CS Foundation – Page 6

Emerging Trends in Business – CS Foundation Business Environment Notes

December 5, 2022

Emerging Trends in Business – CS Foundation Business Environment Notes

Franchising:

It refers to a business relationship between two organisations where a franchiser allows a franchisee to use his product, brand or process in return of fees, (royalty)
In this, one firm allows the other to use its technical know-how & trade marks.
Franchiser is an individual or firm granting rights.
Franchisee is an individual or firm to whom the right is granted.
Franchise refers to the special right given by a franchiser to franchisee to sell franchiser’s product/service in a specified area.
Right is granted under special agreement called the Franchise Agreement.
Derived from Anglo French word ‘franc’ meaning ‘free’
Intellectual/property rights include-designs, brands, know-how, patents, trademarks, trade secrets.
It is the practice of using another firm’s successful business model
The Franchisee is an alternative to building chain stores to distribute goods and services, and to avoid investment and liability over a chain.

It has the following characteristics:

Right is granted under a license.
Franchisee gets marketing support and technology from franchiser.
Personnel training may be provided by franchiser.
Business must be operated as per the franchiser’s policy.
Franchisee is required to pay royalty – an agreed sum of money to franchiser.
Franchise agreement is for a limited period which can be renewed.

It provides the following advantages both to the Franchiser and Franchisee :

Franchiser	Franchisee
Quick expansion of distribution system. Business expansion with less capital. Instant feedback from customer. Increased goodwill. Protected rights. Get to know about specific needs and preference of local customers. Wider acceptance of brand name.	Exclusive rights within his territory. Branded product, thus well- known. High degree of quality control. Assistance in training his staff, product promotion etc. Based on proven ideas so franchisee can check out success before committing himself.

However, it suffers from following disadvantages :

Franchiser	Franchisee
Risk of franchisee starting same business. Has to provide initial financial assistance and support. Ongoing cost of supporting the franchisee and national advertising. Risk of leakage of trade secrets. Risk of brand name being destroyed.	Lack of freedom in business operations. Possibility of conflicts. Payment of royalty on regular basis. Restriction on selling his business.

Aggregator:

It is derived from the word “Aggregate”.
Aggregate means to combine, to accumulate or amalgamate.
In Digital world the term refers to that computer software or that website which collects or combines homogenous information from all around the online world and presents it to the viewer or the visitors.

The various types of aggregators are:

Service Aggregator
Search Aggregator
Social Aggregator
News Aggregator
Video Aggregator
Poll Aggregator
Shopping Aggregator

Aggregator

Function

Example

Service Aggregator

Search Aggregator

Social Aggregator

News Aggregator

Video Aggregator

Poll Aggregator

Shopping Aggregator

Providing services to the customers combines the result

is a type of meta search engine (a tool that uses another search engine’s data to produce its own result). It combines user specified search feeds

Collects content from multiple social network

Is a software/web app., contain online newspaper, blogs etc.

Combines various videos from diff. sites

Combines data for an

upcoming election and predict the result.

Combine data from

various online shopping sites.

Uber and Ola

Rich Site Summary (RSS) feed helps the subscriber to a website get automatically news about any update on the website, as the RSS feed constantly monitors the site.

Twine social

Feedly, flip board, comma feed Daily Tube

Electoral-vote.com, votamatic.org etc.

Google Shopping, Nextdg, Shopzilla etc.

Key Factors Driving the Rise of Web Aggregators
1. An aggregator is a software or website that gathers Web content and/or applications from different online sources for reuse or sale.

2. There are two types of aggregators:

Aggregator that simply gather the material and show them
Aggregator that gather and distribute contents as per their customers needs

3. Key factors which are responsible for the rise of web aggregators are:

Increasing demand for business content
Web content aggregators are in huge demand
Content aggregator is the new name for journalist
Syndication
Huge variety of content formats
Rich media content
New Business Models

Key Challenges for the aggregators in the future?

The main challenge is that it promotes various brands under one roof.
The competition to look better than the competitor is high.
As this technology collects data using APIs and XML, so sometimes it miss out with a good updated feed coming in the database.
High cash burn rate – Needs huge investment
Competition – To compete various brands under one roof
Standardisation – To develop technical standards continuously
The Unregulated market
APIs and XIVIL – Are markup language, it is totally dependent on who is writing it, so sometimes it miss out with good updated feed or contain verbose language.

BPO : (Business Process Outsourcing)
1. It refers to the contracting of a specific business tasks, such as payroll, to a third party service provider.

2. It is implemented as a cost saving measure for tasks that a company requires but does not depends upon, to maintain their position in the market place.

