Building Your Dream 10Th Canadian Edition By Walter Good – Test Bank

 

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Sample Test

Stage 03

Market Feasibility Study

 

 

Multiple Choice Questions

1.   The first comprehensive plan you need in contemplating any new venture is called:
A.A profit-loss statement
B. A financial projection report
C. A feasibility study
D. A business plan

If the feasibility study indicates that the business idea has potential, then you can proceed to write a business plan.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

2.   A typical feasibility study includes all of the following areas, except:
A.The concept for your venture
B. The technical feasibility of your idea
C. The supply situation
D. International trade regulations

The other main areas are: cost-profit analysis, your plans for future action, and an assessment of your market.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

 

3.   A fully developed concept includes all of the following, except:
A.A description of the proposed pricing strategy
B. Distribution plans
C. Proprietary aspects
D. A prototype

At the concept Chapter the prototype is not required.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

4.   A microprocessor used to control a single-person car is an example of a product that is:
A.A new invention
B. Highly innovative
C. Moderately innovative
D. Slightly innovative

Examples include microprocessors used to control various automobile systems or single-person cars.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

5.   Cloud computing is an example of a product that is:
A.A new invention
B. Highly innovative
C. Moderately innovative
D. Slightly innovative

Examples are mobile apps, near field communication, cloud computing, wide-ranging consumer products incorporating GPS technology, and non-invasive testing techniques for various kinds of cancer.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

 

6.   Wireless technologies are generally considered to be:
A.New inventions
B. Highly innovative
C. Moderately innovative
D. Copycatting

Examples include fibre optics, electric cars, bionic prostheses for replacement arms and legs, diagnostic and research tools, and wireless technologies.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

7.   Which part of the feasibility study contains information about the nature of your competition?
A.Marketing plan
B. Technical feasibility
C. Market assessment
D. Profit assessment

See Figure 3.2 A Typical Feasibility Study.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

8.   Which part of the feasibility study contains information about the distribution channels for your product?
A.Marketing plan
B. Technical feasibility
C. Market assessment
D. Profit assessment

See Figure 3.2 A Typical Feasibility Study.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

 

9.   ________ is the level of return or compensation that you might expect for assuming the risks associated with investing in this business.
A.Profit potential
B. Return on investment
C. Risk analysis
D. Capital appreciation

Profit potential is the level of return or compensation that you might expect for assuming the risks associated with investing in this business.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

10.                Other firms and businesses in your community and across the country are considered to be part of the:
A.B2C market
B. institutional market
C. industrial market
D. government market

This is also part of the B2B market.

 

Difficulty: Hard
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

11.                Organizations such as hospitals, personal care homes, schools, and universities, are considered part of:
A.The B2C market
B. The institutional market
C. The industrial market
D. The government market

This is also part of the B2B market.

 

Difficulty: Hard
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

 

12.                This process of breaking down large, heterogeneous consumer or industrial markets into more homogeneous groups is known as:
A.Market segmentation
B. Market diversification
C. Market augmentation
D. Market differentiation

Most markets can be segmented on the basis of a number of variables including geographic, demographic, or psychographic factors.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

13.                A condo developer has determined that his target market consists of financially independent, unattached singles between the ages of 40-50. He has segmented the market based on _____ factors.
A.Psychographic
B. Sociological
C. Demographic
D. Geographic

Demographic description, such as age, gender, marital status, family size, race, religion, education level, income, and occupation.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

14.                _________ data comprise information that others have put together relating to your industry and/or your customers.
A.Primary
B. Secondary
C. Internal
D. External

Secondary data can come from a tremendous variety of sources. Often they may not exist in the exact form you require but by combining data from a number of secondary sources you may be able to compile the information you require, and at much lower cost than going out and gathering your own information.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

15.                One key source of demographic data on the Canadian market is:
A.Industry Canada
B. CANSIM
C. The CRA (Canada Revenue Agency)
D. Canadian Industry Statistics

CANSIM is Statistics Canada’s key socioeconomic database. Updated daily, CANSIM provides fast and easy access to a large range of the latest statistics available in Canada.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

