Small Business An Entrepreneur’s Business Plan 9th Edition By Gail Hiduke – Test Bank

Complete Test Bank With Answers

Sample Questions Posted Below

Chapter 5—Reading and Beating the Competition

TRUE/FALSE

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. The market-based economy has changed the way business has to view competition.

ANS: F PTS: 1 REF: p. 121

Once you have established your market niche, it is not important to change your product.

ANS: F PTS: 1 REF: p. 121

The only competition that you should be concerned with are your direct competitors.

ANS: F PTS: 1 REF: p. 122

A competitor profile includes data to track competitors and their behavior.

ANS: T PTS: 1 REF: p. 123

Competitive touchpoint analysis is primarily to help stop shoplifting.

ANS: F PTS: 1 REF: p. 123

One potential element of a customer profile is an investigation into their patents and trademarks.

ANS: T PTS: 1 REF: p. 124

The key to evaluating customer touchpoints is working with a group of your target customers.

ANS: T PTS: 1 REF: p. 125

Competitive intelligence is generally a job for a single person within an organization.

ANS: F PTS: 1 REF: p. 126

When writing your Business Plan it is important to include all your customer touchpoints.

ANS: F PTS: 1 REF: p. 125

The objective of competitive intelligence is to eliminate your competitors.

ANS: F PTS: 1 REF: p. 126

Suppliers are a good source for gathering information about competitors.

ANS: T PTS: 1 REF: p. 129

Competitive intelligence is only used for long-term decision.

ANS: F PTS: 1 REF: p. 12913. 14. 15. 16. 17. 18. 19. 20. 21. 21. 22. 23. 24. Detailed, competitive information on the Internet comes at a very high cost.

ANS: F PTS: 1 REF: p. 130

Trade shows are generally a good source for market data.

ANS: T PTS: 1 REF: p. 130

It is easy to be a leader in all three value disciplines.

ANS: F PTS: 1 REF: p. 134

The best information on your competitors comes from your customers.

ANS: T PTS: 1 REF: p. 132

Entrepreneurs frequently overestimate the power of their competitors.

ANS: F PTS: 1 REF: p. 134

A good positioning strategy will ensure you get the right space in the mall.

ANS: F PTS: 1 REF: p. 136

The market is generally largest in the decline stage.

ANS: F PTS: 1 REF: p. 137

In a high-tech business, a typical life cycle is 3 – 6 years.

ANS: F PTS: 1 REF: p. 137

In a mature market, a change in the arena usually means opportunity.

ANS: T PTS: 1 REF: p. 139

Distribution becomes increasingly important in the growth stage of a market.

ANS: T PTS: 1 REF: p. 138

The ISO forms a bridge between the private and the public sector.

ANS: T PTS: 1 REF: p. 135

Making a change in the arena can spell opportunity in a declining market.

ANS: F PTS: 1 REF: p. 137

The easiest way to compete is by changing your price.

ANS: F PTS: 1 REF: p. 13925. 26. 27. A competitor matrix gives you a good picture of your major competitors.

ANS: T PTS: 1 REF: p. 140

DLC Resources, Inc. has grown by focusing on increasing their number of landscaping contracts.

ANS: F PTS: 1 REF: p. 143

Change is the most predictable element of competition.

ANS: T PTS: 1 REF: p. 142

MULTIPLE CHOICE

1. 2. 3. 4. The following has changed the way a business views competition:

a. The knowledge-based economy

b. Technology

c. Informed customers

d. All of the above

ANS: D PTS: 1 REF: p. 121

Never underestimate the power of your ____ competitors.

