Test Bank for Ventures Feasibility Part 1

Entrepreneurship: Successfully Launching New Ventures Feasibility Analysis 1) Think Gum, the company profiled in the opening feature for Chapter 3, produces gum. The idea behind Think Gum is to produce a gum that includes ingredients that improve concentration and memory. Think Gum initial target market was: A) electronic game enthusiasts B) extreme sports enthusiasts C) college students D) athletics E) business professionals Answer: C 2) According to the textbook, which is the proper sequence of events in developing successful business ideas? A) opportunity recognition, feasibility analysis, development of a business plan B) feasibility analysis, opportunity recognition, development of a business plan C) development of a business plan, opportunity recognition, feasibility analysis D) feasibility analysis, development of a business plan, opportunity recognition E) development of a business plan, feasibility analysis, opportunity recognition Answer: A 3) ________ is the process of determining whether a business idea is viable. A) Feasibility analysis B) Opportunity recognition C) Likelihood analysis D) Achievability analysis E) Scenario analysis Answer: A 4) Janice McDaniel recently surveyed 200 of her classmates to get a sense of the demand for a new software product she is working on. Collecting data via a survey you administer yourself is referred to as: A) key research B) principal research C) primary research D) secondary research E) initial research Answer: C 5) Primary research is: A) original research and is collected by the entrepreneur B) research that is already collected and is available online C) research that is stored in an official government depository D) research that is collected by an impartial third party E) research that is collected by an industry trade association Answer: A 6) Trade journals, industry-related publications, government statistics, and competitors' Web sites are examples of: A) secondary research B) action research C) principal research D) legacy research E) vertical research Answer: A 7) Jennifer Burroughs is thinking about starting a firm in the upscale fashion industry. To get a full appreciation of the competitive nature of the industry, and how she might position her products, Jennifer has spent considerable time looking at industry-related publications, Hoover's Online, and ABI-Inform, which is a database that provides access to articles covering a widevariety of business and industry related issues. Jennifer is conducting: A) primary research B) secondary research C) action research D) temporary research E) purposeful research Answer: B 8) The What Went Wrong feature in Chapter 3 is titled "eBay Drop-Off Stores: How Feasible Were They? What was it about the potential feasibility of eBay Drop-Off stores that worried skeptics from the beginning? A) That the stores would not have enough "quality" merchandise to sell on eBay and that the variety of items the stores would be asked to sell would be too broad. B) That consumers were losing interest in eBay and that the stores would not have enough "quality" merchandise to sell on eBay. C) That eBay was attracting too many competitors and that consumers were becoming increasing Internet savvy making it easier for them to sell items online auctions themselves rather than relying on an intermediary like an eBay Drop Off store. D) That the variety of items the stores would be asked to sell would be too broad and that consumers were losing interest in online auctions. E) That consumers were losing interest in online auctions and that eBay was declining in terms of its popularity. Answer: A 9) Which of the following is not one of the four areas of feasibility analysis discussed in the textbook? A) product/service feasibility B) financial feasibility C) institutional feasibility D) organizational feasibility E) industry/market feasibility Answer: C 10) ________ feasibility is an assessment of the overall appeal of the product or service being proposed. A) Consumer B) Industry/market segment C) Industry/market D) Product/service E) Purchaser/end-user Answer: D 11) Does it make sense? Is it reasonable? Is it something consumers will get excited about? Does it take advantage of an environmental trend, solve a problem, or fill a gap in the marketplace? These are the types of questions asked during the ________ component of a compete feasibility analysis. A) financial feasibility B) industry/target market feasibility C) organizational feasibility D) concept feasibility E) product/service feasibility Answer: E 12) Which of the following is not a part of assessing the product/service feasibility of a business idea? A) buying intentions survey B) gumshoe research C) library research D) assessment of total start-up cash needed E) concept test Answer: D 13) The two components of product/service feasibility analysis are product/service desirability and: A) product/service value B) product/service durability C) market timeliness D) product/service affordability E) product/service demand Answer: E 14) The two components of product/service feasibility analysis are: A) product/service desirability and product/service demand for similar products B) product/service demand and total start-up cash needed C) product/service desirability and management prowess D) product/service desirability and product/service demand E) product/service demand and target market attractiveness Answer: D 15) A ________ involves showing a preliminary description of a product or service idea to prospective customers to gauge customer interest, desirability, and purchase intent. A) concept test B) product/service statement C) impression test D) idea prospectus E) idea test Answer: A 16) Which of the following items is typically not included in a concept statement? A) a description of the product or service being offered B) a description of how the product or service will be sold and distributed C) a description of how much money the new venture needs D) the benefits of the product or service E) the intended target market Answer: C 17) Brian James is in the process of developing an exciting new product in the electronic games industry. He'd like show a preliminary description of the product to industry experts and prospective customers to solicit their feedback. Brian should complete and distribute a: A) perception statement B) usability statement