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Entrepreneurship Essentials
Assignment- Week 05
TYPE OF QUESTION: MCQ/MSQ
Number of questions: 15 Total mark: 15 X 1 = 15
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QUESTION 1:

Crossing the chasm refers to

a. Crossing the valley of death that lies at the early stage of a startup.

b. A growth stage of a startup when it tries to acquire customers of the ‘Early

Majority’ type.

c. A growth stage of a startup when it tries to acquire customers of the ‘Early

Adopter’ type.
d. It is a phase of a startup when its product or service receives customers’
acceptance for the first time.

Correct Answer: b

Detailed Solution:

Innovator and early adopter types of customers constitute only 16% of the market. They are
educated and knowledgeable people with some leadership roles. People in both these groups have
some risk appetite and they are forgiving about the aesthetics and perfection of the product. But
other customers want more validation, more features, and perfection in product or service. So, it
becomes difficult to attract them. This and many other reasons such as resources for the growth
phase, need of the business process management, need of a professional CEO, etc. make it difficult
to convince and acquire customers from among the early majority.

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QUESTION 2:

Which of the following sentences is correct? Choose the one that appears the most appropriate.

a. Trend provides a great opportunity for starting new ventures with assured success.

b. One must start a business based on the forecast of the technology trend in the respective
field to achieve definite success.

c. Startups who operate at the forefront of the trend enjoy first-mover advantage and always
become successful.

d. Those who are ahead of the trend or at least at the forefront of the trend, tend to enjoy
natural advantages.

Correct Answer: d

Detailed Solution:

Nothing can assure success. Remaining ahead or with the trend is important. It offers natural
advantages. But it is anything but a sure recipe for success. Trend alone does not guarantee
success.
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QUESTION 3:

Which of the following is one of the causes of the chasm? Choose the best answer.
a. Running out of cash and not being able to continue to operate.
b. Customers do not buy the products due to the lack of product-market-fit.
c. Product not gaining acceptance by the early majority of the customers and lack of
organizational preparedness to manage growth.
d. A company fails in successfully validating its products by the customers in the
respective market.
Correct answer: c
Detailed Solution:
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The chasm is manifested by the fact that it is difficult for the product or service to gain
acceptance by the early majority, though it gains early growth among innovator and early
adopter kinds of customers. One of the main reasons for failing to acquire early-majority-type
customers due to lack capability to manage business process to handle growth beyond certain
point. Marketing may or may not be one of the reasons. But inability to attract the customers
belonging to the early majority subsumes all other reasons that may be attributed to the chasm.

QUESTION 4:

Which of the following is the most appropriate about business process management?
a. You need resources for the growth phase, need appropriate business process management,
need a professional CEO to achieve growth beyond early adopters.
b. It is most critically important at the idea selection phase for a clear understanding of
business processes that the execution of the business model will warrant.
c. It is the most critically important aspect of business for process management.
d. In the digital age, business process management is the most critically important for
business information management.
Correct Answer: a

Detailed Solution:

As such, business process management is important at every stage of the business, and those
companies who are capable of implementing a robust business process management run the
business almost autonomously. However, at the beginning, business process management does not
play a significant role. It becomes significant as the company starts acquiring an increasing number
of customers. Every section of the business needs to be revamped to meet the growing challenges
arising out of the expansion of the business. Many businesses fail at this stage because they are
found unprepared in meeting this aspect, giving rise to all-round chaos.

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QUESTION 5:

Which among the following is a correct statement?

a. If you start a business in the domain of your circle of competence you will surely achieve
success.
b. The circle of competence is the core area of the knowledge domain of your key employees.

c. One may not be a genius, but may achieve great success by focusing and remaining within
his/her circle of competence.
d. The circle of competency means your knowledge domain that you think you are expert in.

Correct Answer: c

Detailed Solution:

The ‘circle of competency’ is the area of the knowledge in which you are expert in. We all have
knowledge in many things. Most of us think that we know more things than what we actually
know. But, the fact is that every one of us has more knowledge in a particular domain than in any
other domain and we may perform better if we try to perform on something in this domain. The
circle of competency is that domain, i.e. where we are expert in.

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QUESTION 6:

Which of the following is not correct about the Waterfall model of product development?
a. It is a validated learning process that follows the build-measure-learn feedback process.
b. It is an iterative process that requires receiving feedback at every stage.
c. It is a linear process of product development that follows one-way progression.
d. It is a key component of the design thinking process of new product development.

Correct Answer: c
Detailed Solution:

The waterfall model is a linear process of product development without any interim validation by
customers/users.
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QUESTION 7:

Agile process is?

a. The agile process is about reducing waste at all possible steps.

b. A linear process in which validation is done by actual customers as the product

development process progresses.
c. A component of the agile process is the lean startup philosophy.

d. The agile process is a non-linear process of product development that follows the build-
measure-learn feedback system for validated learning.

