Entrepreneurship : CUET Mock Test - 4 - CUET Commerce MCQ

A conglomerate merger is a merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.
Example: A leading manufacturer of athletic shoes merges with a soft drink firm.

An entrepreneur is a person who organises a venture to benefit from an opportunity, rather than working as an employee.

• Entrepreneurs play a key role in any economy.

An entrepreneur keeps himself motivated through:

• Desire for independence
• Search for personal and professional growth
• Search for more rewarding work

SWOT analysis is a process that identifies the strengths, weaknesses, opportunities and threats to an organisation. Strengths and weaknesses are often internal to the organisation, while opportunities and threats relate to external factors.

Re-order level = Maximum re-order period × Maximum usage
= 6 weeks × 105 units = 630 units
The re-order level is 630 units.

Positioning strategy considers the strengths and weaknesses of the organisation, the needs of the customers and market and the position of competitors. A positioning strategy should include the following strategies: promotion strategy, advertising strategy and product strategy. The purpose of a positioning strategy is that it allows a company to spotlight specific areas where they can outshine and beat their competition.

Objectives of a business explain what is to be achieved and by when.
Strategy explains how these objectives are to be achieved.
A vision statement describes the desired future position of a company.
A mission statement defines a company's business, its objectives and its approach to reach those objectives.

People with an 'External Locus of Control' generally believe that their successes or failures result from external factors beyond their control, such as luck, fate, circumstance, injustice, bias, or individuals who are unfair, prejudiced, or unskilled. Hence, External Locus of Control is not one of the traits of an entrepreneur.

The business plan shows whether the business is economically feasible or not. A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a road-map that provides direction to the business.

The document about which the Chartered Accountant advised Meera and Ragini is partnership deed.
Partnership deed is a written legal document that contains an agreement made between two individuals who have the intention of doing business with each other and share profits and losses. It is also called a partnership agreement.

Mission statement of startup provides direction and purpose for the startup. An effective mission statement informs and inspires the critical stakeholders that surrounds startup—this group includes customers, investors, employees and job candidates. A mission statement should help them understand the value of the company and its product.

When two entities combine together and form a new entity, extinguishing both the existing entities, it is known as amalgamation. Amalgamation is distinct from 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.

The inventory control technique known as ABC analysis builds on Pareto's principle. In ABC analysis, a company reviews its inventory and sorts all SKUs (Stock Keeping Units) into three categories, called A, B and C items. The typical breakdown might look like this:

• A inventory: 20 percent of SKUs, 80 percent of value
• B inventory: 30 percent of SKUs, 15 percent of value
• C inventory: 50 percent of SKUs, 5 percent of value

Hence, option 1 is the right answer.

Internal expansion results from the gradual increase in the activities of the concern. The concern may expand its present production capacity by adding more machines or by replacing old machines with the new ones with higher productive capacity. The internal expansion can also be undertaken by taking up the production of more units or by entering new fields on the production and marketing sides.

A business angel is also a sort of venture capitalist who provides capital for business development in exchange for a stake in the Business ownership.

A business where an individual is both the owner and conductor of the business affairs is called Proprietorship Firms. A sole proprietorship, also recognised as personal entrepreneurship, is a kind of business that is controlled and operated by one body and in which there is no constitutional characteristic within the partner and the partnership entity.

Main ingredients of a franchise agreement:

• Contract Explanation: The contract explanation is the part of the agreement that outlines the type of relationship a franchisee is entering into with the franchisor.
• Operations Manual: The operations manual is the section of the agreement that details the guidelines that the franchisee must legally follow in operating the business as outlined by the franchisor.
• Proprietary Statements: Proprietary statements outline how the franchise name is to be used, as well as the marketing and advertising procedures in place that the franchisee will be required to follow.
• Ongoing Site Maintenance: Ongoing site maintenance is another item that is outlined in the agreement. Included are the types and time frames regarding various maintenance items and upgrades that must be made to the franchisee's location.

Therefore, financial statement is not one of the main ingredients of a franchise agreement.

'Born global' is the enterprise that always looks for input resources as well as marketing niches in the global context.

Labelling is a part of branding which enables product identification. It is a printed information that is bonded to the product for recognition and provides detailed information about the same. Customers can take buying decision easily when they see the information on the label of the product.

For small businesses, different types of budgets can be drafted to monitor various financial aspects of the business. An operational budget is the most common type of budget used. It forecasts and tries to pretty closely predict yearly revenue and expenses for a business. This budget can be updated with actual figures on a monthly basis.

A monopolistic or an oligopolistic firm has no incentive to innovate, because it already has a market for its old existing product. Only the purely competitive firm has the instinct to survive and compete by providing something new or different through technological advance.

The process of producing a business plan is, in itself, a beneficial undertaking. It facilitates management's focus on the future as well as the present. In the process of preparing the plan, they have a chance to step back and assess where they are now in terms marketing, production, and finances.
The process has four distinct phases:

• Identification and evaluation of the opportunity
• Development of the business plan
• Determination of the required resources
• Management of the resulting enterprise

A process that allows an organisation to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage is known as marketing strategy. This definition of marketing strategies was given by David Aaker.

Superstar is the type of entrepreneur who is led by charisma, charm and high energy. An entrepreneur like this has an overwhelming personality which works in his favour, so does in the favour of business. This personality often will cause to build business around own personal brand. However, such people tend to become too competitive and workaholic which can sour the workplace and the market. The example of superstar entrepreneur is Peter Sematimba, CEO of Super FM.

Industrial sickness is a phenomenon characterised by loss of production and employment of industries. The industrial sickness basically occurred in the traditional industries which were developed long ago. With the abolition of managing agency system, there was no mechanism to stop the rot, and industries maintained by managing agents were hard hit in the industrial sickness. The causes of industrial sickness can be divided into two broad categories: external and internal.
External causes are those which are beyond the control of its management, and seem to be relatively more important than internal causes. The external causes which have been identified so far include:
(a) Changes in fiscal and monetary policies
(b) Price and distribution
(c) Non-availability of inputs
(d) Industrial relations
(e) Capital market fluctuations

The innovative entrepreneur would have lost much of his personal stake in the initial research itself, making him face the resource crunch at the implementation stage. He is also a relatively an unknown entity in the market place. So, he would face issues in raising the seed capital.

The method that Ritu adopted to spot the trend is talk trends. It involves talking to people which is an equally important trend spotting activity which helps the entrepreneur to get inputs on the needs of the customer. This can be done both online and offline.

A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing and enabling disclosure of the invention.

The marketing assessment process begins with recognition of the problem. Then the problem is analysed. Then comes collection of data connected with the problem or opportunity. This data has to be converted into information that can be analyzed systematically. After the data has been analyzed and interpreted, comes the stage of answering the problem that we started with and putting the ideas worked out, into a systematic action plan to address the problem or exploit the opportunity.

Commercialisation is the process of bringing new products or services to market. The broader act of commercialisation entails production, distribution, marketing, sales, customer support, and other key functions critical to achieving the commercial success of the new product or service.

Let cost price = Rs. 100
Profit = Rs. 25
Sale price = Rs. 125
By unitary method, for sales of Rs. 125, the cost is Rs. 100.
Then, for sales of Rs. 2,000, cost = Rs. {(100/125) × 2,000} = Rs. 1,600
Cost of goods sold = Rs. 1,600