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Indian Institute of Technology Kharagpur

Entrepreneurship Essentials
Assignment- Week 4
TYPE OF QUESTION: MCQ/MSQ
Number of questions: 10 Total mark: 10 X 1 = 10
______________________________________________________________________

Many of the questions may seemingly have multiple correct answers. You should
choose the option that best satisfies the problem statement.

QUESTION 1:
Which of the following statements is wrong as regards major building blocks of business
model canvas?
a. The ‘Competitive landscape’ is one of the building blocks of the Business
model canvas.
b. The ‘Value proposition’ is one of the building blocks of the Business Model
Canvas.
c. The ‘Customer relationship’ is one of the building blocks of the Business
Model Canvas.
d. The ‘Key partners’ is one of the building blocks of the Business Model
Canvas.
Answer: a

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Detailed Solution: ‘Competitive landscape’ is missing from the Business Model
Canvas. ---------------------------------

QUESTION 2:
Which of the following statements is correct as regards the business model canvas
(BMC)?

a. The vision, mission, and value statement is one of the important building
blocks of the business model canvas.
b. The ‘Profit mechanism’ is one of the nine building blocks of BMC that explains
the ways and means for an enterprise to earn money.
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c. The value proposition is the central component, and it explains how the value
proposition is made, how is it dispensed to the market segment, and some
idea on profitability thereof.
d. ‘Pricing power is one of the nine building blocks of BMC that explains the
competitiveness of a business how it enjoys resilience in the face of price rise
of inputs.

Answer: c

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Detailed Solution:
The central component of the BMC is the ‘value proposition’. In the right part, we explain
who the value is to be dispensed to, how we reach out to them, how we create a lasting
relationship so that they come back to us to make a repeat purchase and we have a brand
presence in their minds and they talk to their friends about our products to convert them
into our customers. We also show how we make money. In the left part, we talk about all
that is required to create the value and how much cost we incur so that we have some
idea about the profitability. Except ‘Value Proposition’ all other items do not explicitly
feature in the BMC.

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QUESTION 3:
Which of the following are not directly related to the Value Proposition Canvas?

a. How a company will acquire customers.

b. The superior features of our products and services giving customers
reasons to choose our products or services over those of the competitors.
c. Customer’s pain that a company is trying to alleviate.
d. The ease of purchase, the promise of after-sales services, and buy-back
offers, etc.

Answer: a

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Detailed solution

Value proposition contains all that makes the customers winners such as superior
features, lower price, ease of purchase, and after-sales services, etc. A company
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acquires customers through advertisement, promotion, content marketing and many

other methods that may not be directly related to the Value Proposition Canvas.

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QUESTION 4:
Choose the correct answer:
Innovation is
a. Developing new technologies with novelties, not obvious to people with adequate
technical knowledge in the relevant domain and is potentially useful to people or
enterprises or may significantly transform the society.
b. Developing new cutting-edge technology that is yet to emerge in the market and
that is far ahead of time.
c. Developing new technology and putting in place all infrastructure necessary to
make the solution available to the people who are direct beneficiaries.
d. Developing solutions having the potentials to do a lot of good to society.

Correct answer: c
--------------------------------
Detailed Solution: Invention is creating new knowledge that did not exist, whereas,
innovation is taking all other actions so that the benefits of the new invention reach the
people or businesses who need them. Thomas Edison invented a technology for the
long useful life of the electric light bulb. That was an invention. He laid electric cable, the
electricity generating unit, and all other infrastructure for the people to get the benefit of
the electric light. The whole process of inventing the technology and reaching the
benefits to the people is innovation.
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Question 5:
In the early 1900s, General Electric (GE) of Thomas Edison disciplined the chaotic
process of scientific discovery into a systematic process of innovation. Results: over the
next 70 years, won more patents than any other company in the US. Much of GE’s
competitive prowess during the century following can be traced to that extraordinary
accomplishment. Which of the following describes the above revolutionary act of GE?

a. This is a technological invention that gave General Electric many patents and
unique competitive advantage.
b. This is an innovation that gave the end-beneficiary enormous advantages and
thus GE enjoyed competitive advantages for many years to come.
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c. This is a design innovation that gave GE enormous efficiency in production

operation and helped to cut costs to enjoy competitive advantages.
d. This is an example of innovation in the domain of management and not
technology innovation.

