Deck 5: Understanding Your Business Model and Developing Your Strategy

Question 1

Maintaining trade secrets is one way to protect a company's competitive advantage.

Answer 1

True

Question 2

Franchising speeds growth, but lowers a company's revenue overall.

Answer 2

False

Question 3

Outsourcing is a powerful tool that can reduce a venture's upfront fixed costs.

Answer 3

True

Question 4

In a Freemium business model, your COGS for free offerings can be viewed as a marketing expense.

Question 5

Developing a market test schedule can not only guide your learning, but it can also help you better understand when, how and how much it will cost to meet the next milestone.

Question 6

By merging different revenue sources into as few categories as possible, you make your business model more comprehensive.

Question 7

Non-profit organizations do not need revenue to operate.

Question 8

Hiring a corporate lifer who is used to working in one functional area and has experience with comprehensive administrative support is always the right strategy for a startup firm.

Question 9

Companies should not outsource an activity if it is critical to its competitive advantage.

Question 10

Certain stages of the "initial market test" can be cheap or even free.

Question 11

Entrepreneurs who claim that they "do not have competition" do not truly understand the nature of their business.

Question 12

The more products you sell through your distribution channels, the greater your negotiating power.

Question 13

Today's most successful companies identified a viable business model before they developed their product.

Question 14

The primary purpose of outsourcing is to increase net margins.

Question 15

A strategy that attempts to capture the first-mover's advantage is usually the most inexpensive.

Question 16

COGS is a cost measure that applies to companies that manufacture tangible products; COGS cannot be computed for firms that deal exclusively in a service-based revenue model.

Question 17

Amazon uses a "long-tail" business model.

Question 18

If you do not fully understand your revenue drivers, you cannot achieve the highest success.

Question 19

Entrepreneurs benefit from developing and following a coherent geographic expansion strategy.

Question 20

It is better to formulate the organizational culture after your company begins to grow, rather than at the company's inception.

Question 21

Going global increases risk and requires capital.

Question 22

Of the following differentiators, which most commonly determines the success of a company?

A) The number of distinct products offered
B) Competitive advantage
C) Being the first player to enter a market
D) Better execution than the competition
E) A and C

Question 23

Under the Foreign Direct Investment strategy, the startup retains control of the assets and facilities, which results in a cheap and easy means to go global.

Question 24

Venture capital funding rarely leads to mergers and acquisitions with foreign companies.

Question 25

How many beta-tests of the product should the company do before releasing it to the market?

A) As many as necessary
B) At least 3
C) Not more than 5
D) 5 to 10
E) B and C

Question 26

What is the revenue strategy of both Walmart and Amazon?

A) low costs, high margins
B) low margins, high volumes
C) high margins, high volumes
D) high costs, low volumes
E) none of the above

Question 27

Technology licensing is a good opportunity to extend your brand image into new markets.

Question 28

Franchising requires you to find extensive capital to support growth.

Question 29

Mergers and acquisitions are likely to increase a company's survival rate when used as a means for growth.

Question 30

Which of the following influence a company's revenue?

A) "Markers"
B) "Headers"
C) "Drivers"
D) A and B
E) None of the above

Question 31

Exporting is one of the most expensive ways to enter new markets.

Question 32

It is a good idea for a startup to hire employees who are:

A) Used to working in one functional area
B) Overqualified for their initial roles
C) Young and have little experience, but big potential
D) Educated for the tasks, but have little experience
E) All of the above

Question 33

According to the chapter, what portion of all firms receives venture capital?

A) Less than 0.01%
B) Less than 0.1%
C) Between 1% and 5%
D) Between 5% and 10%
E) More than 10%

Question 34

Developments in technology have spurred young companies to build alliances and joint partnerships in their efforts to expand globally.

Question 35

Examples of an iterative launch strategy would be:

A) Launching a web advertising campaign nationwide in beta
B) Contracting multiple outsourcing manufacturers for your first production run of a single product
C) Opening a food truck business using a short term truck lease in a single market.
D) None of the above

Question 36

Which of the following is the main component of a business model?

