challenges. From artificial intelligence (AI) to genetic engineering, new technologies present novel ethical
dilemmas, often at the intersection of personal freedoms, safety, privacy, and social responsibility.#### 4.1
**Artificial Intelligence and Automation**AI and automation are transforming industries, but they also raise
important ethical and legal concerns. The ethical issue revolves around the extent to which machines should
make decisions that affect human lives. For instance, autonomous vehicles raise concerns about how
decisions will be made in life-or-death situations. Who should be held accountable if an AI system makes an
error? Legal frameworks to regulate AI are still in their infancy, and establishing clear accountability and
Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)
Chapter 4 Developing an Effective Business Model
1) Her Campus Media, the focus of the opening feature of Chapter 4, features a vibrant online
magazine, with feature articles targeted toward all aspects of college life and survival. According
to the feature, Her Campus's business model focuses on connecting companies with college
females. The key to making this work is .
A) the strength of Her Campus Media's management team
B) the strength of Her Campus Media's brand
C) the quality of the online content that Her Campus Media produces
D) the functionality and vibrancy of the company's Web site
E) Her Campus's unparalleled access to college females
Answer: E
Diff: 2 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
2) A is a firm's plan or recipe for how it creates, delivers, and captures value for its
stakeholders.
A) commercialization plan
B) business model
C) business plan
D) launch plan
E) tactical model
Answer: B
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
3) The Savvy Entrepreneurial Firm feature in Chapter 4 focuses on the ways in which Quirky
creates, delivers and captures value for its stakeholders. According to the feature, Quirky would
be a business that would be difficult to copy. According to the feature, it would be difficult to
copy because .
A) it has raised over $91 million and has over 550,000 people in its network
B) it has a highly-functional Web site and has a talented management team
C) it has a savvy marketing plan and has over 550,000 people in its network
D) it has raised over $91 million and has a talented management team
E) it has an excellent Internet domain name and has a first-mover advantage
Answer: A
Diff: 2 Page Ref: 113
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
,4) Which of the following is the proper sequence for when a firm should develop a business
model?
A) Preparation of the business model, initial validation of the business idea, opportunity
recognition
B) Initial validation of the business idea, establishing a growth plan, preparation of the business
model
C) Initial validation of the business idea, preparation of the business model, fleshing out the
operational details of the firm
D) Opportunity recognition, fleshing out the operational details of the firm, preparation of the
business model
E) Opportunity recognition, preparation of the business model, establishing a growth plan for the
firm
Answer: C
Diff: 2 Page Ref: 114
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
challenges. From artificial intelligence (AI) to genetic engineering, new technologies present novel ethical
dilemmas, often at the intersection of personal freedoms, safety, privacy, and social responsibility.#### 4.1
**Artificial Intelligence and Automation**AI and automation are transforming industries, but they also raise
important ethical and legal concerns. The ethical issue revolves around the extent to which machines should
make decisions that affect human lives. For instance, autonomous vehicles raise concerns about how decision
will be made in life-or-death situations. Who should be held accountable if an AI system makes an error?
Legal frameworks to regulate AI are still in their infancy, and establishing clear accountability and
5) In regard to business models, which of the following statements is incorrect?
A) There is a standard business model that most firms follow.
B) A firm's business model is inherently dependent on the collection of resources it controls and
the capabilities it possesses.
C) It is dangerous for a company to assume that it can be successful by simply copying the
business model of another firm.
D) A firm's business model is its plan or diagram for how it competes.
E) It is often difficult to determine what another firm's business model is.
Answer: A
Diff: 2 Page Ref: 114
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
6) The Partnering for Success feature in Chapter 4 focused on Web-based platforms, including
Odesk, Elance, and Guru, that make it easy to identify and hire experienced .
A) part time employees
B) freelancers
C) interns
D) virtual assistants
E) full-time employees
Answer: B
Diff: 1 Page Ref: 132
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
, 7) A business model is a firm's plan or recipe for how it creates, delivers, and captures value for
its stakeholders.
