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Test answers for Business Plans Test 2016

(6 / 73) Last updated: October 25
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6 Answered Test Questions:

1. How could a video rental outlet stand out above their competitors in a positive way?

Answers:

• Guaranteeing availability of all videos

• Charging more by claiming better quality

• Having less staff and creating longer waiting time

• Having fewer locations and thus making it exclusive

2. How does a company assess the performance of its marketing efforts?

Answers:

• By looking at the total revenue and assuming part of it came from marketing

• By dividing marketing expenses by revenue

• By just assuming the more the company spends on marketing, the more it makes

• By tracking where customers are coming from and weighing the cost of marketing against the number of customers and their spending

3. How is "distribution and delivery" defined?

Answers:

• How a company receives its inventory

• How a customer pays for its product

• How a customer learns about its product

• How a customer actually receives its product

4. Why is it important to talk about competition?

Answers:

• It is not important; competition should be ignored

• You want to compliment them in your plan so they like you and your company

• They can sue you if you ignore that they exist and lie to the reader

• Everyone has competition. It is best to address the competition and plan how your firm will stack up against it

5. How detailed should a business plan be?

Answers:

• As detailed as possible, making each section very clear and specific

• Very vague, leaving the reader having to ask several questions

• Somewhat clear, answering general questions but including nothing specific

• None of the above

6. How far into the future should revenue be projected in a business plan?

Answers:

• 2 years

• 6 months

• 1 year

• 5 years


73 NOT Answered Yet Test Questions:

(hold on, will be updated soon)
7. What would a Market Follower strategy be distinguished by?

Answers:

• A company who attacks the market leader

• A company who turns a few heads but does not challenge the market leader

• A company on the verge of going out of business

• A company who wants to enter new markets

8. What is a value chain?

Answers:

• The sequence of activities a business takes to add value to its products and services

• A list of questions directed at past clients

• An award given to industry leaders

• A marketing strategy

9. What is meant by "top down" budgeting?

Answers:

• Starting with specific forecasts by department and then rolling them up

• Starting with high level numbers and breaking down into subcategory amounts

• Allowing several people to contribute to the budget

• Budgeting for the next 10 years

10. Where would company valuation be discussed?

Answers:

• Market

• Marketing

• Financial section

• Executive Summary

11. Why are companies able to stay in business during turbulent financial market times?

Answers:

• They have saved up enough money; they can use these savings to bolster their earnings

• They frequently lay off people thus running a bare bones company

• They have designed a flexible business model that can adapt to change

• They don't; most if not all companies go out of business

12. What is the purpose of creating a valuation statement of the company?

Answers:

• It is required for financial statements

• To work with investors and determine what percentage of equity to give away for investments

• To entice private investors by giving them an unrealistic view of what the company is worth

• The IRS will require it with the tax return

13. What is meant by Relationship Marketing?

Answers:

• Placing ads on the television

• Going door to door to market the company

• Sending out coupons to customers

• The opposite of Mass Marketing ??? connecting with customers directly, one to one

14. What is Blockbuster Videos business model?

Answers:

• It sells candies

• It hires unemployed war veterans

• It sells high quality goods at discounted prices

• It rents dvds for a fee

15. What best describes a cost-leadership strategy?

Answers:

• Focus on product quality

• Focus on marketing

• Focus on pricing

• None of the above

16. Which of the following would be a mistake in forecasting?

Answers:

• Using unrealistic expectations

• Creating a detailed revenue projection

• Creating a set of assumptions on which the forecast is built

• Making a forecast for several years

17. Which of the following would be a value proposition?

Answers:

• Wal-Mart offers the cheapest prices around on a wide range of merchandise.

