Deck 3: Feasibility Analysis

Question 1

Cynthia Jones recently surveyed 200 of her classmates to get a sense of the demand for a new software product she is working on. Collecting data via a survey you administer yourself is referred to as ________ research.

A) direct
B) derivative
C) primary
D) secondary
E) initial

Answer 1

C

Question 2

Feasibility analysis is the process of determining if a business idea is viable.

Answer 2

True

Question 3

Which of the following is not one of the four areas of feasibility analysis discussed in the textbook?

A) Product/service feasibility
B) Financial feasibility
C) Societal feasibility
D) Organizational feasibility
E) Industry/market feasibility

Answer 3

C

Question 4

LuminAid, the company profiled in the opening feature of Chapter 3, was started to produce solar pillows, which are solar powered devices that are simple and can be easily and affordably shipped to disaster locations. The feature describes how LuminAid sought to validate its business idea. According to the feature ________.

A) LuminAid was unable to validate its business idea and the idea was dropped
B) LuminAid's feasibility analysis was incomplete, and the company has struggled ever since it was launched
C) LuminAid's feasibility analysis was flawed, and the company failed
D) LuminAid did an exemplary job validating its business idea, and its solar pillow is now available via the company's Web site, Amazon.com, LL Bean and several similar outlets
E) LuminAid's feasibility analysis was well done, and the company was acquired by Coleman before it could launch its solar pillow as an independent company

Question 5

Jennifer Burroughs is thinking about starting a firm in the upscale women's fashion industry. To get a full appreciation of the competitive nature of the industry, and how she might position her products, Jennifer has spent considerable time looking at industry-related publications, Hoover's Online, and ABI-Inform, which is a database that provides access to articles covering a wide-variety of business and industry related issues. Jennifer is conducting ________ research.

A) primary
B) secondary
C) action
D) temporary
E) purposeful

Question 6

________ feasibility is an assessment of the overall appeal of the product or service being proposed.

A) Consumer
B) Industry/market segment
C) Industry/market
D) Product/service
E) Purchaser/end-user

Question 7

Primary research probes data that is already collected.

Question 8

Which of the following is not a part of assessing the product/service feasibility of a business idea?

A) "Get out of the building" and talk to potential customers
B) Surveying potential customers
C) Library research
D) Analyzing industry attractiveness
E) Concept test

Question 9

Trade journals, industry-related publications, government statistics, and competitors' Web sites are examples of ________ research.

A) secondary
B) action
C) principal
D) legacy
E) vertical

Question 10

A feasibility analysis is an assessment of a potential product or service idea rather than a potential business.

Question 11

________ research is research that is collected by the person or persons completing the analysis. ________ research probes data that is already collected.

A) Primary, Derivative
B) Secondary, Primary
C) Primary, Secondary
D) Indirect, Direct
E) Direct, Indirect

Question 12

The four forms of feasibility analysis include: product/service feasibility, industry/target market feasibility, organizational feasibility, and financial feasibility.

Question 13

________ is the process of determining whether a business idea is viable.

A) Feasibility analysis
B) Opportunity recognition
C) Viability analysis
D) Achievability analysis
E) Scenario analysis

Question 14

Which of the following items is typically not included in a concept statement?

A) A brief description of the company's management team
B) A description of how the product or service will be sold and distributed
C) A description of how much money the new venture needs
D) The benefits of the product or service
E) The intended target market

Question 15

A(n) ________ involves showing a preliminary description of a product or service idea to prospective customers to gauge customer interest, desirability, and purchase intent.

A) concept test
B) product/service statement
C) impression test
D) idea prospectus
E) idea test

Question 16

Does it make sense? Is it reasonable? Is it something consumers will get excited about? Does it take advantage of an environmental trend, solve a problem, or fill a gap in the marketplace? These are the types of questions asked during the ________ feasibility component of a complete feasibility analysis.

A) financial
B) industry/target market
C) organizational
D) concept
E) product/service

Question 17

Census Bureau data, analyst forecasts, and other pertinent information gleaned through library and Internet research are examples of primary research.

Question 18

Talking to industry experts, obtaining feedback from prospective customers, and administering surveys are examples of ________ research.

A) primary
B) secondary
C) derivative
D) principal
E) fundamental

Question 19

Describe the purpose of feasibility analysis. When should a feasibility analysis be conducted relative to opportunity recognition and the development of a business plan?

Question 20

The two components of product/service feasibility analysis are ________ and ________.

A) product/service value; product/service affordability
B) product/service demand; product/service timeliness
C) product/service timeliness; product/service value
D) product/service durability; product/service value
E) product/service desirability; product/service demand

Question 21

A(n) ________ is a group of firms producing a similar product or service. A firm's ________ is the limited portion of the industry that it goes after or to which it wants to appeal.

