Deck 5: Opportunity Recognition

Question 1

The key to succeeding is failing slowly.

Answer 1

False

Question 2

Data available about market characteristics,competitors,and the like are frequently inversely related to the real potential of an opportunity.

Answer 2

True

Question 3

High asset-intensive,high-margin businesses generate the highest profits and sustainable growth.

Answer 3

False

Question 4

According to the Nobel laureate late Herbert Simon,the recognition of patterns is a rational process that is simply logical.

Question 5

The development of the value chain and channels of distribution has led to the opportunity creation in ____.

A) financial services
B) telecommunications
C) tax and SEC laws
D) superstores

Question 6

A fragmented or emerging industry is one in which there are no information or knowledge gaps and one where competition is not profitable.

Question 7

According to research,what is the primary reason companies lose customers?

A) Product quality issues
B) Competitive offers
C) Customer service issues
D) Changing needs

Question 8

A strong management team recognizes the window of opportunity and develops competitive advantage to give a business additional leverage to exploit the market opportunity.

Question 9

The ability to build a business beyond a sole proprietor business to one that can grow with the right resources and people while building equity for you and your investors is known as ____.

A) leveraging
B) strategic differentiation
C) scalability
D) break-even analysis

Question 10

The primary reason that first-time entrepreneurs run out of cash at a faster rate than they bring in customers and profitable sales is that they have not focused on the right opportunity.

Question 11

To gain market entry with high value-added products or services in a growing market,it is best to underprice.

Question 12

According to the capital markets food chain for entrepreneurial ventures,the enterprise value of a company in the R&D stage venture is typically under $1 million.

Question 13

What opportunity is most likely to be created when proprietary or contractual advantage is the root of change?

A) Breakeven
B) Liquidity exit
C) Distributorship
D) Free cash flow

Question 14

The vast majority of radical innovations since World War II have come from new and small firms.

Question 15

The importance of an idea is often underrated,and the need for products or services that can be sold in enough quantity to real customers is overemphasized.

Question 16

Moore's Law and Metcalf's Law are most closely associated with:

A) technology sea change.
B) irrational exuberance.
C) value chain disruption.
D) venture investor criteria.

Question 17

Firms with lower customer acquisition costs allow room for increased profitability.

Question 18

According to Moore's law,the computing power of a chip decreases every 18 months.

Question 19

A real business opportunity is one in which the customers have a low sense of urgency and are unwilling to pay for a solution.

Question 20

Successful entrepreneurs realize that knowing what to do is more important than knowing what not to do.

Question 21

What annual growth rate is indicative of a thriving and expansive industry-one that creates niches for new entrants?

A) 5 to 10 percent
B) 10 to 20 percent
C) 30 to 50 percent
D) 10 to 25 percent

Question 22

Which of the following opportunities has the lowest potential?

A) An opportunity that targets customers who belong to a niche market
B) An opportunity that targets customers who are reachable
C) An opportunity that targets customers who are receptive to the product or service in fast growth markets
D) An opportunity that targets customers who are loyal to existing brands in slow growth markets

Question 23

Which of the following has research shown to be the most important determinant of competitive success?

A) Customer service
B) Product differentiation
C) Flexibility
D) Payback to the customer

Question 24

Attractive opportunities have the potential to yield a return on investment of _____ percent or more per year.

A) 25
B) 20
C) 15
D) 10

Question 25

_____ is defined as the period of revenue growth in the life cycle of target industry when the slope of the revenue growth is increasing.

Question 26

Ventures are considered attractive if they have low to moderate:

A) control over distribution.
B) control over prices.
C) sales growth.
D) capital requirements.

Question 27

When evaluating venture opportunities,which industry has the highest potential?

A) A highly concentrated industry
B) A mature industry
C) An industry with fragmented competition
D) An industry with perfect market competition

Question 28

Which of the following relates to effective opportunity recognition?

A) Doing it first
B) Doing it better
C) Cross-association
D) Asymmetry building

Question 29

________ is the process of linking knowledge in one field or marketplace with quite different technical,business,or market know-how from others.