• Wal-Mart uses coupons to entice visitors to the store

• Wal-Mart hires elderly people

• Wal-Mart is always busy

18. What type of company would never need a business plan?

Answers:

• A hockey equipment manufacturer

• A new online service based company

• A shoe retailer

• None of the above

19. Which of the items below is NOT a purpose of a business plan?

Answers:

• Informing potential investors of the company's business model

• Offering shares of the company for sale

• Letting the employees know the purpose of the business

• Helping the management by providing them with a road map

20. Which of the following factors would be used in estimating revenue?

Answers:

• Current telephone rates

• Number of employees

• Market size

• Interest rates

21. In which section of a business plan would the company's mission statement be located?

Answers:

• Business Model

• Financial Projections

• Market

• Management

22. Why would a company's website be considered a part of its marketing effort?

Answers:

• It is a way to reach out to current and potential customers with information about its product and its value proposition

• It falls under the marketing budget

• The web designer's salary falls under marketing

• The company can offer coupons to customers by creating it

23. Where might a potential competitor come from?

Answers:

• An established company in a different industry could easily expand into your market

• Any company in any industry is a threat

• Some employees may leave and start their own companies

• Some members of the management could leave and start their own company

24. What is one of the ways to establish who your competitors are?

Answers:

• Conduct a survey

• Ask the government

• Pay a detective firm to find out

• Determine your customer base and look at their alternatives

25. What is one of the criteria that a flower delivery company could distinguish itself by on the market?

Answers:

• Charging more

• Timeliness of the deliveries

• Their delivery people are all over age 45

• They have the latest cash register on the market

26. Would a company that produces a complementary product to yours be considered a competitor (e.g. a tennis ball maker and a tennis racket maker)?

Answers:

• Yes, they will try to put you out of business for sure

• Yes, they could expand into your market with their industry expertise

• No, they are restricted by law against entering your market

• No, they won't know how to enter your market

27. Why is it important to have an executive summary?

Answers:

• It is required by law

• It urges the reader to read the entire plan to learn more

• It gives the reader a quick 1 to 2 page summary of the entire business plan without having to read the whole document

• It can be used to sell the shares of the company

28. Why is it important to identify your market segments?

Answers:

• It is required by law

• The company will fail without the information

• It is required for budgeting

• You need to tailor your marketing strategy and products to each market segment differently

29. Why is it important to hire intelligently early on?

Answers:

• You can pay lower rates if you hire early on

• It is easier to fire people who were hired early

• There are tax benefits

• Having key management people in place is important as they will aid in making important decisions early on

30. What is meant by "market segments"?

Answers:

• Different areas of the market

• Different categories of customers

• Different ways to reach the customer

• The various product lines of the company

31. What would sending coupons to prior customers directly be considered?

Answers:

• Target Marketing

• Mass Marketing

• Radio Marketing

• Coupon Forwarding Marketing

32. What role does marketing play in a company's business life?

Answers:

• It creates a tax obligation

• It is how it makes potential customers aware of its products and services

• It is part of the ordering process

• It is part of the financial reporting process

33. What strategy should a new company wanting to enter a market employ?

Answers:

• Market to everyone on earth and see what happens

• Look at the market leader and attempt to steal all of their clients

• Spend every cent they can on online advertising

• Focus on smaller, ignored territories to gain a foothold

34. What is the DuPont formula?

Answers:

• The basic balance sheet formula

• The basic P&L formula

• A formula to show how cash flow is calculated

• A formula created by the DuPont company to help capture all the ingredients of Return on Equity

35. What should a company do if they do not have a marketing plan?

Answers:

• Omit the marketing section completely

• Leave the section blank or write N/A

• Determine the company's marketing plans and realize every company needs some form of marketing

• Copy someone else's marketing plan

36. In which section of a business plan would you talk about the CEO?

Answers:

• Management

• Financial Projections

• Market

• SWOT

37. What is a business model?

Answers:

• A marketing plan

• A financial plan

• A description of what your company does and how it makes money by doing it

• A mini model of the company's headquarters

38. What should be considered while deciding a firm's strategy?

Answers:

• The competitors and the strategy they have employed

• How much the company wants to spend on payroll

• If there is a potential for a lawsuit

• None of the above

39. What is a competitive advantage?

Answers:

• A feature which distinguishes your company from the others and will help it to achieve success

