Chapter 5 Analyzing the Industry and Market TRUE FALSE market 1 Entrepreneurs identify their primary customers by recognizing a need or pain in the 2 The North American Industry Classification System NAICS is the classification system that was developed by the United States Canada and Mexico to identify industries and to allow for common standards and statistics across North America Industries remain static or stable over time so it is easy for the entrepreneur to research and understand the industry There are seven stages in the industry life cycle For every industry the life cycle stages occur at different times and vary in duration Radical change occurs in industries when an innovation results in the obsolescence of previous technology and drives old line companies out of business The government can limit entry to an industry or market through strict licensing requirements and by limiting access to raw materials via laws or high taxes and to certain locations by me of zoning restrictions Target market research provides some of the least important data needed to decide who the first customer will be The market research process consists of seven steps 10 The most important data that entrepreneurs can collect on potential customers are primary data derived from observation online or in person surveys phone surveys interviews and informal focus groups T T 3 F F T 4 5 6 T 7 T 8 F F 9 T 1 1 1 1 1 1 1 1 1 1 A An is a grouping of competitors that an entrepreneur targets MULTIPLE CHOICE 1 industry external environment target market market None of these choices 1 D a b c d e environments in which the new venture will operate a b c d e market industry PEST anthropological demographic C 1 2 A An analysis includes the political sociocultural economic and technological The industry in which a new venture will operate is the business s Google Wikipedia journals and trade magazines are examples of To access the timeliest information it is important to gather on an industry As more firms enter an industry intense occurs 3 external environment target demographic target market first customer None of these choices A 1 4 industry analysis market research primary sources secondary sources None of these choices 1 D 5 secondary data primary data blogs and social networking trade associations None of these choices 1 B 6 growth adaptation differentiation shakeout a b c d e a b c d e a b c d e a b c d 7 The period moves the industry from many companies and high product costs to 8 change is found in industries where resources turn over frequently and must e decline C 1 a more stable industry with only a few efficient firms a b c d e growth adaptation differentiation shakeout maturity D 1 continually be replaced a b c d e Progressive Intermediating Radical Creative None of these choices D 1 9 has provided a way of effectively looking at the structure of an industry and at a company s competitive strength and positioning relative to that industry and to the markets it serves a b c d e Porter s Five Forces PEST Market research Industry analysis None of these choices 1 A 10 Brand equity advertising expense and the rate of industry growth are part of which of Porter s forces a b c d e Threat of substitute products Customer bargaining power Supplier bargaining power Threat of new market entrants Intensity of competitive rivalry E 1 customer with the most a b c d e money time pain All of these choices None of these choices 1 C 11 The first customer is the customer who pays for the product or service and is the 12 How is the industry described Is the industry growing and Where are the opportunities are all examples of the questions that should be wered when conducting the a b c d e industry trajectories industry analysis PEST analysis target market analysis first customer analysis 1 B 13 It is best to begin researching the industry by using information about the Birth growth and adaptation and shakeout are stages of the life cycle industry a b c d e primary secondary market life cycle customer bargaining power None of these choices B 1 a b c d e 14 product market industry company All of these choices C 1 15 A new industry goes through volatile and rapid changes as companies and their respective technologies jockey for position and the right to determine industry standards This is what stage of the industry life cycle a b c d e Birth Shakeout Differentiation and competition Growth and adaptation Maturity and decline D 1 16 change takes place as companies in the industry grow geographically and increase profits through innovations in operations processes distribution and technology a b c d e Radical Creative Progressive Intermediating Internet C 1 The model most commonly used to help an entrepreneur analyze an industry is 17 Porter s Four Forces Model Porter s Five Forces Model the PEST Model the SWOT Analysis Model a b c d e None of these choices B 1 18 What is the phrase that is associated with the costs to produce a product when those costs have declined relative to the price of industry s goods and services a b c d e Threat of new entrants Price and quality of alternatives Switching costs Economies of scale Costs of inputs D 1 19 To analyze specific aspects of the macro environment an entrepreneur should use a b c d e a SWOT analysis a PEST analysis Five Forces analysis All of these choices None of these choices B 1 part of the a b c d e PEST analysis Five Forces Analysis rivalry among existing firms analysis suppliers bargaining power analysis All of these choices A 1 20 Analyzing the government demographics cost of capital and rate of change are all 21 Identifying and profiling the first customer estimating potential demand from that customer and identifying subsequent customer segments and needs to grow the company are goals of market research for a b c d e a new company a mature company all companies large and small companies in decline All of these choices A 1 22 The is an unserved niche that enables the entrepreneur to enter a market with no direct competition for a time general customer base a first customer b supplier c d industry None of these choices e B 1 24 seven five four nine two C a b c d e a b c d e a b c d e A good starting point for gathering secondary market data is 23 the library other companies the Internet the buying habits of potential customers All of these choices C 1 The market research process has steps 1 The second step in the market research process is 25 assessing information