Entrepreneurship Successfully Launching New Ventures 5th Edition by Bruce R. Barringer – Test Bank
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Entrepreneurship: Successfully Launching New Ventures, 5e (Barringer/Ireland)
Chapter 3 Feasibility Analysis
1) LuminAid, the company profiled in the opening feature of
Chapter 3, was started to produce solar pillows, which are solar powered
devices that are simple and can be easily and affordably shipped to disaster
locations. The feature describes how LuminAid sought to validate its business
idea. According to the feature ________.
1. A)
LuminAid was unable to validate its business idea and the idea was dropped
2. B)
LuminAid’s feasibility analysis was incomplete, and the company has struggled
ever since it was launched
3. C)
LuminAid’s feasibility analysis was flawed, and the company failed
4. D)
LuminAid did an exemplary job validating its business idea, and its solar
pillow is now available via the company’s Web site, Amazon.com, LL Bean and
several similar outlets
5. E)
LuminAid’s feasibility analysis was well done, and the company was acquired by
Coleman before it could launch its solar pillow as an independent company
Answer: D
Diff: 1 Page Ref: 75
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: An7.3alytical Thinking
2) ________ is the process of determining whether a business
idea is viable.
1. A)
Feasibility analysis
2. B)
Opportunity recognition
3. C)
Viability analysis
4. D)
Achievability analysis
5. E)
Scenario analysis
Answer: A
Diff: 1 Page Ref: 77
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
3) ________ research is research that is collected by the person
or persons completing the analysis. ________ research probes data that is
already collected.
1. A)
Primary, Derivative
2. B)
Secondary, Primary
3. C)
Primary, Secondary
4. D)
Indirect, Direct
5. E)
Direct, Indirect
Answer: C
Diff: 1 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
4) Cynthia Jones 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 ________ research.
1. A)
direct
2. B)
derivative
3. C)
primary
4. D)
secondary
5. E)
initial
Answer: C
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
5) Talking to industry experts, obtaining feedback from
prospective customers, and administering surveys are examples of ________
research.
1. A)
primary
2. B)
secondary
3. C)
derivative
4. D)
principal
5. E)
fundamental
Answer: A
Diff: 1 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why it’s
important.
AACSB: Reflective Thinking
6) Trade journals, industry-related publications, government
statistics, and competitors’ Web sites are examples of ________ research.
1. A)
secondary
2. B)
action
3. C)
principal
4. D)
legacy
5. E)
vertical
Answer: A
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
7) Jennifer Burroughs is thinking about starting a firm in the
upscale women’s 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 wide-variety of business and industry related issues. Jennifer is
conducting ________ research.
1. A)
primary
2. B)
secondary
3. C)
action
4. D)
temporary
5. E)
purposeful
Answer: B
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
8) Which of the following is not one of the four areas of
feasibility analysis discussed in the textbook?
1. A)
Product/service feasibility
2. B)
Financial feasibility
3. C)
Societal feasibility
4. D)
Organizational feasibility
5. E)
Industry/market feasibility
Answer: C
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
9) Feasibility analysis is the process of determining if a
business idea is viable.
Answer: TRUE
Diff: 1 Page Ref: 77
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
10) A feasibility analysis is an assessment of a potential
product or service idea rather than a potential business.
Answer: FALSE
Diff: 2 Page Ref: 77
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
11) The four forms of feasibility analysis include:
product/service feasibility, industry/target market feasibility, organizational
feasibility, and financial feasibility.
Answer: TRUE
Diff: 2 Page Ref: 77
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
12) Primary research probes data that is already collected.
Answer: FALSE
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
13) Census Bureau data, analyst forecasts, and other pertinent
information gleaned through library and Internet research are examples of
primary research.
Answer: FALSE
Diff: 2 Page Ref: 78
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
14) Describe the purpose of feasibility analysis. When should a
feasibility analysis be conducted relative to opportunity recognition and the
development of a business plan?