16.                Perhaps the best way to get the most current and useful information regarding your potential market is through:
A.Primary data
B. Secondary data
C. Trade publications
D. Statistics Canada

Doing your own research-called primary research-may be the best way to get the most current and useful information regarding your potential market.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

17.                All of the following are likely uses for your prototype, except:
A.You can get photographs and other promotional material.
B. Show the idea to prospective buyers
C. Sell the prototype to the highest bidder
D. Put out publicity releases

You are not likely to sell the prototype which represents the culmination of your hard work.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

18.                Other companies which offer products similar to yours are called:
A.Indirect competitors
B. Direct competitors
C. Parallel competitors
D. Rival competitors

Direct competitors offer products or services that are very similar to yours.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

19.                A SWOT analysis represents:
A.Strengths, weaknesses, obstacles, tactics
B. Strategy, weaknesses, opportunities, tactics
C. Strengths, weaknesses, opportunities, threats
D. Strategy, weakness, obstacles, threats

This analysis helps you to see how your strengths stack up against your competitors’ weaknesses and suggests ways to take advantage of opportunities out in the marketplace.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

20.                Which of the following competitive strategies creates a meaningful difference between your products and those of the competition, which creates a higher level of perceived customer benefits?
A.Cost advantage
B. Marketing advantage
C. Differentiation advantage
D. Focus on a Market Niche

This could be in terms of the physical characteristics of the product itself, the range or level of services provided, or the image and reputation of your business. A business with a meaningful differential advantage can often charge higher prices and generate higher unit profits.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

21.                Which of the following competitive strategies identifies a position in the market that has been overlooked by your competitors?
A.Cost advantage
B. Marketing advantage
C. Differentiation advantage
D. Focus on a Market Niche

This can be particularly effective for smaller firms trying to escape direct competition with larger companies with more resources while trying to build their own competitive advantage.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

22.                The ______ approach utilizes published statistics and weights them by an index that may be some factor such as the percentage of the population within your designated geographic area.
A.Broad-based
B. Narrow-focus
C. Statistic-specific
D. Top-down

One word of caution with the top-down approach: An estimate of the total market is accurate only if data can be extrapolated and conclusions applied to the entire population.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

23.                For your business plan, sales estimates for your first year of operation should be _____, while the estimates for subsequent years can be _________.
A.Quarterly; annually
B. Quarterly; semi-annually
C. Monthly; semi-annually
D. Monthly; quarterly

For your business plan, these sales estimates for your first year of operation should be monthly, while the estimates for subsequent years can be quarterly.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

24.                All of the following are external factors which might affect your sales, except:
A.Seasonal changes
B. Level of your promotional effort
C. Political activities and events
D. Changes in the retail mix

This is considered an internal factor.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

25.                All of the following are internal factors which might affect your sales, except:
A. the distribution channels you decide to use
B. level of your promotional effort
C. fashion trends and cycles
D. your ability to manage inventory levels effectively

This is considered an external factor.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

26.                Selecting a location is most critical for which of the following businesses?
A.An automobile manufacturing plant
B. Public Utilities Commission
C. Municipal waste and recycling site
D. Hakim Optical

Location is most critical for retailers.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

27.                The principal ingredients of a marketing program include all of the following, except:
A. Person
B. Productivity
C. Pricing
D. Place

The other ingredients are promotion and product.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

28.                All of the following are forms of non store retailing, except:
A.Vending machines
B. Fairs and exhibitions
C. Bricks and Mortars
D. The Internet

Bricks and Mortars is the term used to describe the traditional store based retail location.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

29.                Using cost-based pricing, what is the percentage markup on an item costing $1.00 and selling for $5.00?
A.25%
B. 45%
C. 55%
D. 80%

See example provided in Table 3.1 Price Markup Chain.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

30.                What is the percentage markup on an item costing $1.50 and selling for $3.00?
A.25%
B. 50%
C. 75%
D. Cannot be determined.

