Question 1

The second essential purpose for creating a business plan is:

Accepted Answer

B

Question 2

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 refereed to as:

Accepted Answer

The description provided matches most closely with a product or service feasibility analysis, which evaluates the market demand and resource requirements for a product or service idea. Business prototyping and business plan analysis are related concepts but do not fully capture the components of a feasibility analysis, and financial feasibility analysis is only one aspect of the overall assessment.

Question 3

Porter's five forces model assess industry attractiveness by surveying these five factors:

Accepted Answer

Porter's five forces model considers the factors of potential entrants, suppliers, buyers, substitutes, and rivalry among existing firms to assess industry attractiveness. This makes option A the correct choice. The other options either mix up the factors or include irrelevant ones, such as raw materials or similar products.

Question 4

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

Accepted Answer

Low capital requirements and cost advantages that are not related to company size make it easier for new companies to enter the market, which increases the threat of new entrants to the industry. Additionally, the lack of brand loyalty means that customers may switch to new entrants without much resistance, further increasing the threat.

Question 5

The three "tests" associated with a business plan are:

Accepted Answer

The answer of The three "tests" associated with a business...

Question 6

A business plan:

Accepted Answer

A business plan is a valuable managerial tool that helps an entrepreneur focus on developing a course for the business in the future. It is also a valuable tool for convincing lenders or investors to put money into the business. Additionally, it forces an entrepreneur to think a business idea through, considering both its positive and negative aspects.

Question 7

The strongest of the five forces in most industries is:

Accepted Answer

Rivalry among existing competitors is often the strongest force because it directly affects the competitive environment and profitability within an industry. High rivalry can lead to price wars, increased marketing costs, and the need for continuous innovation.

Question 8

Products or services that may be sought as alternative solutions such as purchasing tax planning software rather than paying a CPA to assist with preparing your taxes are referred to as:

Accepted Answer

Products or services sought as alternative solutions that may replace the original product or service are called substitute products. In the given example, tax planning software is a substitute product for the services provided by a CPA for tax preparation.

Question 9

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:

Accepted Answer

The force that considers economies of scale, initial capital requirements, cost advantages relevant to company size, and lack of brand loyalty is the "Threat of New Entrants." This force examines the barriers to entry that new businesses will face when attempting to enter the industry. If the barriers are low, then there is a greater threat of new businesses entering the industry, which will increase competition and lower profits. Therefore, the correct answer is B.

Question 10

One form of primary research is:

Accepted Answer

A focus group is a type of primary research where a small group of people (usually 6-10) are brought together to discuss a specific topic or product. The goal is to collect qualitative data and opinions from the participants in a group setting, allowing for deeper insights and discussion than can be gleaned from individual interviews or surveys. This type of research is often used in marketing and product development.

Question 11

The primary purpose of a business plan is to:

Accepted Answer

The primary purpose of a business plan is to guide a company by charting its future course and devising a strategy for success. While a business plan can certainly help attract lenders and investors, it is not its primary purpose. The other options listed are not typical reasons for creating a business plan.

Question 12

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

Accepted Answer

Switching costs and the number of buyers are both factors that affect the bargaining power of buyers. If switching costs are high and there are few buyers, then the buyers have less bargaining power. On the other hand, if switching costs are low and there are many buyers, then the buyers have more bargaining power. The fact that the items represent a relatively small portion of the cost of finished products is not directly related to any of the options given.

Question 13

Conducting ________ research involves collecting data firsthand and analyzing it while ________ research involves gathering data that has already been complied and is available.

Accepted Answer

Primary research involves collecting data firsthand through surveys, interviews, focus groups, and observation. Secondary research involves gathering data that has already been complied and is available, such as company reports, government statistics, and academic journals. Therefore, the best choice is A, primary research involves collecting data firsthand and analyzing it while secondary research involves gathering data that has already been complied and is available.

Question 14

The primary purpose of the five forces matrix is to:

Accepted Answer

The answer of The primary purpose of the five forces...

Question 15

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

Accepted Answer

Feasibility analysis is the process of evaluating an entrepreneur's idea to determine its feasibility in terms of profitability, market demand, technical feasibility, and other factors that contribute to the success of a business. Business plan, strategic analysis, and industry analysis are all important components of a feasibility analysis, but they are not the same thing as a feasibility analysis itself.

Question 16

The final aspect of the financial feasibility analysis combines the estimated earings and the capital requirements to determine the:

Accepted Answer

The final aspect of the financial feasibility analysis is to determine the rate of return on the capital invested. This is calculated by dividing the estimated earnings by the total capital requirements. Therefore, the correct answer is D, rate of return on the capital invested.

Question 17

A solid business plan:

Accepted Answer

A solid business plan forces potential entrepreneurs to critically evaluate their business idea and assess its potential for success. This objective assessment improves the chances of securing funding from investors or lenders. Thus, all the given options are correct, making option D the correct answer.

Question 18

The financial feasibility analysis takes these aspects into consideration:

Accepted Answer

The financial feasibility analysis takes into account the capital requirements or the amount of money needed to start and operate the business, the estimated earnings or the revenue the business is expected to generate, and the return on investment or the profits that investors can expect to receive. Therefore, option B is the most appropriate choice. Option A does not mention earnings, while options C and D talk about return on sales and owner's equity, which are not as comprehensive as return on investment.

Question 19

The process in which entrepreneurs test their business models on a small scale before committing serious resources to launch a business that might not work is known as:

Accepted Answer

The process described is specifically referred to as business prototyping, which involves testing the viability of a business idea through small-scale experimentation before making a larger-scale commitment. While business modeling, planning, and feasibility analysis are related concepts, they do not necessarily encompass this process.

Question 20

A business plan is a written summary of:

Accepted Answer

A business plan includes all of the above components, providing a comprehensive overview of an entrepreneur's proposed business venture as well as information on the venture's operations, finances, marketing strategies, and the skills and abilities of its management team. A well-written business plan serves as a guide for the entrepreneur and helps investors and stakeholders understand the venture's objectives and potential for success.

Quiz 4: Conducting a Feasibility Analysis and Crafting a Winning Business Plan