Answer: Feasibility analysis is the process of determining
if a business idea is viable. As a preliminary evaluation of a business idea, a
feasibility analysis is completed to determine if an idea is worth pursuing and
to screen ideas before spending resources on them. Feasibility analysis follows
the opportunity recognition stage but comes before the development of a
business plan.
Diff: 1 Page Ref: 77
LO: 3.1: Explain what a feasibility analysis is and why
it’s important.
AACSB: Reflective Thinking
15) ________ feasibility is an assessment of the overall appeal
of the product or service being proposed.
1. A)
Consumer
2. B)
Industry/market segment
3. C)
Industry/market
4. D)
Product/service
5. E)
Purchaser/end-user
Answer: D
Diff: 1 Page Ref: 78
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
16) The two components of product/service feasibility analysis
are ________ and ________.
1. A)
product/service value; product/service affordability
2. B)
product/service demand; product/service timeliness
3. C)
product/service timeliness; product/service value
4. D)
product/service durability; product/service value
5. E) product/service
desirability; product/service demand
Answer: E
Diff: 2 Page Ref: 78
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
17) 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 ________ feasibility component of a complete
feasibility analysis.
1. A)
financial
2. B)
industry/target market
3. C)
organizational
4. D)
concept
5. E)
product/service
Answer: E
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Analytical Thinking
18) Which of the following is not a part of assessing the
product/service feasibility of a business idea?
1. A)
“Get out of the building” and talk to potential customers
2. B)
Surveying potential customers
3. C)
Library research
4. D)
Analyzing industry attractiveness
5. E)
Concept test
Answer: D
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
19) A(n) ________ involves showing a preliminary description of
a product or service idea to prospective customers to gauge customer interest,
desirability, and purchase intent.
1. A)
concept test
2. B)
product/service statement
3. C)
impression test
4. D)
idea prospectus
5. E)
idea test
Answer: A
Diff: 1 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
20) Which of the following items is typically not included in a concept
statement?
1. A) A
brief description of the company’s management team
2. B) A
description of how the product or service will be sold and distributed
3. C) A
description of how much money the new venture needs
4. D)
The benefits of the product or service
5. E)
The intended target market
Answer: C
Diff: 3 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Analytical Thinking
21) Tracy Brady is in the process of developing an exciting new
product in the smartphone industry. She’d like to show a preliminary
description of the product to industry experts and prospective customers to
solicit their feedback. Tracy should complete and distribute a(n) ________
statement.
1. A)
perception
2. B)
usability
3. C)
early adopter
4. D)
concept
5. E)
adoption risk-reward
Answer: D
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
22) Which of the following is an incorrect approach to
administering a concept test?
1. A)
The concept statement shouldn’t exceed one page.
2. B)
After the concept statement is developed, it should be shown to at least 10
people.
3. C)
The best candidates to distribute a concept statement to are family and
friends.
4. D) If
time permits, a concept statement should be used in an iterative manner and
distributed to several groups of people.
5. E) A
short survey should be attached to the concept statement to solicit feedback.
Answer: C
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
23) A/B split testing, landing pages, prototyping services, and
Web site usability testing are all online tools available to assist in the
________ stage of developing a business idea.
1. A)
opportunity recognition
2. B)
feasibility analysis
3. C)
business model
4. D)
business plan
5. E)
growth plan
Answer: B
Diff: 2 Page Ref: 81
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
24) PickFu and Ubounce are Web sites that provide access to
________.
1. A) 3D
printing services
2. B)
Web site usability testing
3. C)
online whiteboarding services
4. D)
A/B split testing services
5. E)
feedback on business ideas
Answer: D
Diff: 3 Page Ref: 81
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
25) Foundersuite, Quirky and Unassumer are Web sites that
provide access to ________.
1. A)
feedback on business ideas
2. B)
landing pages
3. C)
surveys
4. D)
prototyping services
5. E)
market research
Answer: A
Diff: 3 Page Ref: 82
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
26) Three commonly utilized methods for determining
product/service demand are ________.