A) target market; industry
B) trade group; industry
C) industry; trade group
D) competitive group; target market
E) industry; target market

Question 22

Which of the following is an incorrect approach to administering a concept test?

A) The concept statement shouldn't exceed one page.
B) After the concept statement is developed, it should be shown to at least 10 people.
C) The best candidates to distribute a concept statement to are family and friends.
D) If time permits, a concept statement should be used in an iterative manner and distributed to several groups of people.
E) A short survey should be attached to the concept statement to solicit feedback.

Question 23

A/B split testing, landing pages, prototyping services, and Web site usability testing are all online tools available to assist in the ________ stage of developing a business idea.

A) opportunity recognition
B) feasibility analysis
C) business model
D) business plan
E) growth plan

Question 24

Foundersuite, Quirky and Unassumer are Web sites that provide access to ________.

A) feedback on business ideas
B) landing pages
C) surveys
D) prototyping services
E) market research

Question 25

According to the textbook, the only way to know if your product or service is what people want is by ________.

A) interviewing industry experts
B) library, Internet and gumshoe research
C) conducting brainstorming sessions
D) talking to them
E) surveying them

Question 26

Describe what a concept statement is, and what it should include.

Question 27

A concept statement should be two to three pages long.

Question 28

Quirky is a Web site that allows you to submit product ideas to a community that vets and provides feedback on the ideas.

Question 29

Tracy Brady is in the process of developing an exciting new product in the smartphone industry. She'd like to show a preliminary description of the product to industry experts and prospective customers to solicit their feedback. Tracy should complete and distribute a(n) ________ statement.

A) perception
B) usability
C) early adopter
D) concept
E) adoption risk-reward

Question 30

The two components to product/service feasibility analysis are product/service desirability and total startup funds needed.

Question 31

________ feasibility analysis is an assessment of the overall appeal of the industry and market for the product or service being proposed.

A) Institutional
B) Financial
C) Organizational
D) Product/service
E) Industry/target market

Question 32

Katlin Smith is investigating the feasibility of developing an iPhone app to help high school students with math. To get a good handle on the potential demand for her service, Katlin is scrounging around for information wherever she can find it. She even spent two weeks volunteering as a math tutor at a local high school to see how students responded to her methods. Katlin is conducting ________ research.

A) parallel
B) derivative
C) gumshoe
D) secondary
E) on-the-ground

Question 33

Product/service feasibility analysis is an assessment of the overall appeal of the product or service being proposed.

Question 34

Conner Brandshaw is investigating the feasibility of a new type of electronic game targeting middle school and high school-age boys. Which of the following is an example of "gumshoe research" that Conner could conduct to get a sense of the likely demand for his game?

A) Download electronic games industry reports from the Internet.
B) Administer a buying intentions survey.
C) Administer a concept test.
D) Look at the Web sites of a number of companies that sell electronic games.
E) Spend several days in electronic games arcades and stores to observe the types of games that attract the interest of middle school age and high school age boys.

Question 35

PickFu and Ubounce are Web sites that provide access to ________.

A) 3D printing services
B) Web site usability testing
C) online whiteboarding services
D) A/B split testing services
E) feedback on business ideas

Question 36

A ________ is a single Web page that typically provides direct sales copy, like "click here to buy a Hawaiian vacation."

A) sales page
B) marketing page
C) destination page
D) call for action page
E) landing page

Question 37

The temptation to show a concept statement to friends and family members should be avoided because they are predisposed to give positive feedback.

Question 38

Three commonly utilized methods for determining product/service demand are ________.

A) assessing the overall financial attractiveness of the proposed venture, talking face-to-face with potential customers, and assessing industry attractiveness
B) analyzing the financial performance of other businesses, talking face-to-face with potential customers, and assessing target market attractiveness
C) assessing target market attractiveness; utilizing online tools, such as Google AdWords and landing pages; and calculating total startup cash needed
D) assessing industry attractiveness; library, Internet and gumshoe research; and talking face-to-face with friends and family
E) talking face-to-face with potential customers; utilizing online tools, such as Google AdWords and landing pages; and library, Internet and gumshoe research

Question 39

What is gumshoe research and why is it important?

Question 40

The two components of industry/target market feasibility analysis are ________.

A) industry status and target market status
B) industry attractiveness and target market attractiveness
C) industry sufficiency and target market demand
D) industry attractiveness and product/service demand
E) industry evolution and target market attractiveness

Question 41

Which of the following issues should be considered in industry/target market feasibility analysis?

A) Gaps in the marketplace
B) Financial performance of similar businesses
C) Resource sufficiency
D) Industry attractiveness
E) Management prowess

Question 42

The two primary issues to consider in organizational feasibility analysis are management prowess and ________.

