BUSE 129 CH 7-10

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 is an example of a poorly prepared business plan?

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

If some or all of the manufacturing process is to be subcontracted

The plan should mention the subcontractor(s), including location, reasons for selection, costs, and any contracts that have been completed.

A questionnaire is a data collection instrument used by an entrepreneur to gather primary data in the marketing research for a new venture. Identify a true statement about a questionnaire.

It should have questions specifically created to achieve objectives the entrepreneur listed earlier.

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).

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

The marketing plan of a new venture primarily establishes the ways in which an entrepreneur will

effectively compete and operate in the marketplace

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

environmental analysis

As part of preparing a marketing plan for a new venture, an entrepreneur should define the business situation. When defining the business situation, the entrepreneur should

evaluate past performance of the product and the company

In the marketing research for a new venture, secondary resources should be

exhausted before gathering information from primary sources

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.)

Locations Manufacturing operations Raw Materials Equipment Labor Skills Space Overhead Technology

True or false: All marketing goals and objectives of a new venture must be quantified.

false

True or false: Market segmentation prevents an entrepreneur from responding to the needs of homogeneous consumers.

false

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

Sheila, an entrepreneur, prepares a marketing plan for her new venture. After identifying the target market, Sheila's first decision should be to

identify candidate communities that would match the user profile

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 true statement about a focus group, which is used to gather primary data as part of the marketing research for a new venture, is that it

is a group of 10 to 12 potential customers who are invited to engage in a discussion relating to an entrepreneur's research objectives

A marketing plan of a new venture differs from its business plan in that the marketing plan

is a standalone document that should be managed on a short-term basis to ensure whether the venture is meeting its goals and objectives

The process of dividing the market into small homogeneous groups is known as

market segmentation

Statements of level of performance desired by a new venture are known as

marketing goals and objectives

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

Isabella, an entrepreneur, prepares a marketing plan for her new venture that manufactures consumer goods. To make her venture's marketing plan effective, which of the following should she ensure the plan does?

mentions performance criteria that will be monitored and controlled

Before conducting a quick feasibility study of the business concept of a new venture, an entrepreneur should

precisely state the goals and objectives of the business

As part of measuring the progress of a business plan, an entrepreneur should compare the cost figures estimated in the business plan with day-to-day operation costs. This process is part of the control element called Blank______.

production control

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

production plan

A business plan is primarily designed to

provide guidance to an entrepreneur through the first year of operations

A feature of a questionnaire, which is a data collection instrument used to gather primary data in the marketing research for a new venture, is that it should include

questions that are clear and concise and are easy to answer

To prepare the actual budget as part of a business plan for a new venture, an entrepreneur should

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

Before considering primary or commercial sources of information, the entrepreneur should exhaust all free ___ sources, including commercial data sources that may be available in a business library.

secondary

Entrepreneurs can present their business plans for new ventures in colleges and universities or locally sponsored business meetings in a competitive and structured setting. In this designated period of time, an entrepreneur is expected to

sell his or her business concept to the audiences

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?

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?

The organizational plan

A description of past and present business achievements of a new venture is called a(n) ___. It is part of preparing a marketing plan for a new venture.

situation analysis

The section of a business plan for a new venture named description of the venture should

start with the mission statement or company mission

A requirement for the executive summary of a business plan for a new venture is that it should

stimulate a potential investor's interest

A specific group of potential customers toward which a venture aims its marketing plan is known as a(n)

target market

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

true

True or false: An entrepreneur of a new venture can gain information on competitors initially by utilizing as much public information as possible and then complementing this with a marketing research project.

true

Identify the requirements for an effective marketing plan of a firm.

It should be supported by facts and valid assumptions. It should provide a strategy for achieving the firm's mission or goal.

Identify a guideline to be followed when preparing the executive summary of a business plan for a new venture.

It should emphasize in a concise and convincing manner the key points in the business plan.

Entrepreneurs can present their business plans for new ventures in colleges and universities or locally sponsored business meetings in a competitive and structured setting. How should an entrepreneur make use of this designated period of time? (Check all that apply.)

By mentioning the recognized risks and how he or she plans to address them By giving audiences an overview of the marketing program

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

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.)

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

Match the components used to gather primary data in the marketing research for a new venture (in the left column) with their descriptions (in the right column).

A data collection procedure Involves observation or networking A data collection instrument Involves a questionnaire

Match the plans involved in starting a venture (in the left column) with their descriptions (in the right column). Instructions

A marketing plan It primarily concentrates on all marketing activities of a venture for one year or more. A business plan It involves marketing, research and development, operations, manufacturing, personnel, financial projections and analysis, and future growth strategies.

