Deck 3: Starting a Small Business

Question 1

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
The environment that includes factors that directly impact a given firm and all of its competitors

Answer 1

D

Question 2

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
Those capabilities that provide a firm with a competitive edge and reflect its personality

Answer 2

D

Question 3

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
A benefit that exists when a firm has a product or service that is seen by its target market as better than those of competitors

Answer 3

B

Question 4

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed

Question 5

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
Those organizational resources that are invisible and difficult to assess

Question 6

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
To refocus or recreate a startup if the initial concept turns out to be flawed

Question 7

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
Startup ideas centered around providing customers with new or improved products or services

Question 8

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
Identification of potential new products or services that may lead to promising businesses

Question 9

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
A circumstance or development that alone could render a new business unsuccessful

Question 10

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
A company's routines and processes that can coordinate the combined use of its productive assets in order to achieve desired outcomes

Question 11

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
The broad environment, encompassing factors that influence most businesses in a society

Question 12

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
An assessment that catalogs the startup's sources of potential strengths

Question 13

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
Startup ideas involving new or relatively new technology, centered around providing customers with a new product

Question 14

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
A plan of action designed to provide a product or service with unique attributes that are valued by consumers

Question 15

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
The environment that focuses on the strength, position, and likely moves and countermoves of competitors in an industry

Question 16

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
A plan of action that isolates an enterprise from competitors and other market forces by targeting a restricted market segment

Question 17

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
A plan of action that coordinates the resources and commitments of an organization to achieve superior performance

Question 18

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
The basic inputs that a firm uses to conduct its business

Question 19

Match the term with its definition.
a.cost-based strategy
f.intangible resources
b.focus strategy
g.new benefit ideas
c.general environment
h.new market ideas
d.industry environment
i.new technology ideas
e.inside-out analysis
A plan of action that requires a firm to hold down its costs so that it can compete by charging lower prices and still make a profit

Question 20

Match the term with its definition.
a.capabilities
f.differentiation strategy
b.competitive advantage
g.entrepreneurial alertness
c.competitive environment
h.fatal flaw
d.core competencies
i.feasibility analysis
e.cost-based strategy
Readiness to act on existing but unnoticed business opportunities

Question 21

An example of an idea for a new startup from a hobby is

A) a coin collector, who bought and sold coins for years to build a personal collection, deciding to become a coin dealer.
B) a furniture salesperson seeing the possibility of opening a new furniture store in a different area of the city.
C) a sharpshooter, who shot holes in a pair of her boyfriend's jeans during an argument, hearing him get complimented on the way they look.
D) all of the above are examples.

Question 22

Israel Kirzner believes entrepreneurs have a unique capability, which he calls _________ ________, to spot existing opportunities for businesses.

A) innovative thinking
B) market awareness
C) entrepreneurial alertness
D) opportunity recognition

Question 23

A computer technician recognizing a need for more atheistically pleasing computers would be said to have entrepreneurial _____.

A) technology
B) alertness
C) strategy
D) rivalry

Question 24

Laura discovered to her amazement that the skin oil she sold seemed to repel mosquitos. She relabeled the product and began selling it as alternative to brands such as Cutter and Off!. Laura's startup is which kind?

A) New market idea
B) New technology idea
C) New benefit idea
D) New product idea

Question 25

Verlin worked in a cabinet shop until he became frustrated that his ideas for improving efficiency were falling on deaf ears. So he left and started his own cabinet shop where he could implement those ideas. From which source did his ideas for his startup come?

A) From hobbies
B) From personal interests
C) From accidental discovery
D) From work experience

Question 26

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
The study of the general and industry environments of a business context to identify potential startup opportunities

Question 27

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
Those organizational resources that are visible and easy to measure

Question 28

Isabella listens whenever someone says "Someone ought to make a ..." She expects one of these ideas to develop into a profitable business. Isabella possesses:

A) market awareness.
B) entrepreneurial alertness.
C) opportunity recognition.
D) innovative thinking.

Question 29

Janis wants to open a restaurant. She is not interested in a franchise; she wants to build her business literally from the ground up. When she does, her business will be classified as a:

A) entrepreneurial opportunity.
B) startup.
C) new market idea.
D) serendipity.

Question 30

According to a study by the National Federation of Independent Business Foundation, the most common source of new product ideas for small business startups is

A) prior work experience.
B) personal interests and hobbies.
C) a chance happening.
D) existing records of a business.