See example provided in Table 3.1 Price Markup Chain.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

31.                Items such as specialty products or jewellery, for example, typically have markups in the range of:
A.5-10%
B. 20-30%
C. 35-45%
D. 50-60%

Standard markups tend to prevail in different industry sectors. Food products and other staple items usually have a low unit cost and high inventory turnover, so the markups tend to be fairly low, 15 to 25 percent; products such as jewellery and highly advertised specialty products typically have higher markups, perhaps as much as 50 or 60 percent or even more.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

32.                Items such as food products and other staple products typically have markups in the range of:
A.5-10%
B. 15-25%
C. 35-45%
D. 50-60%

Standard markups tend to prevail in different industry sectors. Food products and other staple items usually have a low unit cost and high inventory turnover, so the markups tend to be fairly low, 15 to 25 percent; products such as jewellery and highly advertised specialty products typically have higher markups, perhaps as much as 50 or 60 percent or even more.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

33.                ________ are commonly provided to customers who buy more than some minimum quantity or dollar value of products or services from you.
A.Loyalty discounts
B. Cash discounts
C. Quantity discounts
D. Cumulative discounts

This discount may be based either on the quantity or value of each individual order (noncumulative) or on the total value of their purchases over a certain period of time, such as a month (cumulative).

 

Difficulty: Easy
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

34.                _________ permit customers to deduct a percentage amount from the net cost of their purchases if payment is made in cash at the time of purchase or full payment is made within a specified number of days.
A.Cash discounts
B. Quantity discounts
C. Quality discounts
D. Noncumulative discounts

Different types of businesses have their own customary cash discounts. For example, a typical discount is expressed as “2/10 net 30.” In this situation, a customer who is invoiced on October 1 for an outstanding bill of $2,000 need pay only $1,960 if payment is made before October 10.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

35.                _______ gives you a method of moving inventories that you may otherwise have to carry over to the following year.
A.Cash discounts
B. Quantity discounts
C. Quality discounts
D. Seasonal discounts

Seasonal discounts of 10 percent, 15 percent, 20 percent, or more on your normal base price may be offered to your customers if their purchases are made during your slow or off-season.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

36.                Which of the following promotional activities has the highest cost per audience member?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

37.                Which of the following promotional activities offers the greatest ability to focus on the target customer?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Easy
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

38.                Which of the following promotional activities has the highest level of credibility?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

39.                Which of the following promotional activities is weakest in terms of the ability to deliver a complicated message?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

40.                Which of the following promotional activities is weakest in terms of the ability to focus on the target customer?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

41.                Which of the following promotional activities offers the greatest capacity to interchange with the audience?
A.Advertising
B. Sales Promotion
C. Public Relations
D. Personal Selling

See Table 3.2 A Comparison of Various Promotional Activities.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

42.                Free product samples and contests are activities related to:
A.Advertising
B. Personal selling
C. Sales promotion
D. Public relations

Other examples of sales promotion activities include gifts, discount coupons, exhibits and displays, etc.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

43.                In the model for small business growth, the key issue in the inception Chapter is:
A.Obtaining customers
B. Increasing competition
C. Expansion into new products or markets
D. Finding growth opportunities

Table 3.4 A Model for Small Business Growth.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

44.                In the model for small business growth, the key issue in the maturity Chapter is:
A.Obtaining customers
B. Increasing competition
C. Expansion into new products or markets
D. Finding growth opportunities

Table 3.4 A Model for Small Business Growth.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

45.                In the model for small business growth, the key issue in the survival Chapter is:
A.Obtaining customers
B. Increasing competition
C. Expansion into new products or markets
D. Finding growth opportunities

Table 3.4 A Model for Small Business Growth.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

46.                In the model for small business growth, product and market research in the inception Chapter is:
A.Non-existent
B. Little
C. Moderate
D. Innovative

Table 3.4 A Model for Small Business Growth.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

47.                In the model for small business growth, product and market research in the survival Chapter is:
A.Non-existent
B. Little
C. Moderate
D. Innovative

Table 3.4 A Model for Small Business Growth.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