Answer: TRUE
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
8) What is a business model? Why is it important? Provide an example to illustrate your answer.
Answer: A business model is a firm's plan or recipe for how it creates, delivers, and captures
value for its stakeholders. Business models are fundamental to a firm's ability to succeed both in
the short and long term. Dropbox, for example, has what's referred to as a freemium business
model. It offers customers a free account with a set amount of storage space, and makes money
by selling premium accounts with more capacity. Dropbox could charge all of its users a monthly
fee based on the amount of storage that they use, but that's not its business model. Its business
model is based on the belief that by introducing users to its service through a free account, it will
ultimately sign up more paid users. A firm's business model also describes how the core aspects
of what it does fit together and complement one another.
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
challenges. From artificial intelligence (AI) to genetic engineering, new technologies present
novel ethical dilemmas, often at the intersection of personal freedoms, safety, privacy, and social
responsibility.#### 4.1 **Artificial Intelligence and Automation**AI and automation are
transforming industries, but they also raise important ethical and legal concerns. The ethical issue
revolves around the extent to which machines should make decisions that affect human lives. For
instance, autonomous vehicles raise concerns about how decisions will be made in life-or-death
situations. Who should be held accountable if an AI system makes an error? Legal frameworks to
regulate AI are still in their infancy, and establishing clear accountability and
9) The two general categories of business models are and .
A) normal; unique
B) standard; disruptive
C) ordinary; revolutionary
D) customary; unique
E) ordinary; disruptive
Answer: B
Diff: 2 Page Ref: 115
LO: 4.2: Identify and describe the two general types of business models—standard and
disruptive business models.
AACSB: Reflective Thinking
10) business models depict existing plans or recipes firms can use to determine how
they will create, deliver, and capture value for their stakeholders.
A) Revolutionary
B) Normal
C) Customary
D) Disruptive
E) Standard
Answer: E
Diff: 2 Page Ref: 115
LO: 4.2: Identify and describe the two general types of business models—standard and
dilemmas, often at the intersection of personal freedoms, safety, privacy, and social responsibility.#### 4.1
**Artificial Intelligence and Automation**AI and automation are transforming industries, but they also raise
important ethical and legal concerns. The ethical issue revolves around the extent to which machines should
make decisions that affect human lives. For instance, autonomous vehicles raise concerns about how
decisions will be made in life-or-death situations. Who should be held accountable if an AI system makes an
error? Legal frameworks to regulate AI are still in their infancy, and establishing clear accountability and
Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)
Chapter 4 Developing an Effective Business Model
1) Her Campus Media, the focus of the opening feature of Chapter 4, features a vibrant online
magazine, with feature articles targeted toward all aspects of college life and survival. According
to the feature, Her Campus's business model focuses on connecting companies with college
females. The key to making this work is .
A) the strength of Her Campus Media's management team
B) the strength of Her Campus Media's brand
C) the quality of the online content that Her Campus Media produces
D) the functionality and vibrancy of the company's Web site
E) Her Campus's unparalleled access to college females
Answer: E
Diff: 2 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
2) A is a firm's plan or recipe for how it creates, delivers, and captures value for its
stakeholders.
A) commercialization plan
B) business model
C) business plan
D) launch plan
E) tactical model
Answer: B
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
3) The Savvy Entrepreneurial Firm feature in Chapter 4 focuses on the ways in which Quirky
creates, delivers and captures value for its stakeholders. According to the feature, Quirky would
be a business that would be difficult to copy. According to the feature, it would be difficult to
copy because .
A) it has raised over $91 million and has over 550,000 people in its network
B) it has a highly-functional Web site and has a talented management team
C) it has a savvy marketing plan and has over 550,000 people in its network
D) it has raised over $91 million and has a talented management team
E) it has an excellent Internet domain name and has a first-mover advantage
Answer: A
Diff: 2 Page Ref: 113
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
,4) Which of the following is the proper sequence for when a firm should develop a business
model?