3. It has following two sub-segments:

KPO : Knowledge Process Outsourcing
LPO : Legal Process Outsourcing

4. It is of two types:

Back office outsourcing: Outsourcing of internal business functions like finance, accounting etc.
Front office outsourcing: Outsourcing of customer related services. Example: Customer Care Centre

5. It was originated by soft drink manufacturing drink – Coca Cola.

6. It is generally associated with IT enabled services (ITES)

7. Off-shore outsourcing: Outsourcing is done by contracting outside the company’s country.

8. Near-shore outsourcing: Outsourcing is done by contracting to country’s neighboring or nearby country.

9. India is the hottest spot of IT outsourcing due to following reasons:

supportive government policy
huge skilled man power
advanced technology
reliable communication facilities

BPO is required due to the following reasons –

Smooth working : By outsourcing its routine activities, business can operate smoothly.
Economical : Outsourcing of certain activities is much more economical to do rather than creating separate department for each activity.
Specialization : It enables work to be done by specialized people.
Achieving Better Results : Specialization ensures achieving of better results.
Business Expansion : Business can ensure its expansion by focusing on its growth strategies while outsourcing the rest.

It has following advantages –

Cost Advantages : It saves 30% of company’s overall expenditure.
Flexibility : By outsourcing its various functions company converts its fixed cost into variable, thereby ensuring flexibility in its operations.
Speed : Speed of various business processes and operations increases, thus increasing the flexibility.
Focus on core areas : Company can save its time and energy by outsourcing its non-core activities, thereby it self focusing on company’s core areas of operations.
Availability of Skilled Manpower : Large pool of technically skilled manpower with proficiency in english enables the company to grow with faster pace.
Growth : By ensuring speed and flexibility in its operations, it helps the business in growth and expansion.

It suffers from following disadvantages (B.P.O)

Communication problems : It requires proper communication in order to be effective. Telephonic communication is an obstacle for this business.
Loss of control : By outsourcing, the company lose control over its various operations.
Time Zone Double Edged Sword : Due to difference in countries of both customers and vendors, time differences occurs which has to be considered.
Service Provider’s want of diversifying : Service providers takes up project of various companies simultaneously, thereby creating problems in providing services.
Customer is novice.
Unclear contractual issues between company and service provider.
Changing business requirements
Excessive dependance on BPO reduces flexibility.

Knowledge Process Outsourcing Meaning
1. Knowledge Process Outsourcing is at a higher position in intellectual value chain.

2. Knowledge processes can be some specific activity which requires a deep level of domain knowledge (IT, Management, Law etc.) and/or requires thinking of analytical nature.

3. It uses skilled experts in a particular field or domain and handled by experienced people.
BPO = Reduce Cost + Increase Productivity
KPO = Reduce Cost + Increase productivity + Greater Business Insight + Experienced Workforce
Hence,
KPO = BPO + Greater Business Insight + Experienced Workforce

Scope and Future of KPO –

KPO is the evolution and maturity of the Indian BPO sector.
KPO business units provide distinctive domain-based processes, progressive analytical services and business proficiency, rather than just process proficiency.
The future of KPO is bright and has a high potential.
The reason for this is that KPO is not just restricted to Information Technology (IT) or Information
Technology Enabled Services Sectors (ITES).

Types of KPO:
There are four categories of KPO vendors:

Off-shore : vendors are located abroad (developing countries)
Near-shore : located hearer to the client company
Captive : Operational plants in foreign countries
On-shore : Operations in the same country.

Benefits of KPO:
1. KPO providers use the latest tech, and if info, so you can be assured of error-face work
Speedy deliveries

2. KPO is indeed an extension to the BPO services. The top benefits of Knowledge Process Outsourcing which makes it so important for businesses all around the globe now:

Cost-effective price
Access to best human resource pool
Concentration or Focus on Prime business activity
Best Service Delivery

India is the one of the favorite KPO (off-shore) destination for developed Countries i.e. USA, UK & Australia, examples of some major KPO”s are :

Genepact
WNS Global Services
WIPRO (BPO)
First Source Solutions
TCS (BPO)
IBM Daksh
Aditya Birla Minacs

Electronic Commerce

Popularly known as E-Commerce.
It refers to the use of computer networks for buying and selling goods, information and services.

It refers to the use of electronic mediums (tele communication) to engage in the exchange, including buying and selling of products and services requiring transportation either physically or digitally, from one location to another.

It involves various technologies like –

EDI – Electronic Data Interchange
BB’s – Bulletin Boards
EFT – Electronic Fund Transfer
Digital Cash
Web forecasting
Extranet
Internet
WWW – World Wide Web
Imaging , etc.

