Class 12 Entrepreneurship: CBSE Sample Question Papers- Term I (2021-22)- 1 | Sample Papers for Class 12 Commerce PDF Download

General Instructions:
1. The Question Paper contains three sections.
2. Section - A has 24 questions. Attempt any 20 questions.
3. Section - B has 24 questions. Attempt any 20 questions.
4. Section - C has 12 questions. Attempt any 10 questions.
5. All questions carry equal marks.
6. There is NO negative marking.

Q.1: Which of the following is not a feature of Sole Proprietorship?
(a) Unlimited liability
(b) Sole risk bearer
(c) Separate entity from business
(d) Right to make all decisions. 

Correct Answer is Option (c)
Sole Proprietorship business does not have an identity separate from the owner. Death, insanity, imprisonment, physical ailment or bankruptcy of the sole proprietor will have a direct and detrimental effect on the business and may even cause closure of the business.

Q.2: _______________ is one of the environmental factors that affects the micro internal environment.
(a) Political
(b) Competitors
(c) Legal
(d) Social 

Correct Answer is Option (b)
Competitors affect the micro internal environment because a company needs to consider its competitors in order to grow and earn profits.

Q.3: A business firm can enjoy _______________ through environment scanning.
(a) Last mover advantage
(b) Benefit of taxes
(c) First mover advantage
(d) None of these 

Correct Answer is Option (c)
Environmental scanning helps a business firm to analyse the internal environment of the company and identify the strengths that give a competitive advantage to the company.

Q.4: Which element of operational plan is concerned with deciding the exact path or route of material during the production process?
(a) Routing
(b) Scheduling
(c) Dispatching
(d) Inspection 

Correct Answer is Option (a)
Routing is the process concerned with determining exact route or path a product/ service has to follow right from raw material till its transformation into finished product.

Q.5: Naveen owns a 10 room building near Indira Gandhi International Airport. He wants to start a guest house there because he knows that many visitors require low cost accommodation near the airport. Which of the following he should ensure before opting this opportunity:
(a) There is a good market for the service
(b) Exploring new markets and reorganize the enterprise
(c) Bring out new product in the market
(d) Application of new methods of production

Correct Answer is Option (a)
The two things that an entrepreneur has to ensure before selecting an opportunity:
(a) There is a good market for the product or service he its going to produce or provide.
(b) The rate of return on the investment is attractive to be accepted by him.

Q.6: Samar is a budding rural entrepreneur who is working on improving the health index of the women in rural areas. Samar needs to understand various health issues confronted by women in order to create a socially committed organization. For this, he wants to gather information about the target market or customers in an organized manner. This organized effort of Samar is known as:
(a) Creation
(b) Market research
(c) Verification
(d) Innovation 

Correct Answer is Option (b)
On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted.

Q.7: Growing consciousness for health and fitness has led to the emergence of spa, gyms, slimming centres, yoga centres, etc. 
Which source of spotting idea has been highlighted?
(a) Inventions
(b) Innovations
(c) Changes
(d) Competition 

Correct Answer is Option (c)
Changes in social, political and technological environment bring opportunities for new businesses.

Q.8: At the break-even level:
(a) Total revenue = Total expenses
(b) Total revenue – Total expenses
(c) Total revenue + Total expenses
(d) Total revenue/Total expenses 

Correct Answer is Option (a)
At BEP, a firm is at no profit no loss. It is a point where the total revenue of the firm is equal to the total expenses.

Q.9: Sensing entrepreneurial opportunities is a process of converting _________ and then into an enterprise.
(a) An idea into an opportunity
(b) An opportunity into an idea
(c) An idea into a problem
(d) A problem into an opportunity 

Correct Answer is Option (a)
Sensing entrepreneurial opportunities is a process of perceiving the needs and problems of people and society and arriving at creative solutions, converting these solutions into an opportunity and then into an enterprise.

Q.10: Income distribution, lifestyle, education levels, work habits etc. form a part of ______ environment.
(a) Political
(b) Economic
(c) Social
(d) Ecological 

Correct Answer is Option (c)
The social environment factors include population demographics, income distribution, lifestyle changes, level of education and attitudes of people towards work and leisure. This factor is a part of PESTEL Model.

