MCQs on Startups, Innovation Management, and Design Thinking

1. Definition and Characteristics of Startups

1. Which of the following is a key characteristic of a startup?

A) Low uncertainty
B) Slow growth
C) Innovative products or services
D) Large initial capital

2. According to Steve Blank, a startup is:

A) A permanent institution designed to make quick profits
B) A temporary organization searching for a scalable business model
C) A business with guaranteed success
D) An organization that does not take risks

3. Which of these is NOT a type of startup?

A) Scalable startup
B) Large company startup
C) Industrial startup
D) Social startup

4. What is the main difference between a startup and a traditional business?

A) Startups have fewer employees
B) Startups focus on innovation and scalability
C) Traditional businesses do not make profits
D) Startups are always in the technology industry

5. Which of the following best describes a buyable startup?

A) A business started out of passion
B) A startup created and sold to big players
C) A non-profit organization
D) A large company with an established market
6. At what stage does a startup develop a Minimum Viable Product (MVP)?
A) Pre-seed stage
B) Seed stage
C) Growth stage
D) Maturity stage

7. What characterizes the Expansion Stage of a startup?

A) The startup is still an idea
B) The business experiences growth in new markets
C) The startup is struggling to find funding
D) The startup has no customers

8. Which of the following is NOT an operational stage of a startup?

A) Pre-seed
B) Growth
C) Stagnation
D) Establishment

9. At what stage do startups often seek angel investors?

A) Maturity stage
B) Growth stage
C) Seed stage
D) Merger and acquisition stage

10. What happens during the Merger and Acquisition phase?

A) Startups expand into new markets
B) Startups combine resources with other companies
C) Startups begin their initial idea phase
D) Startups only focus on local customers

11. Startups contribute to economic growth by:

A) Replacing large corporations
B) Avoiding competition
C) Creating jobs and driving innovation
D) Avoiding government regulations
12. Why is a business plan important for a startup?
A) It guarantees the startup's success
B) It serves as a roadmap for business goals
C) It ensures the startup gets unlimited funding
D) It is required by all governments

13. Which of the following is NOT a key component of a startup business plan?
A) Financial projections
B) Competitor acquisition strategy
C) Marketing and sales strategy
D) Operational plan

14. What is the main purpose of a Unique Value Proposition?

A) To eliminate competitors
B) To highlight the startup’s unique benefits
C) To determine funding sources
D) To test the financial viability of the startup

15. What is a Business Model Canvas (BMC) used for?

A) Identifying potential competitors
B) Describing how a startup creates and delivers value
C) Evaluating employee performance
D) Managing government regulations

16. Design thinking is best described as:

A) A linear process for solving technical problems
B) A human-centered problem-solving approach
C) A method only used by designers
D) A business model framework

17. Which is the first phase of design thinking?

A) Ideation
B) Testing
C) Empathy
D) Prototyping
18. What role does prototyping play in design thinking?
A) It finalizes the product
B) It is used to explore potential solutions
C) It is unnecessary for startups
D) It only applies to digital products

19. What does SCAMPER stand for in ideation tools?

A) A business financing method
B) A structured approach for modifying and improving ideas
C) A method of market research
D) A process for evaluating employees

20. Which innovation theory suggests that small firms can disrupt larger firms by offering simpler, more
affordable solutions?
A) Open innovation
B) Disruptive innovation
C) Design thinking
D) Lean startup

21. Which is NOT a characteristic of creative thinkers?

A) Sticking to traditional methods
B) Experimenting with new ideas
C) Finding multiple solutions to a problem
D) Exploring alternative methods

22. What is a key barrier to creativity in business?

A) Too many resources
B) Fear of failure
C) Collaboration with teams
D) Exposure to new ideas

23. Which of these is NOT a technique to boost creativity?

A) Allowing time for incubation
B) Enforcing strict routines
C) Changing the environment
D) Taking breaks
24. What does the term “iteration” mean in product design?
A) Ignoring user feedback
B) Repeating and refining a design based on feedback
C) Stopping product development early
D) Avoiding multiple prototypes

25. Which model describes innovation as an open process where external entities contribute?
A) Disruptive innovation
B) Lean startup
C) Open innovation
D) Traditional business model

26. What is the first phase in product design and development?

A) Prototyping
B) Ideation
C) Engineering
D) Testing

27. How does branding relate to product design?

A) Branding is separate from design
B) A strong brand influences customer perception of the product
C) Branding only affects marketing
D) Branding determines product cost