Data includes text, sound and visual images

It takes place between –

Companies
Companies and their customers
Companies and government departments.

It involves following of categories

B2B – Business to Business
B2C – Business to Customer
C2B – Customer to Business
C2C – Customer to Customer

It includes buying and selling of Goods example – Digital Cameras, Cloths etc.
Information example – Subscription to some law site.
Services example – Placement services through naukri.com

Business to Business – It involves one business enterprise selling to another.
Business to Customer – It is used to refer to sale by a business enterprise to a direct customer.
Customer to Business – In it the consumers can offer products and services to companies and the companies pay them. It is a complete reversal of B2C.
Customer to Customer – It involves the electronically facilitated transactions between consumers through some third party. Example – online auction etc.

It is becoming popular due to following advantages:

Global Market : World becomes a global market for the business firms through internet.
Time and Effort Savings : It involves less of paper and clerical work which saves both time and money
Quick Supplies : Capital does not gets block in inventories as huge stock of material need not be maintained by business.
Quick Delivery : It ensures quick delivery of goods to consumers and timely redressal of complaints.
Low Transaction cost and High Margins : Cost of business transactions can be reduced greatly, thereby enabling it to earn higher profits.
Wider choice : Consumers get wide variety of goods and services before purchasing them.
Working 24 x 7
Direct contact between business and consumer
Customer convenience
Ease in launching of new products.

It suffers from following disadvantages:

High Initial Cost: Various start-up cost like net connection, hardware/software, setting up etc involves huge investment.
Fulfillment Problems: Many a times, it becomes difficult for business to fulfill their commitments made to the customers due to shipping delays, website crashing, etc.
Training and Maintenance: Continuous training and maintenance of staff, net etc. is required to be done by the business.
Security: Customers feel lack of security relating to their personal details like credit card number etc. via online business.
Corporate Vulnerability: Competitors are able to access the business information through internet. This can be harmful for the business.
Web Farming: It refers to the idea of extracting business intelligence from the competitors web pages
Lack of Personal Touch: It is not suitable for customers requiring personalised service as e-commerce does not allows personal touch between buyer and seller.
High Risk associated with it
System and Data Integrity
People’s Resistance

Digital Economy

The digital economy refers to an economy in which major business transaction takes place using digital media or internet or world wide web.
Consumers all around the globe are greatly influenced by digital platforms.
The various new ways of information dissemination are – Facebook, Twitter, Youtube, Linked in etc.
It is found 5-6 hours is the time an average Vs. consumer spends per day with digital media, 51% of which is via mobile.

Consumer in Digital Economy:

Consumer in digital economy is still a king.
Consumers are easily accessing huge amount of data due to digitization of content and thus sharing information has become much easier.
Most recently Facebook and Twitter are the direct benefit of the Digital economy to the customer centric organization.

Merits of Digital Economy are:

Growing use of Internet
Rise in E-Commerce
Digital delivery of goods and services
Greater Transparency

Demerits of Digital Economy Demerits are as follows:

Loss of Job
Less Digital Experts
Strong Infrastructure Requirement

Concept of incubators, asset lite models – These days, some new concepts are also emerging in business such as incubators and Asset Lite Models.

Incubator:

An incubator is an organization designed to accelerate the growth and success of entrepreneurial companies through an array of business support resources and services that could include physical space, capital, coaching, common services, and networking connections.
Incubators provide numerous benefits to owners of startup businesses.
Incubators are critical for driving the growth of startups at all stages of their entrepreneurial journey.
They help provide mentorship and handholding support and above all foster a culture of innovation.

Asset Light Model:

Asset light model is a business model where businesses now instead of purchasing the land enter into a contract with the land owner, where they share a certain percentage or profit arising out of the business done on the land.
This helps in saving a huge cost of land to the business.
Example: Outsourcing, asset sharing, licensing in and licensing out.
Asset-light models can deliver a better return on assets, lower profit volatility, greater flexibility, and higher scale-driven cost savings than asset-heavy models.

