Deck 4: Conducting a Feasibility Analysis and Designing a Business Model

Question 1

Capital requirements, estimate earnings, and return on investment are three aspects of the financial feasibility analysis.

Answer 1

True

Question 2

Entrepreneurs typically identify just one business idea for any given market need.

Answer 2

False

Question 3

A feasibility analysis consists of four interrelated components: an industry and market feasibility analysis, a product or service feasibility analysis, a financial feasibility analysis, and an entrepreneur feasibility analysis.

Answer 3

True

Question 4

What are some of the most important questions a feasibility analysis answers and what model may be of value in this process?

Question 5

The process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business is known as a ________.

A) business plan
B) strategic analysis
C) industry analysis
D) feasibility analysis

Question 6

An idea assessment answers the question, "Should we proceed with this business idea?"

Question 7

The purpose of a feasibility study is to determine whether a business idea is worth pursuing.

Question 8

An idea assessment is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn that idea into a business.

Question 9

Which of the following is not a macro force that creates change in industries?

A) Sociocultural
B) Economic
C) Technological
D) Entry barriers

Question 10

A product or service feasibility analysis determines the degree to which a product or service idea appeals to potential customers and identifies the necessary resources.

Question 11

What are the parameters used in an idea sketch pad?

Question 12

A(n) ________ is the process of examining a need in the market, developing a solution for that need, and determining the entrepreneur's ability to successfully turn the idea into a business.

A) business plan
B) strategic analysis
C) idea assessment
D) feasibility analysis

Question 13

The Internet is an example of a ________ force.

A) economic
B) demographic
C) technological
D) sociocultural

Question 14

The business plan helps an entrepreneur assess ideas in a relatively short period of time.

Question 15

An effective tool used to help assess ideas is the ________.

A) idea toolkit
B) idea dashboard
C) idea sketch pad
D) idea metric

Question 16

More women entering the workforce is an example of a ________ change.

A) economic
B) demographic
C) technological
D) sociocultural

Question 17

First comes idea assessment, then comes feasibility analysis.

Question 18

Generation Y and Generation Z are examples of ________ changes.

A) economic
B) demographic
C) technological
D) sociocultural

Question 19

An effective tool used to help assess ideas is the idea sketch pad.

Question 20

A feasibility analysis is the process of determining whether an entrepreneur's idea is a viable foundation for creating a successful business.

Question 21

When bargaining power of buyers is ________, the industry is ________ attractive.

A) moderate; less
B) low; more
C) high; more
D) low; less

Question 22

The first step in assessing industry attractiveness is to paint a picture of the industry in broad strokes, assessing it from a "macro" level.

Question 23

For Under Armour, its top 10 suppliers manufacture less than half of its products. To Under Armour, supplier power is likely to be ________

A) high
B) moderate
C) significant
D) low

Question 24

Products or services that may be sought as alternative solutions (e.g., purchasing tax planning software rather than paying a CPA to assist with preparing your taxes) are referred to as ________.

A) buyers products
B) rivalry products
C) substitute products
D) competitive alternatives

Question 25

The enactment of the Affordable Health Care Act in 2010 is an example of a ________ change.

A) economic
B) demographic
C) technological
D) political and legal

Question 26

In a survey of members of Generation Z, ________ percent said they would rather save money than spend it.

A) 57
B) 25
C) 31
D) 44

Question 27

Porter's five forces model assesses industry attractiveness by surveying these five factors ________.

A) potential entrants, suppliers, buyers, substitutes, and rivalry among existing firms
B) potential entrants, suppliers, buyers, similar products, and rivalry among existing firms
C) potential entrants, suppliers, raw materials, substitutes, and rivalry among existing firms
D) potential entrants, competitors, buyers, substitutes, and rivalry among existing firms

Question 28

Low capital requirements, cost advantages that are not related to company size, and the lack of brand loyalty are considerations regarding the ________.

A) threat of new entrants to the industry
B) threat of substitute products
C) bargaining power of buyers
D) rivalry among companies competing in the industry

Question 29

Generally, an industry is more attractive when ________.

A) the number of competitors is large
B) competitors are similar in size
C) the industry is growing at a fast pace
D) the opportunity to sell a differentiated product or service is present

Question 30

Generally, an industry is more attractive when companies in the industry have ________ switching costs to go from one supplier to another.

A) high
B) moderate
C) significant
D) low

Question 31

The force from the five forces model that considers economies of scale, initial capital requirements, cost advantages relevant to company size, and lack of brand loyalty is the ________.

A) bargaining power of suppliers
B) threat of new entrants
C) threat of substitute products or services
D) rivalry among companies competing

Question 32

Which of the following is not a question to ask to evaluate an industry?

A) How sparse is the industry?
B) How large is the industry?
C) How fast is it growing?
D) What threats does the industry face?

Question 33

The growth in the number of women entering the workforce is an example of a sociocultural change.

