Question 1

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.

Accepted Answer

Feasibility analysis is the process of evaluating an entrepreneur's idea to determine if it is a viable foundation for creating a successful business. This analysis involves assessing the market demand, competition, potential costs and revenue, and other factors that may impact the success of the business. A business plan, strategic analysis, and industry analysis are all components of a feasibility analysis, but they alone do not represent the entire process.

Question 2

The financial feasibility analysis takes these aspects into consideration:
A) capital requirements, human resources, and return on investment.
B) capital requirements, estimated earnings, and return on investment.
C) capital requirements, estimated earnings, and return on sales.
D) capital requirements, estimated earnings, and return on owner's equity.

Accepted Answer

The financial feasibility analysis considers capital requirements (how much money will be needed to start and sustain the business), estimated earnings (how much money is projected to be earned from the business), and return on investment (how much profit will be gained from the investment). Choice A is not correct because it only considers human resources, which is not the main aspect of financial feasibility analysis. Choice C is also incorrect because it states "return on sales", which is not a common financial term. Choice D only considers return on owner's equity, which is a narrow aspect that does not cover all financial aspects necessary for feasibility analysis.

Question 3

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.

Accepted Answer

Product or service feasibility analysis is the process of evaluating a product or service idea to determine its potential appeal to customers and the necessary resources required to produce or provide it. It helps entrepreneurs to make informed decisions about whether to pursue a particular business idea or not. Business prototyping is the process of creating a working prototype of a product or service, while financial feasibility analysis evaluates the financial viability of a business idea. Business plan analysis involves reviewing and analyzing a written plan that outlines a company's goals and strategies. Therefore, A is the correct answer.

Question 4

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.

Accepted Answer

Rivalry among companies competing in the industry is often the strongest force as all companies are vying for the same customers and market share, leading to intense competition, price wars, and aggressive marketing tactics. This can result in companies sacrificing profits and engaging in risky strategies to outcompete each other, ultimately leading to a less favorable industry environment.

Question 5

A solid business plan:
A) forces potential entrepreneurs to look at their business idea in the harsh light of reality.
B) requires a potential entrepreneur to assess the venture's chances of success more objectively.
C) helps prove to outsiders, such as potential lenders and investors, that a business idea can be successful.
D) All of the above

Accepted Answer

A solid business plan forces potential entrepreneurs to consider the practicality of their idea, assess the chances of success realistically, and demonstrate to outsiders that the business idea is sound. Therefore, all options (A, B, and C) are correct.

Question 6

The three "tests" associated with a business plan are:
A) reality, competitive, and value.
B) competitive, profitability, and value.
C) value, reality, and profitability.
D) reality, value and litmus.

Accepted Answer

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

Question 7

The final aspect of the financial feasibility analysis combines the estimated earnings and the capital requirements to determine the:
A) estimated earnings.
B) total capital requirements.
C) net profit.
D) rate of return on the capital invested.

Accepted Answer

The final aspect of the financial feasibility analysis combines the estimated earnings and the capital requirements to determine the rate of return on the capital invested. This will give an indication of the profitability of the project and whether it is worth pursuing.

Question 8

The primary purpose of a business plan is to:
A) attract lenders and investors.
B) enable an entrepreneur to take her company public.
C) guide a company by charting its future course and devising a strategy for success.
D) meet SEC and other legal requirements designed to protect lenders and investors.

Accepted Answer

A business plan serves as a roadmap for a company, outlining its goals, strategies, and tactics for achieving success. While attracting lenders and investors may be one purpose of a business plan, it is ultimately a tool for guiding the company's operations and decision-making. Taking a company public and meeting legal requirements are also potential outcomes of a business plan, but they are not the primary purpose.

Question 9

A business plan is a written summary of:
A) an entrepreneur's proposed business venture.
B) a business venture's operational, financial, and marketing details.
C) the skills and abilities of a business venture's managers.
D) All of the above

Accepted Answer

A business plan is a comprehensive written document that outlines the proposed business venture's operational, financial, and marketing details. It also includes information about the skills and abilities of the business venture's managers. Therefore, all the options mentioned in the given question are correct.

