ENT 241 Ch 7

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

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 confidentiality of the report

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.

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.

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

Which of the following should be primarily covered in the final part of a business plan's industry analysis section? (Check all that apply.)

who the customers are, the condition of the business environment in the specific market

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 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

In an organizational context, the final part of a business plan's industry analysis section should place emphasis on _____.

the specific market

The entrepreneur's perspective

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

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

True or false: Investors of a new business venture often place less emphasis on an entrepreneur's character than lenders do.

False

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. Evaluate general environmental and demographic trends 2. Analyze the trends in the baking industry in the country 3. Assess environmental and demographic trends in the town 4. Analyze the strength and weaknesses of other bakeries in the town

What are the needs of investors, particularly venture capitalists, from a new business venture? (Check all that apply.)

They want an entrepreneur to be compliant and willing to accept their involvement in the actual management of the business. They demand high rates of return from the business.

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

environmental analysis

If a new business venture has a strong growth plan and in five years expects to be positioned for an initial public offering (IPO), the executive summary of its business plan should _____.

explain about an exit strategy

Goals and objectives that are too general / not feasible

make a business plan for a new venture difficult to control and implement

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

If a new venture does not have a strong growth plan and does not expect to be positioned for an initial public offering (IPO) in five years, the executive summary of its business plan should _____.

not include any discussion of an exit strategy

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 _____.

production control

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

It should be created by an entrepreneur.

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

Lenders

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. It should mirror an entrepreneur's credit history.

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.)

Letters from distributors Secondary research data

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.)

Location, Equipment, Labor Skills, Raw Materials

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 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 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 investor's perspective

The entrepreneur should ensure that there are sound financial projections.

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.)

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.

The marketing perspective

The entrepreneur should view his or her business through the eyes of the customer.

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

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.

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.

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

True

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

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

Employees will not understand the business goals.

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

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

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

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 _____.

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

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

As part of measuring the progress of a business plan, an entrepreneur should set up an effective collections system for accounts receivable to avoid aging of accounts and bad debts. This process is part of the control element called _____.

sales control

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

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

start with the mission statement or company mission

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

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

stimulate a potential investor's interest

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

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

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

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

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

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

Character Equity contribution Cash flow Collateral

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.

Why is a firm's business plan important to the entrepreneur, potential investors, and/or new personnel? (Check all that apply.)

It guides the entrepreneur in organizing his or her planning activities. It acts as a significant tool in helping to obtain financing.