BA3305 Entre - Chp 7

Value benefits are important because: A. they lead to scope savings. B. they lead to higher prices. C. they result in scale savings. D. they lead to reduced costs.

B. they lead to higher prices.

Which of the following types of value benefits is most likely to be offered by a product if it helps the community, a group, the environment, or the world? A. Scope savings B. Personalization C. Altruism D. Scale savings

C. Altruism

_____ is a value benefit that can come from the products or services that a business owner offers, or from his or her firm's reputation. A. Brand B. Scale savings C. Learning D. Scope savings

A. Brand

Which of the following is a generic strategy that targets a portion of the market, called a segment or niche? A. Focus strategy B. Differentiation strategy C. Cost strategy D. Value strategy

A. Focus strategy

_____ is the general name for the line of product or service being sold, or the firms in that line of business. A. Industry B. Market C. Scope D. Niche group

A. Industry

Which of the following is the advantage of knowing the magic number? A. It helps in evaluating if the proposed business can deliver the desired return. B. It helps in retaining customers. C. It seeks out customers who are already being serviced by another firm. D. It helps in making incremental product improvements.

A. It helps in evaluating if the proposed business can deliver the desired return.

Which of the following statements is true regarding the entry wedge of supply shortage? A. It occurs when a new product is in demand. B. It takes place in a stable market that doesn't change rapidly. C. It takes place in a long-term market. D. It occurs when certain physical resources are unutilized.

A. It occurs when a new product is in demand.

Which of the following is true of a blue ocean strategy? A. It results in a new product or service. B. It is the business equivalent of cloning. C. It involves patterning a business on existing firms. D. It matches the precision of copying as seen in franchising.

A. It results in a new product or service.

Which of the following are the two major classification systems that code industries? A. NAICS and SIC B. SCALE and SCOPE C. SWOT and VRIO D. OLC and SWOT

A. NAICS and SIC

Which of the following is a tactical action? A. New distribution channels B. Mergers C. New product introductions D. Entering new markets

A. New distribution channels

_____ is a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry. A. Shake-out B. Growth stage C. Maturity stage D. Retrenchment

A. Shake-out

_____ is the idea and actions that explain how a firm will make its profits. A. Strategy B. Objective C. Mission D. Goal

A. Strategy

Differentiation strategy is a type of generic strategy aimed at: A. clarifying how one product is unlike another in a mass market. B. mass markets in which a firm offers a combination of cost benefits that appeals to the customers. C. a portion of the market, called a segment or niche. D. buying in bulk and selling or repackaging in smaller amounts.

A. clarifying how one product is unlike another in a mass market.

Standard industrial classification system (SIC) codes have _____ digits. A. four B. six C. seven D. nine

A. four

Changes in competitors, sales and profits in an industry over time are referred to as: A. industry dynamics. B. retrenchment. C. shake-out. D. transformational competency.

A. industry dynamics.

Imitation plus one degree of similarity results in: A. patterning a business on existing firms. B. creating previously unseen products or services. C. creating products or services that have no competitors. D. characterizing a business based on the returns it offers.

A. patterning a business on existing firms.

Gross profit is defined as: A. what is left after deducting the cost of goods sold. B. what is left after deducting the operating expenses of the business. C. the amount of money the owner takes out of the firm annually. D. the profit earned by a company when its product is in the maturity stage of the product life cycle.

A. what is left after deducting the cost of goods sold.

_____ is the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the market. A. Industry analysis B. Competitive advantage C. Resource distribution D. Market relinquishment

B. Competitive advantage

Which of the following is an advantage of using an imitative strategy? A. It allows entrepreneurs to do something that is very different from what others are doing. B. It allows business owners to buy existing technologies. C. It allows entrepreneurs to fit their businesses to their own ideas and preferences. D. It allows business owners to create unique settings.

B. It allows business owners to buy existing technologies.

According to Shepherd, Shanley, and Porter, which of the following is a small business supra-strategy? A. Altruism B. Single-mindedness C. Scope savings D. Technology

B. Single-mindedness

A perceptual map is: A. a chart that maps changes in competitors, sales and profits in an industry over time. B. a graphic display which positions products according to their scores on important strategic dimensions. C. a chart that indicates the changes in the magic number of a business owner. D. a graphic display which indicates the various stages of the lifecycle of a product.

