ETR401 - Chapter 8

83. Which of the following risks is NOT a common threat to business? A. Understated numbers B. Uncertain sales C. Overlooked competition D. Inadequate cushion

A

86. Which of the following would represent Mr. Johnson's interest in Connie's business plan? A. Cash flow and cash cycle B. Growth rate C. Competitive advantage D. Amounts and schedules for returns

A

23. Which of the following is NOT a business plan concern of family and friend investors? A. Competitive advantage B. Amounts and schedules for returns C. Funds use D. Stability of firm

A

27. All of the following are business plan concerns of potential customers EXCEPT A. amounts and schedules for returns. B. responsiveness to customers. C. benefits. D. competitive advantage.

A

29. There are two circumstances under which creating a business plan is absolutely necessary: (1) _____ and (2) _____. A. when outsiders expect it; for internal understanding B. for government requirement; for investor demands C. for stakeholders; for stockholders D. when family is involved; for friends' information

A

36. A tagline that expresses the fundamental idea or goal of the firm is called its A. vision statement. B. executive summary. C. mission statement. D. elevator pitch.

A

25. _____ represents a business plan concern of joint venture partners. A. Amounts and schedules of returns B. Cash flow and cash cycle C. Intellectual property protection D. Stability of firm

C

30. The extent to which employees, investors, and family members involve in the business, know the business's purpose and operation, is called A. external legitimacy. B. test marketing. C. internal understanding. D. angel investing.

C

33. The length of a vision statement should be A. 20-50 words. B. 60-100 words. C. 5-10 words. D. 250-500 words.

C

56. The market section talks about your A. employees. B. stockholders. C. customers. D. family.

C

21. A document designed to detail the major characteristics of a firm is called a(n) A. mission statement. B. marketing plan. C. executive summary. D. business plan.

D

72. Which of the following is incorrect of screening plans? A. The idea behind it is to give a basic overview of the firm and a detailed look at the financials. B. It usually consists of the cover letter, title page, executive summary, and financial sections of the business plan. C. Appendixes are included only when it is important to prove the viability of contracts. D. It consists of company and organization sections.

D

43. While writing the elevator pitch, including something about your product or service that people would remember and take to heart relates to the A. hook of the plan. B. purpose of the plan. C. delivery of the plan. D. position of the plan.

A

45. A one- to two-page overview of the business, its business model, market, expectations, and immediate goals represents a(n) A. executive summary. B. vision statement. C. mission statement. D. elevator pitch.

A

51. Where the type of business is well established, what is the appropriate size for a business plan? A. 10 pages B. 20 pages C. 25 pages D. 40 pages

A

22. The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business is referred to as A. tagline. B. external legitimacy. C. test marketing. D. internal understanding.

B

24. Which of the following represents a business plan concern of silent partners/angel investors? A. Competitive advantage B. Growth rate C. Asset/collateral base D. Benefit

B

28. Which of the following is a business plan concern of key employees in a business? A. Intellectual property protection B. Stability of firm C. Monitoring compliance D. Asset/collateral base

B

42. Which of the following statements about an elevator pitch is true? A. It is shorter than a vision statement or tagline. B. It consistently leads to specific businesses. C. The idea of the pitch is that you are alone with a prospective customer for the length of an elevator ride. D. The pitch ends with where the business is headed.

C

46. Which of the following is NOT a topic addressed in the executive summary? A. Competitive advantages B. Product C. Mission D. Finances

C

87. If Connie gets her family and friends involved as investors, which of the following would be their concern or interest? A. Cash flow and cash cycle B. Growth rate C. Competitive advantage D. Amounts and schedules for returns

D

34. Which of the following is perhaps a firm's most important single idea held by the owner and employees? A. Vision statement B. Executive summary C. Mission statement D. Elevator pitch

A

40. All of the following observations hold true of mission statements EXCEPT A. they are an action-oriented description of your business. B. they rarely discuss profits, but often mention the entry wedge that follows from the firm's strategy. C. they might include the major competitive advantages of the firm, and its position in the industry. D. they are best when they are simple, short, and direct.

