67) You have been asked to explain how rivalry among companies competing in the industry
affects the attractiveness of the industry. How would you explain it?
68) How does a company such as Under Armour control the bargaining power of its suppliers?
69) How does the threat of substitutes affect an industry’s structure?
70) An analysis that determines the degree to which a product or service idea appeals to potential
customers and identifies the resources necessary to produce the product or provide the service is
referred to as ________.
A) product or service feasibility analysis
B) business prototyping
C) business plan analysis
D) financial feasibility analysis
71) Conducting ________ research involves collecting data firsthand and analyzing it while
________ research involves gathering data that has already been complied and is available.
A) primary; secondary
B) secondary; primary
C) primary; industry
D) product; secondary
72) One form of primary research is ________.
A) to review published articles
B) Internet research
C) library research
D) a focus group
73) “Windshield” research is an example of ________ research.
A) library
B) primary
C) secondary
D) tertiary
74) A good advice to follow in customer surveys is ________.
A) “Keep them short”
B) “Be as detailed as possible”
C) “You’ve got them hooked, get all you can from them”
D) All of the above
75) A(n) ________ group involves enlisting a small number of potential customers to get
feedback on specific issues about the company‘s product or service.
A) Delphi
B) focus
C) industry
D) trade
76) Ideally, a focus group should have ________ members.
A) 2-3
B) 16-20
C) 8-12
D) 5-7
77) Prototypes usually point out potential problems in a product’s ________.
A) price
B) marketing
C) design
D) color
78) A(n) ________ trial involves sending researchers into customers’ homes to observe them as
they use the company’s product or service.
A) in-home
B) prototype
C) windshield
D) focus group
79) Getting traffic counts at local competitor outlets is an example of ________ research.
A) in-home
B) prototype
C) windshield
D) focus group
80) Industry databases are a good source of ________ research.
A) secondary
B) primary
C) windshield
D) tertiary
81) Collecting demographic data from The Statistical Abstract of the United States is an example
of ________ research.
A) secondary
B) primary
C) windshield
D) tertiary
82) Primary research is information that has already been compiled and is available for use, often
at very reasonable costs or sometimes at no cost to the entrepreneur.
83) Conducting primary research involves collecting data firsthand and analyzing it.
84) Secondary research includes customer surveys.
85) Using focus groups is an example of primary research.
86) Driving around and observing competition is called “windshield” research.
87) In designing customer surveys it is a good idea to keep them short.
88) The ideal size of a focus group is 20-25.
89) A business model is an original, functional model of a new product that entrepreneurs can
put into the hands of potential customers so that they can see it, test it, and use it.
90) Testing with prototypes is known as beta tests.
91) How does primary research differ from secondary research?
Mini-Case 4-1: The Need For A Plan
Andrew Sycamore has spent more than ten years in the human resources department of a large
management consulting company. During his tenure, he was often put in charge of training new
recruits, where he arranged for various company managers to address the recruits and teach them
skills important in the workplace. What Andy had noticed was the one skill that was often the
hardest to teach involved problem identification and problem solving. Even the best recruits from
well-known universities found it hard to assess a situation to determine what the problem was
and how to develop solutions for it. In his heart, Andy was an entrepreneur and he was dying to
quit his corporate job and be his own boss. He was convinced there was a business opportunity in
developing an interactive, online problem identification and problem solving tool.
Andy’s idea, which he titled “Nested Learning,” involved software that included a screen where a
scenario was presented to the user and the user was asked to first identify the problem and then
develop solutions for it. What was unique about “Nested Learning” was that the initial scenario
was specifically written so as not to be sufficient enough to generate a problem. In other words,
the user (or the trainee) had to ask the software questions that would be responded with
additional facts about the situation. Andy argued that problem solvers don’t get all the facts
handed to them at the very beginning and that they had to “tease” more out of the situation to
identify the problem.
Andy’s idea was to develop a prototype of the software with a small number of generic scenarios.
He then hoped to meet with training managers of different companies and “sell” them the idea of
using “Nested Learning” as a better training tool. Once a client agreed to use it, Andy would then
work with the client to develop client-specific scenarios.
