Deck 4: Understanding Your Business Model and Developing Your Strategy

Question 1

Outsourcing is a powerful tool that can reduce a venture's upfront fixed costs.

Answer 1

True

Question 2

In a Freemium business model, your COGS for free offerings can be viewed as a marketing expense

Answer 2

True

Question 3

Markets that truly do not have competition are the most profitable, though such markets are nearly impossible to find.

Answer 3

True

Question 4

Twitter uses a "long-tail" business model

Question 5

Companies should not outsource an activity if it is critical to its competitive advantage.

Question 6

By merging different revenue sources into as few categories as possible, you make your business model more comprehensive.

Question 7

Learning from others is less efficient than learning from one's own mistakes.

Question 8

Hiring a corporate lifer who is used to working in one functional area and has experience with comprehensive administrative support is always the right strategy for a startup firm.

Question 9

Certain stages of the "initial market test" can be cheap or even free.

Question 10

Lowering COGS allows companies to reach their break even date earlier.

Question 11

A strategy that attempts to capture the first-mover's advantage is usually the most inexpensive.

Question 12

It is better to formulate the organizational culture after your company begins to grow, rather than at the company's inception.

Question 13

Maintaining trade secrets is one way to protect a company's competitive advantage.

Question 14

COGS is a cost measure that applies to companies that manufacture tangible products; COGS cannot be computed for firms that deal exclusively in a service-based revenue model.

Question 15

The primary purpose of outsourcing is to increase net margins

Question 16

If you do not fully understand your revenue drivers, you cannot achieve the highest success.

Question 17

The more products you sell through your distribution channels, the greater your negotiating power.

Question 18

Non-profit organizations do not need revenue to operate.

Question 19

Entrepreneurs benefit from developing and following a coherent geographic expansion strategy

Question 20

Franchising speeds growth, but lowers a company's revenue overall.

Question 21

Examples of an iterative launch strategy would be

A)Launching a web advertising campaign nationwide in beta
B)Contracting multiple outsourcing manufacturers for your first production run of a single product
C)Opening a food truck business using a short term truck lease in a single market.
D)None of the above

Question 22

Mergers and acquisitions are likely to increase a company's survival rate when used as a means for growth.

Question 23

Which of the following is the main component of a business model?

A)The revenue model
B)The net income model
C)The cost model
D)The cash flow mode
E)Both A and C

Question 24

Developments in technology have spurred companies to expand to other countries increasingly early in their business lives.

Question 25

Of the following differentiators, which most commonly determines the success of a company?

A)The number of distinct products offered
B)Competitive advantage
C)Being the first player to enter a market
D)Better execution than the competition
E)A and C

Question 26

How many beta-tests of the product should the company do before releasing it to the market?

A)As many as necessary
B)At least 3
C)Not more than 5
D)5 to 10
E)B and C

Question 27

Exporting is one of the most expensive ways to enter new markets.

Question 28

Before raising capital, the company should identify which of the following?

A)Its strategy
B)Its core customers
C)Its major cost categories
D)Its sources of competitive advantage
E)All of the above

Question 29

Technology licensing is a good opportunity to extend your brand image into new markets.

Question 30

What is the goal of outsourcing?

A)To lower production costs
B)To increase gross margins
C)To increase revenue
D)To decrease labor costs
E)All of the above

Question 31

It is a good idea for a startup to hire employees who are:

A)Used to working in one functional area
B)Overqualified for their initial roles
C)Young and have little experience, but big potential
D)Educated for the tasks, but have little experience
E)All of the above

Question 32

According to the chapter, what portion of all firms receives venture capital?

A)Less than 0.01%
B)Less than 0.1%
C)Between 1% and 5%
D)Between 5% and 10%
E)More than 10%

Question 33

Which of the following is part of the first-mover myth?

A)You must launch the first product in the market.
B)Creating a new market is easier than entering an existing one.
C)Creating a market is inexpensive.
D)A first mover's advantage is expensive.
E)B and C

Question 34

Going global increases risk and requires capital.

Question 35

Under the Foreign Direct Investment strategy, the startup retains control of the assets and facilities, which results in a cheap and easy means to go global.

Question 36

Franchising requires you to finds extensive capital to support growth

Question 37

Venture capital funding rarely leads to mergers and acquisitions with foreign companies.

Question 38

What is the revenue strategy of both Walmart and Amazon?

