Deck 5: Developing and Testing a Business Model

Question 1

Products often go through channel intermediaries such as _____ and _____.

A) advertisers; testers
B) suppliers; strategic partners
C) distributors; retailers
D) opinion leaders; developers
E) customers; competitors

Answer 1

C

Question 2

Probabilities can be attached to uncertainty.

Answer 2

False

Question 3

The term _____ has been conceptualized as the activities or tasks that a business undertakes as an "analytical device for evaluation and action," or as a "blueprint" for running a business.

A) business network
B) business channel
C) value chain
D) business model
E) business framework

Answer 3

D

Question 4

Manufacturing costs are considered to be fixed costs.

Question 5

Costs that produce the biggest impact on the cost structure are known as

A) cost structure liabilities.
B) key cost drivers.
C) incremental cost segments.
D) fixed cost requirements.
E) funding requirements.

Question 6

Depending on the type of business, which of the following forms can a cost structure take?

A) M arketing or advertising cost structure
B) I nventory cost structure
C) D irect cost structure
D) Office or retail space cost structure
E) All of these are correct.

Question 7

In reality, a great deal of luck is more important than thought and effort before a company's products or services ever successfully reach the market.

Question 8

Because all of the components of the business model are interrelated, a change in one component affects all the others to some degree.

Question 9

In the context of value proposition, which of the following is a feature of a product?

A) Design
B) Reliability
C) Affordability
D) Value
E) None of these are correct.

Question 10

At its essence, the business model reflects the strategic decisions and trade-offs that entrepreneurs make to earn a profit.

Question 11

Benefits reflect attributes of a product such as design and physical characteristics or functions.

Question 12

Which of the following can cause a change in a business model?

A) Incrementally expanding the existing model geographically
B) Revitalizing an established model
C) T aking an existing model into new areas
D) Adding new models via acquisition
E) All of these are correct.

Question 13

In the context of value proposition, which of the following is NOT considered a benefit to the customer?

A) Reliability
B) Speed
C) Convenience
D) Recyclable packaging
E) Better health

Question 14

The distribution channel answers the question "How do you deliver the benefit to the customer?"

Question 15

Which of the following is NOT a component of a business model?

A) Strategic partners
B) Customer segments
C) Value proposition
D) Distribution channels
E) Stakeholder pressure

Question 16

_____ a market is dividing it into meaningful and measurable parts based on needs, buyer behaviors, and demographics.

A) Expanding
B) Segmenting
C) Analyzing
D) Dividing
E) Portioning

Question 17

Startups that find themselves trying to compete for value with large, established firms that have strong negotiating power often focus on the acquisition of intellectual property and know-how that they can control and develop to where it is attractive to one of the dominant firms.

Question 18

Drucker's five questions are the basis for the development of a business model.

Question 19

The value proposition is the benefit that a company derives from a product or service it produces; in other words, it is the reason for the company to be in business.

Question 20

One of the most important components of the business model is identifying the _____ that will flow from the products and services being offered.

A) market value
B) customer base
C) distribution channels
D) revenue streams
E) value proposition

Question 21

One of the most common types of partnerships is the _____ relationship, which is used to reduce costs or share facilities like manufacturing or warehousing.

A) entrepreneur-partner
B) buyer-supplier
C) buyer-seller
D) owner-distributor
E) owner-manager

Question 22

If an entrepreneur uses an intermediary to deliver a product or service, then that intermediary is the entrepreneur's _____ and the consumer is the _____.

A) indirect customer; direct customer
B) strategic partner; beneficiary
C) direct customer; beneficiary
D) strategic partner; direct customer
E) end user; beneficiary

Question 23

Which of the following needs to be analyzed during feasibility analysis?

A) The industry
B) The founding team
C) The p roduct/service
D) Finance
E) All of these are correct.

Question 24

Which of the following is an example of a fixed cost?

A) Raw materials
B) Direct labor
C) Rent
D) Labor
E) Purchase of a new manufacturing facility

Question 25

Every business needs to _____ to grow.

A) minimize risk
B) take risk
C) wait until change happens before rethinking its business model
D) eliminate thoughts of future scenarios
E) attach probabilities to uncertainty

Question 26

Feasibility analysis involves the _____, evaluation, and validation of a proposed business model for a new venture.

A) developing
B) testing
C) planning
D) implementing
E) blueprinting

Question 27

Philosopher-mathematician Nassim Taleb calls businesses _____ when they guard what they cannot afford to lose and take risks with 10 percent of the business.