A) market timeliness
B) concept testing
C) resource sufficiency
D) target market attractiveness
E) total startup cash needed

Question 43

The What Went Wrong? Feature in Chapter 3 focuses on Standout Jobs. Although the company was acquired by a larger firm in 2010, it was not considered to be a financial success. According to the case, Standout Jobs failed to meet expectations for the following three reasons: ________.

A) First, the company's timing was bad; second, prior to launch, the company's management team didn't have a strong enough understanding of the HR/recruitment market; and third, the company's leaders found that you can't shove a solution down your customer's throats
B) First, the company's product had flaws; second, the company's management team didn't have a strong enough understanding of the HR/recruitment market; and third, the company's marketing plan was ineffective
C) First, the company's management team was inexperienced; second, the company's timing was bad; and third, the company was poorly financed
D) First, the company's product had flaws; second, the company management team was inexperienced; and third, the company found that you can't shove a solution down your customer's throats
E) First, the company's feasibility analysis was poor; second, the company's management team didn't have a strong enough understanding of the HR/recruitment market; and third, the company was poorly financed

Question 44

The focus in organizational feasibility analysis is on financial resources.

Question 45

________ feasibility analysis is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch its business.

A) Industry/market
B) Institutional
C) Financial
D) Organizational
E) Product/service

Question 46

Which of the following is an example of a resource that normally would not be evaluated as part of the "resource sufficiency" stage of organizational feasibility analysis?

A) Ability to form favorable business partnerships
B) Financial resources
C) Affordable office space
D) Key equipment needed to operate the business
E) Key support personnel

Question 47

Mintel, IBISWorld, and Bizminer are databases most likely to be used during the ________ feasibility stage of the feasibility analysis process.

A) organizational
B) economic
C) political/legal
D) industry/target market
E) product/service

Question 48

The Partnering for Success feature in Chapter 3 focuses on the task of finding the right business partner. According to the feature, which of the following is an incorrect rule-of-thumb in finding a business partner?

A) Know the skills and experiences you need in a partner.
B) Make sure you and your partner's work habits are compatible.
C) Make sure you and your partner have common goals and aspirations.
D) Pick a partner that is similar rather than different from you in terms of skills, abilities, and functional background.
E) Hire a lawyer to negotiate the partnership agreement.

Question 49

Organizational feasibility analysis is conducted to determine whether a proposed business venture has sufficient management expertise, organizational competence, and resources to successfully launch its business.

Question 50

Which of the following is not an attribute of an attractive industry?

A) Is young rather than old
B) Is not crowded
C) Is late rather than early in its life cycle
D) Is important to the customer
E) Is fragmented rather than concentrated

Question 51

Industry/target market feasibility is an assessment of the overall appeal of the industry and the target market for the product or service being proposed.

Question 52

Which of the following statements about target markets is incorrect?

A) There is a distinct difference between a firm's industry and its target market.
B) The challenge in identifying an attractive target market is to find a market that's large enough for the proposed business but is yet small enough to avoid attracting larger competitors.
C) By focusing on a target market, a firm can usually avoid head-to-head competition with industry leaders and can focus on serving a specialized market very well.
D) A target market is a place within a larger market segment that represents a narrower group of customers with similar needs.
E) It's generally easier to find good information about a target market than an industry as a whole.

Question 53

The focus in organizational feasibility analysis is on ________.

A) financial resources for manufacturing firms and nonfinancial resources for service firms
B) financial resources for service firms and nonfinancial resources for manufacturing firms
C) nonfinancial and financial resources equally
D) nonfinancial resources
E) financial resources

Question 54

A(n) ________ team is the group of founders, key employees, and advisers that either manage or help manage a new business in its startup years.

A) opening
B) entrepreneurial
C) scout
D) launch
E) new venture

Question 55

To test resource sufficiency, a firm should list the ________ most critical non-financial resources that it will need to move its business idea forward and determine if those resources are available.

A) 1 to 2
B) 3 to 5
C) 6 to 12
D) 10 to 16
E) 15 to 25

Question 56

The two primary issues to consider in organizational feasibility analysis are ________.

A) target market attractiveness and financial rate of return
B) management prowess and resource sufficiency
C) capital requirements and industry attractiveness
D) concept testing and financial rate of return
E) industry attractiveness and overall attractiveness of the investment

Question 57

The Savvy Entrepreneurial Firm feature in Chapter 3 focuses on Bill Gross, and how a company he was leading, Knowledge Adventure, made a 180-degree turn on the positioning of a product. According to the feature, Gross and his team made the change as a result of ________.