True / False Questions
 

48.                The first plan you will write for your new venture is the business plan, once that is complete, you will then conduct a feasibility study.
FALSE

If the feasibility study indicates that the business idea has potential, then you can proceed to write a business plan.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

49.                Examples of psychographic factors include the desire for status, the pursuit of fun, and the desire to be environmentally conscious.
TRUE

Psychographic or sociological factors such as lifestyle, status, timing and means of purchasing, and reasons for buying products or services similar to yours.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

50.                The market research process involves two basic steps: gather information and then interpret it.
FALSE

There are four steps in the research process.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

51.                Secondary data is far less expensive for a firm to collect than is primary data.
TRUE

Combining data from a number of secondary sources may allow you to compile the information you require, and at much lower cost than going out and gathering your own information.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

52.                Survey research is the most widely used method of primary data collection.
TRUE

Its principal advantages are its relatively low cost and flexibility. It can be used to obtain many different kinds of information in a wide variety of situations.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

53.                When it comes to the “one-store test” to test your product, you are safe to assume that the single location will be representative of the marketplace in general.
FALSE

The one store in which you test your product may not be representative of the marketplace in general.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

54.                A cost advantage competitive strategy involves a significantly lower cost compared to the competition which permits reasonable profit margins while offering lower prices.
TRUE

These lower costs may arise from maintaining a lower variable cost per unit sold, having a lower level of marketing expenses, or having a lower level of overhead or operating expenses.

 

Difficulty: Hard
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

55.                The bottom-up approach involves aggregating information from the customer level to the total market level.
TRUE

Individual or household statistics are aggregated based on population or household statistics that are available from Statistics Canada and other sources to develop an estimate of the total size of the potential market.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

56.                Merchant wholesalers are further classified as full-service, limited-function, drop shippers, truck wholesalers, and rack jobbers.
TRUE

Wholesalers are classified according to whether they actually take title or ownership of the products they handle (merchant wholesalers) or not (agents).

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

57.                A discount expressed as “2/10 net 30” means the customer can take a 2 percent cash discount for making payment within 10 days. Otherwise, the customer must increase the invoice total by 2 percent and pay that amount in 30 days.
FALSE

The customer need not increase the invoice total by 2 percent. If they forego the discount offered by paying within ten days, they simply pay the invoice total (without discount) within 30 days.

 

Difficulty: Hard
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

58.                A personal sales person’s primary function is informing customers about the nature of the offering and the value and benefits of using the product or service.
FALSE

A personal sales person’s primary function is usually more concerned with obtaining orders than informing your customers about the nature of your offering, as in the case of advertising.

 

Difficulty: Easy
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

Short Answer Questions
 

59.                Discuss the relationship between the level of risk of a new venture and the expected return for that risk for new inventions, moderately or slightly innovative ideas, and copycat products?

In general, the following relationships hold:

1. New inventions are extremely risky and difficult to evaluate, but if they are accepted in the marketplace they can provide enormous profits.
2. For moderately innovative and slightly innovative ideas, the risks are lower and evaluation is less difficult, but profit potential tends to be more limited.
3. In the “copycat” category, risks are often very high and profit potential tends to be quite low. Such businesses usually show no growth, or very slow growth, and there is little opportunity for profit beyond basic wages.

 

Difficulty: Medium
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

60.                What are the most important technical requirements to consider when developing a working prototype?

• Functional design of the product and the attractiveness of its appearance
  · Flexibility of the product in permitting ready modification of its external features to meet customer requirements or competitive pressures
  · Durability of the materials from which the product is made
  · Expected product reliability under normal operating circumstances
  · Safety of the product under normal operating conditions
  · Expected rate of obsolescence
  · Ease and cost of maintenance
  · Ease and cost of processing or manufacture
  · Ease of handling and use by the customer

 

Difficulty: Hard
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

 

61.                Describe market segmentation based on geographic location.

Geographic location refers to part of a city or town, county, province, region, or country. If you are selling farm equipment, geographic location is obviously a major factor in segmenting your target markets since your customers will be located in particular rural areas. Climate is a commonly used geographic segmentation variable that affects industries such as sporting equipment, lawn and garden equipment, snowblowers and snowmobiles, and heating and air-conditioning equipment. If this is a factor in your business, you need to identify the geographic area where your market is located and identify the specific boundaries within which you will do business.

