SBM - Chapter 5 Review

The second essential purpose for creating a business plan is ________.

• to guide the operation of the company by charting its future course and devising a strategy for following it

• to attract lenders and investors

• to file with the SEC before a public stock offering

• to attract potential managers and employees to run the new venture

The three "tests" associated with a business plan are ________.

• reality, competitive, and value

• competitive, profitability, and value

• value, reality, and profitability

• reality, value and litmus

The competitive test that a business plan must pass to attract financing from lenders and investors involves proving ________.

• that the company can gain a competitive advantage over its key competitors

• that the business venture will provide lenders and investors a high probability of repayment or an attractive rate of return

• that a market for the company's product or service actually does exist and that the company can actually build it for the cost estimates included in the plan

• that the industry in which the business will compete is growing faster than the overall economy and has room for more competitors

The value test that a business plan must pass to attract financing from lenders and investors involves proving ________.

• that the company can gain a competitive advantage over its key competitors

• that the business venture will provide lenders and investors a high probability of repayment or an attractive rate of return

• that a market for the company's product or service actually does exist and that the company can actually build it for the cost estimates included in the plan

• that the industry in which the business will compete is growing faster than the overall economy and has room for more competitors

Which of the following is true about the preparation of a business plan?

• The format should follow a "cookie-cutter" approach to ensure uniformity and consistency with others and to promote ease of understanding.

• The elements of the plan may be standard, but the content should reflect the unique aspects of the business and the excitement of the entrepreneur.

• The plan should cover every standard element in great detail and be at least 100 pages long to prove to potential lenders and investors that the entrepreneur has studied the business and the market opportunity.

• The entrepreneur should avoid seeking the advice of professionals, such as accountants, business professors, and attorneys.

The ________ is also known as the "elevator pitch" and is written last, but is included as the first part of the business plan and should summarize all the relevant points.

• loan proposal

• business history

• business profile

• executive summary

The ________ serves as the "thesis statement" for the entire business plan and is the broadest expression of a company's purpose and defines the direction in which it will move.

• executive summary

• mission statement

• company history

• marketing strategy

Which of the following is not one of the three components of intellectual capital?

• Human

• Structural

• Competitor

• Customer

________ involves developing a game plan to guide a company as it strives to accomplish its mission, goals, and objectives to keep it on its desired course.

• Competitive advantage

• Mission

• Strategic management

• Market segmentation

The value proposition that sets a company apart from its competitors and gives it a unique position in the market, superior to its competition, is its ________.

• mission statement

• competitive advantage

• competitive profile

• strategic plan