Entrepreneurship: Successfully Launching New Ventures, 5e, Global Edition
(Barringer/Ireland)
Chapter 4 Developing an Effective Business Model
1) Her Campus Media, the focus of the opening feature of Chapter 4, features a vibrant online
magazine, with feature articles targeted toward all aspects of college life and survival. According
to the feature, Her Campus’s business model focuses on connecting companies with college
females. The key to making this work is ________.
A) the strength of Her Campus Media’s management team
B) the strength of Her Campus Media’s brand
C) the quality of the online content that Her Campus Media produces
D) the functionality and vibrancy of the company’s Web site
E) Her Campus’s unparalleled access to college females
2) A ________ is a firm’s plan or recipe for how it creates, delivers, and captures value for its
stakeholders.
A) commercialization plan
B) business model
C) business plan
D) launch plan
E) tactical model
3) The Savvy Entrepreneurial Firm feature in Chapter 4 focuses on the ways in which Quirky
creates, delivers and captures value for its stakeholders. According to the feature, Quirky would
be a business that would be difficult to copy. According to the feature, it would be difficult to
copy because ________.
A) it has raised over $91 million and has over 550,000 people in its network
B) it has a highly-functional Web site and has a talented management team
C) it has a savvy marketing plan and has over 550,000 people in its network
D) it has raised over $91 million and has a talented management team
E) it has an excellent Internet domain name and has a first-mover advantage
4) Which of the following is the proper sequence for when a firm should develop a business
model?
A) Preparation of the business model, initial validation of the business idea, opportunity
recognition
B) Initial validation of the business idea, establishing a growth plan, preparation of the business
model
C) Initial validation of the business idea, preparation of the business model, fleshing out the
operational details of the firm
D) Opportunity recognition, fleshing out the operational details of the firm, preparation of the
business model
E) Opportunity recognition, preparation of the business model, establishing a growth plan for the
firm
5) In regard to business models, which of the following statements is incorrect?
A) There is a standard business model that most firms follow.
B) A firm’s business model is inherently dependent on the collection of resources it controls and
the capabilities it possesses.
C) It is dangerous for a company to assume that it can be successful by simply copying the
business model of another firm.
D) A firm’s business model is its plan or diagram for how it competes.
E) It is often difficult to determine what another firm’s business model is.
6) The Partnering for Success feature in Chapter 4 focused on Web-based platforms, including
Odesk, Elance, and Guru, that make it easy to identify and hire experienced ________.
A) part time employees
B) freelancers
C) interns
D) virtual assistants
E) full-time employees
7) A business model is a firm’s plan or recipe for how it creates, delivers, and captures value for
its stakeholders.
8) What is a business model? Why is it important? Provide an example to illustrate your answer.
9) The two general categories of business models are ________ and ________.
A) normal; unique
B) standard; disruptive
C) ordinary; revolutionary
D) customary; unique
E) ordinary; disruptive
10) ________ business models depict existing plans or recipes firms can use to determine how
they will create, deliver, and capture value for their stakeholders.
A) Revolutionary
B) Normal
C) Customary
D) Disruptive
E) Standard
11) Brandon Jones has crafted a business model for his firm that is based on an existing plan or
template for how firms in his industry create, deliver and capture value for their shareholders.
Brandon has crafted a ________ business model.
A) standard
B) disruptive
C) customary
D) normal
E) temporary
12) Which of the following statements about business models is incorrect?
A) There are two general types of business models.
B) There is no perfect business model.
C) Most of the standard business models have been in place for some time.
D) A firm’s business model is confined to its own boundaries.
E) Firms should guard themselves against thinking that one particular business model is a “home
run” regardless of circumstances.
13) ________ refers to the number of subscribers that a subscription-based business loses each
month.
A) Agitate
B) Churn
C) Erosion
D) Attrition
E) Stir
14) Tyler Smith founded a firm that has a subscription-based business model. Although Tyler
has averaged 600 new subscribers per month, she also loses 450 subscribers per month. The
number of subscribers that Tyler loses each month is referred to as ________.
A) erosion
B) churn
C) destruction
D) attrition
E) agitation
15) Which of the following firms has a peer-to-peer business model?