92) How important is a prototype for Andy Sycamore to succeed with his “Nested Learning?”
93) The financial feasibility analysis takes these aspects into consideration: ________.
A) capital requirements, human resources, and return on investment
B) capital requirements, estimated earnings, and return on investment
C) capital requirements, estimated earnings, and return on sales
D) capital requirements, estimated earnings, and return on owner’s equity
94) The final aspect of the financial feasibility analysis combines the estimated earnings and the
capital requirements to determine the ________.
A) estimated earnings
B) total capital requirements
C) net profit
D) rate of return on the capital invested
95) Time out of cash is relevant to ________ analysis.
A) strategic
B) business model
C) business plan
D) financial feasibility
96) The typical start-up in the United States needs a launch capital of ________.
A) $30,000
B) $80,000
C) $100,000
D) $50,000
97) ________ is the process of finding creative ways to exploit opportunities to launch and grow
businesses with limited resources.
A) Prototyping
B) Bootstrapping
C) Undercapitalizing
D) Leveraging
98) ________ is the number of months the business can survive at its current rate of negative
cash flow.
A) Time out of cash
B) Bleeding rate
C) Survival time
D) Life cycle
99) Time out of cash is one of the four major elements included in a financial feasibility analysis.
100) Bootstrapping is the process of finding creative ways to exploit opportunities to launch and
grow businesses with the limited resources available for most start-up ventures.
101) A venture must produce an attractive rate of return relative to the level of risk it requires.
102) What are the four major elements to be included in a financial feasibility analysis?
103) Many new businesses require that an entrepreneur have a certain set of knowledge,
experiences, and skills to have any chance of success. This is called entrepreneurial ________.
A) grit
B) trait
C) readiness
D) chutzpah
104) Asking the question, “Is this idea right for me?” is part of the process of assessing
________ feasibility.
A) business
B) financial
C) entrepreneur
D) All of the above
105) Having access to capital is called entrepreneurial readiness.
106) The process in which entrepreneurs test their business models on a small scale before
committing serious resources to launch a business that might not work is known as ________.
A) business modeling
B) business prototyping
C) business planning
D) product or service feasibility analysis
107) The Business Model Canvas has ________ elements.
A) 3
B) 5
C) 9
D) 6
108) Osterwalder and Pigneur found that most entrepreneurs use a visual process, such as
diagramming their business on a whiteboard, when developing their business ideas.
109) The Business Model Canvas consists of six elements.
110) The Business Model Canvas is a dynamic framework to guide entrepreneurs through the
process of developing, testing, and refining their business models.
111) Explain the concept of a value proposition as per the Business Model Canvas.
Mini-Case 4-1: The Need For A Plan
Andrew Sycamore has spent more than ten years in the human resources department of a large
management consulting company. During his tenure, he was often put in charge of training new
recruits, where he arranged for various company managers to address the recruits and teach them
skills important in the workplace. What Andy had noticed was the one skill that was often the
hardest to teach involved problem identification and problem solving. Even the best recruits from
well-known universities found it hard to assess a situation to determine what the problem was
and how to develop solutions for it. In his heart, Andy was an entrepreneur and he was dying to
quit his corporate job and be his own boss. He was convinced there was a business opportunity in
developing an interactive, online problem identification and problem solving tool.
Andy’s idea, which he titled “Nested Learning,” involved software that included a screen where a
scenario was presented to the user and the user was asked to first identify the problem and then
develop solutions for it. What was unique about “Nested Learning” was that the initial scenario
was specifically written so as not to be sufficient enough to generate a problem. In other words,
the user (or the trainee) had to ask the software questions that would be responded with
additional facts about the situation. Andy argued that problem solvers don’t get all the facts
handed to them at the very beginning and that they had to “tease” more out of the situation to
identify the problem.
Andy’s idea was to develop a prototype of the software with a small number of generic scenarios.
He then hoped to meet with training managers of different companies and “sell” them the idea of
using “Nested Learning” as a better training tool. Once a client agreed to use it, Andy would then
work with the client to develop client-specific scenarios.
112) What is the value proposition of “Nested Learning?” Is it compelling?