Question 1

According to the textbook, by studying a product's or service's value chain an organization can:
A) identify ways to create additional value and assess whether it has the means to do so
B) determine if its business plan needs to be revised
C) determine if it is cost effective to manufacture the product or sell the service
D) determine if an attractive niche market is available
E) determine if a product or service will be successful in the marketplace

Accepted Answer

By studying a product's or service's value chain, an organization can identify ways to create additional value by assessing each component of the value chain and determining if there are ways to improve or add value. This analysis can also help an organization determine if it has the means to make improvements to the value chain.

Question 2

Two fatal flaws can render a business model untenable from the beginning. These are:
A) failure to complete a business plan and failure to get funding
B) a complete misread of the customer and utterly unsound economics
C) failure to copy the industry leader's business plan and a complete misread of the customer
D) failure to complete a business plan and overemphasizing the importance of feasibility analysis
E) overemphasizing the importance of feasibility analysis and utterly unsound economics

Accepted Answer

A business model that fails to understand the needs and wants of its customers and has unsound economics is doomed to fail, regardless of whether or not a business plan is completed or funding is secured. While those elements are certainly important, they are not the two fatal flaws that can render a business model untenable from the beginning.

Question 3

Two fatal flaws can render a business model untenable from the beginning. These are utterly unsound economics and:
A) a complete misread of the customer
B) failure to copy the industry leader's business plan
C) overemphasis on the importance of feasibility analysis
D) overemphasis on the importance of industry analysis
E) failure to complete a business plan prior to developing a business model

Accepted Answer

A complete misread of the customer base is a fatal flaw that can render a business model untenable from the beginning. If a business fails to understand what its customers want and need, it will struggle to gain traction and generate revenue. Overemphasis on feasibility analysis and industry analysis may also hinder the success of the business, but they are not as significant as a fundamental misunderstanding of the target audience. Failure to complete a business plan prior to developing a business model may be a mistake, but it is not necessarily a fatal flaw. Similarly, copying an industry leader's business plan may not lead to success if the business model is not suitable for the specific company's needs and goals.

Question 4

The opening feature in Chapter 6 focuses on Stroome, an exciting new Web-based service for editing and remixing video. The idea for Stroome emerged in:
A) a graduate communications class at the University of Southern California
B) a student-run incubator at the University of Illinois
C) a technology commercialization class at Cornell
D) a city-owned new business incubator in Cleveland
E) a business plan class at Kansas State

Accepted Answer

According to the opening feature in Chapter 6, the idea for Stroome emerged in a graduate communications class at the University of Southern California.

Question 5

Which of the following is a "primary" activity in the value chain?
A) resource procurement
B) technology development
C) outbound logistics
D) firm infrastructure
E) human resource management

Accepted Answer

Outbound logistics is a primary activity in the value chain as it involves the activities involved in delivering goods or services to customers. Resource procurement is a support activity, technology development is part of research and development, firm infrastructure involves overhead costs, and human resource management is also a support activity.

Question 6

The ________ is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user.
A) consequence sequence
B) business chain
C) meaning chain
D) value chain
E) worth procession

Accepted Answer

The value chain is the series of activities involved in taking a product from raw materials to consumers. Options A, C, and E are not commonly used terms and do not accurately describe the process. Option B could be a valid answer, but value chain is the more commonly used term in business.

Question 7

________ involves a firm's relationship with its suppliers and involves all the activities of receiving, storing, and shipping component parts to the place where they will be added to the final product.
A) Resource procurement
B) Operations
C) Outbound logistics
D) Technology development
E) Inbound logistics

Accepted Answer

Inbound logistics involves all the activities related to receiving, storing, and shipping component parts to the place where they will be added to the final product. This includes managing relationships with suppliers and ensuring that the necessary resources are available for production.

