a business model’s CVP to be effective, it must offer better value than the competition.

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: The Customer Value Proposition (CVP)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

6. A diversified market offers a variety of services to two or more customer segments with different needs and problems, which bear no relationship to each other.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

7. The resonating-focus CVP is the “gold standard” because it considers your product or service from the perspective of the customer.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Comprehension

Answer Location: Types of Value Propositions

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

8. Amazon serves a diversified market because it has multiple products and services that serve several unrelated groups of customers.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge

9. Multisided markets describe a variety of services that serve two or more segments with very different needs and problems, which bear no relationship to each other.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

10. Coke and Pepsi are examples of companies that address the mass market.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Customer Segments

Difficulty Level: Easy

AACSB Standard: Application of knowledge

11. Blackberry and Kodak are discussed in the text as examples of companies that were able to successfully change their business models in order to adapt to changes in the market.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Application of knowledge

12. Delivering existing products and services to existing customers but with unique differentiation is one approach to a business model.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

13. The business model is just about revenues and costs.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Four Parts of a Business Model

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

14. The all-benefits approach is the most impactful for creating a value proposition because of its real insight into what the customer wants or needs.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Value Propositions

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

15. In the business model canvas, the offering is comprised of customer relationships and channels.

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

16. The business plan describes the rationale of how a new venture creates, delivers, and captures value.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

17. MOOCs disrupted higher education by creating free online courses.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Comprehension

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

18. Infrastructure is made up of only the products and suppliers entrepreneurs must have to deliver CVP.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Infrastructure

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

19. In creating their CVPs, both IKEA and FedEx first focused on the jobs that customers needed done before coming up with the solution.

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Comprehension

Answer Location: The Customer Value Proposition (CVP)

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

20. The all-benefits approach produces a stronger CVP than points-of-difference because it focuses on the product or service relative to the competition and recognizes that the offering is unique and different.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Knowledge

Answer Location: Types of Value Propositions

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

21. Financial viability defines the revenue and cost structures a business needs to meet its expenses and financial obligations.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: Financial Viability

Difficulty Level: Easy

AACSB Standard: Financial theories, analysis, reporting, and markets

22. The “value” portion of the customer value proposition is how much you could expect to sell one share of your company in an initial public offering (IPO).

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Knowledge

Answer Location: The Offering

Difficulty Level: Easy

AACSB Standard: Systems and processes in organizations

23. For Justin Gold of Justin’s nut butters, old food processors were part of the infrastructure that made his venture a success.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Comprehension

Answer Location: The Infrastructure

Difficulty Level: Medium

AACSB Standard: Application of knowledge

24. Doug Halls describes the one big benefit you offer your customer can be determined by asking the question “Why should I care?”.

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Knowledge

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Medium

AACSB Standard: Application of knowledge

25. Tata Motors succeeded in resolving the problem of access for its customers.

Learning Objective: 5.3: Explain the importance of the Customer Value Proposition.

Cognitive Domain: Knowledge

Answer Location: Jobs, Pain Points, and Needs

Difficulty Level: Medium

AACSB Standard: Application of knowledge

Essay

1. Consider the many Amazon.com business models. Using the text’s definition of a business model, choose two of Amazon’s and describe them in detail.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Application

Answer Location: What Is a Business Model?

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

2. Define the market segment targeted by Facebook. Describe how that segment may or may not be the same as originally planned.

Learning Objective: 5.2: Identify the four parts of a business model.

Cognitive Domain: Analysis

Answer Location: The Customers

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

3. Imagine that you want to start a venture that specializes in designing and installing solar lighting systems. You’ll begin with a brick-and-mortar salesroom and showroom and also have a retail website. You’ll focus, initially, on residential lighting. Now imagine the infrastructure portion of your company’s business model canvas. Identify the key activities and which of them could be, potentially, outsourced. Then, identify possible key resources. Finally, identify who the key partners might be.

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Application

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Hard

AACSB Standard: Reflective thinking

4. Explain why a shopping center is an example of a multisided market.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Analysis

Answer Location: Types of Customer Segments

Difficulty Level: Hard

AACSB Standard: Systems and processes in organizations

5. Consider that you are selling a Jeep SUV to a customer. Identify the key points in an all-benefits CVP approach.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Value Propositions

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

6. Consider that you are selling a Jeep SUV to a customer in Maine. Identify the key points in a resonating focus CVP approach.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Application

Answer Location: Types of Value Propositions

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Analysis

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Medium

AACSB Standard: Systems and processes in organizations

8. Define the business model and identify its four core areas.

Learning Objective: 5.1: Define the business model.

Cognitive Domain: Knowledge

Answer Location: What Is a Business Model?

Difficulty Level: Easy

AACSB Standard: Application of knowledge

9. Identify all the components of the business model canvas.

Learning Objective: 5.5: Identify the nine components of the Business Model Canvas.

Cognitive Domain: Knowledge

Answer Location: The Business Model Canvas (BMC)

Difficulty Level: Easy

AACSB Standard: Application of knowledge

10. Explain the differences among the following customer segment types: niche market, segmented market, diversified market, and multisided market.

Learning Objective: 5.4: Describe the different types of Customer Value Propositions and learn how to identify customer segments.

Cognitive Domain: Comprehension

Answer Location: Types of Customer Segments

Difficulty Level: Medium

AACSB Standard: Application of knowledge