Question 30

Attractive opportunities are ones that have potential for a moderate-to-strong degree of control over ____.

A) barriers to entry
B) exit mechanism
C) channels of distribution
D) strategic differentiation

Question 31

According to the late Herbert Simon,Nobel laureate,the _____ is a creative process which involves the creative linking,or cross-association,of two or more in-depth "chunks" of experience,know-how,and contacts.

Question 32

With regard to the capital markets,what is most critical in initial public offerings?

A) Audited documentation
B) Timing
C) Market adoption
D) The underwriter

Question 33

In the United States,the economy is dominated by _____ businesses.

Question 34

Finding a good _____ is the first of many steps in the process of converting an entrepreneur's creativity into an opportunity.

Question 35

_____ law states that computer chips double productivity every 18 months.

Question 36

Which of the following is true of market structures?

A) A fragmented industry is devoid of asymmetries.
B) An emerging market often contains vacuums.
C) Industries that are highly concentrated and perfectly competitive are typically more likely to succeed.
D) Markets where information or knowledge gaps exist are most likely to fail.

Question 37

Having a favorable window of opportunity is most closely related to:

A) barriers to entry.
B) exit mechanism.
C) channels of distribution.
D) strategic differentiation.

Question 38

Earnings before interest but after taxes (EBIAT)is driven by sales,profitability,and ____.

A) liquidity
B) cash flow
C) depreciation
D) asset intensity

Question 39

Which of the following functions is performed by the right brain?

A) Logical
B) Intuitive
C) Rational
D) Analytical

Question 40

High value for a company can be created by the potential to be a market leader and to capture at least _____ percent share of the market.

A) 10
B) 20
C) 5
D) 15

Question 41

For an entrepreneur to estimate and communicate sustainable value to potential stakeholders,an opportunity should have a minimum market size of _______.

Question 42

Superior opportunities solve a significant problem,remove a serious pain-point,or meet a significant want or need for which someone is willing to pay a(n)____.

Question 43

Ventures that generate after-tax profits of less than ________ percent are quite fragile.

Question 44

What minimum level of gross margin is characteristic of a superior opportunity?

Question 45

Briefly discuss the harvest issue of exit mechanism and strategy in evaluating venture opportunities.

Question 46

The context in which the sale or acquisition of a company occurs is largely driven by the _____ at that particular time.

Question 47

According to studies,the _____ side of the brain performs rational,logical functions.

Question 48

What are the five attributes of real business opportunities?

Question 49

The goal for a firm is to avoid declining revenue conditions and become the _____ provider.

Question 50

In the medical and life sciences,what is the minimum market size in sales opportunity seekers should be looking for?

Question 51

Venture opportunities that frequently target expensive-to-reach customers have _____ potential.

Question 52

The positive attributes of an opportunity diminish when the time to breakeven and achieve positive cash flow exceeds _____ years.

Question 53

_____ is defined as earnings before interest but after taxes (EBIAT)plus amortization (A)and depreciation (D)less spontaneous working capital requirements (WC)less capital expenditures (CAPex)or FCF = EBIAT + [A + D] - [+ or - WC] - CAPex.

Question 54

Briefly discuss profits after tax as a criterion in evaluating venture opportunities.

Question 55

Briefly discuss cost structure as a criterion in evaluating a high-potential venture opportunity.

Question 56

When evaluating venture opportunities in the medical and life sciences today,a minimum market size of _____ in sales is attractive.

Question 57

In general,when do business plans become obsolete?

Question 58

Of utmost importance with new venture creation is the fit of the _____ and the management team with the opportunity.

Question 59

Spontaneous,facilitated collaboration with no criticisms is a creative group process referred to as ____.

Question 60

Price-cutting and other competitive strategies in highly concentrated markets can present a significant ________ for new entrants.

Question 61

If an idea is not an opportunity,what is an opportunity?

Question 62

At a 20 percent gross margin,for every $1 increase in fixed costs (e.g. ,insurance,salaries,rent,and utilities),by how many dollars do sales need to increase just to stay even?

Question 63

Briefly discuss the risk/reward tolerance as a personal criterion in evaluating venture opportunities.