Deck 5: Creating Business From Opportunity

Question 1

A(n) ________ is a group of people or organizations that may be interested in buying a given product or service, has the resources to purchase it, and is permitted by law and regulation to do so.

A) Target market
B) Market
C) Organization
D) Industry
E) All of the above

Answer 1

B

Question 2

Your ________ is a concise communication of your strategy including your business definition and your competitive advantage.

A) Mission statement
B) Target market analysis
C) Values statement
D) Business plan
E) SWOT analysis

Answer 2

A

Question 3

The cost of producing one additional unit of a product is called ________.

A) Cost of goods sold
B) Cost of materials
C) Cost of services sold
D) Cost of utilities
E) Cost of lease

Answer 3

A

Question 4

Business definition + Competitive advantage is ________.

A) Competitive strategy
B) Competitive plan
C) Competitive approach
D) Competitive tactics
E) Business mission

Question 5

Which of the following items is not a competitive advantage?

A) Consistently providing better customer service than the competition
B) Using a new patented manufacturing process that reduces manufacturing costs by 25%
C) Finding a better supplier at a lower cost
D) Cutting costs on shipping by 50%
E) Offering free samples during a two-week promotion

Question 6

To succeed, a business must satisfy a consumer need ________.

A) At a price consumers can afford
B) At a price that covers the business's costs
C) At a price that provides the business with a profit
D) At a price that covers variable costs
E) At a price that matches your competitors

Question 7

A retail business buys from ________ and sells to ________.

A) Wholesalers, consumers
B) Wholesalers, manufacturers
C) Manufacturers, consumers
D) Traders, consumers
E) Vendors, consumers

Question 8

Total cost of goods sold per unit consists of ________.

A) Materials cost per unit plus labor cost per unit
B) Volume cost plus labor cost
C) Selling price per unit plus gross profit per unit
D) Labor cost minus volume discount per unit
E) None of the above

Question 9

To help determine whether your business will be profitable, calculate your ________.

A) Economics of one unit
B) Finances of one unit
C) Cost of goods sold
D) Rate of goods sold
E) The difference between the costs and profits for one unit

Question 10

Total gross profit = ________.

A) Total cost of goods sold - Total revenue
B) Total profit - Total revenue
C) Total revenue - Total cost of goods sold
D) Total revenue - Total profit
E) None of the above

Question 11

A typical unit of sale for a wholesaler would be ________.

A) One hour of work
B) A block of time devoted to a task
C) One item
D) One dozen
E) All of the above

Question 12

For your business to be successful you will need a strategy for beating the competition, that is, a ________.

A) Competitive advantage
B) Market analysis
C) Target market
D) Customer analysis
E) Competitive benefit

Question 13

Average gross profit per customer is ________.

A) Average sale per customer minus average cost of sale per customer
B) Average cost of tangible product minus average cost of intangible product
C) Average sale per consumer plus average sale per wholesaler
D) Average cost of sale minus average sale per customer
E) Average cost of sale multiplied by average sale per customer

Question 14

Trey has a T-shirt business that buys shirts from a wholesaler for four dollars each and sells them to retailers for eight dollars each. He imprints each shirt with a picture of a musical artist that costs him two dollars. He also pays his cousin to do the printing at five dollars an hour. LaShawn prints five shirts per hour. A retailer offers to buy 1000 shirts at seven dollars each. Should Tray agree to the deal?

A) Yes, Tray will make a profit of one dollar per shirt.
B) Yes, Tray will make a profit of two dollars per shirt.
C) No, Tray will not make a profit at this price.
D) No, Tray's profit at this price is too small.
E) None of the above

Question 15

What is the average unit of sale for a restaurant that serves $3,250 per day in meals to 200 customers per day?

A) $16.25
B) $20.00
C) $18.05
D) $17.25
E) $14.00

Question 16

A ________ is a group of people who would be interested in buying a given product or service.

A) Market
B) Target
C) Customer
D) Consumer
E) Shopper

Question 17

The foreign exchange rate is ________.

A) The relative value between one currency and another
B) The relative value between the dollar and foreign currencies
C) The rate at which countries do business
D) The value of products within a country
E) The rate of trade

Question 18

Business leaders create wealth by ________.

