Revision Sheet

Choose the suitable answer:

1) A solid business plan ________.
A) forces potential entrepreneurs to look at their business idea in the harsh light of reality
B) requires a potential entrepreneur to assess the venture's chances of success more objectively
C) helps prove to outsiders, such as potential lenders and investors, that a business idea can be
successful
D) All of the above

2) The ________ test that a business plan must pass to attract financing from lenders and
investors involves proving that a market for the company's product or service actually does exist
and that the company actually can build it for the cost estimates included in the plan.
A) reality
B) competitive
C) value
D) profitability

3) The competitive test that a business plan must pass to attract financing from lenders and
investors involves proving ________.
A) that the company can gain a competitive advantage over its key competitors
B) that the business venture will provide lenders and investors a high probability of repayment or
an attractive rate of return
C) that a market for the company's product or service actually does exist and that the company
can actually build it for the cost estimates included in the plan
D) that the industry in which the business will compete is growing faster than the overall
economy and has room for more competitors

4) The value test that a business plan must pass to attract financing from lenders and investors
involves proving ________.
A) that the company can gain a competitive advantage over its key competitors
B) that the business venture will provide lenders and investors a high probability of repayment or
an attractive rate of return
C) that a market for the company's product or service actually does exist and that the company
can actually build it for the cost estimates included in the plan
D) that the industry in which the business will compete is growing faster than the overall
economy and has room for more competitors

5) The ________ is also known as the "elevator pitch" and is written last, but is included as the
first part of the business plan and should summarize all the relevant points in about two pages.
A) loan proposal
B) business history
C) business profile
D) executive summary

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6) ________ involves developing a game plan to guide a company as it strives to accomplish its
mission, goals, and objectives to keep it on its desired course.
A) Competitive advantage
B) Mission
C) Strategic management
D) Market segmentation

7) The value proposition that sets a company apart from its competitors and gives it a unique
position in the market, superior to its competition, is its ________.
A) mission statement
B) competitive advantage
C) competitive profile
D) strategic plan

8) Which of the following was not identified as a way for the typical small business to establish a
competitive advantage?
A) Lowering prices
B) Providing higher quality goods or services
C) Improving customer service
D) Doing whatever the company does for its customers better than its competitors

9) ________ are positive internal factors that contribute toward accomplishing the company's
mission, goals, and objectives, while ________ are negative internal factors that inhibit the
accomplishment of a firm's mission, goals, and objectives.
A) Strengths; weaknesses
B) Weaknesses; strengths
C) Opportunities; threats
D) Threats; opportunities

10) Your ________ competitors offer the same products and services, and customers often
compare prices, features, and deals from these competitors as they shop.
A) significant
B) direct
C) indirect
D) All of the above

11) ________ are the broad, long-range attributes the small business seeks to accomplish;
________ are the more specific targets for performance.
A) Goals; objectives
B) Goals; strategies
C) Objectives; goals
D) Strategies; goals

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12) More women entering the workforce is an example of a ________ change.
A) economic
B) demographic
C) technological
D) sociocultural

14) Printed newspapers have seen their readership rates decline as new generations of potential
readers turn to their iPads and smartphones for sources of news. This is an example of ________.
A) threat of substitutes
B) bargaining power of buyers
C) bargaining power of suppliers
D) rivalry among existing firms

15) Prototypes usually point out potential problems in a product's ________.

A) price
B) marketing
C) design
D) color

16) 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

17) Time out of cash is relevant to ________ analysis.

A) strategic
B) business model
C) business plan
D) financial feasibility

18) The Business Model Canvas has ________ elements.

A) 3
B) 5
C) 9
D) 6

19) The technique of ________ uses three columns that allow the entrepreneur to weigh both the
advantages and the disadvantages of a particular decision and work to maximize the variables
that support it while minimizing those that work against it.
A) force-field analysis
B) TRIZ
C) brainstorming

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D) mind mapping

20) Steps in the patent process include ________.

A) establishing whether it is a novelty
B) documenting and verifying the date the idea was first conceived
C) searching existing patents
D) All of the above

Indicate whether the following statements are true or false.

1) A business plan is a written summary of an entrepreneur's proposed venture, its operational
and financial details, its marketing opportunities and strategy, and its managers' skills and
abilities.

2) A well-prepared business plan forces an entrepreneur to assess the venture's chances of

success more objectively.

3) To get external financing, an entrepreneur's business plan must pass the reality test, the
competitive test, and the value test with potential lenders and investors.

4) The competitive test that a business plan must pass to attract financing for lenders and
investors involves proving to them that the venture offers a high probability of repayment or an
attractive rate of return.

5) The value test that a business must pass to attract financing from lenders and investors
involves proving to them that the venture offers a high probability of repayment or an attractive
rate of return.

6) Although building a business plan does not guarantee an entrepreneur's success, it does
increase his or her chances of succeeding in business.

7) Before presenting a business plan to potential lenders and investors, an entrepreneur must be
well informed and well prepared.

8) A business plan should contain certain basic elements, but it should also be tailored to the
individual company by emphasizing its particular personality and reflecting the entrepreneur's
excitement for the business opportunity.

9) In the business and industry profile section of the business plan, the entrepreneur should
provide information on the size of the market, growth trends, and the relative economic and
competitive strength of the industry's major players.

10) The executive summary of a business plan should summarize all of the relevant points of the

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proposed venture and should be concise — no more than one page.

11) In a business plan, both company goals and objectives should relate to the company's
mission.

12) The three components of intellectual capital are human, structural, and customer.

13) Conducting a SWOT analysis for her/his own business and for her/his key competitors
allows an entrepreneur to gain a competitive edge by matching her/his company's strengths
against her/his competitors' weaknesses.

14) A feasibility analysis is the process of determining whether an entrepreneur's idea is a viable
foundation for creating a successful business.

15) An effective tool used to help assess ideas is the idea sketch pad.

16) A product feasibility analysis answers the question, "Are customers willing to purchase our
goods and services?"

17) Time out of cash is one of the four major elements included in a financial feasibility analysis.

18) Having access to capital is called entrepreneurial readiness.

19) When "brainstorming," individuals should be encouraged to use "idea hitchhiking," or

building new ideas on those already suggested.

20) Mind-mapping is a graphical technique that encourages thinking on both sides of the brain,
visually displays the various relationships among ideas, and improves the ability to view a
problem from many sides.

21) Force-field analysis is a useful technique for evaluating the forces that support and oppose a
proposed change.

22) TRIZ is an acronym for a systematic approach to help solve technical problems based on the
study of hundreds of the most innovative patents.

23) The first step in assessing industry attractiveness is to paint a picture of the industry in broad
strokes, assessing it from a "macro" level.

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Essay:
1) Explain at least two functions or purposes of preparing a business plan.

2) To get external financing, an entrepreneur's plan must pass three tests with potential lenders
and investors. List and briefly explain all three.

3) What is strategic management? What role does a strategic plan play in a small company?

4) Assume that you are a consultant to a small independent hardware store in a town where a
retail giant such as Wal-Mart, Kmart, or Target is about to open. The large retailer sells many of
the same items the small hardware store sells, but at lower prices. What advice would you offer
the owner concerning the hardware store's strategy? Explain.

5) What is strategy? Describe the three basic strategies small companies can choose from: cost-
leadership, differentiation, and focus. Explain the conditions under which each works, its
benefits, and its pitfalls.

6) How does the threat of substitutes affect an industry's structure?

7) What are the four major elements to be included in a financial feasibility analysis?

8) Explain the concept of a value proposition as per the Business Model Canvas.

Good Luck

Dr.Noha Anan