28. Which of these is NOT a 21st-century skill essential for innovation?

A) Collaboration
B) Critical thinking
C) Memorization
D) Creativity

29. What is a major goal of a startup's marketing strategy?

A) Minimize costs without promotion
B) Build customer trust and awareness
C) Avoid competition
D) Focus only on product pricing
30. Which business model generates revenue through ads?
A) Freemium model
B) Subscription model
C) Advertising model
D) On-demand model

31. What is the primary difference between angel investors and venture capitalists?
A) Angel investors invest for profit, while venture capitalists do not
B) Angel investors provide smaller investments than venture capitalists
C) Angel investors require company ownership, while venture capitalists do not
D) Venture capitalists invest in early-stage startups, while angel investors invest in established
companies

32. Which funding source involves raising small amounts of money from many individuals?
A) Bootstrapping
B) Crowdfunding
C) Venture capital
D) Bank loans

33. Which of the following is NOT a source of startup funding?

A) Angel investors
B) Public aid
C) Employee salaries
D) Grants

34. Why is financial projection important for a startup?

A) It guarantees profit
B) It shows potential investors the business’s future financial outlook
C) It is legally required for all startups
D) It replaces the need for market research

35. Which is NOT a major expense in a startup's cost structure?

A) Operations
B) Marketing
C) Team salaries
D) Employee vacations

36. A successful startup team should have:

A) A large number of employees
B) Only technical experts
C) A balanced mix of skills and expertise
D) Only experienced entrepreneurs

37. What is the key role of a startup founder?

A) Handling only marketing strategies
B) Developing the product alone
C) Setting the vision and leading the company’s growth
D) Avoiding financial risks

38. Which of the following is essential in maintaining a passionate startup team?

A) High salaries regardless of business success
B) Clear vision and motivation
C) Strict work policies with no flexibility
D) Focusing only on product development

39. What is one major challenge startups face in team management?

A) Having too many experienced employees
B) Finding and retaining skilled talent
C) A lack of competition
D) Too many funding opportunities

40. Why is adaptability important in a startup team?

A) Startups often need to pivot based on market feedback
B) Startups should stick to their original plan at all costs
C) The startup team should never change strategies
D) It helps avoid learning new business trends

41. What is a major indicator that a startup is in the growth stage?

A) No need for external funding
B) A steady customer base and consistent income
C) The business is still in ideation phase
D) The startup is only focused on product design

42. When should a startup consider international expansion?

A) Immediately after launch
B) When it has a stable revenue model and market demand
C) Before securing funding
D) Only after reaching maturity
43. Which of the following is NOT a growth strategy for startups?
A) Expanding to new markets
B) Increasing customer acquisition
C) Reducing product quality
D) Improving brand recognition

44. What is a major advantage of digital marketing for startups?

A) It is always free
B) It guarantees instant success
C) It helps reach a large audience at a lower cost
D) It does not require content creation

45. What is the purpose of a Minimum Viable Product (MVP)?

A) To create the final product before market entry
B) To test key features and gather customer feedback
C) To ensure the product is perfect before launch
D) To generate maximum revenue in the first stage

46. Why is legal compliance important for startups?

A) It allows startups to avoid paying taxes
B) It ensures the business operates within regulatory frameworks
C) It helps startups bypass competition
D) It is only required for large businesses

47. What is intellectual property (IP) protection used for in startups?

A) To prevent others from copying the startup’s ideas
B) To avoid market research
C) To increase product costs
D) To delay competition

48. Which legal structure provides the highest level of protection for a startup founder’s personal assets?
A) Sole proprietorship
B) General partnership
C) Limited liability company (LLC)
D) Informal business agreement

49. What is a major legal challenge startups face when scaling?

A) Increasing team size
B) Expanding into international markets with different regulations
C) Hiring too many employees
D) Finding a product-market fit

50. What is a Non-Disclosure Agreement (NDA) commonly used for in startups?

A) To prevent employees from working elsewhere
B) To protect sensitive business information from being shared
C) To eliminate market competition
D) To increase product prices
 Answer Key
1. C 31. B
2. B 32. B
3. C 33. C
4. B 34. B
5. B 35. D
6. B 36. C
7. B 37. C
8. C 38. B
9. C 39. B
10. B 40. A
11. C 41. B
12. B 42. B
13. B 43. C
14. B 44. C
15. B 45. B
16. B 46. B
17. C 47. A
18. B 48. C
19. B 49. B
20. B 50. B
21. A
22. B
23. B
24. B
25. C
26. B
27. B
28. C
29. B
30. C