Entrepreneurship : CUET Mock Test - 3 - CUET Commerce MCQ

A mission statement defines what line of business a company is in, and why it exists or what purpose it serves. Every company should have a precise statement of purpose that gets people excited about what the company does and motivates them to become part of the organisation.

Average inventory = 
Let closing inventory = X
Opening inventory = X + 5000
24,000 = 
24,000 × 2 = 2X + 5000
48,000 - 5000 = 2X
43,000/2 = X
21,500 = X
Value of closing stock = Rs. 21,500
Value of opening stock = Rs. 21,500 + 5,000 = Rs. 26,500

A co-operative society is registered under the Co-operative Societies Act. After registration, a society becomes a separate legal entity, with limited liability of its members. Death, insolvency or lunacy of a member does not affect the existence of a society. It can enter into agreements with others and can purchase or sell properties in its own name.

There are multiple advantages of growing a business through the franchise mode. Certain disadvantages also exist that need to be carefully examined. Franchisee contract limits the degree of freedom for the franchisor. Also, a percentage of revenue gets shared perpetually with the franchisor. The franchisor may also charge additional amounts towards sharing the cost for services provided, but identification of quality franchisee is a problem faced by the franchisor.

Market has been divided into smaller groups based on:(i) Consumer's characteristics:

• Geographic (state, country, etc.)
• Demographic (gender, age, etc.)
• Psychographic (personality, lifestyle, etc.)

(ii) Buying situations:

• Buying conditions (time available, etc.)
• Usage
• Desired benefits (features of product)

The exact four components of marketing mix are Product, Price, Place and Promotion. These are the tools a marketer can use to elicit the desired responses from the target audience.

• Product: The goods and services offered
• Promotion: Communication and information
• Place: Distribution or delivery
• Price: Ensuring fair value in the transaction

A business plan is not a novel, a poem or a cryptogram. If a reasonably intelligent person with a high school education can't understand your plan, then you need to rewrite it. If you are trying to keep the information vague because your business involves highly confidential materials, processes or technologies, then show people your executive summary first (which should never contain any proprietary information). Then, if they're interested in learning more about the business, have them sign non-compete and non-disclosure agreements before showing them the entire plan.

Utility created by Ashok is form utility. Form utility is changing the form of raw materials into finished products.

The product line length shows the number of products a company carries within the product line. For example, consider a car company with two car product lines (3-series and 5-series). Within each product line series are three types of cars. In this example, the product length of the company would be 6.

The pricing strategy adopted by Rasoi is penetrating price. It is a method where the prices are kept low or at par with the competitors in order to gain the market share. Once it is achieved the prices are gradually increased to match up with the market.

Every business has an environment in which it operates. The internal resources of a firm must match the needs of the environment to which the firm caters. Lack of experience in the industry will lead to poor organisation of a firm and its resources. The structure of the industry in which the organisation operates substantially influences small firm's performance outcomes.

Deciding what the general market or industry entrepreneur wishes to pursue is based on market research or industry analysis done and complied with by competent people or the entrepreneurs. We divide the market into smaller groups based on:
(i) Consumer's characteristics:
(a) Geographic (state, country, etc.)
(b) Demographic (gender, age, etc.)
(c) Psychographic (personality, lifestyle, etc.)
(ii) Buying situations:
(a) Buying conditions (time available, etc.)
(b) Usage
(c) Desired benefits (features of product)

Causes of failure of Rohit's business:

• Lack of adequate cash flow: Many small businesses fail because owners have a difficult time projecting what cash will come in every month, and, thus how much can go out. Rohit failed to estimate the correct expense which was required to run the business on a daily basis.
• Management incompetence: Rohit worked on very thin margins which led to huge losses as well as he did not have control over his staff.
• Diminished customer base: Rohit did not keep a track of his customer base. The staff of the shops did not give much attention to the customers. This caused the customer base to diminish.