Question 31

Carol enjoyed yarn crafts but there were no yarn shops in her small town. She reasoned that there were many others nearby who might appreciate being able to purchase yarns and supplies without a long drive. Within a year her shop was profitable and expanding into larger space.Which of these statements best describes this situation?

A) Carol grew a business out of her personal experience.
B) Carol turned her hobby into a thriving business.
C) Carol accidentally stumbled upon a gold mine.
D) Carol used her work experience as a source of startup ideas.

Question 32

Wilma needed wine glasses but all she had were candlestick holders and 8-ounce canning jars. Gluing the two together, she created what she called "mountain crystal" which became a big hit. The local crafters' association asked her to make enough for them to sell, and her business took off. This is an example of building a business from:

A) work experience.
B) hobbies.
C) personal interest.
D) accidental discovery.

Question 33

Jeff Bezos' original business plan involved taking orders for books and having the items shipped directly from the publisher to the customer. He modified the plan to include other products such as toys and decided to buy the toys from the producers and ship them from his own warehouse. This modification of the original plan is called:

A) a change of plan
B) a pivot.
C) a serendipity.
D) a competitive move.

Question 34

Consuela noticed significant growth in the Hispanic population in her mid-size town. The local grocery carried mostly traditional American products. She knew her neighbors would want familiar foods so she decided to open a food market catering to their preferences. Which kind of startup will her store be?

A) New market idea
B) New technology idea
C) New benefit idea
D) New product idea

Question 35

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
A facility for making desirable discoveries by accident

Question 36

Katarina has founded three different businesses in the past eight years, all of which have become so successful she has sold them at large profits. We can say Katarina is good at:

A) innovative ideas.
B) entrepreneurial alertness.
C) new market ideas.
D) opportunity recognition.

Question 37

_____ refers to the way entrepreneurs identify new products or services that may lead to promising businesses.

A) Focus-based decisions
B) Elasticity
C) Opportunity recognition
D) Cost-benefit analysis

Question 38

Match the term with its definition.
a.opportunity recognition
f.startups
b.outside-in analysis
g.strategy
c.pivot
h.SWOT analysis
d.resources
i.tangible resources
e.serendipity
An assessment that provides a concise overview of a firm's strategic situation

Question 39

An example of an idea for a new startup from an accidental discovery is

A) a coin collector, who bought and sold coins for years to build a personal collection, deciding to become a coin dealer.
B) a furniture salesperson seeing the possibility of opening a new furniture store in a different area of the city.
C) a sharpshooter, who shot holes in a pair of her boyfriend's jeans during an argument, hearing him get complimented on the way they look.
D) all of the above are examples.

Question 40

When Jeff Bezos launched Amazon.com, his idea of selling items he did not own from a website was unique. Which type of startup is this?

A) New market idea
B) New technology idea
C) New benefit idea
D) New product idea

Question 41

Richard could see the demand for towable recreational vehicles declining so beginning in the early 1970s he used his equipment, employees, and professional network to design and build utility trucks, a more recession-resistant industry. This is an example of:

A) serendipity.
B) diversification.
C) innovative thinking
D) market ideas.

Question 42

Many commuters grab a cup of coffee and drink it during their ride to work. So someone invented specially shaped cups that don't tip and lids with sip openings that close and don't spill. Which of these innovative ways of thinking best fits this situation?

A) Combine two businesses to create a market opening.
B) Study a product or service to see if you can make it "green."
C) Recognize a hot trend and ride the wave.
D) Study an existing product and explore ways to improve its function.

Question 43

Drs. James and Janet Baker saw that many people experienced difficulty and frustration when typing, some because of physical disabilities. So they invented a voice recognition software to allow users to talk to the computer. Their ideas have become Dragon Naturally Speaking, a popular talk-to-type software application. Which of these statements describes their startup?

A) Borrow heavily from existing products or services.
B) Combine two businesses to create a market opening.
C) Begin with a problem in mind or a pain you can relieve.
D) Recognize a hot trend and ride the wave.

Question 44

Which segment is part of the general environment?

A) The industry segment
B) The global segment
C) The information segment
D) The human resources segment

Question 45

Which statement is an example of an economic trend?

A) The Federal Reserve announces that it will decrease the interest rate charged to banks.
B) Congress passes legislation that increases the tax rate on corporations.
C) A new computer chip is announced which will allow for miniaturization of many electronic devices.
D) The E.U. declares an increase in tariffs on all agricultural goods.

