Ch 7. Entrepreneurial Management Final Exam Prep

Considerations in your offering section should include A. Asking for enough money to last 12-18 months B. Not asking for more money than you need. C. Not detailing the sources and uses of funds over time. D. None of the above E. A and B F. B and C

A and B, Asking for enough money to last 12-18 months, not asking for more money than you need

Advantages of a price skimming are; A. You can gauge what price the customer is willing to pay B. You'll gain increased market penetration C. It's easier to lower prices than to raise them D. A and B E. A and C

A and C, You can gauge what price the customer is willing to pay, It's easier to lower prices than to raise them

Which of the following should NOT appear in the compensation section A. Salary previously earned from prior employment B. Salary due to employees C. A fixed schedule for increasing the entrepreneurs salary D. None of the above.

A fixed schedule for increasing the entrepreneurs salary

A proper organization is critical to making a business plan easy to read. Thus, it should include which of the following? A. Major sections B. Sub-sections C. Exhibits D. Appendices E. All of the above

All of the above

Considerations to include in your Financing plan should include A. Options to slow the "burn rate" if needed. B. Financing requirements by phase of growth C. Milestones to be met between rounds of financing D. None of the above E. All of the above.

All of the above

Entrepreneurs should focus on the key success factors that often lead a customer to buy one product over another, such as___. A. Price B. Quality C. Speed D. All of the above; E. None of the above.

All of the above

How can entrepreneurs minimize risk? A. Market research; B. Focus groups; C. Beta testing; D. All of the above; E. None of the above.

All of the above

When an entrepreneur understands who his customers are, he can assess _____: A. what compels them to make purchases. B. how his company can sell to them. C. the cost of sales. D. how his company can retain customers. E. All of the above.

All of the above

Which of the following is a common subsection of an Operations plan? A. Operations strategy; B. Scope of operations; C. Ongoing operations; D. All of the above; E. None of the above.

All of the above

Which of the following is not a reason that business planning can help entrepreneurs to articulate the business opportunity to stakeholders? A. The plan provides background information that enables the entrepreneur to communicate the upside potential to investors. B. It provides the validation needed to convince potential employees to leave their current jobs for the uncertain future of a new venture. C. It can help secure a strategic partner, D. It can help secure a key customer, or supplier. E. All of the above.

All of the above

Detailed information which expands upon main areas of your business plan should be included in which portion of the plan? A. Operations B. Appendices C. Financial Plan D. Market Plan E. None of the Above

Appendices

Considering competitor actions and reactions, which of the following would be dangerous for entrepreneurs? A. Assuming that competitors will be the same tomorrow as they are today. B. Identifying future competitors that might enter the market. C. Considering when and how your technology might become obsolete. D. None of the above; E. All of the above.

Assuming that competitors will be the same tomorrow as they are today

In the development plan, which issue should be the focus? A. Development strategy; B. Development timeline; C. Development segments; D. Both A and B; E. None of the above.

Both A and B, Development strategy, Development timeline

One of the most pressing challenges for entrepreneurs is to maintain adequate levels of cash. Which of the following is the best way to ensure that a lack of cash does not bankrupt your startup? A. Raise initial capital. B. Give your customers, both businesses and individuals, generous credit terms. C. Carefully monitor your burn rate. D. Avoid accepting too much early capital in exchange for diluting your equity. E. Answers A and B.

Carefully monitor your burn rate

A company's sales channels can include all of the following except: A. Internal sales stream B. Retail C. Internet D. Cost reduction E. Direct mail

Cost reduction

Which of the following subsections is traditionally NOT placed in the executive summary? A. Description of opportunity B. Industry overview C. Critical risks D. Competitive advantage E. Team and offering

Critical risks

Which of the following is NOT in the operations plan? A. Locations B. Insurance C. Employees D. Suppliers E. Customers.

Customers

Which of the following is the most important part of the business plan? A. Executive Summary B. Operations C. Team D. Critical Risks E. Financial Plan

Executive Summary

If you are thinking about venturing into a market and cannot find any competitors, what should you do as an entrepreneur? A. Begin raising capital. B. Examine additional opportunities within the same competitive arena. C. Focus on product quality. D. Expand your definition of the market. E. None of the above.

Expand your definition of the market

As mentioned in earlier chapters and reiterated in this chapter, "cost plus" pricing is the best strategy, because it wastes the least amount of time.

False

Business planning, in a literal sense, begins when you start to look for external funds.

False

Entrepreneurs often enter markets and find, to their surprise, either that direct competition does not exist, or that it is complacent and slow to react.

False

Examining how customers currently acquire similar products is a poor use of time for an entrepreneur launching an innovative, new product.

False

Since the executive summary is the most important part of the finished plan, an entrepreneur should write that section first, in order to frame the rest of the plan.

False

Strategic partners are required by law to be offered seats on your Board of Directors.

False

The Board of Directors' primary role is to oversee the company on behalf of the employees, and to that end the board has the power to replace top executives if it feels doing so would be in the best interests of the staff.

