Value & Competitive Strategy
A business earns revenue above its costs. This is an example of:
(A) Value creation (B) Value capture (C) Market research (D) Specialization
(B) Value capture
Which PESTEL category do government permits and regulations fall under?
(A) Economic (B) Political/Legal (C) Social (D) Technological
(B) Political/Legal
What is an MVP?
Minimum Viable Product
A business that seeks profit while also pursuing a social or environmental goal is best classified as a:
(A) Nonprofit (B) Government program (C) Social enterprise (D) Traditional corporation
(C) Social enterprise
Which business structure separates an owner's personal assets from business liabilities while still allowing more control than a corporation?
LLC
Name two factors (besides cost) that typically influence how a market price gets established for a new product.
Any two of — willingness to pay, alternatives/competitor pricing, convenience, perceived value/quality
A city with high commuter income but a ban on mobile business carts near transit stops represents which type of PESTEL conflict?
(A) Legal restriction outweighing economic opportunity (B) Social trend outweighing technology (C) Environmental support outweighing legal issues (D) No conflict exists
(A) Legal restriction outweighing economic opportunity
Two students observe, interview, and survey classmates before designing a product. This best illustrates:
(A) Production planning (B) Identifying an unmet need (C) Value capture (D) Specialization
(B) Identifying an unmet need
What is the difference between a company's core values and its core competencies? Give one example of each.
Core values are guiding principles/beliefs (e.g., "reducing waste"); core competencies are specialized strengths or capabilities (e.g., "recipe development" or "farm relationships").
As a small business grows rapidly, why might owners start creating separate operations, marketing, and finance departments?
(A) Growth reduces the need for coordination (B) Growth increases complexity, requiring specialized expertise (C) Customers demand it directly (D) It lowers overall business risk automatically
(B) Growth increases complexity, requiring specialized expertise
A company chooses to compete by offering unique features and quality rather than the lowest price. This is called:
(A) Cost leadership (B) Differentiation (C) Market segmentation (D) Value capture
(B) Differentiation
List all six factors in the PESTEL framework.
Political, Economic, Social, Technological, Environmental, Legal
List the four steps of the entrepreneurial design-thinking process shown in a typical product development scenario.
Identify a problem → develop a solution → test a prototype/MVP → gather feedback
Which of the following is the strongest example of a mission statement (as opposed to a vague slogan or a strategy note)?
(A) "To become the largest company in our industry." (B) "To reduce food waste and expand access to healthy meals using imperfect produce." (C) "To build a recognizable brand through frozen foods." (D) "To partner with as many grocery stores as possible."
(B) — it clearly states purpose and who/what it serves, not just growth or branding goals
Which department would most likely be responsible for recruiting, training, and evaluating new employees, and why?
Human Resources (HR) — because HR specializes in hiring, onboarding, training, and performance evaluation processes.
Explain why choosing the "highest expected price" segment isn't automatically the best first target market for a new business.
The segment must also have a strong problem/need fit — high price tolerance alone doesn't mean the product solves their top problem; the best target balances both willingness to pay AND strength of the need.
A city has low labor costs and low commuter income, and scooter use there is mostly recreational rather than commuter-based. Explain how this combination could affect a repair business considering expansion there.
Lower labor costs could help margins, but weak commuter demand and recreational-only usage may limit revenue/repair volume, since recreational users typically need repairs less often than daily commuters.
A team builds a cheap cardboard prototype and tests it with 12 users before mass-producing. What risk are they trying to reduce?
(A) The risk of losing intellectual property (B) The risk of spending on production before knowing actual demand (C) The risk of hiring too many employees (D) The risk of setting prices too high
(B) The risk of spending on production before knowing actual demand
A growing food company is offered a lower-cost supplier that cannot verify worker treatment on its farms. Explain how the company's core values should influence this sourcing decision.
The company should weigh supplier ethics against cost savings, since accepting an unverified/potentially unethical supplier would conflict with values like "respecting farmers"; ethical sourcing should be investigated before switching suppliers.
A company's supplier delivery time may increase significantly due to severe weather. Explain how this supply-chain risk could threaten the company's competitive advantage, using the idea of production capacity or quality.
If a company operates close to its maximum production capacity, a supplier delay could prevent it from meeting demand, cause stockouts, or force a rushed/lower-quality substitute, undermining the quality or reliability that supports its competitive advantage.
A business currently competes on quality and convenience, but 39% of surveyed customers say the price is higher than they'd like. Should the business shift to a low-price strategy? Justify your answer using evidence-based reasoning.
No — if a much larger percentage cites quality/convenience as reasons for buying than cite price concerns, the evidence supports maintaining differentiation rather than switching strategies based on a minority complaint.
Using the PESTEL framework, explain how a single factor (like permitting speed) can influence a company's decision on where to launch first, even if other factors are favorable.
A single blocking legal factor (e.g., a ban or slow permit process) can prevent market entry entirely regardless of favorable economic/social factors, since operations may be illegal or delayed even where demand is strong.
After testing an MVP, customers reported specific feature complaints (e.g., a part breaks too easily). Explain what the entrepreneurs should do next, and why skipping this step would be a mistake.
They should revise the weak features and re-test with an improved model before full production; skipping this and moving straight to large-scale production risks manufacturing a flawed product at scale, wasting resources on unresolved problems.
Describe two concrete actions a company could take to encourage ethical behavior before selecting a new supplier.
Any two of — create written supplier standards, investigate/audit working conditions, train employees on sourcing expectations, apply consistent ethical requirements when negotiating contracts
A business currently averages 4,800 monthly orders against a maximum production capacity of 5,100. A new opportunity would require a significant production increase, but the supplier's delivery time could nearly double. Explain the specific risk this creates and one way the business could reduce it.
With very little spare capacity (only 300 units) and delivery times potentially nearly doubling, the business may be unable to fulfill both existing and new orders during a shortage, risking lost sales or damaged customer relationships. A backup/secondary supplier meeting the same quality standards would reduce dependency risk.