BUSMHR 2500 Chapter 7

Click and drag on elements in order Arrange the contents that should be included in the introductory page of a business plan for a new venture starting from the information that should appear at the beginning to the information that should appear at the end.

1. The company's name and address 2. The name of the entrepreneur(s), telephone number, fax number, e-mail address, and Web site address if available 3. A paragraph explaining the company and the nature of the business 4. The amount of financing needed 5. A statement of the confidentiality of the report

Which of the following is an example of a poorly prepared business plan? Multiple choice question. A business plan created by an entrepreneur who is well informed about the type of business A business plan that lacks an establishment of customer needs for the proposed product or service A business plan with objectives that are specific and not so mundane as to lack any basis of control A business plan created by an entrepreneur who makes a total commitment to the business

A business plan that lacks an establishment of customer needs for the proposed product or service

In an organizational context, the final part of a business plan's industry analysis section should place emphasis on _____. Multiple choice question. general economic trends stimulating the interest of a potential investor the specific market explaining the organization's operations plan

the specific market

True or false: All businesses should create an operations plan as part of their business plan. True false question.

Reason: This is true. All businesses—manufacturing or nonmanufacturing—should include an operations plan as part of the business plan

A written document prepared by an entrepreneur that describes all the relevant external and internal elements involved in starting a new venture is known as a(n) ________ ________.

business plan

Before preparing the financial section of a business plan for a new venture, an entrepreneur should _____. Multiple choice question. stimulate the interest of a potential investor through creating an actual budget create a budget including lists of possible expenditures in the first year and revenue sources prepare an appendix that needs to be included in the plan prepare the final pro forma statements in the financial plan

create a budget including lists of possible expenditures in the first year and revenue sources

As part of a business plan for a new venture, an entrepreneur reviews industry trends and competitive strategies. This is termed a(n) ________ _______.

industry analysis

As part of a business plan for a new venture, an entrepreneur reviews industry trends and competitive strategies. This is termed a(n) ________ ________.

industry analysis

A(n) _______ ________, which is part of a business plan for a new venture, describes market conditions and strategy related to how the product(s) and service(s) will be distributed, priced, and promoted.

marketing plan

A(n) ________ ________, which is part of a business plan for a new venture, details how the product(s) will be manufactured.

production plan

In a business plan for a new venture, a section projects key financial data that determine economic feasibility and necessary financial investment commitment. This section is known as the ________ _______.

financial plan

Click and drag on elements in order Fatima, an entrepreneur, plans to start a retail store in her neighborhood. She plans to use an upside-down pyramid approach to gathering market information. Arrange the groups of trends that she needs to analyze as part of using this approach in the order in which they should be analyzed. (Place the group of trends that needs to be analyzed first at the top.)

1. General environmental and demographic trends 2. National retail industry trends 3. Local environmental and demographic trends 4. Local retail industry trends 5. Local competition strengths and weaknesses

Liam plans to open a bakery in his town. He decides to use an upside-down pyramid approach to gathering market information. Arrange the steps that should be taken by Liam when using this approach in the correct order of occurrence. (Place the first step at the top).

1. He should evaluate the general environmental and demographic trends. 2. He should analyze the trends in the baking industry in his country. 3. He should assess the environmental and demographic trends in the town. 4. He should analyze the strengths and weaknesses of other bakeries in the town.

Click and drag on elements in order Arrange the steps that should be taken by an entrepreneur when creating the section named assessment of risk in a business plan for a new venture in the correct order of occurrence.

1. Mention the potential risks to the new venture. 2. Discuss what might happen in the identified risks become reality. 3. Discuss the plan that will be executed to prevent, minimize, or respond to the identified risks.

Match the situations studied in a production plan as part of a business plan for a new venture (in the left column) with their descriptions (in the right column).

If some or all of the manufacturing process is to be subcontracted matches - The plan should mention the subcontractor(s), including location, reasons for selection, costs, and any contracts that have been completed. If the manufacturing is to be carried out in whole or in part by an entrepreneur - The plan should explain the physical plant layout; the machinery and equipment needed to perform the manufacturing operations; raw materials and suppliers' names, addresses, and terms; costs of manufacturing; and any future capital equipment needs.