A

57. The market refers to the A. total population of people or firms to whom you plan to sell. B. geographic locations where you open business. C. national boundaries where you operate. D. local area where you recruit people for jobs.

A

60. A "no-frills" strategy is an example of a A. fragmented industry strategy. B. generic strategy. C. supra-strategy. D. focus strategy.

A

62. Which of the following refers to the part of a business that is focused on creating new products or services and preparing new technologies, ideas, products or services for the firm's market? A. R&D B. Test marketing C. Preselling D. New entrant business

A

38. A memorable catchphrase that captures the key idea of a business, its service, product, or customer is called a(n) A. mission statement. B. tagline. C. executive summary. D. business plan.

B

66. For an existing business A. income and cash flow are given monthly for the first year. B. the tradition is to offer three years of data projections. C. the financials offer two-year projections for the income, cash flow, and balance sheet. D. the financials report the last five years of actual data.

A

71. Which of the following gives the basic overview of a firm and a detailed look at the financials? A. Screening plan B. Operational plan C. Marketing plan D. Investing plan

A

76. A special form of informational plan posted on the Internet is the _____ Web site. A. proof-of-concept B. invention plan C. operational plans D. private placement memo

A

32. The business planning presentation types include all of the following EXCEPT A. mission. B. annual objectives. C. elevator pitch. D. executive summaries.

B

37. All of the following concern taglines EXCEPT A. they are a good way to present vision statements, as they are brief and memorable. B. they talk in terms of what will make a difference for the customer or the industry. C. it expresses the fundamental idea or goal of the firm. D. it can serve as the company's vision statement.

B

44. Which of the following is NOT a success factor of an effective elevator pitch? A. Hook B. Time C. What D. Delivery

B

48. Identify the correct statement about the 5-M Model. A. It is typical to have multiple measures, and they are typically given in qualitative form. B. Mission statements give the firm's major business goal, which can be stated quantitatively or qualitatively, but always with a time period. C. Methods typically involve identifying quantitatively stated strategic achievements which would prove you have done what you set out to do as a business. D. Mechanics are generally given as one-paragraph project descriptions.

B

50. A one-page document on a letterhead that introduces the business plan and owner and indicates why the recipient is being asked to read the plan is called a(n) A. executive summary. B. cover letter. C. appendix. D. title page.

B

55. A product or service that is kept as a trade secret or is protected legally using patents, trademarks, copyright, or service mark is called a A. tagline. B. proprietary technology. C. pioneering business. D. test marketing.

B

59. Which of the following is a supra-strategy? A. Cost B. Customization C. Formula facilities D. Differentiation

B

65. Which of the following financial statements is NOT expected in the business plan? A. Income statement B. SEC filing statement C. Balance sheet D. Cash flow statement

B

73. Identify the business plan that typically consists of company and organization sections. A. Idea plan B. Informational plan C. Operational plan D. Invention plan

B

75. Which of the following is NOT a special-purpose plan? A. Screening plan B. Key employer plan C. Invention plan D. Informational plan

B

82. Identify the specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments. A. Concept plan B. Private placement memorandum C. Proof-of-concept plan D. Mini-plan

B

84. The _____ is the percentage of people who buy out of the total population of people you approach. A. base rate B. hit rate C. tagline rate D. proof-of-concept rate

B

88. Connie shops are established businesses and so Connie's business plans could/should be _____ pages of text. A. 40 B. 10 C. 20 D. 25

B

90. Connie should be aware of which of the following risks that may cause Mr. Johnson to evaluate her plan negatively? A. Most likely the numbers B. Experiencing deficit C. High hit rate for preselling D. Adequate or high payback

B

39. The _____ describes the firm's goals and competitive advantages. A. vision statement B. executive summary C. mission statement D. elevator pitch

C

53. In the first paragraph of the cover letter, you A. explain your company in detail. B. describe the current situation of your company. C. introduce yourself. D. thank the reader for their consideration.

