Question 1

Match the term with its definition.
-A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed

Accepted Answer

Feasibility analysis is a preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed. The other options are:
A) Capabilities - refers to the skill sets or resources possessed by a company 
B) Competitive advantage - refers to the unique advantage that a company has over its competitors 
C) Competitive environment - refers to the external factors that may influence a company's competitiveness 
D) Core competencies - refers to the key strengths or abilities that a company has 
E) Cost-based strategy - refers to a pricing strategy based on the cost of producing a product or offering a service 
F) Differentiation-based strategy - refers to a strategy based on offering a unique or superior product or service 
G) Entrepreneurial alertness - refers to an individual's ability to identify and exploit opportunities for entrepreneurship 
H) Fatal flaw - refers to a flaw or weakness in a business idea or plan that could lead to its failure.

Question 2

A focus strategy can be set up in all of the following ways EXCEPT

Accepted Answer

A focus strategy involves concentrating on a specific subset of customers or market segment, so expanding the market to multiple geographical regions would go against this strategy. The other options listed (B, C, and D) are all valid ways to implement a focus strategy.

Question 3

Which of the following actions causes a segmented market to erode?

Accepted Answer

The focus strategy is imitated, leading to increased competition and reduced differentiation between segments, causing the segmented market to erode.

Question 4

Many direct sales organizations suggest that the new "member" begin selling the product part time while continuing to work at his or her regular job. Which of the following explanations best fits this recommendation?

Accepted Answer

Starting out part time while continuing to work a regular job allows the business to be tested cheaply and expanded incrementally, minimizing risk and financial investment. This is a common strategy in direct sales organizations.

Question 5

Select one of the ways of innovative thinking, explain it, and give an example of a business idea this type of thinking might generate.

Accepted Answer

The answer of Select one of the ways of innovative...

Question 6

Peggy would like to open a dog grooming business in her home. Which of the following, if true, would indicate this is a good idea?

Accepted Answer

The fact that more households now own dogs but owners don't want to give them regular baths indicates there may be a demand for a dog grooming business.

Question 7

Match the term with its definition.
-A benefit that exists when a firm has a product or service that is seen by its target market as better than that of competitors

Accepted Answer

Competitive advantage is defined as a benefit that exists when a firm has a product or service that is seen by its target market as better than that of competitors.

Question 8

According to strategy guru Michael Porter, a segmented market can erode when

Accepted Answer

The target segment loses its uniqueness.

Question 9

Which of the following statements about a macro-level and micro-level analysis is true?

Accepted Answer

The answer of Which of the following statements about a...

Question 10

Jesse would like to start a landscaping company that concentrates on using native plants. The feasibility analysis showed a need for $100,000 to start the company (she has $10,000), competition of three other companies (one concentrated on using native plants), and buyers who were predominantly 60 years or older (who loved yard work). Which of the following statements is true?

Accepted Answer

While financing is a challenge, Jesse could explore alternative financing options like loans or grants. The competition is also a challenge, but it is possible to differentiate and build a niche in the market with a focus on native plants. The potential market of older buyers interested in yard work could be a selling point, and there may be opportunities to expand beyond this demographic. Therefore, while there are challenges, the plan has potential and could be successful with some adjustments.

Question 11

Match the term with its definition.
-The capabilities that distinguish a firm competitively and reflect its focus and personality

Accepted Answer

Core competencies refer to the unique capabilities and strengths of a firm that give it a competitive advantage in the market.

Answer: B 
 Competitive advantage refers to the unique advantages that a firm has over its competitors that allow it to succeed in the marketplace.

Answer: C 
 Competitive environment refers to the external factors and forces that affect a firm's competitiveness in the market.

Answer: F 
 Differentiation-based strategy refers to a business strategy that focuses on offering a unique product or service to stand out from competitors.

Answer: G 
 Entrepreneurial alertness refers to a person's ability to recognize and capitalize on business opportunities.

Answer: H 
 Fatal flaw refers to a major weakness in a business that can lead to its failure.

Answer: I 
 Feasibility analysis refers to the process of assessing the viability and potential success of a business idea or plan.

Answer: A and E 
 Capabilities refer to the skills and resources that a firm possesses, while cost-based strategy refers to a business strategy that focuses on minimizing costs to achieve a competitive advantage.

Question 12

Kitty-Kat Korner fabric shop caters to the quilters in the region. Other fabric shops carry fabrics for all types of clothing, along with floral, yarn, and other craft supplies. Kitty-Kat only carries items related to quilting. Which of the following best describes Kitty-Kat's strategy?

Accepted Answer

Kitty-Kat Korner's strategy is to focus specifically on meeting the needs of quilters, rather than trying to appeal to a broader market.

Question 13

Match the term with its definition.
-A company's routines and processes that coordinate the use of its productive assets in order to achieve desired outcomes

Accepted Answer

Capabilities refer to a company's routines and processes that coordinate the use of its productive assets to achieve desired outcomes.

Question 14

Miriam opened a yarn craft store in her small town based on her personal interests and hobbies. There were no competitors locally; the merchandise was readily available; and she had the initial capital to open the store. Yet her business failed. Too few customers visited her store. What was Miriam's fatal flaw?

Accepted Answer

Miriam ignored market limitations by not conducting proper market research and evaluating the demand for her products in the local area. Just because the merchandise was readily available and there were no local competitors, it did not necessarily mean that there was a market for her products in that specific location.

Question 15

Compare and contrast personal experience, hobbies and personal interests, and accidental discovery as a source of startup ideas. Use examples to strengthen the discussion.

Accepted Answer

The answer of Compare and contrast personal experience, hobbies and...

Question 16

O-MY-U once had a winning team in every college sport, but athletes graduate and fortunes change. For the past four seasons, the school has only won five games. Hotels in the area that were consistently booked during winning seasons found themselves with vacancies, even with discounted prices. How would Michael Porter explain this?

Accepted Answer

Michael Porter would explain this situation as demand disappearing because the primary reason for the high demand (a winning sports team attracting visitors) no longer exists, leading to decreased hotel bookings.

Question 17

Mike and Jane opened a franchise sporting goods store. Neither was athletic; neither had ever managed a retail store; and the business failed within one year. Which of the following statements best explains these results?

Accepted Answer

Mike and Jane lacked the knowledge and understanding of the critical factors necessary for the success of a retail store and thus led to the failure of the business.

Question 18

Which of the following best describes the distinction between a market and an industry?

Accepted Answer

A market refers to the buyers and potential buyers of a specific product or service, whereas an industry refers to the companies or organizations that produce and sell those products or services. Therefore, a market consists of buyers while an industry consists of sellers.

Question 19

As the success of the athletic teams at O-MY-U skyrocketed, so did attendance at the games. Out-of-town visitors found all the hotels fully booked. In response, Bob and Shirley opened their home to guests on weekends, operating as a bed and breakfast. Soon many of their neighbors did the same, and Bob and Shirley found they could no longer fill all their rooms every game weekend. How would Michael Porter explain this?

Accepted Answer

The focus strategy that Bob and Shirley initially employed, targeting a specific market niche of visitors needing accommodation during game weekends, was imitated by their neighbors, leading to increased competition and a decrease in their own occupancy rates.

Question 20

Match the term with its definition.
-Readiness to act on existing, but previously unnoticed, business opportunities

Accepted Answer

Entrepreneurial alertness refers to the readiness to act on existing, but previously unnoticed, business opportunities.

Quiz 3: Starting a Small Business

Match the term with its definition. -A preliminary assessment of a business idea that gauges whether the venture envisioned is likely to succeed