Patterns of Entrepreneurship Management 4th Edition by Kaplan – Test Bank

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Chapter 5: Writing the Winning Business Plan

 

True/False

 

  1. The main purpose of writing a business plan is to test the viability of the business idea and set a path for the entrepreneur to follow.

Ans: True                                                        Page: 109

 

  1. A business plan allows for bank loans and investors to gain insight into the business idea and determine the financial requirements.

Ans: True                                                        Page: 110

 

  1. A business plan is a 45 to 60 page written document that describes where a business is heading and how it hopes to achieve its goals and objectives.

Ans: False                                                       Page: 110

 

  1. The single most important reason for preparing a business plan is to secure needed human resources.

Ans: False                                                       Page: 111

 

  1. A business plan is a first attempt at controlling entrepreneurial life.

Ans: False                                                       Page: 111

 

  1. Writing a business plan guarantees that problems do not come up.

Ans: False                                                       Page: 111

 

  1. Research finds that it will take at least three hundred hours of dedicated effort to produce a good plan.

Ans: False                                                       Page: 114

 

  1. The marketing and sales strategy section of the business plan describes how the business will implement the marketing plan to achieve expected sales performance.

Ans: True                                                        Page: 116

 

  1. To protect the human resource talent and competitive positioning, the management team’s talents and skills should not be detailed in the management team section of the business plan.

Ans: False                                                       Page: 118

 

  1. Fortunately, the financial plan is the most flexible part of a business plan in terms of format.

Ans: False                                                       Page: 119

 

 

 

Short Answer / Fill in the Blank

 

  1. A(n) ________ serves as a blueprint for building a company.

Ans: business plan                                          Ans: 110

 

  1. An entrepreneur should use a(n) ________ business plan when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers.

Ans: full                                                          Page: 113

 

  1. A(n) _________ is a two-to-five page document that contains the most important information about the business and its direction.

Ans: executive summary plan                         Page: 113

 

  1. _______ pricing is when the business sells the products or services based on demand or whatever the market will bear.

Ans: Demand                                                  Page: 117

 

  1. ________ are individuals who buy products, often overseas, directly from the distributor and sell them to retailers or end users.

Ans: Brokers                                                   Page: 117

 

  1. The term _______ is used to describe when products and services are sold through a web site or through Internet partner alliances.

Ans: Web E-commerce                                   Page: 117

 

  1. ________ most often reflects at least quarterly performance for the first year.

Ans: Projected income statements                  Page: 119

 

  1. The _______ should reflect the company’s financial position at its inception.

Ans: current balance sheet                              Page: 119

 

  1. The funds required and uses section of the business plan should describe how much _______ is required to finance the business, where these funds will be spent, and when they will be needed.

Ans: money                                                     Page: 120

 

  1. A business plan may fail because the _______ is unclear, not concise, and not specifically targeted to the intended audience.

Ans: executive summary                                 Page: 120

 

Multiple Choice

 

  1. The business plan’s primary purpose is to:
    1. develop new applications.
    2. guide the entrepreneur.
    3. avoid competition.
    4. provide a historical perspective of the venture.

Ans: B                                                             Page: 109

 

  1. Which of the following is not one of the ways that the business plan will determine if the business has a chance of becoming successful?
    1. Decrease the likelihood of the venture’s success.
    2. Test the feasibility of the business concept.
    3. Attract bank loans and investors.
    4. Improve your business planning process to become more manageable and effective.

Ans: A                                                             Page: 109

 

  1. How long is a typical business plan?
    1. 45-50 pages
    2. 25-40 pages
    3. 60-80 pages
    4. 20-22 pages

Ans: B                                                             Page: 110

 

  1. Which of the following is not one of the three essential reasons to prepare a business plan?
    1. Entrepreneurs reap benefits from the planning activity itself.
    2. The plan provides a basis for measuring actual performance against expected
      1. performance.
    3. The plan acts as a vehicle for communicating to others what it is that the business
      1. is trying to accomplish.
    4. The plan is to attract competitors’ action.