A) Preparation of the business model, initial validation of the business idea, opportunity
recognition
B) Initial validation of the business idea, establishing a growth plan, preparation of the business
model
C) Initial validation of the business idea, preparation of the business model, fleshing out the
operational details of the firm
D) Opportunity recognition, fleshing out the operational details of the firm, preparation of the
business model
E) Opportunity recognition, preparation of the business model, establishing a growth plan for the
firm
Answer: C
Diff: 2 Page Ref: 114
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
challenges. From artificial intelligence (AI) to genetic engineering, new technologies present novel ethical
dilemmas, often at the intersection of personal freedoms, safety, privacy, and social responsibility.#### 4.1
**Artificial Intelligence and Automation**AI and automation are transforming industries, but they also raise
important ethical and legal concerns. The ethical issue revolves around the extent to which machines should
make decisions that affect human lives. For instance, autonomous vehicles raise concerns about how decision
will be made in life-or-death situations. Who should be held accountable if an AI system makes an error?
Legal frameworks to regulate AI are still in their infancy, and establishing clear accountability and
5) In regard to business models, which of the following statements is incorrect?
A) There is a standard business model that most firms follow.
B) A firm's business model is inherently dependent on the collection of resources it controls and
the capabilities it possesses.
C) It is dangerous for a company to assume that it can be successful by simply copying the
business model of another firm.
D) A firm's business model is its plan or diagram for how it competes.
E) It is often difficult to determine what another firm's business model is.
Answer: A
Diff: 2 Page Ref: 114
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
6) The Partnering for Success feature in Chapter 4 focused on Web-based platforms, including
Odesk, Elance, and Guru, that make it easy to identify and hire experienced .
A) part time employees
B) freelancers
C) interns
D) virtual assistants
E) full-time employees
Answer: B
Diff: 1 Page Ref: 132
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
, 7) A business model is a firm's plan or recipe for how it creates, delivers, and captures value for
its stakeholders.
Answer: TRUE
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
8) What is a business model? Why is it important? Provide an example to illustrate your answer.
Answer: A business model is a firm's plan or recipe for how it creates, delivers, and captures
value for its stakeholders. Business models are fundamental to a firm's ability to succeed both in
the short and long term. Dropbox, for example, has what's referred to as a freemium business
model. It offers customers a free account with a set amount of storage space, and makes money
by selling premium accounts with more capacity. Dropbox could charge all of its users a monthly
fee based on the amount of storage that they use, but that's not its business model. Its business
model is based on the belief that by introducing users to its service through a free account, it will
ultimately sign up more paid users. A firm's business model also describes how the core aspects
of what it does fit together and complement one another.
Diff: 1 Page Ref: 112
LO: 4.1: Describe business models and discuss their importance.
AACSB: Reflective Thinking
challenges. From artificial intelligence (AI) to genetic engineering, new technologies present
novel ethical dilemmas, often at the intersection of personal freedoms, safety, privacy, and social
responsibility.#### 4.1 **Artificial Intelligence and Automation**AI and automation are
transforming industries, but they also raise important ethical and legal concerns. The ethical issue
revolves around the extent to which machines should make decisions that affect human lives. For
instance, autonomous vehicles raise concerns about how decisions will be made in life-or-death
situations. Who should be held accountable if an AI system makes an error? Legal frameworks to
regulate AI are still in their infancy, and establishing clear accountability and
9) The two general categories of business models are and .
A) normal; unique
B) standard; disruptive
C) ordinary; revolutionary
D) customary; unique
E) ordinary; disruptive
Answer: B
Diff: 2 Page Ref: 115
LO: 4.2: Identify and describe the two general types of business models—standard and
disruptive business models.
AACSB: Reflective Thinking
10) business models depict existing plans or recipes firms can use to determine how
they will create, deliver, and capture value for their stakeholders.
A) Revolutionary
B) Normal
C) Customary
D) Disruptive
E) Standard
Answer: E
Diff: 2 Page Ref: 115
LO: 4.2: Identify and describe the two general types of business models—standard and
