MBA Entrepreneurship 1 — Questions and Answers
Question 1: What is a 'business model canvas' used for?
- Designing the physical layout of a business office
- A one-page strategic framework for visualizing the nine building blocks of how a business creates, delivers, and captures value (Correct answer)
- A detailed financial projection model for investors
- A legal document for establishing a company
Correct answer: A one-page strategic framework for visualizing the nine building blocks of how a business creates, delivers, and captures value
The Business Model Canvas, developed by Alexander Osterwalder, maps out nine elements — customer segments, value propositions, channels, relationships, revenue streams, resources, activities, partners, and costs — on a single page.
Question 2: What is 'lean startup' methodology?
- Starting a business with minimal employees
- A methodology that emphasizes rapid experimentation, validated learning, and iterative product development to reduce waste (Correct answer)
- A franchise model for small businesses
- A bootstrapping approach to avoid venture capital funding
Correct answer: A methodology that emphasizes rapid experimentation, validated learning, and iterative product development to reduce waste
The Lean Startup method (Eric Ries) advocates building minimum viable products, measuring customer response, and learning from feedback quickly to pivot or persevere with a business idea.
Question 3: What is a 'minimum viable product' (MVP)?
- The lowest quality product version acceptable for mass production
- A product with just enough features to be released to early adopters to validate a business hypothesis with minimal resources (Correct answer)
- A prototype that only investors get to see
- The cheapest version of a product you can manufacture
Correct answer: A product with just enough features to be released to early adopters to validate a business hypothesis with minimal resources
An MVP is the simplest version of a product that allows a startup to begin collecting real customer feedback to test core assumptions before investing in full development.
Question 4: What is 'venture capital' (VC)?
- A bank loan provided to established companies
- Private equity investment provided to early-stage, high-growth-potential startups in exchange for equity ownership (Correct answer)
- Government grants given to small businesses
- Angel investment provided by individual wealthy investors
Correct answer: Private equity investment provided to early-stage, high-growth-potential startups in exchange for equity ownership
Venture capital firms pool investor money to provide funding to startups with high growth potential in exchange for equity stakes, typically targeting a 10x or greater return at exit.
Question 5: What is 'bootstrapping' in entrepreneurship?
- Borrowing large amounts from banks to fund rapid growth
- Building and growing a business using personal savings and revenue generated by the business without external funding (Correct answer)
- Acquiring funding from multiple venture capital firms
- Licensing a business model from an established company
Correct answer: Building and growing a business using personal savings and revenue generated by the business without external funding
Bootstrapping means funding a startup through personal savings, early customer revenue, and reinvested profits rather than seeking outside investment, maintaining full ownership and control.
Question 6: What is a 'pivot' in startup terminology?
- Expanding the company's geographic reach
- A structured change in business strategy based on validated learning — adjusting the product, market, or model while keeping core learnings (Correct answer)
- Replacing the founding team with experienced managers
- Merging with a competitor to achieve scale
Correct answer: A structured change in business strategy based on validated learning — adjusting the product, market, or model while keeping core learnings
A pivot involves changing a fundamental component of the business model — target customer, product feature, revenue model — based on evidence that the current direction isn't working.
MBA Entrepreneurship 1
What is a 'business model canvas' used for?