B. a graphic display which positions products according to their scores on important strategic dimensions.

In the goal step of the strategic planning process, the key is to: A. focus on the kind of customers the business wants to deal with. B. bring together the decisions that underlie the business plan. C. offer state-of-the-art or leading-edge technology. D. build a brand reputation through the products or services.

B. bring together the decisions that underlie the business plan.

In the context of entry wedges, _____ occurs because government agencies, government-sponsored commercial contracts, and many big businesses have policies that provide for quotas for buying from small businesses. A. second sourcing B. favored purchasing C. market relinquishment D. customer contracting

B. favored purchasing

Most small businesses are more _____ than _____. A. cost-directed; profit-directed B. imitative; innovative C. profit-directed; cost-directed D. innovative; imitative

B. imitative; innovative

Market scope is important because: A. it helps business owners in determining the size of the target market. B. it helps business owners to decide where to focus their sales and advertising efforts. C. it helps business owners in designing a product. D. it helps business owners in calculating their magic number.

B. it helps business owners to decide where to focus their sales and advertising efforts.

North American industry classification system (NAICS) codes have _____ digits. A. three B. six C. eight D. nine

B. six

_____ is a strategic action. A. Increasing marketing efforts B. Using new distribution channels C. Acquiring a competitor D. Increasing prices

C. Acquiring a competitor

Which of the following is characteristic of the boom stage in the life cycle of a product? A. Most customers are unaware of the offerings. B. Many firms close down. C. Firms begin to compete on features and prices. D. Established firms must find new approaches to improve the business.

C. Firms begin to compete on features and prices.

Which of the following is a strategic action? A. Price cutting B. Product enhancements C. New product introductions D. Increased marketing efforts

C. New product introductions

_____ refers to the size of the market, whereas _____ refers to the geographic range covered by the market. A. Scope; scale B. Mass; niche C. Scale; scope D. Niche; mass

C. Scale; scope

Which of the following is true of niche markets? A. They are broad markets. B. They target all the customers in the entire market. C. They are specific and narrow. D. They involve large portions of the population.

C. They are specific and narrow.

The fourth step of a small business' strategic planning process involves: A. considering the customers and the benefits to offer them. B. refining the firm's capabilities in order to maintain a competitive advantage. C. determining the best strategic direction and strategy for the firm. D. studying the dynamics and trends of the industry.

C. determining the best strategic direction and strategy for the firm.

An overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas is referred to as _____. A. pure innovation B. niche strategy C. incremental innovation D. blue ocean strategy

C. incremental innovation

Industry analysis is defined as the technique used to: A. determine the magic number in a particular industry. B. determine the extent to which a product is similar to another product. C. study the dynamics and trends of an industry. D. study the effects of low cost on an industry.

C. study the dynamics and trends of an industry.

Which of the following is the second step of a small business' strategic planning process? A. Reviewing and confirming the goals that define the firm B. Knowing the magic number C. Studying the dynamics and trends of the industry D. Considering the customers and the benefits to offer them

D. Considering the customers and the benefits to offer them

_____ are classic strategies for businesses of all types and they include differentiation, cost, and focus. A. Personalization strategies B. Altruistic strategies C. Retrenchment strategies D. Generic strategies

D. Generic strategies

Which of the following is true of the entry wedge of second sourcing? A. It occurs when business firms leave a market. B. It occurs because many big businesses have policies that provide for set-asides for purchases from small businesses. C. It offers the advantage of being globally based. D. It provides a competitive pressure to ensure that suppliers keep providing the best service and prices.

D. It provides a competitive pressure to ensure that suppliers keep providing the best service and prices.

In the context of entry wedges, which of the following is the key benefit of rule changes by the government? A. Place B. Delivery C. Quality D. Technology

D. Technology

Which of the following is a key benefit of the entry wedge of customer contracting? A. Scale savings B. Lower costs C. Scope savings D. Technology

D. Technology

Amy plans to open a laundromat with a gym. She got the idea from the laundromat with a bar and game rooms, which she visits regularly. She wants to test her idea by starting out in a small space with the focus on the laundromat and a small space allocated for gym equipments. Amy's idea is an example of _____. A. a blue ocean strategy B. a pure innovation C. an altruistic approach D. an incremental innovation

D. an incremental innovation

A type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time is called the _____. A. maturity stage B. retrenchment C. shake-out D. boom

D. boom

In an imitative strategy, an entrepreneur: A. creates a new product or service which has no competitors. B. considers prospective customers before creating a product or service. C. seeks to do something that is very different from what others are doing. D. does more or less what others are already doing.