• A listing of competitors

• A marketing strategy

• An advantage your competitors have over you

40. Why is it important to know the entire potential market even if your company can only focus on a small segment?

Answers:

• The total market dictates what the individual market size will be and what the maximum potential size is

• It is needed for company financial reports

• You can expand the company to reach the entire market

• There is no real reason to know

41. What is an advantage of making a competitor analysis?

Answers:

• It is required by law

• It fills out sections of the business plan so it looks impressive

• It find weaknesses in competitors business models and exploit them

• It can lead to lower tax obligations

42. What marketing method is a gas station most likely to use?

Answers:

• Door to door sales

• Online advertisements

• Television ads

• Coupons distributed locally to the residents

43. What is meant by Target Marketing?

Answers:

• Placing a television ad during prime time spots

• Directing your marketing efforts towards a specific demographic or customer type

• Handing out flyers at a football game

• Marketing outside of the Target retail store

44. What is the purpose of a cash flow forecast?

Answers:

• To forecast the company's cash flow and also see if and when the company will ever run out of cash at all

• To fulfill a legal requirement

• To predict profit and loss

• To show if the company can afford to take on investors

45. What is a way to segment the market?

Answers:

• By their looks

• By their geographical location

• By their dreams

• By their library status

46. Why is it okay to let some competitors' moves go unanswered?

Answers:

• Companies should focus on their own initiatives rather that constantly respond to other companies actions

• Let the competitors succeed or fail first before responding to their moves

• It is better to be a follower and always follow the competition

• Competitors always make stupid decisions

47. What is meant by Value Proposition?

Answers:

• The same as by marketing strategy

• How a company plans to raise capital

• How a company plans to price their product

• A promise of value to be delivered and a belief from the customer that value will be experienced.

48. What has been the trend in marketing in the last few decades?

Answers:

• Marketing to mass markets

• Moving towards smaller marketing schemes, more direct to the customer

• Spending less on marketing as it does not really reward the company

• Getting away from the internet and spending more on television advertising

49. How might a company learn more about its market and what drives the customers to purchase their product?

Answers:

• Contact focus groups and gain valuable information directly from the customers

• Make assumptions and go with them

• Ask the competitors and assume it's the same for your company

• There is no way to find out

50. What section of the financial forecast would expenditure on telephones be forecasted under?

Answers:

• Revenue

• Cost of goods sold

• Short term liabilities

• SG&A

51. What is one of the reasons for the failure of companies?

Answers:

• Their product sells too well

• They fail to make a marketing plan

• Lack of long term vision and planning

• The management is over qualified

52. Where would the Financial Projections typically be located in a business plan?

Answers:

• In the middle of the plan

• In the final section before the appendix

• In the first section before the executive summary

• In the section after the executive summary

53. What is a characteristic of a market leader strategy?

Answers:

• Follows the strongest company in the industry

• Goes out of business first

• Copy cats other companies

• Makes the first moves and distinguishes itself as the prominent player in the industry

54. What are the minimum financial statements that should be included in a business plan?

Answers:

• Statement of Retained Earnings and P&L

• Income Statement, Balance Sheet, Statement of Cash Flow

• Only profit projections for five years

• Cash Flow, Balance Sheet and Statement of Retained Earnings

55. What best describes a differentiation strategy?

Answers:

• Emphasis on the unique benefits of the product or service

• Focus on product pricing

• Focus on marketing

• None of the above

56. Which of the following could be a core competency of a company?

Answers:

• No marketing plan in place

• Ability to change direction quickly

• High labor burden rates

• Inexperienced management team

57. What would be the best methodology to follow while creating a forecast?

Answers:

• Be conservative

• Be extravagant

• Base it on a competitor's

• Copy someone else's so you don't have to take any pains

58. What is a "Pay Per Click" marketing campaign?

Answers:

• Television advertising based on channel changing

• Radio advertising

• Online advertising where a company pays each time their advertisement is clicked on, typically on a website where the company's target market would often be found