A) observing how customers acted when buying their product
B) studying industry trends
C) conducting Internet research
D) administering a concept test and a buying intentions survey
E) hiring consultants to provide them advice

Question 58

The two primary areas to consider in organizational feasibility analysis are management prowess and resource sufficiency.

Question 59

Describe the purpose of industry/target market feasibility analysis, and identify the two primary issues that should be considered. What is the difference between a firm's industry and its target market?

Question 60

According to the textbook, two of the most important factors to consider regarding "management prowess" are ________.

A) the passion the sole entrepreneur or the management team has for the business idea and the extent to which the management team or sole entrepreneur understands the markets in which the firm will participate
B) whether the members of the management team have worked successfully together before and the passion the sole entrepreneur or the management team has for the business idea
C) whether the members of the management team are good "networkers" and the extent to which the management team or sole entrepreneur understands the markets in which the firm will participate
D) the educational and functional backgrounds of the management team or sole entrepreneur
E) whether the members of the management team are good "networkers" and the passion the sole entrepreneur or the management team has for the business idea

Question 61

Which of the following factors is a positive as it pertains to the financial feasibility of a business venture?

A) Inconsistent and slow growth in sales during the first five to seven years in a clearly defined market niche
B) High percentage of recurring revenue
C) Inability to forecast income and expenses with a reasonable degree of accuracy
D) Reliance on externally generated funds to finance and sustain growth
E) Absence of an existing opportunity for investors to convert equity into cash

Question 62

Which of the following factors is a negative as it pertains to the financial feasibility of a business venture?

A) Steady and rapid growth in sales during the first five to seven years in a clearly defined market niche
B) High percentage of recurring revenue-meaning that once a firm wins a client, the client will provide recurring sources of revenue
C) Inability to forecast income and expenses with a reasonable degree of accuracy
D) Internally generated funds to finance and sustain growth
E) Availability of an exit opportunity for investors to convert equity into cash

Question 63

The most important issues to consider in financial feasibility analysis are ________.

A) resource sufficiency, industry attractiveness, and total startup cash needed
B) total startup cash needed, financial performance of similar businesses, and the overall financial attractiveness of the proposed venture
C) target market attractiveness, resource sufficiency, and product/service demand
D) total startup cash needed, management prowess, and product/service demand
E) concept testing, total startup cash needed, and financial performance of similar businesses

Question 64

The most important issues to consider in financial feasibility analysis are total startup cash needed, financial performance of similar businesses, and overall financial attractiveness of the proposed venture.

Question 65

Which of the following is incorrect regarding the "total startup cash needed" component of financial feasibility analysis?

A) It's not necessary to complete an actual budget of startup expenses.
B) When explaining where the startup funds will come from, avoid cursory explanations such as "I plan to bring investors on board" or "I'll borrow the money."
C) There are worksheets posted online that help entrepreneurs determine the startup costs to launch their venture.
D) An explanation of where the startup funds will come from should be included.
E) If the money will come from friends and family or is raised through other means, a reasonable plan should be stipulated to repay the money.

Question 66

For financial feasibility analysis, a very detailed and comprehensive financial analysis is required.

Question 67

First Screen is a template for completing industry analysis

Question 68

The most important issues to consider in financial feasibility analysis are: financial performance of similar businesses, total cash needed, and ________.

A) the projected internal rate of return of the proposed venture
B) the projected years to an IPO or an acquisition for the proposed venture
C) management prowess
D) overall attractiveness of the proposed venture
E) the projected borrowing power of the proposed business

Question 69

________ feasibility analysis is a quick financial assessment of the viability of a business idea.

A) Organizational
B) Institutional
C) Product/service
D) Financial
E) Industry/market

Question 70

The mechanics for filling out a First Screen worksheet are complicated.

Question 71

The template for completing a feasibility analysis included in Appendix 3.1 of the book is called the ________ analysis.

A) First Evaluation
B) Initial Screen
C) First Pass
D) First Screen
E) Flash Screen

Question 72

Briefly describe the purpose of the First Screen and how it's used.

Question 73

A new venture team is the group of founders, key employees, and advisers that either manage or help manage a new business in its startup years.

Question 74

The First Screen feasibility analysis template included in Chapter 3 is called "First Screen" because ________.

A) it is the first feasibility analysis template created
B) it is the first and most important step in the opportunity recognition process
C) it is the first step in a sequence of several steps that must be completed before a business idea is deemed to be feasible
D) feasibility analysis is an entrepreneur's initial or first pass at determining the feasibility of a business idea
E) it is the first of several "screens" that a business idea must pass through before it is considered to be feasible

Question 75

In regard to management prowess, two of the most important factors in this area are the passion that the solo entrepreneur or the management team has for the business idea and the extent to which the management team or solo entrepreneur understands the markets in which the firm will participate.