Question 8

The four components of a firm's business model are:
A) marketing plan, core strategy, business plan, and customer interface
B) core strategy, strategic resources, partnership network, and customer interface
C) economic environment, social environment, technological environment, and legal-regulatory environment
D) opportunity recognition, feasibility analysis, business plan, and human resource plan
E) marketing plan, operating plan, financial plan, and human resource plan

Accepted Answer

The four components of a firm's business model are its core strategy, strategic resources, partnership network, and customer interface. These components are interconnected and work together to create a sustainable business model that generates value for the firm and its customers. The core strategy defines the firm's unique value proposition, while the strategic resources and partnership network enable the firm to deliver that value proposition effectively. The customer interface encompasses all interactions between the firm and its customers, including marketing, sales, and customer support.

Question 9

The What Went Wrong? feature in Chapter 6 focuses on Joost, a company that launched in 2006 as a premier online video service that aggregated and streamed premium video online. Joost failed just three years after it launched. According to the feature, Joost's most critical mistake dealt with subtle aspects of its business model. In particular, its:
A) core strategy wasn't focused
B) pricing model was misguided
C) partnership network never came together
D) customer interface was poorly conceived
E) customer service strategy was poorly executed

Accepted Answer

According to the feature, Joost's most critical mistake was that its core strategy wasn't focused. This means that Joost lacked a clear and specific direction in terms of its business model, which ultimately led to its failure.

Question 10

The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on three business model innovators: Warby Parker, Shopkick, and SunRun. What is Shopkick's business model innovation?
A) rewarding shoppers by the number of times they visit a Web site
B) rewarding shoppers by simply walking into a retail store
C) rewarding shoppers by the amount of time they spend in a particular store
D) rewarding shoppers by the number of times they visit a particular store
E) rewarding shoppers by the number of times they "tweet" about a particular store on Twitter

Accepted Answer

Shopkick's business model innovation is to reward shoppers for simply walking into a retail store, without requiring them to make a purchase. This is achieved through a mobile app that uses location-based technology to track when a user enters a store and then provides them with points that can be redeemed for gift cards or other rewards. This incentivizes consumers to visit physical stores rather than just shopping online, and also allows retailers to track foot traffic and engage with customers in real-time.

Question 11

Which of the following is not one of the components of a firm's business model?
A) core strategy
B) strategic resources
C) partnership network
D) business plan
E) customer interface

Accepted Answer

A business plan is a document that outlines a company's goals and strategies, but it is not one of the components of a firm's business model. The other choices listed - core strategy, strategic resources, partnership network, and customer interface - are all key components of a business model.

Question 12

The term ________ refers to initiatives, such as Netflix in movie rentals and Zipcar in car sharing, which revolutionize how products are sold in an industry.
A) product model modernism
B) business model innovation
C) feasibility analysis innovation
D) value innovation
E) opportunity innovation

Accepted Answer

Business model innovation refers to the creation or reinvention of a business model, which can revolutionize how products or services are delivered in an industry, as seen with Netflix and Zipcar.

Question 13

Which of the following is not one of the purposes of a business model?
A) serves as an ongoing extension of feasibility analysis
B) serves as a template for conducting industry analysis
C) focuses attention on how all the elements of a business fit together
D) describes why the network of participants needed to make a business idea viable is willing to work together
E) articulates a company's core logic to all stakeholders

Accepted Answer

The answer of Which of the following is not one...

Question 14

In the WebHouse example included in Chapter 6, WebHouse failed because:
A) it did not complete a feasibility analysis
B) it did not write a complete business plan
C) it couldn't motivate its suppliers or customers to participate at a sufficient scale to support the overhead of the business
D) it charged too much for its services
E) it failed to focus on developing a core strategy

Accepted Answer

The given explanation states that WebHouse failed because it couldn't motivate its suppliers or customers to participate at a sufficient scale to support the overhead of the business. This suggests that the primary reason for failure was the lack of sufficient participation from suppliers and customers, leading to inability to generate enough revenue to cover costs.