Q.11: Vishal owns a cloth manufacturing concern which uses cotton threads to manufacture garments. Identify the type of utility created by Vishal.
(a) Form Utility
(b) Place Utility
(c) Time Utility
(d) Possession Utility 

Correct Answer is Option (a)
Business enterprises create various utilities. Form utility is converting raw material into finished products

Q.12: “Each for all and all for each” is the motto of which of the following form of business organisation?
(a) Sole Proprietorship
(b) Partnership
(c) Company
(d) Cooperative Society 

Correct Answer is Option (d)
The primary aim of a cooperative society is to provide service to its members. Its motto is “Each for all and all for each”.

Q.13: The service sector contributes to almost half of India’s GDP (48.9%) and it only employs around one-third of its workforce. Identify the environmental factor which helped them in taking this decision.
(a) Legal
(b) Economic
(c) Social
(d) Political 

Correct Answer is Option (b)
Economic environment refers to factors and forces concerning means of production and distribution of wealth.

Q.14: The characteristics of a company includes:
(1) Common Seal
(2) Perpetual Succession
(3) Limited Liability
(a) Only 1
(b) Both 1, 2
(c) Only 2
(d) All 1, 2, 3

Correct Answer is Option (d)

Q.15: Observing and listening to customers give an idea about market trends. Which way to spot trend is being referred?
(a) Read Trend
(b) Talk Trend
(c) Watch Trend
(d) Think Trend 

Correct Answer is Option (c)
Watch trend is where ideas are generated through observation and listening. Entrepreneur make it regular to go to places where the target customers generally hang out.

Q.16: Environmental scanning provides relevant information about the business environment. Such information is useful in planning and policy making. Identify the benefit of environmental scanning in the above statement.
(a) First mover advantage
(b) Early warning signals
(c) Customer Focus
(d) Strategy Formulation 

Correct Answer is Option (d)
Environmental scanning provides relevant information which helps in policy making and planning.

Q.17: _____ involves application of new idea and converting these ideas into useful products or services.
(a) Innovation
(b) Invention
(c) Creativity
(d) Scanning

Correct Answer is Option (a)
Innovation refers to the process of doing new things or doing old things in a new way. It involves transformation of innovative ideas into useful applications.

Q.18: In this stage, entrepreneur comes out with a viable plan to give practical shape by arranging funds, raw material, policy making, etc. Out of the following, identify the stage of ‘Creative process’ discussed above.
(a) Incubation
(b) Innovation
(c) Illumination
(d) None of these 

Correct Answer is Option (c)
Illumination is the stage where the idea resurfaces as a realistic creation.

Q.19: Why is it important for an entrepreneur to calculate Break-even point?
(a) It helps in assessing the minimum level of output to be produced.
(b) It helps in assessing the effect of change in quantity of output upon the profits.
(c) It helps in assessing the selling price of the product.
(d) All of these 

Correct Answer is Option (d)
Break-even point is the level of sales (or revenue generated) that equals all the expenses required for generating that revenue. It is not more than the expenses (i.e. no profit) nor is it less than the expenses (i.e. no loss). In other words, there is neither loss nor profit. It helps in setting profit goal and sales target. In a manufacturing environment, it helps in determining the products that are not contributing to meet the fixed expenses and thus brings up the item for discussion in management meetings about its continuity.

Q.20: Gross Profit =
(a) Unit Price – Unit Cost
(b) Unit Price + Unit Cost
(c) Unit Price / Unit Cost
(d) None of these 

Correct Answer is Option (a)
Excess of Unit Price over Unit Cost is known as the Unit Gross Profit or Unit Gross Margin. This represents the business profit from selling a product or providing service before deducting fixed expenses such as salaries, rent and other expenses.

Q.21: How is ‘Unit of Sale’ determined in a restaurant providing dinner?
(a) Unit of sale will be the number of dinners offered.
(b) Unit of sale will be the average amount billed per dinner.
(c) Both (A) and (B).
(d) None of these. 

Correct Answer is Option (a)
Unit of sale can be defined as a measure of what products are sold. Thus, unit of sale will be the number of dinners offered.

Q.22: _____________ is one of the factors for sensing entrepreneurial opportunities.
(a) Vision and Creativity
(b) Competition
(c) Problems
(d) All of these 

Correct Answer is Option (a)
Sensing entrepreneurial opportunities is a process that is germinated with one’s vision to perceive the needs of people and society and converting it into an enterprise.