Question 34

The primary purpose of the five forces matrix is to ________.

A) assign values to each of the five elements
B) provide a graphic
C) list the five forces in rank order
D) assess the five forces as compared to a standard value

Question 35

The ________ the leverage suppliers of key raw materials or components have, the ________ attractive is the industry.

A) greater; more
B) more; more
C) greater; less
D) less; less

Question 36

The strongest of the five forces in most industries is ________.

A) rivalry among companies competing in the industry
B) bargaining power of buyers
C) threat of new entrants to the industry
D) threat of substitute products or services

Question 37

Capital required to compete in an industry determines ________

A) bargaining power of buyers
B) bargaining power of suppliers
C) threat of substitutes
D) threat of new entrants

Question 38

Changing demographics create opportunities for entrepreneurs.

Question 39

What are sociocultural changes and why are they important?

Question 40

Switching costs, the number of buyers, and if the items represent a relatively small portion of the cost of finished products are key considerations regarding the ________.

A) threat of new entrants to the industry
B) rivalry among companies competing in the industry
C) bargaining power of suppliers
D) bargaining power of buyers

Question 41

New entrants to an industry can erode existing companies' market share and profits.

Question 42

Generally, an industry is more attractive when quality substitute products are not readily available, the prices of substitute products are higher, and buyers' costs of switching products is high.

Question 43

The weakest of the five forces in most industries is the rivalry that exists among the businesses competing in a particular market.

Question 44

Specialized knowledge is an example of a barrier to entry.

Question 45

According to the five forces model, Delta Airlines is a substitute for United Airlines.

Question 46

The five forces model would assess economies of scale factors in the "threat of new entrants" portion of the model.

Question 47

Generally, an industry is more attractive when competitors are not similar in size or capability.

Question 48

Economies of scale relate to which of Porter's 5-forces?

A) Bargaining power of buyers
B) Threat of new entrants
C) Bargaining power of suppliers
D) Threat of substitutes

Question 49

Generally, an industry is more attractive when substitute products are available for the items suppliers provide.

Question 50

Which of the following is not a barrier to entry?

A) Capital requirements
B) Large number of buyers
C) Specialized knowledge
D) Access to distribution channels

Question 51

Generally, an industry is more attractive to new entrants when the advantages of economies of scale are present.

Question 52

Generally, an industry is more attractive when the items suppliers provide the industry account for a relatively high portion of the cost of the industry's finished product.

Question 53

The greater the leverage suppliers of key raw materials or components have, the less attractive is the industry.

Question 54

Generally, an industry is less attractive when the number of buyers in the industry is large.

Question 55

Porter's five forces model only considers direct competitors within a single industry.

Question 56

Generally, an industry is more attractive when the opportunity to sell a differentiated product or service is absent.

Question 57

Which of the following is a danger of using a niche strategy?

A) Niches change.
B) Niches can go away.
C) Entering a niche requires adaptability in your initial plan.
D) All of the above

Question 58

According to Porter's 5-forces model, a substitute for Coca-Cola, the carbonated cola drink, would be ________.

A) Pepsi
B) Mountain Dew
C) Dr. Pepper
D) bottled water

Question 59

Printed newspapers have seen their readership rates decline as new generations of potential readers turn to their iPads and smartphones for sources of news. This is an example of ________.

A) threat of substitutes
B) bargaining power of buyers
C) bargaining power of suppliers
D) rivalry among existing firms

Question 60

The strongest of the five forces in most industries is the rivalry that exists among the businesses competing in a particular market.

Question 61

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

Question 62

How does a company such as Under Armour control the bargaining power of its suppliers?

Question 63

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

Question 64

Prototypes usually point out potential problems in a product's ________.

A) price
B) marketing
C) design
D) color

Question 65

Ideally, a focus group should have ________ members.

A) 2-3
B) 16-20
C) 8-12
D) 5-7

Question 66

"Windshield" research is an example of ________ research.

A) library
B) primary
C) secondary
D) tertiary

Question 67

When niches grow, they can attract more competitors.

Question 68

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

Question 69

One of the cautions with a niche strategy is that niches change.

Question 70

How does the threat of substitutes affect an industry's structure?

Question 71

Getting traffic counts at local competitor outlets is an example of ________ research.

A) in-home
B) prototype
C) windshield
D) focus group

Question 72

A product feasibility analysis answers the question, "Are customers willing to purchase our goods and services?"

Question 73

How does Porter's five forces model help analyze an industry?

Question 74

Many small businesses prosper by sticking to niches in a market that are too small to attract the attention of large competitors.

Question 75

Generally, an industry is more attractive when buyers' cost of switching to substitute products is low.

Question 76

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

Question 77

Industry databases are a good source of ________ research.

A) secondary
B) primary
C) windshield
D) tertiary

Question 78

One form of primary research is ________.

A) to review published articles
B) internet research
C) library research
D) a focus group

Question 79

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

Question 80

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?