A) The revenue model
B) The net income model
C) The cost model
D) The cash flow mode
E) Both A and C

Question 37

What is the goal of outsourcing?

A) To shift the firm's cost model to one that is comprised of more variable costs and less fixed costs
B) To increase gross margins
C) To reduce overall up-front fixed costs
D) To decrease labor costs
E) All of the above

Question 38

Which of the following is part of the first-mover myth?

A) You must launch the first product in the market.
B) Creating a new market is easier than entering an existing one.
C) Creating a market is inexpensive.
D) A first mover's advantage is expensive.
E) B and C

Question 39

Typically, survival is the most pressing concern for a startup during the first:

A) 1 - 2 years
B) 2 - 3 years
C) 3 - 4 years
D) 4 - 5 years
E) 5 - 6 years

Question 40

Before raising capital, the company should identify which of the following?

A) Its strategy
B) Its core customers
C) Its major cost categories
D) Its sources of competitive advantage
E) All of the above

Question 41

Which of the following is the cheapest and easiest way to enter new markets?

A) Venture financing
B) Technology Transfer
C) Exporting
D) Outsourcing
E) Foreign Direct Investment

Question 42

What risks does the company take when expanding its product mix?

A) The company may incur unwieldy development expenses.
B) The market may not accept the new product.
C) Unsuccessful products can damage the brand.
D) All of the above
E) None of the above

Question 43

Which of the following is not mentioned in the chapter as a factor you need to weigh when planning geographic expansion?

A) Do the customers differ between the existing and the new location?
B) Can you continue to use the same vendors?
C) Can you use the same distribution channels?
D) Is your brand name well-known in the new location?
E) None of the above

Question 44

What opportunity do you lose when choosing to use Technology Licensing as a means to grow?

A) Generate more revenue
B) Conserve resources
C) Increase your brand name recognition
D) None of the above
E) All of the above

Question 45

Approximately what share of all new products are failures?

A) Less than 30%
B) 40 %
C) 50-60%
D) 80%
E) Over 90%

Question 46

If you have a replicable business model, it is wise to use which of the following strategies to expand internationally:

A) Foreign Direct Investment
B) Venture financing
C) Exporting
D) Franchising
E) Technology Licensing

Question 47

Some advantages to going global through merger and acquisition are

A) Instant presence
B) Rapid growth and expansion
C) Low capital requirements
D) A and B
E) B and C

Question 48

Dickson describes the following three types of global entrepreneurial firms:

A) Born global, born-again global, full global
B) Born-again global, direct global, gradual global
C) Gradual global, born global, born-again global
D) Born-again global, gradual global, diversified global

Question 49

Which of the following is true about all of the large, retail corporations in existence today?

A) They started as multinationals.
B) They employed a franchising strategy.
C) They had roots in one geographic region.
D) They attracted venture capital.
E) None of the above

Question 50

Which of the following is a primary means for FDI?

A) Acquiring foreign assets
B) Building new facilities overseas
C) Expanding current facilities overseas
D) None of the above
E) All of the above

Question 51

According to Dickson, a "born-again" global, entrepreneurial firm enters international markets as a result of:

A) Long-standing relationships with supplies overseas
B) A triggering event, such as an unsolicited order from overseas
C) Reduced risk in certain international markets
D) Their initial strategy included a desire to enter foreign markets
E) None of the above

Question 52

Which of the following is not related to Dickson's eight primary means to expand globally?

A) Technology Licensing
B) Outsourcing
C) Foreign Direct Investment
D) Mergers and Acquisitions
E) Initial Public Offering

Question 53

By selling a higher volume of your product through a particular distribution channel, you increase your:

A) Average variable cost
B) Inventory
C) Negotiating power
D) Brand Awareness
E) Gross margin per product