Q.23: Which plan describes the proposed venture’s form of ownership?
(a) Financial
(b) Organisational
(c) Marketing
(d) Operational 

Correct Answer is Option (b)
Organisational Plan is that part of business plan that describes the proposed venture’s form of ownership.

Q.24: (i) What kind of people are required?
(ii) How many people are required?
(iii) How to procure personnel?
Which type of business plan is highlighted by above statements?
(a) Operational plan
(b) Manpower plan
(c) Organisational plan
(d) Production plan

Correct Answer is Option (b)
Manpower plan includes:
(a) Kind of personnel required
(b) Quantity of personnel required
(c) Ways to procure personnel

Q.25: Non-registration of a partnership firm does not affect:
(a) The right of the phone to enforce its claim against third party in court of law
(b) The right of firm to file a legal suit against any of its partner
(c) The right of third party to sue the unregistered form or its partners
(d) The right of a partner of the unregistered form to file a suit against other partners 

Correct Answer is Option (c)

Q.26: With the change in consumption habits of people Rakesh who was running a sweet shop, shifted to chocolate business. On the eve of Diwali, he offered chocolates in attractive packages at reasonableprices. He made huge profit by selling chocolates. Identify the dimension of macro environment discussed in the above case.
(a) Political
(b) Technical
(c) Legal
(d) Social 

Correct Answer is Option (d)
The social environment includes population demographics, social mobility, income distribution, lifestyle changes, attitude to work and leisure, levels of education and consumerism.

Q.27: Bharat Engineering produces equipment 800 units at ₹100 per unit. The variable cost of production is ₹70 per unit and the fixed cost are ₹9,000 per month. What would be break-even units for a month?
(a) 300
(b) 500
(c) 200
(d) 150 

Correct Answer is Option (a)
BEP (in units)

Q.28: Vini wanted to start a jewellery business related to the sterling silver jewellery. Just to know more about the consumer interest and other trends in the market, she started attending various jewellery exhibitions and trade fairs. Which method of trend spotting is Vini using?
(a) Read Trend
(b) Talk Trend
(c) Think Trend
(d) Watch Trend

Correct Answer is Option (b)
Entrepreneur get involved in specific industry’s trade association and in attending events and in talking to customers both online and offline. They also take advantage of social networking tools like LinkedIn and Facebook.

Q.29: Amrita has a passion for teaching she was working as PGT in a well reputed school. She was getting good salary and other incentives in return. But she was not satisfied. She decided to open a primary school of her own. With her passion and hard work she did everything possible to make her venture a success. Which economic activity is Amrita currently engaged into?
(a) Business
(b) Profession
(c) Employment
(d) None

Correct Answer is Option (a)
Business covers all the economic activities concerned with the production and distribution of goods and services.

Q.30: Match the Column:

(a) 1– (a), 2 – (b), 3 – (d), 4 – (c)
(b) 1– (b), 2 – (a), 3 – (d), 4 – (c)
(c) 1– (b), 2 – (d), 3 – (a), 4 – (c)
(d) 1– (b), 2 – (a), 3 – (c), 4 – (d) 

Correct Answer is Option (b)

Q.31: Assertion (A): When a problem exists, an idea leads to a solution to resolve that problem, it emerges as a business opportunity.
Reason (R): Competition often results in emergence of new and better ideas that result in new business opportunities.
(a) Both assertion (A) and reason (R) are true and reason (R) is the correct explanation of assertion (A).
(b) Both assertion (A) and reason (R) are true but reason (R) is not the correct explanation of assertion (A).
(c) Assertion (A) is true but reason (R) is false.
(d) Assertion (A) is false but reason (R) is true. 

Correct Answer is Option (b)
Ability to perceive and preserve basic ideas is one of the factors involved in sensing opportunities. The various sources which lead to the emergence of basic ideas are problems, change, inventions, competitions, innovation, etc.

Q.32: Sohan used to sell firecrackers in Delhi in year 2020 due to Covid. Chief Minister of Delhi banned the selling and bursting of firecrackers and issued a notice through court that if someone tries to break the law will be fined and may be imprisoned. Which business and environment is talked about in the above para?
(a) Legal
(b) Political
(c) Social
(d) Economical

Correct Answer is Option (a)
The legal environment includes the law passed by the government as well as decisions rendered by various commissions and agencies at every level of the government.