C

61. _____ involves introducing your product to potential customers and taking orders for late delivery. A. R&D B. Test marketing C. Preselling D. New entrant business

C

64. The legal form of business and the place where it is registered should be presented under which section of the business plan? A. Company B. Market C. Organization D. Financials

C

67. What is the goal of appendixes? A. To inform customers and partners about the firm and the product. B. To establish an ongoing relationship with the listener. C. To provide supporting information that helps detail the key selling points of your plan. D. To sell customers and investors on the idea of the business and their need for it.

C

69. When a firm sells its products in a limited area, for a limited time, it is called A. an R&D venture. B. a pioneering business. C. test marketing. D. a new entrant business.

C

78. These plans are designed to be used as working documents within a business. A. Idea plans B. Informational plans C. Operational plans D. Invention plans

C

79. All of the following pertain to a private placement memorandum EXCEPT A. it is the official version of a business plan offered to potential investors. B. it is a legal document, and should be drafted by a lawyer. C. it is used to send your business plan to professional funding sources. D. it builds on a business plan, using information about the company, products and services, strategy and operations, and competition.

C

80. Which of the following is a business plan that provides information to potential licensees? A. Screening plan B. Business plan C. Invention plan D. Informational plan

C

85. All of the following are key things an influential person looks for in your business plan presentation EXCEPT A. your passion for the business. B. your expertise about the business and the plan. C. how many others are already working with you. D. how easy it would be to work with you.

C

89. Connie needs to know that all of the following are key components of a business plan she should include EXCEPT A. the market. B. the organization. C. the regulatory limitations. D. the financials.

C

26. Which of the following is NOT a business plan concern of bankers? A. Cash flow and cash cycle B. Asset/collateral base C. Long-term prospects D. Monitoring compliance

D

31. Which of the following statements about business plans is false? A. If you are seeking a banker, investor, or partner, a business plan is absolutely essential. B. If you are trying to run your business in an ambitious way, a business plan is vitally important. C. Typically, the higher-performing firms in any industry tend to be those who engage in planning. D. Having a business plan guarantees higher profits.

D

35. The length of an executive summary should be A. 20-50 words. B. 60-100 words. C. 5-10 words. D. 250-500 words.

D

41. A 30-second action-oriented description of a business designed to sell the idea of the business to another is called a(n) A. vision statement. B. mission statement. C. executive summary. D. elevator pitch.

D

47. Which of the following statements about executive summaries is true? A. Typically, they remain the least popular item to send people who ask about your business. B. The order for the topics in an executive summary is fixed. C. They do not give as much information about the business as the vision or mission statements do. D. They form the basis for additional discussion when someone asks for more detail.

D

49. The classic business plan contains _____ pages that include financials and appendixes. A. 15 B. 25 C. 60 D. 40

D

52. Which of the following is NOT a major component of a business plan? A. Company B. Markets C. Organization D. Regulations

D

54. In which paragraph of the cover letter do you thank the recipient for his/her consideration? A. First B. Second C. Third D. Fourth

D

58. A good marketing strategy focuses on all of the following ideas EXCEPT A. the overall strategy your firm pursues in the market. B. the sales plan. C. the long-term competitive plan. D. harvesting the business plan.

D

63. Growth plans often talk about all of the following EXCEPT A. longer-term partnerships to be sought. B. new markets to be pursued. C. ways to leverage the firm's assets. D. the day-to-day specifics of how sales are achieved.

D

68. A firm whose product or service is new to the industries or is itself creating a new industry is called A. a new entrant business. B. R&D. C. test marketing. D. a pioneering business.

D

70. A firm whose product or service is established elsewhere and is new to this market is called A. an R&D venture. B. a pioneering business. C. test marketing. D. a new entrant business.

D

74. Which of the following business plans is also called a "mini-plan"? A. Invention plan B. Idea plan C. Operational plan D. Screening plan

D

77. A key employee/partner plan is also referred to as all of the following EXCEPT A. summary plan. B. concept plan. C. idea plan. D. mini-plan.

D

81. Which of the following is a business plan designed to be used internally for management purposes? A. Screening plan B. Informational plan C. Invention plan D. Operational plan

D