Based on the marketing strategy and action plan of a new venture, match the situations of a marketplace (in the left column) with its effects on the pricing of a product or service (in the right column). Instructions

A situation where a product or service is in a nondifferentiated market An entrepreneur has little room for price variations from the competition. A situation where a product or service is unique in the marketplace An entrepreneur has flexibility for price variations from the competition.

Identify the reasons why a business plan for a new venture fails. (Check all that apply.)

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

How should an entrepreneur decide whether to hire a consultant or to make use of other resources when preparing a business plan for a new venture?

By assessing his or her own skills objectively

In the context of the upside-down pyramid approach to industry analysis, how should an entrepreneur of a new venture begin competitor analysis?

By documenting the present strategy of each primary competitor

What do lenders, as the potential suppliers of business capital for a new venture, typically focus on? (Check all that apply.)

Collateral Cash flow Equity contribution Character

Which of the following is a factor of the marketing mix that provides utility to the customer?

Distribution

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). Instructions

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

Identify an implication of starting a new business without good planning.

Employees will not understand the business goals.

Which of the following are conducted as part of marketing research for a new venture? (Check all that apply.)

Estimating the size of the potential market Determining who are the prospective buyers for the product

True or false: Focus groups are a more formal method for gathering in-depth information as part of the marketing research for a new venture than questionnaires.

False

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.

False

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.)

General Environmental and demographic finds National Food Industry trends Local Environmental and demographic trends Local food industry trends Local competition strengths and weaknesses == Marketing positions --> Market Objectives

Stella, an entrepreneur, plans to develop a marketing plan for her new venture. As part of the process, she divides the market into smaller groups based on characteristics of the customer. Match the factors she should consider in this process of dividing the market (in the left column) with their components (in the right column). Instructions

Geographic State, country, city, or region Demographic Age, sex, occupation, education, income, or race Psychographic Personality or lifestyle

Which of the following make a business plan for a new venture difficult to control and implement?

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

Shane plans to start a venture that sells customized furniture. Before starting the venture, he conducts market research. Which of the following steps should be taken by Shane as part of the research?

He should determine the most appropriate mode of selling the furniture.

What are the perspectives an entrepreneur should consider in preparing a business plan for a new venture? (Check all that apply.)

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

Which of the following should be determined by an entrepreneur as part of the first step of marketing research? (Check all that apply.)

How much would potential customers be willing to pay for the product or service? Where would potential customers prefer to purchase the product or service? Where would the customer expect to hear about or learn about such a product or service?

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 Competition Involves preparing for potential threats from larger corporations and being aware of who the competitors are and what their strengths and weaknesses are

Which of the following is considered the primary data in the marketing research for a new venture?

Information that is new

______ is the most common approach used to gather market information for a new venture.

Interviewing

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.

Introductory Page Name and address of business Name(s) and address(es) of principal(s) Nature of business Statement of financing needed Statement of confidentiality of report Executive Summary—Two to three pages summarizing the complete business plan Industry Analysis Future outlook and trends Analysis of competitors Market segmentation Industry and market forecasts Description of Venture Product(s) Service(s) Size of business Office equipment and personnel Background of entrepreneur(s) Production Plan (if necessary) Manufacturing process (amount subcontracted) Physical plant Machinery and equipment Names of suppliers of raw materials Operations Plan Description of company's operation Flow of orders for goods and/or services Technology utilization Marketing Plan Pricing Distribution Promotion Product forecasts Controls Organizational Plan Form of ownership Identification of partners or principal shareholders Authority of principals Management team background Roles and responsibilities of members of organization Assessment of Risk Evaluate weakness(es) of business New technologies Contingency plans Financial Plan Assumptions Pro forma income statement Cash flow projections Pro forma balance sheet Break-even analysis Sources and applications of funds Appendix (contains backup material) Letters Market research data Leases or contracts Price lists from suppliers

Match the control elements that are assessed by an entrepreneur as part of measuring the progress of a business plan (in the left column) with their descriptions (in the right column).

Inventory control Making sure that maximum service is provided to customers Production control Controlling machine time, worker hours, process time, delay time, and downtime cost Quality control Making sure that a product performs satisfactorily

Identify the true statements about the introductory page of a business plan for a new venture. (Check all that apply.)

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

Which of the following is true about the importance of updating an existing business plan for an entrepreneur?

It helps in being responsive to changes in the company, industry, and market.

What is the implication of knowing the target market for a product or service?

It is the basis for deciding the appropriate marketing action strategy that will effectively meet the market's needs.

Identify a true statement about the preparation of a business plan for a new venture.

It should be created by an entrepreneur.

Identify the true statements about the marketing plan of a new venture. (Check all that apply.)

