BMGT 2309 Small Business Management Fall 2008 Due Date: September 15, 2008
Lesson Two Chapter 3 Getting Started
INSTRUCTIONS: Follow the instructions found on the course website including creating an answer sheet, putting your name and the course name on the answer sheet, using complete sentences for essay and/or discussion questions. Submission of this lesson indicates that you have read and understand ALL of the information found on the course website. Multiple Choice – 4 points each 1. Which of the following is a criteria used to judge whether a new business idea is a good investment opportunity? a. The market need is defined so clearly that timing of introduction is unimportant. b. The proposed business can achieve a durable or sustainable competitive advantage. c. The return on investment must be just high enough to allow for errors and mistakes. d. The opportunity must be financially rewarding, regardless of the entrepreneur's abilities. 2. Attractiveness of a target market ____ as the time required to breakeven in the market ____. a. increases, decreases b. increases, increases c. decreases, decreases d. is unchanged, decreases Questions that a would-be entrepreneur should consider before deciding to implement a startup include all but which of the following? a. Will I acquire the benefit of the experience of the prior owner? b. How do I identify a genuine opportunity? c. What are some of sources for new ideas? d. What are the different types of startup ideas I should consider? What type of idea accounts for the largest number of startups? a. A technically new process b. Performing an old function in a new and improved way c. Using prior work experience as a basis for starting a new business d. Providing customers with a product or service absent in their market but available elsewhere According to a study by the National Federation of Independent Business Foundation, the most common source of new product ideas for small business startups is a. prior work experience. b. personal interests and hobbies. c. a chance happening. d. existing records of a business. All of the following are specified by Michael Porter as factors that determine the nature and degree of competition in an industry except a. threat of new competitors. b. rivalry among existing competitors. c. industry cost/price structure. d. bargaining power of buyers and/or suppliers.
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An increase in the rivalry among existing competitors in a target market a. increases both the attractiveness and the profitability of the target market. b. decreases both the attractiveness and the profitability of the target market. c. decreases the attractiveness and increases the profitability of the target market. d. increases the attractiveness and decreases the profitability of the target market. The two broad strategies for building a competitive advantage are the ____ strategies. a. cost-based and differentiation-based b. price-advantage and cost-advantage c. marketing-advantage and price-advantage d. focus-advantage and marketing-advantage Containers Etc. manufactures household containers. In contrast to traditional market designs, all of Containers Etc.'s products are microwaveable and child-proof and come in an assortment of 35 colors. Accordingly, Containers Etc. is pursuing a ____ strategy. a. product-based b. differentiation-based c. concept-based d. efficiency-based Elegant Writings, a small creator of high-quality fountain pens, segmented its market into five distinct groups of consumers. The firm then decided to target only the segment labeled "affluent business executives." By doing so, the management hopes to establish a small, viable market for its products while simultaneously avoiding direct competition with larger competitors. Elegant Writings is following a ____ strategy. a. selective b. market focus c. focus d. cost-based Which of the following is a cause for erosion of a small firm's focus strategy? a. Consumer demand grows b. New firms reconstruct the industry c. Differences between segments grow larger d. The focus strategy is imitated A computer technician recognizing a need for more atheistically pleasing computers would be said to have entrepreneur __________. a. Technology b. Alertness c. Strategy d. Rivalry
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Discussion Question – 12 points Compare the different approaches to deliberate search for new venture ideas. Exploring the Web – 40 points Be aware that websites may have been updated since the textbook was published and since the lesson was written. Usually the information you are looking for is still available, but you may have to navigate the website a bit to locate it. If you have questions about this, please contact your instructor. 1. Reread what this chapter has to say about the external and internal analysis that might help you evaluate a new venture opportunity. To assess the impact of these factors on your business idea, go to http://www.bplans.com/common/successquiz/ and take the quiz and print out your score. What does your score imply for the future of your business? If you do not have a business idea, take the quiz based on a small business you are familiar with. (15 points)
2. The editors of Inc. publish a series of “How-To” guides on the magazine’s Web site (www.inc.com) to help business owners start, run, and grow successful businesses. Go to the “How-To” guide on finance and capital (www.inc.com/guides/finance/20797.html) a. There are nine categories of articles on this site – Survey the Field, Bootstrap Your New Business, Inspiration from the INC500, etc . From among those listed on this Web site, read at least five articles - each from a different category - on raising startup capital. Write a brief description of the information in the articles you selected being sure to list the articles you read and which category the article is in and summarize the best of the tips for raising startup capital. This should be written in your own words – not copied from the articles. (5 points for each article)
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