Q.33: Match the following:

(a) 1 - (c), 2 - (d), 3 - (b), 4 - (a)
(b) 1 - (c), 2 - (b), 3 - (d), 4 - (a)
(c) 1 - (b), 2 - (c), 3 - (a), 4 - (d)
(d) 1 - (d), 2 - (a), 3 - (b), 4 – (c)

Correct Answer is Option (d)
Idea germination: is the seeding stage of a new idea. It is the stage where the entrepreneur recognises that an opportunity exists. On the basis of the idea, interest and curiosity the need is adjudged by the entrepreneur and he starts looking for the answer to implement the idea. If the idea is to launch a new product or service then market research is conducted. Incubation is the subconscious assimilation of information. This is the transition period. The entrepreneur starts thinking about the idea and implementation in his subconscious mind. In the period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting rawmaterial, arranging funds, policy–making for the implementation of idea.

Q.34: Information for environmental scanning can be collected from which of the following sources?
(a) Records of companies
(b) Government publications
(c) Publications by various financial institutions
(d) All of these 

Correct Answer is Option (d)

Q.35: Which of the following importance of environment helps in identifying threats and opportunities in the market?
(a) Identification of opportunities to get first mover advantage
(b) Formulation of strategies and policies
(c) Tapping useful resources
(d) Better performance 

Correct Answer is Option (b)
Environment scanning helps in identifying threats and opportunities in the market. These can serve as the basis of formulation of strategies to counter threats and capitalize on opportunities in the market.

Q.36: Why it is important for an entrepreneur to scan the environment?
(a) Organizations gather information on changing conditions.
(b) The right information can determine an organization's future viability.
(c) Both (A) and (B)
(d) None of these

Correct Answer is Option (c)
In a rapidly changing environment, one rule of thumb applies: If you don't adapt, you don't endure. This is the core idea behind environmental scanning. It refers to the means by which organizations gather information on changing conditions and incorporate those observations into a process where necessary changes are made. The right information, combined with the right adaptations, can determine an organization's future viability.

Q.37: ‘Ayush Generic Medicines’, a chemist shop sells generic medicines. On 15.2.2016 medicines as per the details given below were sold:

The average amount of medicines sold per customer is ________.
(a) ₹878.25
(b) ₹868.25
(c) ₹858.25
(d) ₹808.25

Correct Answer is Option (a)

Average amount of medicines sold per customer = 1,75,650/200 = ₹ 878.25

Q.38: Assertion (A): Usefulness of break-even analysis continues to be the same whether a business is operating a single product or multiple product.
Reason (R): Break-even analysis helps in setting profit goal and sales target.
(a) Both assertion (A) and reason (R) are true and reason (R) is the correct explanation of assertion (A).
(b) Both assertion (A) and reason (R) are true but reason (R) is not the correct explanation of assertion (A).
(c) Assertion (A) is true but reason (R) is false.
(d) Assertion (A) is false but reason (R) is true.

Correct Answer is Option (b)
Break-even analysis helps in setting profit goal and sales target. In a manufacturing environment, it helps in determining the products that are not contributing to meet the fixed expenses and thus brings up the item for discussion in management meetings about its continuity.

Q.39: Which of the following is the formula for break-even point?
(a) Fixed expenses × Gross margin
(b) Fixed expenses / Gross margin
(c) Fixed expenses + Gross margin
(d) Fixed expenses – Gross margin 

Correct Answer is Option (b)

Q.40: Chirag, Ravi, and Suresh were three friends in school time they studied arts, commerce, and science streams respectively when they passed from school they pursued their higher education. Chirag became and chartered accountant, Ravi became an IPS officer and Suresh had started his own laundry business. Who among these is an entrepreneur?
(a) Chirag
(b) Ravi
(c) Suresh
(d) Both (A) and (C) 

Correct Answer is Option (c)
An entrepreneur is a person who sets up a business or businesses, taking on financial risk in the hope of profit.