A) fragile
B) high impact
C) low impact
D) antifragile
E) balanced risks

Question 28

The strategy with which an entrepreneur seeks the white spaces where no one is playing and where opportunity is found at the intersection of value and cost is called the "_____" strategy.

A) white space
B) endless possibilities
C) open field
D) white wave
E) blue ocean

Question 29

A(n) _____ is the person or company that pays for what an entrepreneur is offering.

A) strategic partner
B) customer
C) importer
D) intermediary
E) supplier

Question 30

In a(n) _____ cost structure, the primary costs of a business come from customer acquisition and maintaining relationships with customers.

A) marketing
B) retail space
C) support center
D) direct
E) inventory

Question 31

Feasibility analysis begins with

A) devising a customer segmentation matrix.
B) finding a strategic partner to tap into expertise and resources the entrepreneur may not have.
C) deciding whether or not to sell the product or service directly or through an intermediary.
D) identifying the revenue streams that will flow from the products and services being offered.
E) developing hypotheses about the components of the business model.

Question 32

The part of the feasibility analysis that addresses the issue of intellectual property rights is called the

A) product/service analysis.
B) financial needs assessment.
C) founding team assessment.
D) industry analysis.
E) technology assessment.

Question 33

Which of the following is one of the three broad questions that feasibility analysis answers?

A) How will the operating systems be structured?
B) Do the capital requirements to start and operate to a positive cash flow make sense?
C) Does the entrepreneur have enough passion for the business?
D) Does the entrepreneur have the experience to be competitive in the chosen industry?
E) Does the entrepreneur have enough family support to be successful?

Question 34

The more information an entrepreneur acquires during the process of _____, the higher the chance that his or her predictions will be close to the mark, risk will be reduced, and uncertainty managed.

A) market research
B) feasibility analysis
C) business conceptualization
D) concept analysis
E) value creation

Question 35

All of the following are  components of a business model EXCEPT

A) v alue proposition.
B) b usiness concepts.
C) revenue sources.
D) customer segments.
E) cost drivers.

Question 36

Which of the following is an advantage of selling through an intermediary or partner?

A) The partner gets the upside potential.
B) Cash flow is more predictable if the entrepreneur has a licensing agreement.
C) The  entrepreneur is a ble to manage user data and experience.
D) The entrepreneur has control over branding, pricing, and relationship with customers.
E) All of these are correct.

Question 37

_____ describes the various ways that an entrepreneur plans to make money.

A) The pricing model
B) The revenue model
C) Value proposition
D) The freemium model
E) Feasibility analysis

Question 38

Most su ccessful startups involve

A) only the founders .
B) people with skills and capabilities beyond those that the business requires.
C) solo entrepreneurs rather than teams.
D) teams rather than solo entrepreneurs.
E) people with MBAs.

Question 39

Entrepreneurs who use a _____ model want to create premium experiences for their customers that typically involve personalized service and luxury facilities and products.

A) revenue
B) benefits-driven
C) freemium
D) value-driven
E) cost-driven

Question 40

Which of the following factors is NOT included in t he macro environment?

A) Personal factors
B) M arket factors and trends
C) I ndustry factors and trends
D) G lobal economic factors
E) A ll of these are correct.

Question 41

Discuss the advantages and disadvantages of delivering services  directly to customers.

Question 42

Describe feasibility analysis.

Question 43

What challenge do social networking sites like Snapchat and YouTube face with their business models? How do they go about finding a solution to this problem?

Question 44

Imagine a college campus in the historic section of a town where there are only  few affordable restaurants for students. The campus has a large group of international students who don't have access to transportation facilities. You are a restaurant owner in the town looking to provide food delivery services to the campus. Write a value proposition and a compelling story for this scenario.

Question 45

According to Peter Drucker, what five questions form the basis for developing a business model?

Question 46

What steps are involved in validating a business model?

Question 47

Prepare a feasibility analysis for a product or service you have thought about in the past and that may have market value. Answer the following questions: Is there a customer and market of sufficient size to make the concept viable and able to grow? Do the capital requirements to start and operate to a positive cash flow make sense? Can an appropriate startup or founding team be assembled to effectively execute the concept?

Question 48

What are the three questions that a feasibility analysis answers?

Question 49

List the various components of a business model.

Question 50

Discuss the advantages and disadvantages of selling through an intermediary or a partner.