D. does more or less what others are already doing.

A customer group that involves large portions of the population is referred to as a _____. A. niche market B. secondary market C. local market D. mass market

D. mass market

An imitative business that competes locally with others in the same industry is referred to as _____. A. incremental competition B. niche business C. linear competition D. parallel competition

D. parallel competition

In which of the following stages is there an explosion of choices in terms of products and services? A. Introduction stage B. Growth stage C. Maturity stage D. Decline stage

B. Growth stage

Which of the following is true of imitation? A. It does not involve patterning a business on existing firms. B. It does not match the precision or completeness of copying seen in franchising. C. It involves the creation of new products or services which have no competitors. D. It results in the creation of previously unseen products or services.

B. It does not match the precision or completeness of copying seen in franchising.

Which of the following is true of the introduction stage of a product? A. Sales are almost always high. B. Most customers are unaware of the offerings. C. Firms begin to compete on features and prices. D. Some products turn out to be extremely popular.

B. Most customers are unaware of the offerings.

The first step of the strategic planning process for a small business is: A. performing a SWOT analysis. B. reviewing and confirming the goals that define the firm. C. mapping the prospective customers. D. studying the dynamics and trends of the industry.

B. reviewing and confirming the goals that define the firm.

Which of the following is true of a differentiation strategy? A. It requires a firm to offer a combination of cost benefits that appeals to the customers. B. It is generally pursued by all small businesses. C. It is aimed at mass markets. D. It is used by businesses that pursue a very low cost operation.

C. It is aimed at mass markets.

Which of the following types of customers are likely to generate more potential customers than any other type? A. Loyal customers B. Local customers C. Passionate customers D. Corporate customers

C. Passionate customers

As a firm gets more experience, it can often work with fewer mistakes and greater efficiencies, thereby lowering costs. This leads to the cost benefit of _____. A. personalization B. scope savings C. learning D. altruism

C. learning

Buying in volume usually produces savings. This leads to the cost benefit of _____. A. scope savings B. lower costs C. scale savings D. learning

C. scale savings

In an industry life cycle, the shake-out phase ends when: A. the firms introduce new products or services. B. the competition between firms increases. C. the rapid die-off of firms stops. D. the growth phase begins.

C. the rapid die-off of firms stops.

Which of the following is an advantage of picking customer-desired benefits that a business owner's competitors do not offer? A. They results in lower pricing. B. They help business owners to set realistic goals. C. They help a business owner in identifying the magic number. D. They make the firm stand out from the competition.

D. They make the firm stand out from the competition.

A research process that provides the entrepreneur with key information about other firms in the same line of business as his or her, the current situation and trends is known as: A. SWOT analysis. B. VRIO analysis. C. value chain analysis. D. industry analysis.

D. industry analysis.

Growth stage is an industry life cycle stage in which: A. customer purchases increase at a dramatic rate. B. a product or service is being invented and initially developed. C. sales and profits of the firms in the industry begin a falling trend. D. an industry eventually reaches a relatively stable number of firms.

A. customer purchases increase at a dramatic rate.

A _____ is a narrowly defined segment of the population that is likely to share interests or concerns. A. niche market B. mass market C. primary market D. parallel market

A. niche market

Magic number is defined as: A. the number of employees hired by a start-up in the first year. B. the post-tax income the entrepreneur personally seeks from the business. C. the number of loyal customers. D. the income a start-up is able to generate from quarterly sales.

B. the post-tax income the entrepreneur personally seeks from the business.

An opportunity that makes it possible for a new business to gain a foothold in a market is referred to as a(n) _____. A. parallel competition B. incremental innovation C. differentiation strategy D. entry wedge

D. entry wedge

Retrenchment is: A. the third life cycle stage. B. a stage marked by a stabilization of demand. C. a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms. D. an organizational life cycle stage in which established firms must find new approaches to improve the business.

D. an organizational life cycle stage in which established firms must find new approaches to improve the business.

The life cycle stage in which a product or service is being invented is known as the _____. A. growth stage B. boom C. introduction stage D. shake-out

C. introduction stage