A)low costs, high margins
B)low margins, high volumes
C)high margins, high volumes
D)high costs, low volumes
E)none of the above

Question 39

Typically, survival is the most pressing concern for a startup during the first:

A)1 - 2 years
B)2 - 3 years
C)3 - 4 years
D)4 - 5 years
E)5 - 6 years

Question 40

Which of the following influence a company's revenue?

A)"Markers"
B)"Headers"
C)"Drivers"
D)A and B
E)None of the above

Question 41

Provide an example of Amazon.com's "drivers" that can influence the company's revenue.

Question 42

By selling a higher volume of your product through a particular distribution channel, you increase your:

A)Average variable cost
B)Inventory
C)Negotiating power
D)Brand Awareness
E)Gross margin per product

Question 43

Dickson describe three types of global entrepreneurial firms

A)Born global, born-again global, full global
B)Born-again global, direct global, gradual global
C)Gradual global, born global, born-again global
D)Born-again global, gradual global, diversified global.

Question 44

Which of the following is true about all of the large, retail corporations in existence today?

A)They started as multinationals.
B)They employed a franchising strategy.
C)They had roots in one geographic region.
D)They attracted venture capital.
E)None of the above

Question 45

What risks does the company take when expanding its product mix?

A)The company may incur unwieldy development expenses.
B)The market may not accept the new product.
C)Unsuccessful products can damage the brand.
D)All of the above
E)None of the above

Question 46

Explain how a company that lowers its net income margins can generate more profit.

Question 47

Approximately what share of all new products are failures?

A)Less than 30%
B)40 %
C)50-60%
D)80%
E)Over 90%

Question 48

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

A)Generate more revenue
B)Conserve resources
C)Increase your brand name recognition
D)None of the above
E)All of the above

Question 49

According to Dickson, there are how many types of global, entrepreneurial firms?

A)2
B)3
C)4
D)5
E)None of the above

Question 50

Which of the following is the primary means for FDI?

A)Acquiring foreign assets
B)Building new facilities overseas
C)Expanding current facilities overseas
D)None of the above
E)All of the above

Question 51

Which of the following is the cheapest and easiest way to enter new markets?

A)Venture financing
B)Technology Transfer
C)Exporting
D)Outsourcing
E)Foreign Direct Investment

Question 52

Some advantages to going global through merger and acquisition are

A)Instant presence
B)Rapid growth and expansion
C)Low capital requirements
D)A and B
E)B and C

Question 53

Explain the relationship between your broad strategy, business model, and operating/tactical plan

Question 54

Explain why it is important to break down the revenue model into categories.

Question 55

Discuss some considerations of executing a Freemium business model

Question 56

If you have a replicable business model, it is wise to use which of the following strategies to expand internationally:

A)Foreign Direct Investment
B)Venture financing
C)Exporting
D)Franchising
E)Technology Licensing

Question 57

Which of the following is not mentioned in the chapter as a factor you need to weigh when planning geographic expansion?

A)Do the customers differ between the existing and the new location?
B)Can you continue to use the same vendors?
C)Can you use the same distribution channels?
D)Is your brand name well-known in the new location?
E)None of the above

Question 58

Explain the importance of start-ups having clear values and hiring those who will share those values

Question 59

Which of the following is not related to Dickson's eight primary means to expand globally?

A)Technology Licensing
B)Outsourcing
C)Foreign Direct Investment
D)Mergers and Acquisitions
E)Initial Public Offering

Question 60

Why do some products have COGS lower than others?

Question 61

Why do venture capitalists avoid dealing with entrepreneurs who claim that they don't have any competition?

Question 62

Discuss some check points an entrepreneur should confirm before expanding a product mix
$\bullet$ Is the expanded product line delivering more value to existing customers or to new customers?

Question 63

What is the difference between "gradual global," "born global" and "born again global" types of entrepreneurial firms?

Question 64

What are the distinctive characteristics of entrepreneurial firms that seek aggressive, international expansion?

Question 65

Explain why every startup that plans to grow must benchmark its competitors, devise an initial market test, and create a platform for its business.

Question 66

Why is it so important to create the organization's culture in the beginning of a startup?

Question 67

What are some of the trade-offs of the first mover's advantage?

Question 68

Describe business model available to digital businesses which may be impractical for a traditional "brick and mortar" businesses.