Which of the following should be primarily covered in the final part of a business plan's industry analysis section? (Check all that apply.) Multiple select question. The condition of the business environment in the specific market The assessment of operations and marketing strategies Who the customers are Who the potential investors are

The condition of the business environment in the specific market Who the customers are

Which of the following sections of a business plan for a new venture provides complete overview of its product(s), service(s), and operations? Multiple choice question. The executive summary The assessment of risk The description of the venture The industry analysis

The description of the venture

Which of the following sections of a business plan for a new venture goes beyond the manufacturing process (when the venture involves manufacturing) and describes the flow of goods and services from production to the customer? Multiple choice question. The executive summary The financial plan The operations plan The assessment of risk

The operations plan

Which of the following is part of a business plan for a new venture that describes a venture's form of ownership—proprietorship, partnership, or corporation? Multiple choice question. The organizational plan The marketing plan The industry analysis The executive summary

The organizational plan

True or false: In an organizational plan as part of a business plan for a new venture, it is important to detail the shares of stock authorized and share options if the venture is a partnership.

This is false. In an organizational plan as part of a business plan for a new venture, it is important to detail the shares of stock authorized and share options if the venture is a corporation. If the venture is a partnership, the terms of the partnership should be included.

A true statement about a business plan for a new venture is that it is usually _____. Multiple choice question. framed by investors, suppliers, and potential customers a combination of functional plans like marketing, finance, manufacturing, and human resources created to address only short-term decision making for the first three years of operation a road map prepared by the employees of a firm

a combination of functional plans like marketing, finance, manufacturing, and human resources

Before conducting a quick feasibility study of the business concept of a new venture, an entrepreneur should _____. Multiple choice question. provide a brief summary of the business plan's contents precisely state the goals and objectives of the business stimulate the interest of a potential investor hire lawyers, accountants, and engineers

precisely state the goals and objectives of the business

To prepare the actual budget as part of a business plan for a new venture, an entrepreneur should _____. Multiple choice question. refrain from including information that stimulate the interest of a potential investor recognize benchmarks in the industry that can be used to form the final pro forma statements in the financial plan prepare a descriptive appendix that needs to be included in the plan avoid considering reasonable assumptions regarding expenditures based on industry history and trends

recognize benchmarks in the industry that can be used to form the final pro forma statements in the financial plan

The section of a business plan for a new venture named description of the venture should _____. Multiple choice question. provide a brief summary of the business plan's contents include detailed descriptions about environmental analysis start with the mission statement or company mission highlight in a concise manner the key points in the business plan

start with the mission statement or company mission Need help? Review these concept resources.

Assessment of external uncontrollable variables that may impact a business plan of a new venture is known as a(n) ________ ________.

environmental analysis

Identify the reasons why a business plan for a new venture fails. (Check all that apply.) Multiple select question. An entrepreneur lacks sense of potential threats or weaknesses to the business. An entrepreneur sets goals that are measurable. An entrepreneur consults a lawyer while creating the business plan. An entrepreneur sets unreasonable goals.

An entrepreneur lacks sense of potential threats or weaknesses to the business. An entrepreneur sets unreasonable goals.

True or false: The significance of a feasibility study of the manufacturing operations by an entrepreneur of a new venture depends on the nature of the business.

Reason: This is true. The relevance of a feasibility study of the manufacturing operations by an entrepreneur of a new venture depends on the nature of the business. Most of the information needed can be obtained through direct contact with the appropriate source.

Match the sections included in the section of a business plan for a new venture named the financial plan (in the left column) with their descriptions (in the right column).

Summary of the forecasted sales and the appropriate expenses for at least the first three years - Includes estimated sales, cost of goods sold, and the general and administrative expenses Includes estimated sales, cost of goods sold, and the general and administrative expenses Cash flow figures for at least three years - Includes the demands on money on a monthly basis, especially in the first year Includes the demands on money on a monthly basis, especially in the first year Projected balance sheet - Summarizes the assets of a business, its liabilities (what is owed), the investment of an entrepreneur and any partners, and retained earnings (or cumulative losses)

Which of the following sections of a business plan for a new venture contains backup material that is not necessary in the text of the document? Multiple choice question. The introduction The appendix The financial plan The operations plan

The appendix

Which of the following sections of a business plan for a new venture identifies potential hazards and alternative strategies to meet business plan goals and objectives? Multiple choice question. The executive summary The assessment of risk The industry analysis The description of venture

The assessment of risk

An entrepreneur should be prepared for sudden changes or disasters that can affect the implementation of a business plan. In this context, which of the following are true about contingency plans? (Check all that apply.) Multiple select question. A contingency plan should be implemented immediately if there is a crisis. A contingency plan should be a step-by-step plan. A generalized contingency plan is more effective than a specific one. The process of creating a contingency plan is independent of the nature of the business.

A contingency plan should be implemented immediately is there is a crisis. A contingency plan should be a step-by-step plan.