Correct Answer: d
Detailed Solution:

Agile process is a validated learning process or an iterative process in which a large project is
broken into components and development progresses in regular collaboration with the targeted
users. It is fully an integral part of lean startup and not barely one of its components.
QUESTION 8:
A startup begins with two hypotheses: A value hypothesis and a growth hypothesis. What is the
value hypothesis?
a. The proposed product will be superior compared to those of the competitors in terms of
values perceived by the customers.
b. The proposed business will generate huge value for the nation in terms of employment,
government revenue, and wealth for the nation.
c. The proposed product or service will create great value for the company.
d. The business will create great values for all the stakeholders and sustain for a long time.
Correct Answer: a
Detailed Solution:
The value hypothesis is that the product or service being proposed will lead to a superior value
proposition compared to those of the competitors and customers will have reasons to buy our
product and not those of the competitors. The product or service will be superior only if our
value hypothesis is proven right.
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QUESTION 9:

Choose the correct statement from the following:

a. The circle of competence was originally propounded by Steve Jobs.
b. The circle of competence was originally propounded by Warren Buffett and Charlie
Munger.
c. The circle of competence is the knowledge domain that you think you know well.
d. The circle of competence is the center of your knowledge and experience, i.e. your core
competence

Correct Answer: b

Detailed Solution:

The idea about the ‘circle of competence’ was originally conceived by Warren Buffett and Charlie
Munger. It is the knowledge domain that one really knows well and not just thinks that s/he knows
well. The circle of knowledge that one thinks s/he is good at, is larger than the one representing
the domain one is really expert in.

QUESTION 10:
A startup begins with a leap of faith. What is a leap of faith in this regard?
a. It is in the context of faith that customers will be forgiving about limitations in the
product or service and will buy repeatedly.
b. The company will have a great leap forward with the proposed product and will achieve
appreciable growth.
c. It is an assumption that the product will sell in a market where there is no precedence of
such a product and no data available about the customers’ choices.
d. The proposed business will generate enough growth of wealth for founders.

Correct Answer: c
Detailed Solution:
Leap of faith is an assumption without any data that the product being developed will be liked
and purchased by the target customers. Most of the customers may not be aware of the exact
form of a plausible solution, but may find it attractive once they buy it. This market is almost
unknown as even the customers are not aware of the pain until they use the product. So, startups
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take a leap of faith that the product they are planning to make will be accepted by the targeting
customers.
QUESTION 11:

Select all the correct options from the following in respect of the lean startup concept?

A. The lean startup uses the agile philosophy of build-measure-learn feedback loop.
B. The lean startup applies the lean manufacturing philosophy of reducing waste wherever
possible.
C. The lean startup reduces the time, effort, and cost of product development.
D. The lean startup emphasizes the lean and thin enterprise, lean funding, and lean
investment.
Options:

a. A, B & C

b. B & C

c. B & D

d. A, B, & D

Correct Answer: a

Detailed Solution:

Lean startup concept is a combination of agile system and lean manufacturing that is executed
through the build, measure, and learn iterative process. The agile system espouses iterative
validation at different stages of development in order to ensure that the final product is
acceptable to customers. The lean manufacturing principle minimizes waste and reduces cost.
Thus lean startup concept reduces failure of new products and reduces the cost of developing a
product.

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Question Number 12:

Which of the following are components of the lean startup?

A. Repeated experimentation and iteration

B. A detailed plan about the shortest possible execution to ensure the quick and successful
start of the venture.
C. Customer feedback
D. Building an MVP
a. A, B, & C
b. B, C, & D
c. A, B, & D
d. A, C, & D

Correct Answer: d

Detailed Solution:

Experimentation, building an MVP, and customer validation are the hallmarks of lean startup.

QUESTION 13:
How does a lean startup work? Choose the correct option.
a. Define hypotheses based on a customers’ pain, build MVP, get it validated by early
adopters, rebuild based on learning, continue the validated learning cycle.
b. Write a business plan, approach investors, follow the build, operate, and validate in
the iterating process of product development.
c. Have a lean team, lean business model, lean customer base, and lean logistics to
ensure quick execution, higher margin, and sustainable business success.
d. Prepare business model canvas, validate the hypothesis, refine your product, follow
build, measure, and learn processes.

Correct Answer: a

Detailed Solution:

The working philosophy of a lean startup is to define the hypotheses based on a customers’ pain,
build MVP, get it validated by early adopters, rebuild based on learning, continue the validated
learning cycle. Please see explanations in other questions related to lean startup. The lean startup
does not have any connection with writing a business plan or business model canvas.

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QUESTION 14:
Read the following statements carefully:

A. Symphony Ltd. found early success because Achal Bakeri focused on his circle of
competence.
B. Symphony Ltd. met with devastating failure because it diversified into areas that were
outside the circle of competence of the company.
C. The initial success of Symphony Ltd. can be attributed to deep empathy of Achal Bakeri
with the desert cooler users.
D. After failure Symphony discarded all the products except the desert cooler to continue the
business and achieved commendable success.
Choose the correct statements from the above:

a. A & B

b. B & C

c. C & D

d. A & C

e. B & D

Answer: b

Detailed solution
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Achal Bakery could empathize with the then desert cooler user by suffering the pain since his
machine was creating unbearable noise and was not so effective in cooling the room. However, he
could come up with a new design through some research. The technology of desert coolers was
not within his circle of competency. The company measurably failed since they diversified into
unrelated areas (outside the circle of competency). They came back to robust health after
discarding all the unrelated products except geyser and cooler.
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QUESTION 15:
Identify the correct statement out of the following:

a. The car aggregator business is an example of collaborative consumption.

b. Lean startup philosophy is a new business trend.
c. Moving forward, everything that can be personalized will be personalized to offer the
best experience to customers.
d. Using natural products instead of plastic is a part of the promotion of the circular
economy.
Correct answer: c

Detailed answer:

Consumers are a lot empowered today and every company is trying to draw their attention to its
brand. In the process, there are unprecedented efforts to personalize products and services. And
the process is likely to be accentuated moving forward.

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