• Print ads distributed with newspapers

59. Why would a new company spend most of their budget on marketing?

Answers:

• Investors want to see their money spent on marketing

• There is nothing else to spend the money on in the early stages

• It is a requirement of SEC for new companies

• To establish a client base early on

60. What are core competencies?

Answers:

• Things your company is not good at

• What your competition is good at

• The management team

• Things that you and your company are the strongest at

61. Would you ever consider talking to your competitors directly?

Answers:

• No, you do not want to give away any information about the company

• Only if you can get them to talk without you having to talk

• Yes, but only if they pay you for information

• Yes, companies often discuss their business models with competitors as it is often not a secret, and both parties can benefit

62. Which of the following terms best describes how a company can make itself stand out from the competitors?

Answers:

• Differentiation

• Marketing

• Doing a business plan

• Stealing employees

63. Why is it important to track your competitors?

Answers:

• They might be indulging in illegal activities

• You can steal their employees

• To look for the moves they are making which could impact your business

• You can steal their proprietary ideas

64. What policy should be followed regarding employees and the company strategy?

Answers:

• Never let employees know the strategy; they are there just to do their job and nothing more

• Only let top executives know the company's strategy

• Let everyone know the company strategy and how they will accomplish it

• Require employees to sign a non disclosure before reading it

65. Which of the following strategies has warehouse reseller Costco taken?

Answers:

• High prices, selected goods

• A strategy similar to that of a regular grocery store

• Low priced items but a limited selection

• A wide variety, low price, no frills shopping experience with a membership

66. What is meant by vertical integration?

Answers:

• A product sold to marketing firms

• Being involved in many stages of the industry

• Focusing on one aspect of your industry

• Using new age software

67. What section would SWOT analysis typically be in?

Answers:

• Financial Highlights

• Executive Summary

• Business Model

• Market

68. What market segment is an airline offering no frills targeting?

Answers:

• Price sensitive people

• Rich people

• Time sensitive people

• Anyone who will fly their airline

69. What should be the minimum length of a business plan?

Answers:

• 2 pages at the most

• At least 50 pages

• At least 100 pages

• There are no predefined standards

70. Why is it important to talk about market timing?

Answers:

• There are laws about entering a market in an off time

• There are no preferred times to enter a market, it is irrelevant

• While there is no good time to enter a market, it is important to discuss them

• Several industries are cyclical and there are advantages in entering a market which is just beginning on an upswing

71. What is the purpose of a what-if analysis?

Answers:

• It is required by law

• It shows the preparer is intelligent

• It shows the forecasted numbers under different scenarios, both good and bad

• It shows what happens if the firm doesn't receive investment capital

72. Which of the following would you factor into long term liabilities?

Answers:

• Loans the company has to take

• Interest rates

• Current depreciation rates

• Revenue projections

73. Which of the following is one of the groups a business plan is meant to inform?

Answers:

• The SEC

• Government entities

• Potential investors

• The IRS

74. Which of the following is a traditional method of marketing?

Answers:

• Pay Per Click

• Television advertisements

• Search Engine Optimization

• None of the above

75. Why would a company with a very rigid business plan possibly face trouble?

Answers:

• Competitors will more easily mimic their business model

• They will run out of money quicker

• The management will not stay with the company

• It will be unable to change as the market changes

76. What is one of the ways to track your competitors?

Answers:

• To keep track of publicly available financial statements

• Ask your employees to spy on them

• Bribe one of their employees

• Assume they do better than you

77. Which of the following would not typically be a section in a business plan?

Answers:

• Executive Summary

• Financial Projections

• Market

• Payroll Policies

78. Why should a business plan be revisited annually?

Answers:

• To make sure the company gets its money's worth out of the business plan cost

• Because the company's values, objectives, strategies and forecasts keep changing

• It is required by law

• It helps the management to look intelligent to the employees

79. What is meant by Market Demographics?

Answers:

• The number of people in the market

• Age, gender, racial, educational, occupational, religious characteristics

• The population of the country being marketed to

• Buying trends of the market