Q.41: Which of the following PESTEL model factor is indicated in the below mentioned lines? “Kashmir is rich in flora and fauna, free from air and land pollution”.
(a) Ecological factor
(b) Social factor
(c) Political factor
(d) Economic factor 

Correct Answer is Option (a)
Ecological factor considers the ways in which the organisation can produce its goods or services with minimum environmental damage.

Q.42: Vidya has an antique table which she bought few years back.  She now wants to sell this. Will this be considered as business activity?
(a) Yes, it will be a business activity because it involves sale of the good
(b) No, it will not be considered business activity as the dealings in good is not on regular basis
(c) Can't be said
(d) None of these 

Correct Answer is Option (b)
For any activity to be considered as a business activity the dealings in goods and services should be undertaken on regular basis. A single or isolated transaction will not constitute the business.

Q.43: The founder of Domino’s Pizza had a tough childhood, was raised in orphanages and hostel homes. In 1960 he and his brother borrowed $900 and bought a pizzeria. His brother left within a year, but he hung on, surviving bankruptcy and fire. He worked 18 hours a day seven days a week whole heartedly making Domino’s Pizza, today it is one of the biggest MNC in the world and a household name. What type of business was Domino’s when it was started initially?
(a) Partnership
(b) Joint stock company
(c) Sole proprietorship
(d) None of these 

Correct Answer is Option (a)
Partnership is an association of two or more persons to carry on as coowners of a business and to share its profits and losses.

Q.44: MakeMyTrip started their operations in India in various parts of the country. They had been successful in its operation as more people prefer to book hotels and many other facilities by their website and their app. The business made it easy for people to access hotels and other facilities on the tap of the finger which caused a change in the lifestyle and attitude towards working leisure of the people. Which factor of PESTEL model is referred in the case?
(a) Political
(b) Social
(c) Ecological
(d) Technological 

Correct Answer is Option (b)
The social environment includes population demographics, social mobility, income distribution, lifestyle changes, attitude to work and leisure, levels of education and consumerism.

Q.45: Kartik is a budding entrepreneur who is about to pitch his idea to a group of investors. He made a teaser of a few minutes to present his business plan to awaken the interest of potential investor. Which format of presenting a business plan did Kartik use?
(a) Elevator pitch
(b) A pitch deck with oral narratives
(c) Written presentation for external stakeholders
(d) Operational plan 

Correct Answer is Option (a)
Elevator pitch is it three minute summary of business plans. This is often used as a teaser to awaken the interest of potential funders, customers or strategic partners

Q.46: Partnership is the outcome of a ____________ .
(a) Agreement
(b) Contract
(c) Profit sharing
(d) None of these 

Correct Answer is Option (b)
Partnership is the outcome of a contract. Thus, there must be at least 2 persons to enter into contract to form partnership. Minors cannot form a partnership firm as they are incompetent to enter into contract but can be admitted to the benefits of a running firm.

Q.47: Calculate break-even point in units with the given information:

Total Fixed Cost is ₹ 40,000.
(a) 3,125 units
(b) 3,100 units
(c) 3,115 units
(d) 3,200 units

Correct Answer is Option (a)

Q.48: Naman learned painting since childhood. He’s a great sketch artist now and he paints well. Open art studio of his own where he used to sell sketches and paintings made by him and used to meet sketches on painting of people who wanted. He introduced a new special colour painting in his studio which was appreciated by everyone. What form of business organisation is operated by him?
(a) Private company
(b) Public company
(c) Sole proprietorship
(d) Partnership

Correct Answer is Option (c)
Sole Proprietorship business does not have an identity separate from the owner. Death, insanity, imprisonment, physical ailment or bankruptcy of the sole proprietor will have a direct and detrimental effect on the business and may even cause closure of the business.

Q.49: Nimit was not too keen to take up his family run business of making bamboo baskets. But due to the bad condition of the family business he had no option except to take up this business. He started thinking about the new ways of using bamboo. One day while having lunch in a restaurant he overheard the owner talking about the difficulty in disposing the plastic and thermacol crockery that was being used in the restaurant. This provided him the stimulus for a new venture creation. Nimit started looking into various options of making bamboo plates which could be used in the restaurants. He discussed the idea with his father who advised Nimit that ideas should lead to commercially viable forms in order to survive and grow. In the above case which step of creative process is mentioned?
(a) Idea germination
(b) Preparation
(c) Incubation
(d) Illumination 

Correct Answer is Option (d)
In the period of illumination the idea re-surfaces in realistic way and entrepreneur comes out with viable plan to give practical shape by collecting rawmaterial, arranging funds, policy–making for the implementation of idea.

