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Test: Enterprise Growth Strategies- 1 - Commerce MCQ


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10 Questions MCQ Test Entrepreneurship Class 12 - Test: Enterprise Growth Strategies- 1

Test: Enterprise Growth Strategies- 1 for Commerce 2024 is part of Entrepreneurship Class 12 preparation. The Test: Enterprise Growth Strategies- 1 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Enterprise Growth Strategies- 1 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Enterprise Growth Strategies- 1 below.
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Test: Enterprise Growth Strategies- 1 - Question 1

Patil wants to start his business by taking a franchisee of McDonalds. He is planning to take the franchisee with the aim of speedy growth. The only way he could think of if taking the franchisee and McDonalds is the most popular food joint. The only limitation he sees is ________.

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 1
  • Initial investment is the amount required to start a business or a project. It is also called initial investment outlay or simply initial outlay. It equals capital expenditures plus working capital requirement plus after-tax proceeds from assets disposed off or available for use elsewhere.
  • Initial investment equals capital expenditures or fixed capital investment (such as machinery, tools, shipment and installation, more) plus a change in working capital, minus proceed from the sale old asset, plus tax adjusted profit or loss from the sale of assets.
Test: Enterprise Growth Strategies- 1 - Question 2

Insights Ltd. is working on expanding the business. They are exploring various opportunities and strategies for their business growth. They planned to hire a new Marketing Manager. Satish appeared for an interview for the above position. During the 
interview, the HR listed down the steps involved in exploring opportunities in an environment. In light of the above scenario, arrange the steps in correct order as Satish did it.
(i) Evaluating the ideas received from different sources to find a creative solution.
(ii) Identifying a product or service through innovation.
(iii) Opportunity spotting by analysing the needs and problems that exist in the environment.
(iv) Setting up a project and nurturing it to success.

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 2

Correct steps are:
(iii) Opportunity spotting by analysing the needs and problems that exist in the environment.
(i) Evaluating the ideas received from different sources to find a creative solution.
(ii) Identifying a product or service through innovation.
(iv) Setting up a project and nurturing it to success.

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Test: Enterprise Growth Strategies- 1 - Question 3

Sohan and Shyam are partners in a business of manufacturing biscuits. They are planning to merge with a namkeen manufacturing company in order to increase the sales and earn more profit. They decided to adopt merger as their strategy for growth. Mention which two ways are available for them to select to give way to the merger.
(i) Amalgamation
(ii) Absorption
(iii) Consolidation
(iv) Acquisition

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 3
  • Amalgamation: An amalgamation is a combination of two or more companies into a new entity. Amalgamation is distinct from a merger because neither company involved survives as a legal entity. Instead, a completely new entity is formed to house the combined assets and liabilities of both companies.
  • Absorption: Absorption is defined as the process when one thing becomes part of another thing, or the process of something soaking, either literally or figuratively. An example of absorption is soaking up spilt milk with a paper towel. A paper towel takes up water, and water takes up carbon dioxide, by absorption.
Test: Enterprise Growth Strategies- 1 - Question 4

Rohan and Aman are partners in a car parts manufacturing company. They are planning to expand their business and in order to grow Rohan suggested to merge with another car accessories company, however Aman wanted to acquire another car accessories company. Both mergers and acquisitions are enterprise growth strategies, but how they come into existence makes them different from each other. Which of the below statements justifies the given statement?

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 4
  • The terms mergers and acquisitions are often used interchangeably, but they differ in meaning.
  • In an acquisition, one company purchases another outright.
  • A merger is the combination of two firms, which subsequently form a new legal entity under the banner of one corporate name.
  • A company can be objectively valued by studying comparable companies in an industry and using metrics.
Test: Enterprise Growth Strategies- 1 - Question 5

Shoes and Socks Ltd. is a leading shoes and socks manufacturing company. It decided to join its operations together with Drink Up Ltd., which is an energy drink company especially for sportsmen and women. After this merger, Shoes and Socks Up would help the existing companies to extend their markets as both of these firms will share the goodwill. Identify the type of merger relationship they are in.

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 5

A product extension merger takes place between two business organizations that deal in products that are related to each other and operate in the same market. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers.
An example of this idea was the acquisition in 2002 of the American-based Eagle Bancshares Inc by the subsidiary of Royal Bank of Canada, RBC Centura Inc.

Test: Enterprise Growth Strategies- 1 - Question 6

The main ingredients of a franchise agreement:

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 6
  • Contract Explanation: Contract, in the simplest definition, a promise enforceable by law. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting. If one of the parties fails to keep the promise, the other is entitled to legal redress.
  • Operations Manual: The operations manual is the documentation by which an organisation provides guidance for members and employees to perform their functions correctly and reasonably efficiently. The operations manual helps the members of the organisation to reliably and efficiently carry out their tasks with consistent results.
  • Proprietary Statements: Proprietary information, also known as a trade secret, is information a company wishes to keep confidential. Proprietary information can include secret formulas, processes, and methods used in production.
Test: Enterprise Growth Strategies- 1 - Question 7

In 1955 Ray Kroc took over a small chain of food franchises and built it into today’s most successful fast food franchise in the world, now known as ___________.

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 7

Kroc is credited with the global expansion of McDonald's, turning it into the most successful fast food corporation in the world. Due to the company's growth under Kroc, he has also been referred to as the founder of the McDonald's Corporation.

Test: Enterprise Growth Strategies- 1 - Question 8

Which of the following types of franchises provide an organization with the right to manufacture a product and sell it to the public, using the franchisor’s name and trademark?

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 8

Manufacturing Franchise Opportunity: It provides an organisation with the right to manufacture a product and sell it to the public, using the franchisor's name and trade mark. This type of franchising is very common.
For example, in the food and beverage industry, bottlers of soft drinks, etc.

Test: Enterprise Growth Strategies- 1 - Question 9

Which of the following is the reason for mergers and acquisitions:

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 9

1. Synergy: (a) It refers to the difference between the value of the combined firm and the value of the sum of the participants,
(b) Synergy accrues in the form of revenue enhancement and cost savings.
(c) For example, if firms A and B merge and the value of the combined entity—V(AB)—is expected to be greater than (VA+VB), the sum of the independent values of A and B, the combined entity is said to be benefitting through synergy.
2. Acquiring new technology: To remain competitive, companies need to constantly upgrade their technology and business applications. To upgrade technology, a company need not always acquire technology. By buying another company with unique technology, the buying company can maintain or develop a competitive edge. For example is a merger
(a) Logistics company such as a land transport entity with an air-line cargo company.
(b) Blackberry and Treo which can incorporate cell phone capability and e-mail connectivity in one device; palm pilots and tablet laptops can provide benefits to both the entities.
3. Acquiring a competency: Companies also opt for M&As to acquire a competency or capability that they do not have and which the other firm does. For example,
(a) The ICICI ITC alliance made the retailer network and depositor base available to the merging entity.
(b) IBM merged with Daksh for acquiring competencies that the latter possessed.

Test: Enterprise Growth Strategies- 1 - Question 10

The acquisition of Mobilink Telecom Inc. by Broadcom is a proper example of:

Detailed Solution for Test: Enterprise Growth Strategies- 1 - Question 10

The acquisition of Mobilink Telecom Inc. by Broadcom is a proper example of product extension merger. 
A product extension merger
takes place between two business organizations that deal in products that are related to each other and operate in the same market. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers.

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