a. Indirect

b. Market

c. Direct

d. Invisible

ANS: A PTS: 1 REF: p. 122

An example of a customer touchpoint is:

a. An advertisement

b. The floor of the store

c. The store sign

d. All of the above

ANS: D PTS: 1 REF: p. 123

Businesses that have the capacity or desire to provide the same products you do are known as:

a. Indirect competitors

b. Market competitors

c. Invisible competitors

d. Direct competitors

ANS: C PTS: 1 REF: p. 122

5. Competitive touchpoint analysis:

a. b. c. Forces you to acknowledge your competitor’s strengths and weaknesses

Helps identify areas you should not compete

Identifies what you must provide to be successful

d. All of the above

ANS: D PTS: 1 REF: p. 1236. An area of greatest strength in the marketplace is:

a. Competitor matrix

b. Customer touchpoint

c. Distinctive competency

d. Market segment

ANS: C PTS: 1 REF: p. 125

7. Competitor profile elements:

a. b. c. Include keeping an eye on direct competition only

Include an analysis of the key players in the company

Do not include an analysis of financial statements

d. All of the above

ANS: B PTS: 1 REF: p. 124

8. Competitive Intelligence:

a. Is part of all best-in-class companies

b. Is an invention of the 20th century

c. Is a true forecasting tool

d. All of the above

ANS: A PTS: 1 REF: p. 129

9. Secondary research:

a. Should only be done using the Internet

b. Is generally very expensive

c. Prepares you for primary data searching

d. All of the above

ANS: C PTS: 1 REF: p. 131

10. Operational excellence:

a. Is one of three value disciplines

b. Is practiced by Apple

c. Is difficult to achieve in large multi-product companies

d. All of the above

ANS: A PTS: 1 REF: p. 134

11. The International Organization for Standardization (ISO):

a. b. c. Forms a bridge between the private and the public sector

Allows suppliers to offer products that have wide international acceptance

Makes technology transfer easier and safer

d. All of the above

ANS: D PTS: 1 REF: p. 135

12. In the embryonic stage of an industry, competition:

a. Is high

b. In almost non existent

c. Becomes desperate

d. Is fierce

ANS: B PTS: 1 REF: p. 13713. During the growth stage of a product life style:

a. b. d. Pricing is high and experimental

Design focuses on product differentiation instead of improvement

c. Competition is strong

Opportunities for service and repair emerge

ANS: C PTS: 1 REF: p. 137

14. If you are in a mature industry, one of the best ways to survive profitably is to:

a. Give better service

b. Cut prices

c. Not make any changes to your products

d. Do more marketing research

ANS: A PTS: 1 REF: p. 139

15. As the industry matures:

a. Competition gets fierce, and you are forced to steal customers to survive.

b. You can take a laid-back attitude because there is no competition

c. You can increase your prices to increase your profitability

d. None of the above.

ANS: A PTS: 1 REF: p. 137

16. In the decline stage of the life cycle:

a. Research and development ceases

b. Unit cost increases because capital equipment is paid for

c. Product innovation is strong

d. Many new firms enter the market

ANS: A PTS: 1 REF: p. 139

17. A competitor matrix:

a. Is constructed to rank your competitors

b. May result in the discovery of an underserved market

c. Helps find areas of vulnerability

d. All of the above

ANS: D PTS: 1 REF: p. 140

18. Because of changes in competition, it is important to:

a. b. c. Keep your products and services stable

Always be ready with Plan B

Try to excel in all three value disciplines

d. All of the above

ANS: B PTS: 1 REF: p. 142SHORT ANSWER

1. Describe indirect competitors.

Indirect competitors are companies or individuals that provide the same benefit as perceived by your

PTS: 1 REF: p. 122

2. ANS:

Target Customer.

Describe the contents of a competitor profile.

ANS:

of your competitors.

A competitor profile includes data needed to identify, classify and track past, current and future actions

PTS: 1 REF: p. 124

3. Describe a positioning strategy.

ANS:

A positioning strategy is where you try to place a product in the customer’s eye through pricing,

promotion, product, and distribution.

PTS: 1 REF: p. 136

4. What is meant by a change in the arena?

ANS:

customer appeal.

A change in the arena is transforming a product or service by adding a benefit that has immediate

PTS: 1 REF: p. 139

5. Explain how to construct a Competitor Matrix.

ANS:

List all your major competitors on the vertical axis. List all the important benefits to your Target

Customers and vital elements for the operational success of your business in order on the horizontal

axis.

PTS: 1 REF: p. 140