False

The biggest difference between an internal operation plan and the one that you might present to a potential investor is the level of detail, which tends to be greater in the disclosure to the investor.

False

The biggest risk any new venture faces is dilution of equity.

False

41) When writing a business plan it is best to: A. Use a creative format to capture the investor's attention. B. Lead the plan with the TEAM section because investors often focus on the team members, rather than the idea. C. Follow a common outline because it helps spot reading. D. Avoid appendices because nobody reads them. E. All of the above.

Follow a common outline because it helps spot reading

The best way to develop a winning business plan is to: A. Have an accountant develop your financials; B. Hire your professor to write the plan; C. Go through several iterations to refine the strategy and business model; D. Don't bother writing a plan, it is not an efficient use of time; E. All of the above.

Go through several iterations to refine the strategy and business model

Which of the following is not in the contents of marketing plan? A. Marketing communications; B. Growth strategy. C. Product mix D. Pricing; E. Customer analysis.

Growth strategy

Which of the following is not a standard subsection of a marketing plan? A. Product strategy; B. Market strategy of the competitors; C. Pricing strategy; D. Distribution strategy; E. Sales strategy.

Market strategy of the competitors

53) Many of the big names in retail revolutionized and unified fragmented markets. Which of the following should NOT be on such a list? A. Microsoft; B. Walmart; C. Staples; D. Home Depot; E. All should be on the list

Microsoft

Which of the following is NOT a common category in the critical risks section? A. Market Interest and Growth Potential B. Competitor Actions and Retaliation C. Time and Cost of Development D. Operating Expenses E. Offering of Financing

Offering of Financing

What are the two methods of forecasting future revenues, as stated in the chapter? A. The comparable method and the build-up method; B. The comparable method and the distributed method; C. The distributed method and the precise method; D. The random method and the precise method; E. None of the above.

The comparable method and the build-up method

Which of the following is not a goal of business planning? A. To attract various stakeholders; B. To help entrepreneurs gain a deeper understanding of the opportunity; C. To convince stakeholders of the business potential; D. To inform competitors of your intentions E. To convince potential employees to join.

To inform competitors of your intentions

A development strategy includes a schedule that highlights major milestones for the venture.

True

A simple, flat organization chart is often useful to visualize what roles you have filled and what gaps remain.

True

A three-ring binder filled with initial intelligence can be a good starting point in the business planning process.

True

All plans have risks, and a solid business plan should acknowledge critical assumptions made, the risk of those assumptions proving false, and a plan to confirm/deny those assumptions in a timely manner.

True

An 'A' entrepreneur with a 'B' idea is better than a 'B' entrepreneur with an 'A' idea."

True

An important end result of the business planning process is that it allows the entrepreneur to articulate the business opportunity to various stakeholders in the most effective manner.

True

Both positive and negative trends will help shape the businesses

True

Competitive profile matrices can aid in identifying undeserved or vulnerable parts of the market susceptible to a new entrant.

True

It is appropriate to discuss the geographic location of production facilities and how this enhances your firm's competitive advantage.

True

It is important to explain why the team's compensation is appropriate.

True

It's a common misperception that a business plan is primarily used for raising capital.

True

Market analysis looks at current trends in the market; anticipating future trends is reserved for later steps in the business planning process.

True

New ventures will have better chances for success in an emerging market, on the verge of rapid growth.

True

The Scope of Operations section should discuss partnerships with vendors, suppliers, and partners

True

The appendices of a business plan can include anything and everything that you think adds further validation to your concept, but does not fit in the main parts of the plan.

True

The business plan must establish that there is an opportunity worth exploiting and must detail how to take advantage of it.

True

The chapter takes the view that the self-examination required to develop a tight, well written business plan is more important than the plan itself.

True

When presenting your plan, you should tailor the information, style, and format of the presentation to the information needs and formatting preferences of your audience.

True

Your business plan should be designed to be flexible, to allow for rapid adjustments as more information becomes available.

True

Your distribution strategy can define your company's fortune as much as the product itself.

True

Which of the following is the key to creating visual catch-points in a business plan? A. Write long, descriptive paragraphs B. Use clearly marked headers and sub-headers throughout the document. C. Maintain 1 inch margins on the sides and top and ½ inch on bottom. Single spaced text. D. None of the above. E. All of the above.

Use clearly marked headers and sub-headers throughout the document

To truly understand your customers, you MUST ___ A. tell them why they need your product. B. hire the best marketing research firm available. C. listen carefully and adapt based upon what they say. D. advertise in multiple media forms, like the Internet. E. All of the above

listen carefully and adapt based on what they say

If business planning predicts that your gross margins will be 5%, you would be best advised to: A. redesign your concept or abandon your concept. B. keep your business small so that you can manage costs. C. focus on guerilla marketing to target a niche. D. All of the above E. None of the above

redesign your concept or abandon your concept