Chapter 5 Question Bank : Identification of Business opportunity
Multiple Choice Questions
- What is the first step in identifying a business opportunity?
a) Conducting market research
b) Securing funding
c) Launching the product
d) Hiring employees
Answer: a) Conducting market research - A good business opportunity must:
a) Solve a problem
b) Have unlimited resources
c) Rely on trends only
d) Ignore competition
Answer: a) Solve a problem - Which of the following is a key factor in identifying opportunities?
a) Lack of competitors
b) Customer needs and demands
c) Random guessing
d) High risk with no return
Answer: b) Customer needs and demands - Market analysis includes:
a) Understanding trends
b) Ignoring competitors
c) Copying existing businesses
d) Avoiding innovation
Answer: a) Understanding trends - A business opportunity should provide:
a) Sustainable profits
b) Immediate loss
c) Low-quality products
d) No customer satisfaction
Answer: a) Sustainable profits - Which of these is NOT a characteristic of a viable business opportunity?
a) Large customer base
b) High start-up costs without return
c) Potential for growth
d) Addressing market gaps
Answer: b) High start-up costs without return - SWOT analysis helps in:
a) Ignoring market weaknesses
b) Evaluating strengths and weaknesses
c) Making arbitrary decisions
d) Avoiding opportunities
Answer: b) Evaluating strengths and weaknesses - Opportunities in business arise from:
a) Changes in technology
b) Static market conditions
c) Avoiding customer feedback
d) Declining industries
Answer: a) Changes in technology - One of the tools for identifying a business opportunity is:
a) Business model canvas
b) Unorganized planning
c) Ignoring competition
d) Eliminating all risks
Answer: a) Business model canvas - What should entrepreneurs consider when identifying opportunities?
a) Personal interests
b) Market saturation
c) Lack of innovation
d) Government disapproval
Answer: a) Personal interests - A good business idea is based on:
a) Personal intuition only
b) Market needs and trends
c) Ignoring customer feedback
d) High-risk strategies
Answer: b) Market needs and trends - Which of these factors is a driving force behind business opportunities?
a) Social changes
b) Lack of innovation
c) Saturated markets
d) Static technology
Answer: a) Social changes - Which tool helps analyze external opportunities and threats?
a) SWOT analysis
b) Business evaluation chart
c) Sales tracking
d) Risk avoidance plan
Answer: a) SWOT analysis - Entrepreneurs identify opportunities by studying:
a) Market gaps
b) Established competitors only
c) Redundant industries
d) Risks without rewards
Answer: a) Market gaps - Viable business opportunities are supported by:
a) Clear customer demand
b) Lack of vision
c) High entry barriers
d) Unclear profitability
Answer: a) Clear customer demand - Identifying a niche market is an example of:
a) Analyzing competition
b) Market opportunity
c) Ignoring trends
d) Reducing growth potential
Answer: b) Market opportunity - What is the purpose of identifying a target audience?
a) To cater products/services to their needs
b) To expand to irrelevant markets
c) To ignore customer feedback
d) To reduce profits
Answer: a) To cater products/services to their needs - A business opportunity with low competition and high demand is:
a) Ideal for entry
b) High risk with no return
c) Not viable
d) Saturated
Answer: a) Ideal for entry - Government policies can create business opportunities by:
a) Offering subsidies
b) Increasing operational restrictions
c) Eliminating markets
d) Discouraging new businesses
Answer: a) Offering subsidies - Entrepreneurs should prioritize opportunities that:
a) Solve customer problems
b) Require no analysis
c) Have no growth potential
d) Ignore market demand
Answer: a) Solve customer problems - Which of the following is a component of opportunity evaluation?
a) Ignoring market trends
b) Feasibility analysis
c) Risk avoidance
d) Avoiding customer needs
Answer: b) Feasibility analysis - Entrepreneurs should focus on opportunities that align with:
a) Their personal preferences only
b) Market demand and profitability
c) High-risk ventures with no demand
d) Saturated industries
Answer: b) Market demand and profitability - Identifying a gap in service delivery can lead to:
a) Customer dissatisfaction
b) A new business opportunity
c) Increased operational costs
d) Stagnant growth
Answer: b) A new business opportunity - A thorough market analysis is essential to:
a) Develop effective strategies
b) Reduce the customer base
c) Ignore competitive trends
d) Increase uncertainty
Answer: a) Develop effective strategies - A business opportunity with high scalability potential is:
a) Ideal for growth
b) Suitable for small-scale operations only
c) Risk-free
d) Limited to local markets
Answer: a) Ideal for growth
True/False Questions
- A business opportunity must align with market needs.
Answer: True - Identifying a business opportunity does not require market research.
Answer: False - Understanding competitors is irrelevant in identifying opportunities.
Answer: False - A viable opportunity always involves low risk.
Answer: False - Business opportunities arise from changes in government policies.
Answer: True - Technology advancements often create new business opportunities.
Answer: True - Ignoring market trends is an effective way to identify opportunities.
Answer: False - Entrepreneurs should only rely on their instincts when identifying opportunities.
Answer: False - A business opportunity must have a potential customer base.
Answer: True - Conducting a SWOT analysis helps entrepreneurs evaluate the feasibility of opportunities.
Answer: True - Identifying market gaps is unnecessary for entrepreneurs.