 

Difficulty: Easy
Learning Objective: 03-01 Explain what a feasibility study is and why you need one.
Topic: 03-01 Technical and Market Assessment

62.                Compare and contrast observational methods to questioning methods as a form of primary data collection.

This is the gathering of primary data by observing people and their actions in particular situations. It may entail such approaches as observing the behaviour of shoppers in a store as they go about purchasing a range of different products, counting traffic flows through a mall or past a particular location, or observing patterns in traffic flows around a store or other facility. Questioning methods include both the use of surveys and experimentation that involves contact with respondents. Survey research involves the systematic collection of data from a sample of respondents to better understand or explain some aspect of their behaviour. This data collection can occur by personal contact, through the mail, by telephone, or on the Internet. In addition, the information may be gathered from people individually as in an individual interview or in a group such as a focus group.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

63.                Describe the primary issues faced by manufacturing firms in the selection of a location for their facilities.

Manufacturers are principally concerned about locating their plant where their operations will be most efficient. This means considering such issues as:

· General proximity to primary market areas
· Access to required raw materials and supplies
· Availability of a suitable labour force
· Accessibility and relative cost of transportation and storage facilities
· Availability and relative cost of power, water, and fuel supplies
· Financial incentives and other inducements available from municipal, provincial, or federal government agencies

The importance of each of these factors in the location decision will depend on the nature of your manufacturing business and your own preferences and requirements.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

64.                Discuss the disadvantages associated with running a home-based business.

It takes a lot of self-discipline to sustain a regular work schedule and resist distractions from family, friends, television, and other sources. Suppliers and prospective customers may not take you as seriously. The space available in your home may not be appropriate for your business, and you may not have access to facilities and equipment such as boardrooms and copy machines that you need to conduct your business effectively. If your house is in a typical residential area, operating a business from your home will probably contravene local zoning bylaws. You can feel lonely and very alone without anyone to talk to or banter ideas around with.

 

Difficulty: Easy
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

 

65.                What are some of the common complaints faced by the owners of home-based business from neighbours and others in the community?

Activities that may lead to complaints are posting a large sign on the front lawn; constant noise; a steady stream of customers, suppliers, or others in and out of your home; or the clutter of parked vehicles in your yard or on the street.

 

Difficulty: Medium
Learning Objective: 03-02 Describe why market research is important.
Topic: 03-06 Research Your Market

66.                Describe three different kinds of discounts provided by businesses to their customers.

The three types of discounts presented in the text are cash, quantity, and seasonal. Cash discounts are based on the typical terms of trade within an industry and permit customers to deduct a certain percentage amount from the net cost of their purchases if payment is made in cash at the time of purchase or full payment is made within a specified number of days. Seasonal discounts of 10 percent, 15 percent, 20 percent, or more on your normal base price may be offered to your customers if their purchases are made during your slow or off-season. Quantity discounts are commonly provided to customers who buy more than some minimum quantity or dollar value of products or services from you.

 

Difficulty: Medium
Learning Objective: 03-03 Prepare your marketing plan.
Topic: 03-15 Fleshing Out Your Marketing Program

 

Stage 05

Business Plans

 

 

Multiple Choice Questions

1.   Another term used to describe a business plan is:
A.A feasibility plan
B. A game plan
C. A financial plan
D. A progress plan

The business plan can be thought of as your new venture’s “game plan”.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

2.   The business planning process focuses on the:
A.Present
B. Past
C. Future
D. Customers

The business planning process focuses on the future. It enables you to relate what you wish to achieve to what your business concept or idea can deliver.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

3.   The _______ lays out the “super goal” that you would like your business to achieve.
A.Concept statement
B. Financial statement
C. Mission statement
D. Vision statement

A vision statement focuses on the “what” of your business and should describe your idealized perception of what your business will look like under perfect conditions, if all your goals and objectives have been met. It lays out the “super goal” that you would like your business to achieve.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

4.   The _______ defines the “super strategy” of your business.
A.Mission statement
B. Vision statement
C. Concept statement
D. Financial statement

A mission statement defines the purpose of your venture, outlines the reason for the existence of your business, and provides some understanding of how your business will be operated. It is, in fact, the “super strategy” of your business.