Question 10

The second essential purpose for creating a business plan is:
A) to guide the operation of the company by charting its future course and devising a strategy for following it.
B) to attract lenders and investors.
C) to file with the SEC before a public stock offering.
D) to attract potential managers and employees to run the new venture.

Accepted Answer

The answer of The second essential purpose for creating a...

Question 11

A business plan:
A) is a valuable managerial tool that helps an entrepreneur focus on developing a course for the business in the future.
B) is a valuable tool for convincing lenders or investors to put money into the business.
C) forces an entrepreneur to think a business idea through, considering both its positive and its negative aspects.
D) All of the above

Accepted Answer

A business plan serves as a valuable managerial tool by providing a clear direction for the business in the future, facilitates convincing lenders or investors to put money into the business, and forces the entrepreneur to think through every aspect of the business idea, considering both its positive and negative aspects.

Question 12

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.

Accepted Answer

The force mentioned in the question refers to the threat of new entrants, as the factors mentioned in the question make it difficult for new companies to enter the market and compete with established players who have already achieved economies of scale and cost advantages. Additionally, lack of brand loyalty makes it difficult for new entrants to capture market share. Therefore, the threat of new entrants is reduced.

Question 13

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.

Accepted Answer

Switching costs and the number of buyers are key considerations in determining the bargaining power of buyers. If there are few buyers and high switching costs, the buyers have greater bargaining power. Additionally, if the items being purchased represent a relatively small portion of the cost of the finished product, the buyers have less incentive to negotiate aggressively for lower prices, which can further reduce the bargaining power of suppliers.

Question 14

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.

Accepted Answer

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

Question 15

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

Accepted Answer

Products or services that may be sought as alternative solutions are referred to as substitute products. Substitutes can be a threat to a company's profitability because customers may choose to switch to the substitute product/service if it provides the same benefits at a lower cost or with more convenience. In the given example, tax planning software is a substitute for a CPA to assist with preparing taxes, as it provides similar benefits but at a lower cost.

Question 16

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:
A) business modeling.
B) business prototyping.
C) business planning.
D) product or service feasibility analysis.

Accepted Answer

The process described is commonly known as business prototyping, where entrepreneurs create a scaled-down version of their business model to test its feasibility before investing significant resources. A and C are related terms, but they refer to broader activities that may or may not include business prototyping. D is also a related concept but specifically refers to analyzing the feasibility of a product or service rather than the overall business model.

Question 17

One form of primary research is:
A) to review published articles.
B) Internet research.
C) library research.
D) a focus group.

Accepted Answer

The best choice for primary research is a focus group. This involves gathering a small group of people together to discuss and provide opinions on a specific topic or product. This form of research allows for in-depth insights into the thoughts and behaviors of the target audience, which can be valuable in making informed business decisions. Reviewing published articles, conducting Internet research, and library research are all forms of secondary research, which involve analyzing existing data rather than collecting new data.

Question 18

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

Accepted Answer

Primary research involves collecting firsthand data through methods such as surveys, interviews, and observations. Secondary research involves gathering data that has already been compiled and is available through sources such as government publications or industry reports. Therefore, option A correctly identifies primary research as involving firsthand data collection and secondary research as involving pre-existing data.

Question 19

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.

Accepted Answer

Porter's five forces model considers the potential threat from new entrants, bargaining power of suppliers and buyers, availability of substitutes, and rivalry among existing firms. Option A includes all these factors, making it the most accurate description of the five forces model. Option B includes "similar products" instead of substitutes, which is not a common factor in assessing industry attractiveness. Option C includes "raw materials" instead of potential entrants, which is not a relevant factor in this case. Option D includes "competitors" instead of potential threat from new entrants and "buyers" instead of bargaining power of buyers, which are not as comprehensive as the factors in option A.

Question 20

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.

Accepted Answer

Low capital requirements, cost advantages not related to company size, and lack of brand loyalty are all factors that make it easier for new entrants to enter an industry, increasing the threat of new competition.

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

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

The financial feasibility analysis takes these aspects into consideration:

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:

The strongest of the five forces in most industries is:

A solid business plan:

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

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

The primary purpose of a business plan is to:

A business plan is a written summary of:

The second essential purpose for creating a business plan is:

A business plan:

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:

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:

The primary purpose of the five forces matrix is to:

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:

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:

One form of primary research is:

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

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

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