A) Dell
B) Dropbox
C) Airbnb
D) Salesforce.com
E) Google
16) ________ business models are ones that do not fit the profile of standard business models,
and are impactful enough that they disrupt or change the way business is conducted in an
industry or an important niche within an industry.
A) Disruptive
B) Normal
C) Unique
D) Incomparable
E) Exceptional
17) Google and its AdWords program is an example of a ________ disruptive business model.
A) low-end
B) new-market
C) high-quality
D) low-price
E) new-channel
18) Southwest Airlines is an example of a ________ disruptive business model.
A) low-end
B) new-market
C) high-quality
D) new-product
E) new-channel
19) There are two types of disruptive business models — ________ and ________.
A) low-end; high-end
B) new-product; new-market
C) new-market; low-end
D) new-channel; high-quality
E) standard; unique
20) Which of the following firms introduced a disruptive business model?
A) Salesforce.com
B) eBay
C) Panera Bread
D) Barnes & Nobel
E) J. Crew
21) Standard business models depict existing plans or recipes firms can use to determine how
they will create, deliver, and capture value for their stakeholders.
22) It is important to understand that there are several perfect business models.
23) Disruptive business models are impactful enough that they disrupt or change the way
business is conducted in an industry or an important niche within an industry.
24) According to the textbook, Southwest Airlines introduced a new market disruption type of
disruptive business model.
25) The Barringer/Ireland Business Model Template has five major categories and 14 individual
parts.
26) What is the difference between standard business models and disruptive business models?
Include examples of both in your answer.
27) The Barringer/Ireland Business Model Canvas consists of ________ major category(ies) and
________ parts.
A) 1; 12
B) 3; 9
C) 6; 18
D) 4; 12
E) 2; 6
28) The four major categories in the Barringer/Ireland Business Model Template are ________.
A) core strategy, resources, financials, and operations
B) core strategy, value proposition, customers and channels
C) value proposition, resources, customers and partners
D) activities, partners, customers, and competitors
E) value proposition, cost structure, financials, and operations
29) Which of the following is not one of the four major categories in the Barringer/Ireland
Business Model Template?
A) Operations
B) Resources
C) Channels
D) Core strategy
E) Financials
30) In the Barringer/Ireland Business Model Template, ________ describes how the firm plans
to compete relative to its competitors.
A) strategic plan
B) grand strategy
C) tactical strategy
D) value proposition
E) core strategy
31) Jamie Finch is crafting the business model for her fashion design firm. She just completed
the section that describes how her firm plans to compete relative to her rivals. Jamie just
completed the ________ portion of her business model template.
A) operations
B) core strategy
C) resources
D) strategic plan
E) tactical strategy
32) Which of the following is not one of the four elements of the core strategy section of the
Barringer/Ireland Business Model Template?
A) Business mission
B) Key assets
C) Basis of differentiation
D) Target market
E) Product/market scope
33) A business’s ________ describes why it exists and what its business model is supposed to
accomplish.
A) values statement
B) importance statement
C) differentiation statement
D) mission statement
E) significance statement
34) Nathan Green is starting a firm in the organic produce industry. Nathan has developed a
statement—“Helping Make Your Life Better, Healthier, and Fuller”—that describes the reason
his company exists and what his business model is supposed to accomplish. In the terminology
used in the Barringer/Ireland Business Model Template, Nathan’s statement is referred to as his
________ statement.
A) values
B) uniqueness
C) differentiation
D) mission
E) task
35) The first box in the Barringer/Ireland Business Model Template is ________.
A) product/market scope
B) revenue streams
C) business mission
D) target market
E) channels
36) When completing the basis of differentiation box in the Barringer/Ireland Business Model
Template, it is best to limit the description to ________.
A) two to three points
B) one point
C) five to10 points
D) two to three points for manufacturing firms and five to 10 points for service firms
E) five to 10 points for manufacturing firms and two to three points for service firms
37) A firm’s ________ market is a place within a larger market segment that represents a
narrower group of customers with similar interests.
A) aspirational
B) ambitious
C) constrained
D) target
E) objective