Question 46

As China's production of exportable goods increases, Chinese workers have more money to spend on consumer items. Other developing countries are experiencing the same growth. Which type of trend does this represent?

A) Economic
B) Sociocultural
C) Global
D) Demographic

Question 47

Alyson and Andrea, country artists, realized that their love of classic rock was also popular with their fans. Their change to their show to incorporate more rock songs with a country flavor is an example of

A) recognizing a hot trend and riding the wave.
B) combining two businesses into one to create a market opening.
C) beginning with a problem in mind.
D) finding a way to adapt a product or service to meet customer needs in a different way.

Question 48

Today's smartphones bear little resemblance to the original analog cell phones of the early 1990s. Their capabilities exceed those of the early desktop computers. It seems nearly every adult carries at least one cell phone. Which of the trends does this represent?

A) Sociocultural
B) Demographic
C) Technological
D) Global

Question 49

When conducting an outside-in analysis, one should consider the _____ environment followed by the _____ environment.

A) general; industry
B) general; natural
C) industry; natural
D) industry; political

Question 50

For the past several years the borrowing interest rates has been very low in the United States. This is an example of a(n) ______________ trend.

A) economic
B) sociocultural
C) political/legal
D) demographic

Question 51

An evaluation of the general environment

A) is done before the feasibility analysis.
B) helps identify a trend that could be used for a possible startup idea.
C) will clarify the unique value of the startup idea.
D) will be the primary determinant for a possible startup idea.

Question 52

The quote "Good artists borrow; great artists steal" is the principle that launched which company?

A) Aimie's Dinner and Movie
B) Apple
C) C and D Landscape Company
D) Xerox

Question 53

Which statement is an example of a global trend?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks.
B) Congress passes legislation that increases the tax rates on corporations.
C) A new computer chip is announced that will allow for miniaturization of many electronic devices.
D) The E.U. declares an increase in tariffs on all agricultural goods.

Question 54

Which statement is an example of a technological trend?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks.
B) Congress passes legislation that increases the tax rates on corporations.
C) A new computer chip is announced which will allow for miniaturization of many electronic devices.
D) The E.U. announces an increase in tariffs on all agricultural goods.

Question 55

When Sally realized her vintage clothing pieces were being bought by the local college students and not just their parents, she started adding more vintage pieces to her inventory. Sally is

A) recognizing a hot trend and riding the wave.
B) combining two businesses into one to create a market opening.
C) beginning with a problem in mind.
D) considering ways to adapt a product or service to meet customer needs in a different way.

Question 56

Have you noticed women's footwear recently? Women who still wear high heels favor six-inch spiked or wegdged platform shoes. Which type of trend does this represent?

A) Economic
B) Sociocultural
C) Technological
D) Demographic

Question 57

Julie, owner of a bed and breakfast inn, had been asked repeatedly to cater events. Once she realized her kitchen was not being used during the later part of the day, she started the company. This change is an example of

A) recognizing a hot trend and riding the wave.
B) combining two businesses into one to create a market opening.
C) beginning with a problem in mind.
D) considering ways to adapt a product or service to meet customer needs in a different way.

Question 58

The State of Maryland has recently imposed a "rain tax" based on the amount of non-water-absorbing surfaces on real estate. Which type of trend does this represent?

A) Economic
B) Sociocultural
C) Political/legal
D) Technological

Question 59

The increased trade between the United States and Mexico since the enactment of the North American Free Trade Agreement is related to the ____ element of the general environment.

A) technological
B) global
C) ecological
D) sociocultural

Question 60

Which statement is an example of a political/legal trend?

A) The Federal Reserve announces that it will decrease the interest rate it charges banks.
B) Congress passes legislation that increases the tax rates on corporations.
C) A new computer chip is announced which will allow for miniaturization of many electronic devices.
D) The E.U. declares an increase in tariffs on all agricultural goods.

Question 61

Intangible resources include:

A) a good location, cash, and capable business partners.
B) a good reputation, a respected brand name, and an extensive personal network.
C) intellectual property rights, equipment, and technology.
D) capable business partners, intellectual property rights, and equipment.

Question 62

TV commercials promote reverse mortgages. Other ads promote medications for high blood pressure, ED, immune system disorders, and high cholesterol. Which type of trend do these represent?