A) Hiring employees in order to sell more units and generate more profit
B) Reducing their gross margins
C) Charging high prices to customers
D) Avoiding the cost of hiring employees
E) Putting competitors out of business

Question 19

________ is/are the core values of an organization in action.

A) Culture
B) Mission
C) Vision
D) Goals
E) None of the above

Question 20

Which of the following is not a strong method of identifying business opportunities?

A) A person has a talent for making something and decides that they should go into business.
B) Searching through a process of identification and selection starting with research on "hot" businesses or growth areas.
C) Searching through a process of identification and selection beginning with self-developed (or group-developed) ideas.
D) All of the above
E) None of the above

Question 21

What type of business buys in bulk from a manufacturer and sells smaller quantities to a retailer?

A) Wholesaler
B) Attorney
C) Consumer driven
D) Service firm
E) All of the above

Question 22

An offer includes the complete bundle of products and services the entrepreneur will be bringing to the marketplace.

Question 23

A manufacturing type of business sells an intangible product to businesses or consumers.

Question 24

The function of a mission statement is to clarify what the business is trying to do in the present, but it can provide direction and motivation for future action through a clear and compelling message.

Question 25

What type of business deals in tangible products?

A) Service
B) Manufacturing
C) Agricultural production
D) All of the above
E) None of the above

Question 26

When you start your business, your ________ will guide the business operations and decisions.

A) Core beliefs
B) Track record
C) Competitive offers
D) Guiding light
E) Core theories

Question 27

Giovanni's entrepreneurial venture produces a tangible product. This is an example of a ________ venture.

A) Service
B) Wholesale
C) Manufacturing
D) None of the above
E) All of the above

Question 28

Once you know your ________ you can calculate gross profit.

A) Cost of goods sold
B) Unit of sale
C) Gross cost
D) Profit
E) Fixed costs

Question 29

A tactic is a plan for outperforming the competition.

Question 30

Leaders of a company build a particular culture by making the beliefs, values, and behavioral norms explicit and intentional.

Question 31

For a business to be successful, a competitive advantage must be ________.

A) Sustainable
B) Profitable
C) Legal
D) Expensive
E) Clever

Question 32

The offer can be defined as what the business will sell to customers.

Question 33

In analyzing your competitive advantage, you will need to ask three questions. Among these is/are ________.

A) Competitive offers: How do you compare with competitors on a feature-by-feature basis?
B) Cost structure: Are you at a cost advantage or disadvantage?
C) What is your unique selling proposition: What do you have that competitors cannot or will not match?
D) Both A and B
E) All of the above

Question 34

A unique selling proposition is the distinctive feature and benefit that sets you apart from your competition.

Question 35

The vision for your business is narrower and less comprehensive than its mission.

Question 36

You only need to be concerned with having a competitive advantage over direct competitors.

Question 37

The business definition has three elements: ________.

A) Offer, target market, and production/delivery capability
B) Offer, acceptance, and consideration
C) Business definition, target market, and market analysis
D) Target market, potential customers, and production capability
E) None of the above

Question 38

If the Foreign Exchange rate between the Japanese yen and the euro is 190:1, how many yen will equal 10 euros?

A) 1900
B) 1800
C) 2000
D) 300
E) 500

Question 39

Core values include the fundamental ethical and moral philosophy and beliefs that form the foundation of the organization and provide broad guidance for all decision making.

Question 40

A competitive advantage can be based on any of six factors. Which of the following is not one of the six?

A) Selection
B) Opportunity
C) Quality
D) Cost
E) Service

Question 41

Describe the six factors of competitive advantage.

Question 42

Why is it a good idea to figure out your Economics of One Unit?

Question 43

How do you decide whether your competitive advantage is strong enough? Give an example.

Question 44

Economic forces, social forces, technological advances, and political and regulatory changes are not sources for finding competitive advantage.

Question 45

A target market can never be too broad and unfocused.

Question 46

The decision process can occur in three different ways, all of which are market driven.

Question 47

Briefly describe a product or service idea (e.g., a bookstore) and describe how you might create a competitive advantage.

Question 48

Competitive advantage must be sustainable over the long term.

Question 49

Barriers to entry are the factors that contribute to the ease or difficulty of a new competitor's joining an established market.

Question 50

Before you can start your business, you must define it. Describe the questions that the business definition answers and its three elements.