Very Short Type Questions - Enterprise Growth Strategies, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download

Q1. What are the two ways in which an organisation can expand ? (TBQ) (1 mark)
Ans.
(i) Internal Expansion,
(ii) External Expansion.

Q2. What are the main forms of external expansion ? (1 mark)
Ans.
(i) Franchising,
(ii) Merges and acquisitions.

Q3. Who is a franchisor ? (TBQ) (1 mark)
Ans. The person offering the franchise is known as the franchisor.

Q4. Who is a franchisee ? (TBQ) (1 mark)
Ans. Franchisee is the person who purchases the franchise and is given the opportunity to enter a new business with a better chance to success.

Q5. What is Franchising ? (2 marks)
Ans. “An agreement whereby the manufacturer or sole distributor of a Trade Marked product or service gives exclusive rights of local distribution to independent retailers in return for their payment of royalties and confirmance to standardized operating procedures.”

Q6. Which is the most popular form of franchising ? (TBQ) (1 mark)
Ans. Business format franchise opportunity.

Q7. Name the main ingredients of a franchise agreement. (2 marks)
Ans.
(i) Contract Explanation,
(ii) Operations Manual,
(iii) Proprietary statements,
(iv) Ongoing site maintenance.

Q8. Name the types of franchising. (2 marks)
Ans.
(i) Product franchise business opportunity.
(ii) Manufacturing franchise opportunity.
(iii) Business franchise opportunity ventures.
(iv) Business format franchise opportunity.

Q9. What is “Franchise Agreement” ? (1 mark)
Ans. A Franchise Agreement is the legal document that binds the franchisor and franchisee together.

Q10. Explain the benefit of manufacturing franchise opportunity ? (1 mark)
Ans. It provides an organization with the right to manufacture a product and sale it to the public, using the franchisor’s name and trademark.

Q11. In which type of industry is manufacturing franchise opportunity mostly found ? (1 mark)
Ans. This type of franchise is found most often in food and beverage industry.

Q12. Define Royalty. (2 marks)
Ans. Royalty is the payment made by the franchisee to the franchisor for getting permission to distribute branded goods or services of the franchisor. The franchisor may recieve fixed or periodic royalty.

Q13. Give one example of franchisor. (1 mark)
Ans. Nirulas is the franchisor, the business unit which is selling Nirulas product is the franchisee.

Q14. In what sense are small enterprises more vulnerable than large ones ? (1 mark)
Ans. Small enterprises are more vulnerable than large ones to small changes in environment, change in taste and preference of consumers, taxation policies, government policies, etc.

Q15. Why is it necessary for an enterprise to have a plan for growth ? (1 mark)
Ans. As without growth the enterprise will be removed from the market and will become extinct.

Q16. What constitutes direct competition ? (2 marks)
Ans. Direct competition is found where many producers are producing the product. Each producer want to capture maximum consumers using various techniques like persuasive advertising, schemes, etc. Each firm wants to enjoy competitive edge over its competitors.

Q17. How is an internal expansion financed ? (1 mark)
Ans. Internal expansion may be financed by the issue of more share capital, generating funds from old profits or by issuing long-term securities.

Q18. What is required by an entrepreneur to ensure the continued efficiency and profitable functioning and growth of an enterprise ? (1 mark)
Ans. To ensure the continued efficiency and profitable functioning and growth of an enterprise, extra managerial ability is required.

Q19. What are the disadvantages of franchising to the franchisor ? (1 mark)
Ans. Poor management may lead to the failure of the franchisee which can adversely affect the franchise system as a Whole.