Small Business Management Chapter 4

pilot testing

A basic informational website is deployed that describes the products or services that are being offered. It is meant to be an interactive way to test the fit of the solution to customers. The test usually provides fairly significant feedback on how well the approach works.

design thinking

A customer-focused approach using interviews, observation, and exercises to create services and products that provide demonstrated evidence of solving customers' problems

Retail Arbitrage

An approach to business where an entrepreneur buys something at a severely reduced market price and then resells it at a price closer to the typical market price

When one is taking a causal approach to start a new business, which of the following are examples of sources of ideas?

Education or expertise: Applying what was learned in school or developed on own; idea websites; chance: Being at the right place at the right time.

Which of the following are pitfalls that entrepreneurs may fall victim to when attempting to become more innovative?

Failing to act Obeying rules that don't exist Stopping with the first good idea

Which of the following statements about a royalty are correct?

Famous TV shows, comic and movie characters are also examples of licensed goods where royalties are paid. It is a payment per item sold. The MP3 format, Dolby noise reduction, and Gatorade are examples.

Order of the entrepreneurial process

Feel, check, plan, do

business model canvas

It consists of 11 factors such as value proposition, key partners, and revenue streams. It is a great way to identify and organize key information about a business and how it will achieve its goals. It is an analytic tool used in developing a start-up that would appeal to customers, compete well, and earn a profit.

feasibility study

It evaluates the potential of a business opportunity by investigating five primary areas. The areas consist of: the business idea, product/service, industry and market, financial projections, and plan for future action. One should examine the strengths and weakness of each opportunity within each of the five areas.

Entrepreneurial awareness

It includes the ability to notice things that have been overlooked; it includes the motivation to search for opportunities

Which of the following are pitfalls that business can experience when attempting to become more innovative?

Judging ideas too quickly. Identifying the wrong problem. Stopping with the first good idea.

Which of the following are the traditional problems that new ideas are likely to face?

Launch of products from new ideas would need bringing in additional funding and resources to run a business. New ideas cannot be economically turned into products or services.

Which of the following is true of cost in a business model canvas?

Most elements of a business model canvas are affected by a business's costs

Casual Model of entrepreneurship

One way to think about opportunities and business creation depends on an individual's dreams or ideas about new or yet-to-be-created products or services

Which of the following take place during a brainstorming session?

Participants are asked to think of specific ways to improve a product or service in terms of quality or usability. Participants are asked to think of a situation or a product or service.

Four steps to organize creative thinking

Preparation, incubation, illumination, and verification

sources of business ideas

Seeing something new and copying it; frustration from one's work or personal life; a friend or relative's idea

Which of the following statements about the business' channels for the business canvas are correct?

Selling directly to the customer allows the business to control the process, but it is often more expensive and harder to get started. It should describe how the product or service will be delivered to the customer. Selling through an intermediary can be less expensive, but how will the business be heard and seen by its customers.

Which of the following statements about the conversion rate process are correct?

The number of people who provide their email address to be informed when the product or service is available is of key importance. The number of people who check out the site is counted. The visitor's geographic location and demographics is considered important to developing an understanding.

Which of the following statements about feasibility are correct?

The two main ways of examining feasibility are the business model canvas process and the classic feasibility study. It is the extent to which an idea is viable and realistic. It is the next-step process after the IDEO screen.

Which of the following statements about A/B testing are correct?

The website that gets the least number of customer commitments gets revised. Two versions, A and B of the website are served up randomly to prospective customers. The process is repeated until a highly accepted version of the idea is created or it becomes evident that the idea does not make a viable business.

Which of the following statements about the customer segments section of the business model are correct?

There is often more than one type of custom segment. Customer segments build from the IDEO screen work-up. Each customer segment usually has its own problem and value proposition.

Which of the following statements about the key partners section of the business model canvas are correct?

Well-regarded suppliers that provide raw materials and partners that provide advice inspire confidence in the customer's eyes. Attorneys, accountants, and advisory board members are other examples of key partners. Most small companies rely on individuals and organizations to help develop the business deliver on its promise in its value proposition.

royalty

a payment to a licensor based on the number or value of items that are sold

SCAMPER

an acronym for cues that trigger to help one develop new ideas

freemium

an approach to pricing that connects free and premium products or services

imitative strategy

an overall strategic approach in which the entrepreneur does more or less what others are already doing

gain

any kind of outcome customers or potential customers would like to encounter or be able to depend on

The ______ portion of the business model canvas has to do with how the business will get its product or service to the customer.

channels

causal model of entrepreneurship

individuals need to think about what they need to do to bring their new product or service into existence

Opportunity recognition

involves creative thinking that results in the discovery of novel and useful ideas searching and capturing new ideas that generate business opportunities