Q.50: Yadav was running a garments store in Pune. His business was running well. He wanted to expand his business so he borrowed ₹5 lakh and added new stock to the store, but then Covid 19 strike the country very harshly. All businesses were hit very hard. His store didn't open for 8 months and he faced huge losses. He had to pay the creditors so he sold his one flat and car and other assets to pay the creditors. Which limitation of sole proprietorship is highlighted in the case?
(a) Limited resources
(b) Unlimited liability
(c) Lack of continuity
(d) Limitation of capital 

Correct Answer is Option (b)
Unlimited liability refers to the full legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners' personal assets, which is different than the popular limited liability business structure.

Q.51: COVID-19 breakout was the major breakout of the century which hasn’t happened in last hundred years due to which many people lost their lives, their loved ones, and their jobs. Government of India introduced various schemes and policies and relief packages for the people and businesses of the country who were hit worst by the pandemic. They made changes in taxation policies. The economy was slowly coming on track but then another wave of COVID-19 hit and this time it was more brutal. The country was lacking basic resources like oxygen, beds in hospitals etc. Prices of petrol and diesel shot up in the country like anything which made transportation costly. Due to costly transportation all basic need items like vegetables, pulses, bread, and daily meal items prices shot up. This caused a situation of inflation in the economy. Which of the following components of PESTEL model are discussed in the case?
(a) Economic
(b) Social
(c) Political
(d) Both (b) & (c) 

Correct Answer is Option (d)
The political environment includes taxation policy, government stability and foreign trade regulations. Economic environment includes rate of interest, inflation, business cycles, unemployment, disposable income, availability of energy etc.

Q.52: The product that has given the world its best known taste was born in Atlanta a local pharmacist produced for Coca-Cola and carried a jug of the new product down the street to pharmacy, where he sampled it, pronounced excellent and less and sale for five cents a glass as a soda fountain drink. He gradually sold portions of his business to various partners and just prior to his death, sold his remaining interest in Coca-Cola, with great business acumen. Mr. Candler proceeded to buy additional business right and acquire complete control. Before the pharmacist gradually sold portion of his business to various partners which type of business was Coca-Cola?
(a) Sole proprietor
(b) Partnership
(c) Company
(d) None of these 

Correct Answer is Option (a)
Sole proprietor ship is a type of business under which a person is solely responsible for providing the capital, for bearing the risk and for the management of business.

Q.53: Sonakshi was talking to her brother, who is also in chartered accountant, about how to make successful venture. He suggested her that she should improve her business model so that it will enable mass production. They analysed that they will have to make a list of all pros and cons of increasing production in the business. Keeping this in mind, her brother prepared a document which described formerly the relevant capital structure required, the various sources and application of funds etc. involved in starting the venture on a large scale. Which type of plan did her brother form for Sonakshi?
(a) Financial plan
(b) Organisational plan
(c) Human resource plan
(d) Marketing Plan 

Correct Answer is Option (a)
Finance is one of the most important prerequisite is to establish an enterprise. Availability of finance facilitate the entrepreneur to bring together men, material, machines and methods to produce goods and services.

Q.54: Sakina is a sole proprietor. Over the past decade, her business has grown from operating a neighbourhood corner shop, selling accessories such as artificial jewellery, bags, hair clips and nail art to a retail chain with three branches in the city. Although she looks after the varied functions in all the branches, for better management of the business she is thinking to convert her sole proprietorship into some other form of business. She also has plans to open branches countrywide. She is afraid of the fact that in case the business incurs losses, her personal property may be called upon to pay the business debts. She is also feeling that she may not be able to effectively manage a large business because of her deteriorating health. The above case talks about:
(a) Features of sole proprietorship
(b) Advantages of sole proprietorship
(c) Limitations of sole proprietorship
(d) None of these

Correct Answer is Option (b) 
Disadvantages of Sole Proprietorship:
• Limitation of Management Skills
• Limitation of Capital
• Unlimited Liability
• Lack of Continuity
• Weak Bargaining Position
• Limited Scope for Expansion