Management by objectives, also known as management by results, was first popularised by Peter Drucker in his 1954 book 'The Practice of Management'. Management by objectives is the process of defining specific objectives within an organisation, that management can convey to organisation members, then deciding on how to achieve each objective in sequence.

The theory of business is one of the most famous theories of entrepreneurship used all around the world. The theory was advanced by a famous scholar, Joseph A. Schumpeter, in 1991. Schumpeter believed that creativity or innovation is the key factor in any entrepreneur's field of specialisation. He argued that knowledge can only go a long way in helping an entrepreneur to become successful.

Selection of specific media, where the advertisements will be run and when they will be run, to reach the target market is called Media Planning. It is the process of identifying and selecting media outlets – mainly newspapers, magazines, websites, TV and radio stations, and outdoor placement.

Net working capital is excess of current assets over current liabilities.
Example: Current asset are Rs. 1,50,000 and current liabilities are Rs. 1,00,000. Then net working capital would be Rs. 50,000. It reveals the soundness of financial position.

Exclusive, non-exclusive or cross are the types of a licence and not franchising. Franchising may take different forms. In direct franchising, the franchiser frames policy, and monitors and directs the activities in each host country from its home-country base. But in case of indirect franchising, there are sub-franchisers between the original franchiser and the host country units.

Predatory pricing is a pricing strategy in which prices are set at a low level so that firms can't compete with each other. Predatory pricing policy is designed to drive competitors out of business.

Packaging attracts consumers and increases the product's sale. It also reduces the marketing and advertisement cost of the product and can be used to prevent any damages to the product while transportation.

Most angel investors (like Ashok) are current or retired executives, business owners or high net worth individuals who have the knowledge, expertise, and funds that help start-ups match up to industry standards.
As angel investors bear extremely high risk and are usually subject to dilution from future investment rounds, they expect a very high return on investment. (The text mentions: The business is of high risk along with higher expected returns.)
Their objective is to create great companies by providing value creation, and simultaneously helping investors realise a high return on investments.
Hence, option 1 is the right answer.

Distribution is one of the four elements of the marketing mix. Distribution is the process of making a product or service available for the consumer or business user who needs it.

Entrepreneurship is the ability of a person to run an enterprise and organise it. Social, economical and psychological factors affect entrepreneurship. This is due to the fact that social and psychological factors develop the mindsets of people.

The micro environment of the organisation consists of those elements which are controllable by the management. Organisations have to closely analyse and monitor all the elements of micro environment in order to stay competitive. Elements of micro environment are: Customers/Consumers, Competitors and Organisation. Society is not an element of micro environment, as it is an element of macro environment.

Capital markets are markets for buying and selling equity and debt instruments. They may be classified as either primary markets or secondary markets. Long-term loan market is the component of capital market.
Government securities market, treasury bill market and commercial bill market are components of money market.

The ICICI provides foreign currency loans and advances to enable Indian Industrial concerns to secure essential capital goods from foreign countries. It is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra with its registered office in Vadodara, Gujarat.

The emphasis of Human Resource Management is the development of human resources and their training. It helps an organisation meet its goals in the future by providing competent and well-motivated employees.

A private company can have a minimum of just two members (but just one is enough if it is a one person company), and a maximum of up to 200 members. Private companies cannot freely transfer their shares to the public, like public companies.

Number of orders =  = 8 orders per year (Given: Economic Order Quantity is 800 units)
Time between two consecutive orders = 12 (months/8) = 1.5 months

• A. 'formed an organisation wherein the persons voluntarily associate.....'- voluntary association, anybody can become a member of a co-operative organisation.
• B. 'managing committee that was elected on the basis of one member one vote' - democratic management, the management of the co-operative society is democratically elected.
• C. 'the purpose of this organisation is to help these craftsmen to find market for their products' - service motive, the main objective of a co-operative society is to provide service to its members and not to earn profits.

Hence, the form of business organisation set up by Geeta is co-operative organisation.