1. A)
assessing the overall financial attractiveness of the proposed venture, talking
face-to-face with potential customers, and assessing industry attractiveness
2. B)
analyzing the financial performance of other businesses, talking face-to-face
with potential customers, and assessing target market attractiveness
3. C)
assessing target market attractiveness; utilizing online tools, such as Google
AdWords and landing pages; and calculating total startup cash needed
4. D)
assessing industry attractiveness; library, Internet and gumshoe research; and
talking face-to-face with friends and family
5. E)
talking face-to-face with potential customers; utilizing online tools, such as
Google AdWords and landing pages; and library, Internet and gumshoe research
Answer: E
Diff: 3 Page Ref: 83
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
27) Katlin Smith is investigating the feasibility of developing
an iPhone app to help high school students with math. To get a good handle on
the potential demand for her service, Katlin 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. Katlin is conducting ________ research.
1. A)
parallel
2. B)
derivative
3. C)
gumshoe
4. D)
secondary
5. E)
on-the-ground
Answer: C
Diff: 2 Page Ref: 83
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
28) Conner Brandshaw 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 Conner could conduct
to get a sense of the likely demand for his game?
1. A)
Download electronic games industry reports from the Internet.
2. B)
Administer a buying intentions survey.
3. C)
Administer a concept test.
4. D)
Look at the Web sites of a number of companies that sell electronic games.
5. 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
Diff: 2 Page Ref: 83
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
29) According to the textbook, the only way to know if your
product or service is what people want is by ________.
1. A)
interviewing industry experts
2. B)
library, Internet and gumshoe research
3. C)
conducting brainstorming sessions
4. D)
talking to them
5. E)
surveying them
Answer: D
Diff: 2 Page Ref: 83
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
30) A ________ is a single Web page that typically provides
direct sales copy, like “click here to buy a Hawaiian vacation.”
1. A)
sales page
2. B)
marketing page
3. C)
destination page
4. D)
call for action page
5. E)
landing page
Answer: E
Diff: 2 Page Ref: 84
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
31) Product/service feasibility analysis is an assessment of the
overall appeal of the product or service being proposed.
Answer: TRUE
Diff: 1 Page Ref: 78
LO: 3.2: Describe a product/service feasibility analysis, explain
its purpose, and discuss the two primary issues that a proposed business should
consider in this area.
AACSB: Reflective Thinking
32) The two components to product/service feasibility analysis
are product/service desirability and total startup funds needed.
Answer: FALSE
Diff: 2 Page Ref: 78
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
33) A concept statement should be two to three pages long.
Answer: FALSE
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
34) The temptation to show a concept statement to friends and
family members should be avoided because they are predisposed to give positive
feedback.
Answer: TRUE
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
35) Quirky is a Web site that allows you to submit product ideas
to a community that vets and provides feedback on the ideas.
Answer: TRUE
Diff: 2 Page Ref: 82
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
36) Describe what a concept statement is, and what it should
include.
Answer: A concept statement is a preliminary description
of a business. It should include:
·
A description of the product or service being offered.
·
The intended target market.
·
The benefits of the product or service.
·
A description of how the product will be positioned relative to
similar ones in the market.
·
A description of how the product or service will be sold and
distributed.
The concept statement is administered as part of product/market
feasibility analysis and should be used to get initial feedback and input
regarding a business idea.
Diff: 2 Page Ref: 79
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
37) What is gumshoe research and why is it important?
Answer: Gumshoe research is simply doing what it takes to
collect sufficient information to assess the target market feasibility of a
product idea. A gumshoe is a detective or an investigator that scrounges around
for information or clues wherever they can be found. This type of research can
take creative forms. For example, if your idea is to sell educational toys, you
might spend a week volunteering at a day care center and watch how children
interact with toys. Similarly, you might spend some time browsing through a toy
store and observing the types of toys that get the most attention. Gumshoe
research is simply being inventive in regard to the activities that can be
undertaken to better understand your industry and target market’s
attractiveness.
Diff: 2 Page Ref: 85
LO: 3.2: Describe a product/service feasibility analysis,
explain its purpose, and discuss the two primary issues that a proposed
business should consider in this area.
AACSB: Reflective Thinking
38) 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.