Q.55: Sita and Ram had a company which they use to run very well. They both were MBA graduates. They knew the basics of business in and out and also that there are many factors that impact the business. They used to sit every week for some extra hours and plan their strategies for next week and month by analysing the market, political scenario, legality, the competition etc. This was helpful for them. Since 15 years no matter what the situations comes they would anticipate it and have a backup plan ready for it. Which advantage of environmental scanning is discussed above?
(a) Identification of opportunities to get first mover advantage
(b) Formulation of strategies and policies
(c) Tapping useful resources
(d) All of these 

Correct Answer is Option (b) 
It helps in identifying threats and opportunities in the market. These can serve as the basis of formulation of strategies to counter threats and capitalise on opportunities in the market.

Q.56: Naveen started a school bag business with his brother. Both were very excited about the new venture. With meticulous planning and a lot of hard work they were able to sell 1,000 bags in the first year. But they did not make any profit but both were happy because they were not in loss and revenue generated was equal to the cost. Now they were moving towards earning profit in the second year. Identify the concept discussed in the above statement.
(a) Fund sourcing
(b) Break-even point
(c) Both (A) & (B)
(d) None of these 

Correct Answer is Option (b) 
The break-even point is the level of production at which the costs of production equal the revenues for a product. In investing, the break-even point is said to be achieved when the market price of an asset is the same as its original cost.

Q.57: Ola was one of its kind amazing start-up which allowed people to book cabs online. Ola did not own any of the car but they set up network with local taxi drivers and asked them to get registered on their platform which will enable them to get business. For both it was a win-win situation. With time it came in the eyes of the public & it started introducing new features like call–radio taxis with additional features like GPS systems, online booking etc. Now they have launched their own Electric scooter and buzzing in the market. Which advantage of environmental scanning is discussed above?
(a) Identification of opportunities to get first mover advantage
(b) Formulation of strategies and policies
(c) Image Building
(d) Both (b) & (c) 

Correct Answer is Option (c) 
If a company is sensitive to the external environment, it will come out with new products and services to meet the requirements of the customers. This would build the image or reputation of the firm in the eyes of the general public.

Q.58: Gaytri was doing business of hand crafted pure leather accessories. Her business was running well. She used to sell the products in the domestic market as well as the international market. The business was started in 2004. In 2015 the government put a ban on sale of leather goods to stop the killing of innocent animals. The government has issued notices in the whole country that if anyone is caught selling leather items will be fine ₹1,00,000, and imprisonment for 1 year. Which type of environmental factor is discussed in the case?
(a) Micro
(b) Macro
(c) Social
(d) Technical 

Correct Answer is Option (b) 
Macro environment is also known as general environment or remote environment. Macro environment refers to the general environment that originates  outside the organization and affects the business operations indirectly and the businessman has no control over these forces.

Q.59: Poonam is from a village in India. The people in the village are very talented. They are very good at creating statues from marbles and other stones. Basically they all are artist. They used to carve life out of marble. Poonam did not have enough resources so she went to the collector's office and discussed her idea. Collector liked the idea. He proposed that they together with a partnership of government should start selling those handicrafts in the different parts of the country. They started a venture together where entire investment will be made by the government and Poonam will manage the venture. Their motive will be welfare of people. What kind of business enterprise is discussed in the case?
(a) Public sector enterprise
(b) Private sector enterprise
(c) Joint sector enterprise
(d) None of these 

Correct Answer is Option (a) 
When business enterprises are owned, controlled and operated by public authorities, with welfare as primary and profit as secondary goals, they are called as public sector enterprises.

Q.60: Victor industries has been one of the leading companies in Mobile Phone Industry in India. The company decided to launch a new Model AI 1 which will have in built latest software to encourage hands free use and enhance the customer experience through 3D photos. They are also looking into ideas to use eco-friendly recyclable materials for the body of the phone which will cause less environmental damage. Identify the two factors of PESTEL model from the above case study.  
(a) Economic, Social
(b) Ecological, Technological
(c) Legal, Economic
(d) Social, Political

Correct Answer is Option (b) 
Under the PESTEL Model, ecological environment considers the ways in which an organization can produce its goods and services with minimum environmental damage.