Answer: d
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Detailed Solution: Innovation is possible in every sphere of business. There are
wonderful examples of gaining unassailable competitive advantages through
management innovation. General Electric innovated a system of scientific discovery that
systematized the whole process improving efficiency and reducing redundancy. Over
the next 70 years, GE won more patents than any other company in the US. Much of
GE’s competitive prowess during the century following can be traced to that
extraordinary accomplishment.
------------------------------------

Question 6:
In 1903, DuPont systematized capital-budgeting techniques. A few years later, the
company also developed a standardized way of estimating the return on investment.
They used it in comparing the performance of its numerous product departments.
These innovations and more helped DuPont become one of America’s industrial giants.
Choose the statement from the following that most appropriately relates to the above
facts.

a. This is a core part of business process management that gave DuPont many
patents.
b. This can be classified as management innovation that provides unique
advantages.
c. This is a technology innovation that gave DuPont huge competitive advantages
for many years to come.
d. This was an accounting innovation that turned into a common practice by other
enterprises.

Answer: b
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Detailed Solution: Innovation is possible in every sphere of business. There are
wonderful examples of gaining unassailable competitive advantages through
management innovation. This is an example of management innovation by DuPont
helping it differentiate the performance of various units and accordingly formulate
appropriate strategies to exploit opportunities and neutralize challenges.
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Question 7:
Business model innovation is NOT possible through which of the following?
a. Changing the value proposition, building products that gives a better product-
market-fit, and adopting a new pricing method.
b. Changing business system architecture and identifying new market segment.
c. Through management innovation and adoption of efficient process technologies
d. Inducting new co-founder with key complementary knowledge that was missing
so far.

Answer: d
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Detailed Solution:
Inducting a new co-founder does not change the business model whereas, all other
option significantly change the business model.
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Question 8:
Uber could define the pain points and it could apply the latest technologies to
alleviate them. In urban places of high mobility, it is very difficult to get a taxi, one
that would come and pick you up, one with a driver having some identity for reliability
and safety, to know when a taxi will arrive. It offered the ease of paying for the trip
and easy guidance of the route, etc. They innovated the solution based on the pains.
The above text is related to all the following constructs to some extent. Which building
block in the business model canvas the above is directly related?
a. Product-market-fit
b. Value proposition
c. Validated learning
d. Key pain-point
Answer: b
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Detailed Solution:
All the points relate to the understanding of customers’ pains and the gap between
customers’ needs and what is provided by the existing solutions. All the points were
fulfilled by Uber in the form of their value proposition. Each element in the statement
adds to the value proposition.
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Question 9:
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Long after the traditional candle lamp lost its primary use as an essential light source,
“Yankee Candle” was launched at a very high price with one candle selling at more than
₹5,000/-. Each candle of high-quality wax is contained in a smart-looking glass jar, is
nicely packed, and emits a variety of aromas. Customers can pick up the ones with the
aroma they like. At the end of the day, back from the office, they can lighten the candle,
immerse in some music of choice and forget the day’s travail.
Yankee Candles are facing high price because of the product differentiation created in
the form of
a. Product features that provide better value for customers’ money.
b. Premium pricing that is part of a pricing strategy to give customers an impression
that the product is a premium one.
c. Extremely good quality of ingredients, top-class aesthetic design, fulfilling the
ego, and best in class packaging.
d. Customer experience that may be tangible or intangible.

Correct answer: d
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Detailed Solution:
Yankee candles do not serve a basic need. Such products should give the customers
new meaning and new experience. The more unique the experience, the higher is the
perceived value for customers and the higher can be the price. Yankee candle can fetch
high price because it gives customers unique experience for which customers are ready
to pay premium price.
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Question No. 10
Which of the following statements is the least appropriate?
a. A business plan is mostly a written document or slide deck delineating the
process of execution, marketing and growth plan, and the projected financial
performance.
b. A business model describes the rationale of how an organization creates,
delivers, and captures value, in economic, social, cultural, or other contexts.
c. A business model explains the rationale of how an organization creates
values for its customers and it acquires and retain a growing number of
customers for profitable and sustainable relationship.
d. A business model describes the rationale of how an organization builds a
team, identifies opportunities, and strategies to goes-to-market.
Correct answer: d
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Detailed Solution:
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A business model describes the rationale of how an organization creates, delivers, and
captures value for the customers, in economic, social, cultural, or other contexts so that
an increasing number of customers will find their products or services more attractive
compared to those of competitors. Building a team, identifying opportunities and
strategy to go-to-market is a small part of a business model.
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