Two Fatal Flaws Can Render a Business Model Untenable from the Beginning

question 5

Multiple Choice

Two fatal flaws can render a business model untenable from the beginning. These are utterly unsound economics and:

• A) a complete misread of the customer
• B) failure to copy the industry leader's business plan
• C) overemphasis on the importance of feasibility analysis
• D) overemphasis on the importance of industry analysis
• E) failure to complete a business plan prior to developing a business model

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Definitions:

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the Federal Reserve's discount window.

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy, regulating banks, maintaining financial stability, and providing financial services.

Double Coincidence of Wants

A situation in barter economies where two parties each hold an item the other wants, making it possible for them to exchange these items directly.

100-percent-reserve Banking

A banking system in which banks are required to keep 100% of their deposits available as reserves, thus eliminating the possibility of bank runs.