Short Type Questions - Entrepreneurial Opportunity, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download

Q1. Explain how ‘social factor’ and ‘political factors’ help in scanning the environment.
(CBSE 2010, Outside Delhi)
Or
Explain in brief:
(i) Social factors and
(ii) political factors as environmental factors of entrepreneurship. (4 marks)
Ans.
(i) Social Factor : Social/cultural factor includes study of population demographics, social mobility, income distribution, life style changes, attitudes to work and leisure, levels of education and consumerism.
(ii) Political factor : It includes study of taxation policy, government stability and foreign trade regulations.

Q2. An entrepreneur has decided to open a retail outlet to sell fast food items like pizza, noodles etc. in the rural areas. Do you think his decision is correct? Give any one reason identifying the environmental factor helpful in taking this decision. (CBSE 2010, Outside Delhi) (3 marks)
Ans. No, his decision is not correct because in rural areas culture is not compatible with these types of food products.
Social factor is helpful in taking this decision.

Q3. Why is environment an important factor for entrepreneurship? Explain in detail. (CBSE 2009, Comptt.) (3 marks)
Ans. Environment is an important factor for entrepreneurship, as environment refers to the various facts within which enterprises whether big, medium or small have to operate business. It is important because scanning of environment helps in a close examination of the environment to develop an understanding of the social, economic, political, legal, financial and developmental factors in order to ensure that the perceived entrepreneurial opportunity is compatible with them. It also helps in knowing trend issues and expectations from the environmental changes. If an enterprise is able to adopt to its environment, it can succeed in the long run. Thus, it is a fundamental need of enterprise.

Q4. Explain ‘care to ecology and environment’ as a social responsibility of an entrepreneur. (CBSE 2008 Delhi) (3 marks)
Ans. Ecology and Environment : Production process often cause some sort of pollution. It may be noise, smoke or affluents. Some enterprises are prone to ecological disturbances still others cause or encourage deforestation, soil erosion or even lead to human and animal health hazards. Entrepreneurs should take the responsibilities to keep pollution under control, to provide devices to prevent polluting material from affecting public health.
They are required to discipline themselves not to indulge in any activity that vitiate or degrade environment.

Q5. What are the three steps involved in the process of sensing entrepreneurial opportunities ? (CBSE 2007) (3 marks)
Ans. Three steps involved in the process of sensing entrepreneurial opportunities are as follows :
(i) Scanning of Environment : The word ‘Scan’ means-to examine closely especially in search of their relevant environment to identify opportunities and threat affecting them. It also develops an understanding of social, economic, political and other developmental factors in order to ensure that perceived entrepreneurial opportunity is compatible with them. It helps in knowing trends, issues and expectations from the environment changes.
(ii) Generation of Ideas : While scanning of environment, entrepreneur can take up thorough study of different sources of business ideas to explore it. These ideas can come  from talking to friend and others, customers, brainstorming, visiting shops, etc. It is mainly a conscious effort to explore ideas from several sources with the purpose to find a creative solution to a problem or need.
(iii) Identification of Product or Services : After evaluating the various ideas received from various sources, an entrepreneur scrutinizes it and selects the best product or service for launching an entrepreneurial venture.

Q6. Draw the Enterprise Process Diagram. (CBSE Textbook)
Or
Draw and explain Enterprise Process Diagram. (3 marks)
Ans. Enterprise Process Diagram

When an entrepreneur looks outside for business ideas he often sees that business opportunities exists in the environment. This process diagram shows different stages :
First Stage : Spotting an opportunity by analyzing the needs and problems that exists in the environment e.g., Safety Razor was invented with an intention of sharp nick-free and quick shaving.
Second Stage : Evaluating the ideas received from different sources to find a creative solution.
Third Stage : Identifying a product or service through innovation.
Fourth Stage : Setting up a project and nurturing it to success.