Ans: D                                                             Page: 110

 

  1. Which of the following is the first step in the process to write the business plan?
    1. Draft the Outline
    2. Review the Outline
    3. Draft the Plan
    4. Identify the Objectives

Ans: D                                                             Page: 111

 

  1. Which of the following is the third step in the process to write the business plan?
    1. Draft the Outline
    2. Review the Outline
    3. Draft the Plan
    4. Identify the Objectives

Ans: B                                                             Page: 112

 

  1. Detailed support for any assumptions and assertions made in the business plan should be available in what stage of writing the business plan?
    1. Draft the Outline
    2. Review the Outline
    3. Draft the Plan
    4. Identify the Objectives

Ans: B                                                             Page: 112

 

  1. Which of the following is the fourth step in the process to write the business plan?
    1. Draft the Outline
    2. Review the Outline
    3. Draft the Plan
    4. Have the Plan Reviewed and Updated

Ans: C                                                             Page: 112

 

  1. Which of the following is not part of the executive summary?
    1. Business Concept
    2. Financial Features
    3. Success Factors
    4. Temporary Position

Ans: D                                                             Page: 113

 

  1. An entrepreneur should use a(n) _____ when he or she needs to describe the business in detail to attract potential investors, strategic partners, or buyers.
    1. executive summary plan
    2. full business plan
    3. action plan
    4. target plan

Ans: B                                                             Page: 113

 

  1. A document the management team uses to implement the plan is called the:
    1. Executive summary plan
    2. Full business plan
    3. Action plan
    4. Target plan

Ans: C                                                             Page: 113

 

  1. The business plan should be read by:
    1. The key employees of the venture.
    2. Potential customers.
    3. A and B only.

Ans: D                                                             Page: 113

 

  1. Which of the following is NOT addressed in the business plan?
    1. Target customer
    2. Competition
    3. Market constraints
    4. Government’s role

Ans: D                                                             Page: 114

 

  1. The purpose of the title page is:
    1. to provide contact information about the company.
    2. Indicate the length of the plan.
    3. Questionable, especially to investors.
    4. Both A and B.

Ans: A                                                             Page: 114

 

  1. How long should the executive summary be?
    1. One page
    2. Four to six pages
    3. Two to three pages
    4. 8-10 pages

Ans: C                                                             Page: 115

 

  1. Writing the overview of the company, industry, products, and services addresses all of the following questions except:
    1. What is the business?
    2. How much money will the business bring in?
    3. What customers will it serve?
    4. Where is it located, and where will it do business?

Ans: B                                                             Page: 115

 

  1. Which marketing section should define how the business will use its marketing tools?
    1. Market Opportunity
    2. Competition
    3. Marketing Strategy
    4. Sales Forecasts

Ans: C                                                             Page: 115

 

  1. Which marketing section presents financial projections in the financial section of a business plan?
    1. Sales Forecasts
    2. Market Research
    3. Support Material
    4. Competition

Ans: A                                                             Page: 116

 

  1. Which type of pricing includes all costs, both fixed and variable, and a profit percentage is added on?
    1. Demand Pricing
    2. Competitive Pricing
    3. Markup Pricing
    4. Cost-Plus Pricing

Ans: D                                                             Page: 117

 

  1. Which type of pricing is where the company enters a market where there is an established price and where it is difficult to differentiate one product from another?
    1. Value Pricing
    2. Competitive Pricing
    3. Markup Pricing
    4. Cost-Plus Pricing

Ans: B                                                             Page: 117

 

 

  1. In the operations section of the business plan, all of the following are included except:
    1. Maintenance and Support
    2. Manufacturing
    3. Marketing
    4. Product/Service Development

Ans: C                                                             Page: 118

 

  1. Which section of the business plan should formulate a credible, comprehensive set of projections reflecting the business’s anticipated financial performance?
    1. Financial plan
    2. Operations section
    3. Marketing analysis section
    4. Marketing and sales strategy section

Ans: A                                                             Page: 119

 

  1. All of the following information should be presented in the financial plan except:
    1. Project income statements
    2. Projected cash flow statements
    3. Competitor’s balance sheet
    4. Other financial projections

Ans: C                                                             Page: 119

 

  1. Which section of the business plan describes how much money is required to finance the business, where these funds will be spent, and when they will be needed?
    1. Operations section
    2. Marketing analysis section
    3. Funds required and uses
    4. Management plan

Ans: C                                                             Page: 120

 

  1. All of the following are typical exhibits except:
    1. Market potential
    2. Process flow
    3. Detailed financials
    4. Working capital

Ans: D                                                             Page: 120

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