Which of the following is true of the term "gain" in the context of the business model canvas approach?

it is one of the two driving forces to create new services or products

The ______ section of the business model canvas describes the most important actions that are central to making the firm successful.

key activities

license

legal agreement granting rights to use a particular piece of intellectual property

The key ______ section of the business model canvas describes the ways individuals and organizations help make the business successful

partners

A comparison between the costs and revenues of a business helps to make an initial assessment of the _____ of the business.

profit potential

incremental strategy

taking an idea and offering a way to do something slightly better than it is presently done

target marketing

the group of customers in the area that it plans to serve, who would likely be interested in the product, or those of competitors

IDEO screen

It is a technique for performing a rapid initial analysis of ideas to determine their potential

In the context of the opportunity identification process, which of the following were the findings of Gaglio and Katz?

Serial entrepreneurs can fashion new ideas in nearly any situation; experienced entrepreneurs think of various kinds of business ideas depending on the situation

Which of the following statements about the business model canvas are true?

It consists of 11 factors such as value proposition, key partners, and revenue streams. It is an analytic tool used in developing a start-up that would appeal to customers, compete well, and earn a profit. It is a great way to identify and organize key information about a business and how it will achieve its goals.

Processing Organizing creative thinking

The process is useful when attempting to identify additional business opportunities. This technique has worked for many creative people like Leonardo da Vinci and Albert Einstein. The process is useful when exploring business problems.

Which of the following statements about the acronym SCAMPER are correct?

SCAMPER is an effective method to help come with alternative solutions and opportunities. Its use gets one to step outside of his or traditional areas of expertise. It stands for Substitute, Combine, Adapt, Magnify or modify, Put to other uses, Eliminate, and Rearrange

conversion rate

the measure of how many visitors come to a business' website and are actually willing to make a commitment to the product or service promoted on the site

canvases

made to be revised to ensure feasibility

The ______ pays the _____ for the rights to use a particular piece of intellectual property.

licensee; licensor

Ideas

Research eliminates about 90% of the ideas; testing eliminates another 60% of ideas; it generally takes 3,000 initial ideas to develop one commercially successful product

customer relationships section of the business model canvas

describes how the business will best care for its most valuable resource

key activities section of the business model canvas

describes the most important actions that are central to making a firm successful

A ______ evaluates the potential of a business opportunity by investigating five primary areas: the business idea, product/service, industry and market, financial projections, and plan for future action.

feasibility study

Entrepreneurial alertness

having a special set of observational and thinking skills that helps businesspersons identify good opportunities It includes the motivation to search for opportunities, and to notice things that have been overlooked

Effectuation Model of entrepreneurship

his approach requires entrepreneurs to talk to people they know to determine if these people can commit to the entrepreneurial ideas, and starting out with the skills, knowledge, and networks they possess

radical innovation strategy

rejecting existing ideas, and presenting a way to do things differently

key resources

section of the business model that describes what the business has that other firms do not

The ______ section of the business model canvas focuses on how the business plans to handle the problem-solving pains or create gains for its customers.

solution

Creativity

the process of producing an idea or opportunity that is novel and useful, frequently derived from making connections among distinct ideas or opportunities

The _____ section of the business model is the small business owners' unique selling points or benefits that customers can expect from the goods or services.

value proposition

Which of the following statements about the freemium approach are correct?

Both Dropbox and Angry Birds are highly successful products that have been offered using this business model. It is a model that provides customers with something for free and lets them buy add-ons.

In the context of the IDEO screen, in which of the following elements should new ideas be high?

Business viability Technical feasibility Market desirability

Which of the following statements regarding using the business model canvas to analyze feasibility are correct?

The first step is to compare the fit between each customer segment and the value proposition, problem, and solution. Step two is to analyze the market factors for value proposition, customer relationship, channels, revenues, and customer segments for their fit. The purpose is to ensure the business is doing the right things in the best way.

Entrepreneurial Process

The order of the process is feel, check, plan, and do; an entrepreneur's alertness is at work when he or she feels there are possibilities; some of the opportunities may already exist, just not in his or her community

Which of the following statements regarding using the business model canvas to analyze feasibility are correct

The purpose is to ensure the business is doing the right things in the best way. The first step is to compare the fit between each customer segment and the value proposition, problem, and solution. Step two is to analyze the market factors for value proposition, customer relationship, channels, revenues, and customer segments for their fit.

customer segment

a group or subgroup of potential purchasers that can be approached in a coherent manner

pilot test

a preliminary run of a business, sales effort, program, or website with the goal of assessing how well the overall approach works and what problems may come up

business model

a way to identify and organize key information on a business and how it achieves its goals