What do lenders, as the potential suppliers of business capital for a new venture, typically focus on? (Check all that apply.) Multiple select question. Character Personnel Equity contribution Collateral Cash flow A cookie-cutter approach

Character Equity contribution Collateral Cash flow

Match the environmental factors entrepreneurs analyze as part of a business plan for a new venture (in the left column) with their descriptions (in the right column). Economy Culture Technology Legislation

Economy - Trends in the GNP, unemployment by geographic area, disposable income, and so on Culture - Shifts in the population by demographics and shifts in attitudes Technology - Powerful technological developments determined from resources committed by major industries or the U.S. government Legislation - Any future restrictions that may affect the product or service, channel of distribution, price, or promotion strategy

Which of the following make a business plan for a new venture difficult to control and implement? (Check all that apply.) Multiple select question. Goals and objectives that are not feasible Goals and objectives that are feasible Goals and objectives that are not too general Goals and objectives that are too general

Goals and objectives that are not feasible Goals and objectives that are too general

What are the perspectives an entrepreneur should consider in preparing a business plan for a new venture? (Check all that apply.) Multiple select question. An employee's perspective Competitors' perspective His or her own perspective An investor's perspective The marketing perspective

His or her own perspective The marketing perspective An investor's perspective

Match the factors entrepreneurs study as part of an industry analysis in a business plan of a new venture (in the left column) with their descriptions (in the right column).

Industry demand - Involves recognizing whether the market is growing or declining, the number of new competitors, and possible changes in consumer needs Involves recognizing whether the market is growing or declining, the number of new competitors, and possible changes in consumer needs Competition - Involves preparing for potential threats from larger corporations and being aware of who the competitors are and what their strengths and weaknesses are Involves preparing for potential threats from larger corporations and being aware of who the competitors are and what their strengths and weaknesses are

Identify the true statements about the introductory page of a business plan for a new venture. (Check all that apply.) Multiple select question. It is prepared after the total plan is written. It gives a brief summary of the business plan's contents. It is of least interest to the investors of the business. It establishes the basic concept that an entrepreneur is trying to develop.

It gives a brief summary of the business plan's contents. It establishes the basic concept that an entrepreneur is trying to develop.

Lenders are considered the potential suppliers of business capital for a new venture. According to lenders, what are the requirements for a business plan? (Check all that apply). Multiple select question. It should mirror an entrepreneur's credit history. It should indicate the amount of personal equity invested by an entrepreneur. It should have clauses that consider the needs of accountants and engineers. It should show the collateral or tangible assets being secured for a loan. It should establish an entrepreneur's personal perspective.

It should mirror an entrepreneur's credit history. It should indicate the amount of personal equity invested by an entrepreneur. It should show the collateral or tangible assets being secured for a loan.

Identify the areas in which an entrepreneur requires information when conducting a feasibility study of the manufacturing operations of a new venture. (Check all that apply.) Multiple select question. Labor skills Profit gains Employee engagement Location Raw materials Equipment

Labor skills Location Raw materials Equipment

Which of the following are examples of information that should be included in the appendix of a business plan for a new venture? (Check all that apply.) Multiple select question. Secondary research data Letters from distributors A description of the venture An environmental analysis

Letters for distributors Secondary research data

True or false: Potential investors regard a marketing plan described in a business plan as critical to the success of a new venture.

Reason: This is true. Potential investors regard a marketing plan described in a business plan as critical to the success of a new venture. Thus, an entrepreneur should make every effort to prepare as comprehensive and detailed a plan as possible so that investors can be clear as to what the goals of the venture are and what strategies are to be implemented to effectively achieve these goals.

An entrepreneur should be prepared for sudden changes or disasters that can affect the implementation of a business plan. In this context, identify the issues that need to be addressed by an entrepreneur to have a contingency plan. (Check all that apply.) Multiple select question. The entrepreneur should provide the employees responsible for carrying out the contingency plan with a generalized plan rather than a specific plan. The entrepreneur should make a list of any factors that can impact his or her venture. The entrepreneur should ensure that the contingency plan specifies that databases are stored in a single place rather than in multiple places. The entrepreneur should ensure that the contingency plan includes details of who should be contacted and how in event of a disaster.

The entrepreneur should make a list of any factors that can impact his or her venture. The entrepreneur should ensure that the contingency plan includes details of who should be contacted and how in even of a disaster.

Match the perspectives an entrepreneur should consider in preparing a business plan for a new venture (in the left column) with their descriptions (in the right column).

The entrepreneur's perspective matches - The entrepreneur should precisely articulate what the business is all about. The entrepreneur should precisely articulate what the business is all about. The marketing perspective matches - The entrepreneur should view his or her business through the eyes of the customer. The entrepreneur should view his or her business through the eyes of the customer. An investor's perspective - The entrepreneur should ensure that there are sound financial projections. The entrepreneur should ensure that there are sound financial projections.