MGMT 3850 CHAPTER 4 CONDUCTING A FEASIBILITY ANALYSIS AND CRAFTING A WINNING BUSINESS PLAN

MGMT 3850 CHAPTER 4 CONDUCTING A FEASIBILITY ANALYSIS AND
CRAFTING A WINNING BUSINESS PLAN
Essentials of Entrepreneurship & Small Business Mgmt., 7e (Scarborough)
Chapter 4 Conducting a Feasibility Analysis and Crafting a Winning Business Plan

1) The process of determining whether an entrepreneur's idea is a viable foundation for creating a
successful business is known as a:
A) business plan.
B) strategic analysis.
C) industry analysis.
D) feasibility analysis.
Answer: D
Diff: 1 Page Ref: 128
AACSB: Analytic Skills
Learning Obj.: 1

2) Porter's five forces model assesses industry attractiveness by surveying these five factors:
A) potential entrants, suppliers, buyers, substitutes, and rivalry among existing firms.
B) potential entrants, suppliers, buyers, similar products, and rivalry among existing firms.
C) potential entrants, suppliers, raw materials, substitutes, and rivalry among existing firms.
D) potential entrants, competitors, buyers, substitutes, and rivalry among existing firms.
Answer: A
Diff: 3 Page Ref: 129-131
AACSB: Analytic Skills
Learning Obj.: 1

3) The strongest of the five forces in most industries is:
A) rivalry among companies competing in the industry.
B) bargaining power of buyers.
C) threat of new entrants to the industry.
D) threat of substitute products or services.
Answer: A
Diff: 2 Page Ref: 130
AACSB: Analytic Skills
Learning Obj.: 1

4) Switching costs, the number of buyers, and if the items represent a relatively small portion of
the cost of finished products are key considerations regarding the:
A) threat of new entrants to the industry.
B) rivalry among companies competing in the industry.
C) bargaining power of suppliers.
D) bargaining power of buyers.
Answer: D
Diff: 2 Page Ref: 130
AACSB: Analytic Skills
Learning Obj.: 1

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,5) Low capital requirements, cost advantages that are not related to company size, and the lack of
brand loyalty are considerations regarding the:
A) threat of new entrants to the industry.
B) threat of substitute products.
C) bargaining power of buyers.
D) rivalry among companies competing in the industry.
Answer: A
Diff: 2 Page Ref: 131
AACSB: Analytic Skills
Learning Obj.: 1

6) Products or services that may be sought as alternative solutions-such as purchasing tax
planning software rather than paying a CPA to assist with preparing your taxes-are referred to as:
A) buyers products.
B) rivalry products.
C) substitute products.
D) competitive alternatives.
Answer: C
Diff: 3 Page Ref: 131
AACSB: Analytic Skills
Learning Obj.: 1

7) The force from the five forces model that considers economies of scale, initial capital
requirements, cost advantages relevant to company size, and lack of brand loyalty is the:
A) bargaining power of suppliers.
B) threat of new entrants.
C) threat of substitute products or services.
D) rivalry among companies competing.
Answer: B
Diff: 3 Page Ref: 131
AACSB: Analytic Skills
Learning Obj.: 1

8) The primary purpose of the five forces matrix is to:
A) assign values to each of the five elements.
B) provide a graphic.
C) list the five forces in rank order.
D) assess the five forces as compared to a standard value.
Answer: A
Diff: 2 Page Ref: 132, Table 4.1
AACSB: Analytic Skills
Learning Obj.: 1




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,9) The process in which entrepreneurs test their business models on a small scale before
committing serious resources to launch a business that might not work is known as:
A) business modeling.
B) business prototyping.
C) business planning.
D) product or service feasibility analysis.
Answer: B
Diff: 2 Page Ref: 136
AACSB: Analytic Skills
Learning Obj.: 1

10) An analysis that determines the degree to which a product or service idea appeals to potential
customers and identifies the resources necessary to produce the product or provide the service is
referred to as:
A) product or service feasibility analysis.
B) business prototyping.
C) business plan analysis.
D) financial feasibility analysis.
Answer: A
Diff: 1 Page Ref: 133
AACSB: Analytic Skills
Learning Obj.: 1

11) Conducting ________ research involves collecting data firsthand and analyzing it while
________ research involves gathering data that has already been complied and is available.
A) primary; secondary
B) secondary; primary
C) primary; industry
D) product; secondary
Answer: A
Diff: 1 Page Ref: 135
AACSB: Analytic Skills
Learning Obj.: 1

12) One form of primary research is:
A) to review published articles.
B) Internet research.
C) library research.
D) a focus group.
Answer: D
Diff: 1 Page Ref: 135
AACSB: Analytic Skills
Learning Obj.: 1




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, 13) The financial feasibility analysis takes these aspects into consideration:
A) capital requirements, human resources, and return on investment.
B) capital requirements, estimated earnings, and return on investment.
C) capital requirements, estimated earnings, and return on sales.
D) capital requirements, estimated earnings, and return on owner's equity.
Answer: B
Diff: 2 Page Ref: 137
AACSB: Analytic Skills
Learning Obj.: 1

14) The final aspect of the financial feasibility analysis combines the estimated earnings and the
capital requirements to determine the:
A) estimated earnings.
B) total capital requirements.
C) net profit.
D) rate of return on the capital invested.
Answer: D
Diff: 2 Page Ref: 137
AACSB: Analytic Skills
Learning Obj.: 1

15) The primary purpose of a business plan is to:
A) attract lenders and investors.
B) enable an entrepreneur to take her company public.
C) guide a company by charting its future course and devising a strategy for success.
D) meet SEC and other legal requirements designed to protect lenders and investors.
Answer: C
Diff: 2 Page Ref: 138
AACSB: Analytic Skills
Learning Obj.: 2

16) A business plan is a written summary of:
A) an entrepreneur's proposed business venture.
B) a business venture's operational, financial, and marketing details.
C) the skills and abilities of a business venture's managers.
D) All of the above
Answer: D
Diff: 1 Page Ref: 138
AACSB: Communication
Learning Obj.: 2




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