C) early adopter statement D) concept statement E) adoption risk-reward statement Answer: D 18) Which of the following is an incorrect approach to administering a concept test? A) The concept statement shouldn't exceed one page. B) After the concept statement is developed, it should be shown to at least 10 people. C) The best candidates to distribute a concept statement to are family and friends. D) If time permits, a concept statement should be used in a iterative manner and distributed to several groups of people. E) A short survey should be attached to the concept statement to solicit feedback. Answer: C 19) A ________ survey is an instrument that is used to gauge customer interest in a product or service. A) buying intentions B) purchase intent C) product demand D) consumer interest E) shopper intent Answer: A 20) Tim Hughes is distributing an instrument, which includes a concept statement with a short survey attached, to try to gauge customer interest in a product he is developing. Tim is distributing a: A) shopper intent survey B) consumer interest survey C) product demand survey D) buying intentions survey E) purchase intent survey Answer: D 21) A buying intentions survey is typically administered as part of ________ feasibility analysis. A) financial B) organizational C) industry/target market D) legal/regulatory E) product/service Answer: E 22) Shelly Jones is investigating the feasibility of a new tutoring service for high school students. To get a good handle on the potential demand for her service, Shelly is scrounging around for information wherever she can find it. She even spent two weeks volunteering as a math tutor at a local high school to see how students responded to her methods. Shelly is conducting ________ research. A) parallel B) derivative C) gumshoe D) secondary E) on-the-ground Answer: C 23) John Kite is investigating the feasibility of a new type of electronic game targeting middle school and high school-age boys. Which of the following is an example of "gumshoe research" that John could conduct to get a sense of the likely demand for his game? A) Leaf through several electronic games industry trade journals. B) Administer a buying intentions survey. C) Administer a concept test. D) Look at the Web sites of a number of companies that sell electronic games. E) Spend several days in electronic games arcades and stores to observe the types of games that attract the interest of middle school age and high school age boys. Answer: E 24) A(n) ________ is a group of firms producing a similar product or service. A firm's ________ is the limited portion of the industry that it goes after or to which it wants to appeal. A) target market, industry B) trade group, industry C) industry, trade group D) competitive group, target market E) industry, target market Answer: E 25) The two components of industry/target market feasibility analysis are: A) industry status/target market status B) industry attractiveness/target market attractiveness C) industry sufficiency/target market demand D) industry attractiveness/product/service demand E) industry evolution/target market attractiveness Answer: B 26) ________ feasibility analysis is an assessment of the overall appeal of the industry and market for the product or service being proposed. A) Institutional B) Financial C) Organizational D) Product/service E) Industry/target market Answer: E 27) A(n) ________ is a group of firms producing a similar product or service, such as computers, cars, or airplanes. A) trade group B) industry C) business group D) commerce group E) conglomerate Answer: B 28) Which of the following issues should be considered in industry/target market feasibility analysis? A) gaps in the marketplace B) financial rate of return C) resource sufficiency D) industry attractiveness E) industry trends Answer: D 29) Mintel, IBISWorld, and Standard & Poor's Net Advantage are databases most likely to be used during the ________ feasibility stage of the full feasibility analysis process. A) organizational B) financial C) political/legal D) industry/target market E) product/service Answer: D 30) Which of the following is not an attribute of an attractive industry? A) is large and growing B) is not crowded C) is fairly old rather than young and less mature D) is important to the customer E) has high operating margins Answer: C 31) A ________ market is a place within a larger market segment that represents a narrower group of customers with similar needs. A) secondary B) primary C) target D) parallel E) minor Answer: C 32) Which of the following statements about target markets is incorrect? A) There is a distinct difference between a firm's industry and its target market. B) The challenge in identifying an attractive target market is to find a market that's large enough for the proposed business but is yet small enough to avoid attracting larger competitors. C) By focusing on a target market, a firm can usually avoid head-to-head competition with industry leaders and can focus on serving a specialized market very well. D) A target market is a place within a larger market segment that represents a narrower group of customers with similar needs. E) Its generally easier to find good information about a target market than an industry as a whole. Answer: E 33) ________ is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch its business. A) Industry/market feasibility analysis B) Institutional feasibility analysis C) Financial feasibility analysis D) Organizational feasibility analysis E) Product/service feasibility analysis Answer: D 34) The two primary issues to consider in organizational feasibility analysis are: A) target market attractiveness and financial rate of return B) management prowess and resource sufficiency C) capital requirements and industry attractiveness D) concept testing and financial rate of return E) industry attractiveness and overall attractiveness of the investment Answer: B 35) The two primary issues to consider in organizational feasibility analysis are resource sufficiency and: A) market timeliness B) concept testing C) management prowess D) target market attractiveness E) total start-up cash needed Answer: C 36) A(n) ________ is the group of founders, key employees, and advisers that either manage or help manage a new business in its start-up years. A) opening team B) entrepreneurial team C) scout team D) launch team E) new venture team Answer: E