Answer: False - A good business opportunity requires thorough planning.
Answer: True - Entrepreneurs should only focus on opportunities in existing markets.
Answer: False - Viable business opportunities provide solutions to customer problems.
Answer: True - A saturated market is the best for identifying opportunities.
Answer: False - Social changes can lead to the emergence of new business opportunities.
Answer: True - The business model canvas is a tool for financial forecasting.
Answer: False - A profitable business opportunity always involves high risks.
Answer: False - Entrepreneurs need to align their business opportunities with market trends.
Answer: True - Business opportunities do not rely on technological advancements.
Answer: False - Feasibility analysis is optional when evaluating business opportunities.
Answer: False - Customer dissatisfaction can highlight new business opportunities.
Answer: True - Ignoring market trends leads to better identification of opportunities.
Answer: False - A business opportunity aligned with market demand has higher chances of success.
Answer: True - Scalability is irrelevant when evaluating business opportunities.
Answer: False
Fill in the Blanks
- The first step in identifying a business opportunity is ________.
Answer: conducting market research - A good business opportunity must solve a ________.
Answer: problem - ________ analysis is a useful tool for assessing business opportunities.
Answer: SWOT - Market opportunities often arise due to changes in ________.
Answer: technology - Entrepreneurs should evaluate the ________ of a business idea before execution.
Answer: feasibility - The ________ model canvas is a tool for identifying business opportunities.
Answer: business - Customer ________ is crucial when exploring opportunities.
Answer: demand - A viable business opportunity should ensure ________ profits.
Answer: sustainable - Identifying opportunities requires understanding market ________.
Answer: gaps - Opportunities in business are influenced by ________ trends.
Answer: market - Business opportunities often arise due to changes in ________ needs.
Answer: consumer - A successful entrepreneur focuses on ________ gaps in the market.
Answer: unmet - Entrepreneurs use ________ research to identify business opportunities.
Answer: market - ________ advancements lead to innovation and new opportunities.
Answer: Technological - An entrepreneur must evaluate the ________ of a business idea before execution.
Answer: feasibility - ________ behavior is a key driver in creating business opportunities.
Answer: Consumer - Identifying a ________ market helps entrepreneurs create unique products.
Answer: niche - ________ analysis identifies strengths and weaknesses of an opportunity.
Answer: SWOT - Entrepreneurs must understand ________ trends to stay competitive.
Answer: market - Government ________ influence the emergence of new opportunities.
Answer: policies - ________ analysis is necessary to determine the feasibility of a business opportunity.
Answer: Feasibility - Entrepreneurs often identify opportunities by analyzing customer ________.
Answer: dissatisfaction - A business opportunity must be aligned with ________ demand to be successful.
Answer: market - Understanding market trends helps entrepreneurs develop effective ________.
Answer: strategies - ________ potential is crucial for the scalability of a business idea.
Answer: Growth
Answer in One Sentence Questions
- What is the first step in identifying a business opportunity?
Answer: Conducting market research is the first step. - What does SWOT analysis stand for?
Answer: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. - How do technological advancements influence business opportunities?
Answer: They create new avenues for innovation and market growth. - Why is market research important in identifying opportunities?
Answer: It helps understand customer needs and market trends. - What role do competitors play in identifying opportunities?
Answer: Understanding competitors helps identify market gaps. - What should a business opportunity address?
Answer: It should address unmet customer needs or problems. - How can government policies create opportunities?
Answer: By introducing incentives or favorable regulations. - What does sustainable profit mean?
Answer: Profit that can be maintained over a long period. - What is a business model canvas?
Answer: A tool that helps visualize and assess business opportunities. - Why should entrepreneurs align opportunities with personal interests?
Answer: It ensures motivation and long-term commitment.
- What is the importance of understanding market gaps?
Answer: It helps identify opportunities to meet unmet needs. - Why are technological advancements important for entrepreneurs?
Answer: They enable innovation and the creation of new opportunities. - What is a niche market?
Answer: A niche market is a specific segment of customers with unique needs. - How does a business model canvas assist entrepreneurs?
Answer: It helps visualize and plan business strategies effectively. - Why is customer feedback essential in identifying opportunities?
Answer: It provides insights into unmet needs and potential improvements. - How do government policies create opportunities?
Answer: By offering incentives or fostering a favorable business environment. - What does SWOT analysis help in identifying?
Answer: It helps in identifying strengths, weaknesses, opportunities, and threats. - What is the role of market research in entrepreneurship?
Answer: It aids in understanding customer demand and market trends. - Why should entrepreneurs evaluate business feasibility?
Answer: To ensure the idea is practical and sustainable. - What is a key characteristic of a viable opportunity?
Answer: A viable opportunity should have potential for profit and growth.
- Why is feasibility analysis important for entrepreneurs?
Answer: It evaluates the practicality and potential success of a business opportunity. - How can customer dissatisfaction lead to business opportunities?
Answer: It highlights unmet needs that can be addressed by innovative solutions. - Why should entrepreneurs follow market trends?
Answer: To identify emerging opportunities and stay competitive. - What is scalability in a business opportunity?
Answer: The ability of a business to grow and expand efficiently. - What role does growth potential play in evaluating opportunities?
Answer: It determines whether the business idea can sustain and thrive in the long term.
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