It should be integrated with the venture's more long-term strategic plan. It should be created annually, evaluating the goals and objectives for the next year.

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.

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

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.)

Secondary research data Letters from distributors

Select the accurate statement(s) about entrepreneurs' and venture firms' use of secondary data sources in market research (select all that apply).

Sources for secondary data at the state and local levels are the State Department of Commerce, chambers of commerce, local banks, state departments of labor and industry, and local media. A review of secondary data sources will determine if more data are needed, in which case a plan to gather primary data will be required. An important purpose of reviewing secondary sources is that it is a good starting point in developing the most effective marketing plan by providing an early assessment of the opportunities and threats to the venture. Using secondary sources will likely produce sufficient data to eliminate the need for gathering primary source data. Improvements in information technology today make secondary source reviews a very effective basis for gathering information on customers, competitors, and market trends. Before considering either primary or commercial sources of information, the entrepreneur should exhaust all free, accessible secondary sources, including commercial data sources that may be available in a business library.

Which of the following represents the definition of marketing strategy and action plan?

Specific activities outlined to meet a venture's business plan goals and objectives

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 Cash flow figures for at least three years 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?

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?

The assessment of risk

Which of the following is true about the definition of a product in a marketing plan?

The definition of a product is more than its physical components.

Which of the following sections of a business plan for a new venture provides complete overview of its product(s), service(s), and operations?

The description of the venture

How should an entrepreneur respond to changes in the company, industry, and market?

The entrepreneur should determine what revisions are needed in the current business plan.

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.

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 event 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 The entrepreneur should precisely articulate what the business is all about. The marketing perspective 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.

Based on a study of new ventures, match the types of ventures based on their growth rate (in the left column) with the areas on which they concentrated to gather primary data in the marketing research (in the right column).

The most successful ventures Competitors, the customer, and the industry, using networking, trade associations, and recent publications The least successful ventures General economic and demographic trends

Based on a study of new ventures, match the types of ventures based on their growth rate (in the left column) with the areas on which they concentrated to gather primary data in the marketing research (in the right column). Instructions

The most successful ventures Competitors, the customer, and the industry, using networking, trade associations, and recent publications The least successful ventures General economic and demographic trends

Roger, an entrepreneur, plans to segment and target customers of his firm as part of developing a marketing plan. Arrange the steps he should take to segment and target the customers in the correct order of occurrence.

The process of segmenting and targeting customers by the entrepreneur should proceed as follows: Decide what general market or industry you wish to pursue. Divide the market into smaller groups based on characteristics of the customer or buying situations. Characteristics of the customer Geographic (e.g., state, country, city, region) Demographic (e.g., age, sex, occupation, education, income, and race) Psychographic (e.g., personality and lifestyle) Buying situation Desired benefits (e.g., product features) Usage (e.g., rate of use) Buying conditions (e.g., time available and product purpose) Awareness of buying intention (e.g., familiarity of product and willingness to buy) Select segment or segments to target. Develop a marketing plan integrating product, price, distribution, and promotion.

Which of the following is true about the definition of a product or service in the marketing plan?

The product or service definition may consider more than the physical characteristics.

What is the implication of the upside-down pyramid approach to industry analysis by an entrepreneur of a new venture?

The upside-down pyramid approach helps the entrepreneur understand competitors' strengths and weaknesses.

Which of the following are true about manufacturers' representatives used by new ventures for product distribution? (Check all that apply.)

They can be used to market to the consumer or household market. Their role is to act on behalf of noncompeting companies that will share the cost of their services.

Identify the true statements about middlemen in the context of the distribution of a product or service in the market. (Check all that apply.)

They possess important experience in the marketplace that can help an entrepreneur build his or her marketing strategy. They are able to provide functions such as storage, delivery, a sales staff, promotion or advertising, and maintenance.

Identify a true statement about decisions on the marketing strategy and action plan of a new venture.

They reflect on the marketing mix variables.

What is the most important purpose of reviewing secondary sources as part of the marketing research for a new venture?

To gather information that will help an entrepreneur make the best decisions regarding the marketing of a product or service

What is the primary focus of the industry analysis carried out by an entrepreneur of a new venture?

To give sufficient knowledge of the environment that impacts marketing strategy decision making

Raj, an entrepreneur, prepares a marketing plan for his new venture. As part of preparing the plan, Raj seeks to identify candidate communities that would match the user profile. In this situation, which of the following tools should be used by Raj as a logical starting place that reveals demographic data on income, ages of children, and employment?

Town census research

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

True

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.

True

A true statement about a business plan for a new venture is that it is usually

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

Before preparing the financial section of a business plan for a new venture, an entrepreneur should

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

As the first step of marketing research, an entrepreneur should

define the purpose of the research study