Q7. What is the purpose to scan the environment ? (TBQ) (3 marks)
Ans. The purpose to scan the environment is to adapt to the changing environment. It is necessary for an organization to combine the right information with the right adaptations.

Q8. What is PESTEL model ? Explain it. (TBQ) (4 marks)
Ans. PESTEL model explains the macro factors affecting the environment. These are as follows :
Political : The political environment includes taxation policy, government stability and foreign trade regulations.
Economic : The economic environment includes interest rates, inflation, business cycles, unemployment, disposable income, energy, availability and cost.
Social : The social/cultural environment includes population demographics, social mobility, income distribution, lifestyle changes, attitudes to work and leisure, levels of education and consumerism.
Technological : It is influenced by government spending on research, new discoveries and development, government and industry focus of technological effort, speed of technological transfer and rates of obsolescence.
Ecological : It considers the ways in which the organization can produce its goods or services with minimum environmental damage.
Legal : It covers areas such as taxation, employment, law, monopoly, legislation and environmental protection laws.

Q9. How does problem identification help the entrepreneur ? (4 marks)

Ans. Problem identification helps the entrepreneur to :
(i) Bring out new products in the market.
(ii) Understand the problems and needs of the market.
(iii) Be creative.
(iv) Increase employment generation.
(v) Increase national income of the country.

Q10. Explain environment analysis. (4 marks)
Ans. Environment analysis is the process of monitoring the economic and non-economic threats to an organization.
Such an analysis involves data collection, information processing and forecasting to provide a rational basis for developing goals and strategies for business survial and growth. Information for environmental scanning can be collected from several sources. These include :
(i) Verbal information from customers, wholesalers, retailers, distributors, consultants, etc.
(ii) Records of companies.
(iii) Government publications.
(vi) Publications by various financial institutions.
(v) Formal studies conducted by strategic planners.

The data so obtained is processed and analysed with the help of quantitative and qualitative techniques.

Q11. Give two examples showing that both economic and social factors can affect business ideas together. (4 marks)

Ans.
(i) Selling of flowers during festive season. Here, festival is a social factor whereas demand for flowers is an economic factor.
(ii) Selling of ceiling fans and air-conditioners at a discount during winter season to clear the stock.

Q12. What are the common factors which have influenced the Indian economic environment ? (3 marks)

Ans. The common factors which have influenced the Indian economic environment are :
(a) Banking sector reform has led to many attractive schemes of deposits and lending money. The banks are offering loans at very nominal rate of interest and with minimum formalities to be completed.
(b) Recent changes in economic and fiscal policy of country have encouraged NRIs and foreign investors to invest in Indian companies.
(c) Lot of economic reforms are taking place in leasing and financing institutions. The private sector is allowed to enter in the financing institutions, as a result customers are gaining.

Q13. Name some aspects of economic environment. (4 marks)

Ans. Some aspects of economic environment are :
(a) Role of Private and Public Sector.
(b) Rate of Saving and Investment.
(c) Balance of Trade.
(d) Balance of Payments.
(e) Money Supply in the Economy.
(f) Rate of growth of GDP, GNP, Per Capita Income.
(g) International Debt.
(h) Transport and Communication System.

Q14. “An entrepreneur who fails to scan business environment is unlikely to survive in the long run.” Explain this statement. (3 marks)
Ans. The above statement is correct because scanning the business environment provides following benefits :
(a) Enables the firm to identify opportunities and getting first mover advantage.
(b) Helps the firm to identify the threats and early warning signal.
(c) Helpful in tapping and assembling resources.
(d) Helps to adjust and adapt with the rapid changes.
(e) Assisting in planning and policy making.
(f) Improvement in performance.

Q15. State the uses of problem identification. (3 marks)
Ans. Problem identification helps the entrepreneur to :
(a) Bring out new products in the market.
(b) Understand the problems and needs of the market.
(c) Motivate entrepreneur to be creative and innoavtive.
(d) Increase employment generation.
(e) Increase national income.