1. A)
target market; industry
2. B)
trade group; industry
3. C)
industry; trade group
4. D)
competitive group; target market
5. E)
industry; target market
Answer: E
Diff: 1 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
39) The two components of industry/target market feasibility
analysis are ________.
1. A)
industry status and target market status
2. B)
industry attractiveness and target market attractiveness
3. C)
industry sufficiency and target market demand
4. D)
industry attractiveness and product/service demand
5. E)
industry evolution and target market attractiveness
Answer: B
Diff: 2 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
40) ________ feasibility analysis is an assessment of the
overall appeal of the industry and market for the product or service being
proposed.
1. A)
Institutional
2. B)
Financial
3. C)
Organizational
4. D)
Product/service
5. E)
Industry/target market
Answer: E
Diff: 1 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
41) Which of the following issues should be considered in
industry/target market feasibility analysis?
1. A)
Gaps in the marketplace
2. B)
Financial performance of similar businesses
3. C)
Resource sufficiency
4. D)
Industry attractiveness
5. E)
Management prowess
Answer: D
Diff: 2 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
42) The Savvy Entrepreneurial Firm feature in Chapter 3 focuses
on Bill Gross, and how a company he was leading, Knowledge Adventure, made a
180-degree turn on the positioning of a product. According to the feature,
Gross and his team made the change as a result of ________.
1. A)
observing how customers acted when buying their product
2. B) studying
industry trends
3. C)
conducting Internet research
4. D)
administering a concept test and a buying intentions survey
5. E)
hiring consultants to provide them advice
Answer: A
Diff: 2 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
43) Which of the following is not an attribute of an attractive
industry?
1. A) Is
young rather than old
2. B) Is
not crowded
3. C) Is
late rather than early in its life cycle
4. D) Is
important to the customer
5. E) Is
fragmented rather than concentrated
Answer: C
Diff: 2 Page Ref: 87
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
44) Mintel, IBISWorld, and Bizminer are databases most likely to
be used during the ________ feasibility stage of the feasibility analysis
process.
1. A) organizational
2. B)
economic
3. C)
political/legal
4. D)
industry/target market
5. E)
product/service
Answer: D
Diff: 3 Page Ref: 88
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
45) Which of the following statements about target markets is
incorrect?
1. A)
There is a distinct difference between a firm’s industry and its target market.
2. 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.
3. 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.
4. D) A
target market is a place within a larger market segment that represents a
narrower group of customers with similar needs.
5. E)
It’s generally easier to find good information about a target market than an
industry as a whole.
Answer: E
Diff: 2 Page Ref: 88
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
46) ________ feasibility analysis is conducted to determine
whether a proposed business has sufficient management expertise, organizational
competence, and resources to successfully launch its business.
1. A)
Industry/market
2. B)
Institutional
3. C)
Financial
4. D)
Organizational
5. E)
Product/service
Answer: D
Diff: 1 Page Ref: 88
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
47) Industry/target market feasibility is an assessment of the
overall appeal of the industry and the target market for the product or service
being proposed.
Answer: TRUE
Diff: 1 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
48) Describe the purpose of industry/target market feasibility
analysis, and identify the two primary issues that should be considered. What
is the difference between a firm’s industry and its target market?
Answer: Industry/market feasibility analysis is an
assessment of the overall appeal of the industry and the target market for the
product or service being promoted. For industry/target market feasibility
analysis, there are two primary issues that a proposed business should
consider: industry attractiveness and target market attractiveness. There is a
distinct difference between a firm’s industry and its target market. An
industry is a group of firms producing a similar product or service, such as
computers, cars, or electronic games. A firm’s target market is the limited
portion of the industry that it goes after or to which it wants to appeal. Most
firms do not try to service their entire industry. Instead, they select or
carve out a specific target market and try to service that market very well.
Diff: 2 Page Ref: 85
LO: 3.3: Describe an industry/market feasibility analysis,
explain its purpose, and discuss the two primary issues to consider when
completing this analysis.
AACSB: Reflective Thinking
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