 

Difficulty: Easy
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

5.   The length and detail of your business plan will depend on all of the following, except:
A.The type of business
B. The expectations of stakeholders
C. The expectations of competitors
D. The expectations of your financial institution

There is no single way to write a business plan. Its length and detail will depend on the type of business and the expectations of stakeholders such as investors or financial institutions.

 

Difficulty: Medium
Learning Objective: 05-01 Choose the business plan model that is best for your business.
Topic: 05-01 Business Plans

 

6.   At the heart of the capital-raising process is:
A.Your business plan
B. Your statement of cash flows
C. Your feasibility study
D. Your income statement

Any knowledgeable banker or prospective investor will expect you to be professional in your approach, fully prepared, and armed with a thoroughly researched, well-written business plan when seeking their support.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

7.   Rather than using page count as a way to measure the length of a business plan, expert Tim Berry recommends that you measure a plan based on:
A.Readability and grammar
B. Sentence structure and summarization
C. Readability and summarization
D. Sentence structure and grammar

Page count is not a good way to measure length of a business plan according to Tim Berry, founder of Palo Alto Business Plans. You should measure a plan by readability and summarization.

 

Difficulty: Hard
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

8.   According to Tim Berry, business planning has become:
A.Lengthy and complex
B. Leaner and more agile
C. Long-winded and overly formal
D. Short and lacking in depth

Tim Berry states, “Regardless of the name or label, business planning has in fact changed in recent years. It has become leaner and more agile.” The long-winded formal business plan is obsolete.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

9.   Which of the following components of a business plan will answer the question, “is there a need and demand?”?
A.Executive summary
B. Market opportunity and competitive advantage
C. Goals and business strategy
D. Detailed financials

The determination of market need and demand will be addressed in the market opportunity and competitive advantage section of your business plan.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

10.                Financial institutions are likely to read the executive summary of your business plan, and then skip directly to the section pertaining to:
A.The competition
B. Financials
C. Competitive advantage
D. Incorporation

Once they have made it past the executive summary they will skip to the financials. They are looking for projected sales for a minimum of two years.

 

Difficulty: Easy
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

11.                Many financial institutions will accept a ________ for use by early-Chapter businesses in applying for a bank loan.
A.Cash flow statement
B. Feasibility study
C. Consultant’s perspective
D. Summary business plan

Summary business plans commonly run about 10 pages. Summary business plans have become increasingly popular and accepted for use by early-Chapter businesses in applying for a bank loan.

 

Difficulty: Medium
Learning Objective: 05-02 Explain the importance of a business plan in your business.
Topic: 05-06 Why Develop a Business Plan?

 

12.                A _________ gives the title of the plan or the name of your business, and outlines the major features of your plan that may be of interest.
A.Letter of Transmittal
B. Letter of Expression
C. Letter of Purpose
D. Letter of Intent

The letter of transmittal officially introduces your business plan to the reader.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

13.                Which part of the business plan should capture the attention of the reader, stimulate interest, and get the reader to keep on reading?
A.Letter of Transmittal
B. Title Page
C. Table of Contents
D. Executive Summary

The summary has to make the reader comfortable that the entrepreneur knows what they are doing. If you achieve this then the reader may very well jump right to the financials.

 

Difficulty: Easy
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?

14.                All of the following websites offer outlines, instructions, and templates for developing a business plan, except:
A.Canada Business Network
B. Canadian Bank Association
C. Business Development Bank of Canada
D. Industry Canada

Industry Canada does not assist with business plan development.

 

Difficulty: Hard
Learning Objective: 05-03 Identify what should be included in a business plan.
Topic: 05-10 What Should Your Plan Contain?