A) Sociocultural
B) Global
C) Technological
D) Demographic

Question 63

Which of the following could be considered a core competency?

A) Zappos' 365 day return policy
B) NutriSystem's claim that users lose weight by eating
C) McDonald's ability to fry hamburgers quickly
D) Southwest Airlines' ability to make flying fun

Question 64

Considering Michael Porter's five factors, we can say that the fast food hamburger industry is characterized by:

A) intense rivalry.
B) strong suppliers.
C) strong buyers.
D) ease of entry into the industry.

Question 65

Farmers wishing to sell grain cannot negotiate a price; they either accept the price offered or decline to sell their crop. This is an example of:

A) low barriers to entry.
B) availability of substitutes.
C) intense rivalry.
D) strong buyers.

Question 66

Tangible resources include:

A) cash, technology, and raw materials.
B) cash, management expertise, and a good reputation
C) management expertise, a good reputation, and technology.
D) intellectual property rights, equipment, and a skilled workforce.

Question 67

Considering Michael Porter's five factors, the automotive industry in the United States is characterized by:

A) weak rivalry.
B) high barriers to entry.
C) many substitute products.
D) weak suppliers.

Question 68

An increase in the bargaining power of suppliers

A) increases both the attractiveness and the profitability of the target market.
B) decreases both the attractiveness and the profitability of the target market.
C) decreases the attractiveness and increases the profitability of the target market.
D) increases the attractiveness and decreases the profitability of the target market.

Question 69

Based on William A. Sahlman's suggestions, which question about competitors should be answered by the business plan?

A) Are there ways to co-opt potential or actual competitors by forming alliances?
B) How easily can new competitors enter the industry?
C) Do small businesses have special advantages when competing in the industry?
D) What is the average size of competitors?

Question 70

Considering Michael Porter's five factors, the chicken meat processing industry is characterized by:

A) low barriers to entry.
B) intense rivalry among competitors.
C) availability of many substitutes.
D) strong buyers.

Question 71

Which factor determines the nature and degree of competition in an industry, as identified by Michael Porter in his book Competitive Advantage?

A) The interest of small businesses
B) Bargaining power of competitors
C) Threat of substitute products or services
D) The macroeconomic level of the industry

Question 72

A(n) _____ exists when multiple resources are integrated and then deployed to the firm's advantage.

A) networked resource
B) common intangible
C) capability
D) industry edge

Question 73

Miles' startup company began well but within a couple months he found he was unable to pay invoices from suppliers. He didn't understand how he could have this problem. He hired experts; his business idea was sound; and he had many new customers. What went wrong?

A) Miles lacked critical technologies.
B) Miles lacked patents or copyrights.
C) Miles lacked raw materials.
D) Miles lacked cash resources.

Question 74

Substitute products

A) reduce the attractiveness and profitability of an industry.
B) represent those items manufactured by direct rivals within an industry.
C) are usually cheaper than the products they can replace.
D) are always a serious threat to rivals in an industry.

Question 75

Morris built a thriving business by selling tailor-made clothing at off-the-rack prices. All other custom-clothing stores charge much higher prices. We can say that Morris has a(n)

A) core competency.
B) competitive advantage.
C) serendipity.
D) opportunity alertness.

Question 76

Rumpelstiltskin, an imp in a Grimm Brothers fairy tale, could spin straw into gold. We would call this a(n)

A) useful skill.
B) tangible resource.
C) intangible resource
D) capability.

Question 77

An inside-out analysis is one that:

A) considers the general environment and industry setting.
B) catalogs the startup's sources of potential strengths.
C) considers the strengths of buyers and suppliers.
D) catalogs the possible responses of rivals in theindustry.

Question 78

The diamond market is monopolized by the DeBeers organization, from mining to cutting and polishing to wholesaling. Jewelers can do little to negotiate prices. This situation typifies:

A) low barriers to entry.
B) availability of substitutes.
C) intense rivalry.
D) strong suppliers.

Question 79

Resources are best described as

A) those basic inputs that a firm uses to conduct its business.
B) only those features that are visible and easy to quantify.
C) the firm's lending capacity.
D) capabilities that can be exploited.

Question 80

Careful analysis of the competitive environment can result in:

A) failure of a new business.
B) unexpected response from a rival.
C) loss of the startup's supplier base.
D) greater financial success of the startup.