Question 15

Stroome, the focus on the opening feature for Chapter 6, has developed a new Web-based service for editing and remixing video. Stroome's initial business model is based on making money in the following two ways:
A) subscription fees and licensing its software to film producers
B) a "freemium" pricing model and white labeling its site
C) online advertising and affiliate fees
D) white labeling its site and subscription fees
E) Google AdSense and affiliate fees

Accepted Answer

Stroome's initial business model is based on a "freemium" pricing model, which means that they offer basic services for free but charge for premium features. They also plan to white label their site, which means that they will allow other companies to customize and use their technology under their own brand name.

Question 16

Which of the following is a "support" activity in the value chain?
A) inbound logistics
B) service
C) marketing and sales
D) outbound logistics
E) resource procurement

Accepted Answer

Resource procurement is considered a support activity in the value chain, as it involves acquiring the necessary resources to support primary activities.

Question 17

Which of the following is not a "primary" activity in the value chain?
A) inbound logistics
B) marketing and sales
C) service
D) technology development
E) outbound logistics

Accepted Answer

The primary activities in the value chain include inbound and outbound logistics, operations, marketing and sales, and service. Technology development is considered a support activity in the value chain.

Question 18

Catherine Smith has just finished writing a business plan for a startup in the medical products industry. She has now reached the point where she needs to develop a plan for how her firm will compete, use its resources, structure its relationships, interface with customers, and create value to sustain itself on the basis of the profits it earns. Jennifer needs to establish her firm's:
A) tactical plan
B) feasibility plan
C) business model
D) business template
E) operating plan

Accepted Answer

The plan that Catherine needs to develop is her firm's business model, which outlines the overall strategy for how the business will create, deliver, and capture value. This includes decisions on competition, resources, relationships, customer interactions, and revenue generation. The other options listed are not as comprehensive or relevant to the task at hand.

Question 19

________ involves all the activities required to manufacture a product.
A) Resource procurement
B) Administration
C) Operations
D) Outbound logistics
E) Inbound logistics

Accepted Answer

Operations refer to all the activities and processes involved in the manufacturing of a product. This includes the production process, quality control, maintenance, and other related activities.

Question 20

In regard to business models, which of the following statements is incorrect?
A) There is a standard business model that most firms follow.
B) A firm's business model is inherently dependent on the collection of resources it controls and the capabilities it possesses.
C) It is dangerous for a company to assume that it can be successful by simply copying the business model of another firm.
D) A firm's business model is its plan or diagram for how it competes.
E) It is often difficult to determine what another firm's business model is.

Accepted Answer

There is no standard business model that most firms follow. Business models vary depending on the industry, market, and individual company's goals and resources.

Quiz 6: Developing an Effective Business Model

According to the textbook, by studying a product's or service's value chain an organization can:

Two fatal flaws can render a business model untenable from the beginning. These are:

Two fatal flaws can render a business model untenable from the beginning. These are utterly unsound economics and:

The opening feature in Chapter 6 focuses on Stroome, an exciting new Web-based service for editing and remixing video. The idea for Stroome emerged in:

Which of the following is a "primary" activity in the value chain?

The ________ is the string of activities that moves a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user.

________ involves a firm's relationship with its suppliers and involves all the activities of receiving, storing, and shipping component parts to the place where they will be added to the final product.

The four components of a firm's business model are:

The Savvy Entrepreneurial Firm feature in Chapter 6 focuses on three business model innovators: Warby Parker, Shopkick, and SunRun. What is Shopkick's business model innovation?

Which of the following is not one of the components of a firm's business model?

The term ________ refers to initiatives, such as Netflix in movie rentals and Zipcar in car sharing, which revolutionize how products are sold in an industry.

Which of the following is not one of the purposes of a business model?

In the WebHouse example included in Chapter 6, WebHouse failed because:

Stroome, the focus on the opening feature for Chapter 6, has developed a new Web-based service for editing and remixing video. Stroome's initial business model is based on making money in the following two ways:

Which of the following is a "support" activity in the value chain?

Which of the following is not a "primary" activity in the value chain?

________ involves all the activities required to manufacture a product.

In regard to business models, which of the following statements is incorrect?