Multiple Choose Questions

Question 1.
Parent organisation grants the permission to other individuals to use their brand, trademark etc. for specified period. Such rights are known as _______.
(a) Franchising
(b) Franchise
(c) Franclisee
(d) Franchiser
Answer:
(b) Franchise

Question 2.
Period for which right is transferred, under an agreement is to be renewed from time to time. This statement is _______.
(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(a) True

Question 3.
Agreed sum paid by franchisee to franchiser is known as _______.
(a) Fees
(b) Commission
(c) Changes
(d) Royalty
Answer:
(d) Royalty

Question 4.
Intellectual Property rights does not include _______.
(a) Trademarks
(b) Patents
(c) Goodwill
(d) Know how
Answer:
(c) Goodwill

Question 5.
BPO stands for _______.
(a) Business Public Organisation
(b) Business Process Outsourcing
(c) Business Private Organisation
(d) Business People Organisation
Answer:
(b) Business Process Outsourcing

Question 6.
LPO stands for _______.
(a) Legal Product Outsourcing
(b) Lawful Process Outsourcing
(c) Legal Process Outsourcing
(d) None of these.
Answer:
(c) Legal Process Outsourcing

Question 7.
_______ is a type of BPO.
(a) Back office outsourcing
(b) Left office outsourcing
(c) Right office outsourcing
(d) None of the above
Answer:
(a) Back office outsourcing

Question 8.
BPO was originally originated by _______.
(a) Reliance
(b) Tata
(c) Coca-Dola
(d) Pepsi
Answer:
(c) Coca-Dola

Question 9.
_______ is the hottest spot of IT – outsourcing.
(a) India
(b) USA
(c) Africa
(d) Pakistan
Answer:
(a) India

Question 10.
Reason for the acceptance of BPO is _______
(a) Smooth working
(b) Specialisation
(c) Economical
(d) All of the above
Answer:
(d) All of the above

Question 11.
E- commerce means _______.
(a) Commerce of electronic goods
(b) Commerce based on transactions using Computers connected by telecommunication network
(c) Commerce dependent on electronics
(d) Commerce by using internet
Answer:
(b) Commerce based on transactions using Computers connected by telecommunication network

Question 12.
E- commerce means buying and selling of _______.
(a) Goods
(b) Services
(c) Information
(d) All of the above
Answer:
(d) All of the above

Question 13.
EDI means _______.
(a) Electrical Data Information
(b) Electrical Data Interchange
(c) Electronic Data Interchange
(d) Electronic Document Information.
Answer:
(c) Electronic Data Interchange

Question 14.
B2B, B2C, C2B, C2B, C2C are types of _______.
(a) Network marketing
(b) M-Commerce
(c) E-Commerce
(d) Marketing.
Answer:
(c) E-Commerce

Question 15.
Following is not an advantage of E-Commerce _______.
(a) Quick Supply
(b) Prompt Delivery
(c) Increased Cost
(d) Wider Choice
Answer:
(c) Increased Cost

Question 16.
Idea of extracting business intelligence from competitor’s web pages is known as _______.
(a) Web Heating
(b) Web Theft
(c) Web Farming
(d) None of these.
Answer:
(c) Web Farming

Question 17.
PDA’s , Smart phones, Mobile phones are required in _______.
(a) M-Commerce
(b) Network Marketing
(c) E-Commerce
(d) Marketing
Answer:
(a) M-Commerce

Question 18.
Under network Marketing, with the help of whom does the product reach the customers from the manufactures?
(a) Wholesaler
(b) Distributors
(c) Retailer
(d) None.
Answer:
(b) Distributors

Question 19.
Under network marketing, lower overhead costs incur due to _______.
(a) Low infrastructural requirement
(b) Low advertisement cost
(c) Both (a) and (b)
(d) None.
Answer:
(a) Low infrastructural requirement

Question 20.
Under network marketing, there is some risk involved-in becoming?
(a) Capitalist
(b) Socialist
(c) Wholesaler
(d) Retailer
Answer:
(a) Capitalist

Question 21.
In network marketing, who becomes the largest customer and takes over the control of the company _______.
(a) Wholesaler
(b) Retailer
(c) Distributor
(d) No one.
Answer:
(c) Distributor

Question 22.
Whom does the franchiser allow to use his trademark under a license?
(a) Franchiser
(b) Licencer
(c) Franchisee
(d) Does not allow such a right.
Answer:
(c) Franchisee

Question 23.
The word “Franchise ” is derived from _______.
(a) Anglo French
(b) Latin American
(c) Indian
(d) Greek.
Answer:
(a) Anglo French

Question 24.
Who does not allow the principle to exert real control over distributor or agent _______.
(a) Agent
(b) Principle
(c) Agency
(d) Distributor
Answer:
(c) Agency

Question 25.
Which one of the following is not an advantage of network marketing?
(a) Continuous growth of the distribution network
(b) Low overhead cost
(c) Opportunity to earn unlimited income
(d) Accurate sales forecasting
Answer:
(d) Accurate sales forecasting

Question 26.
The practice of using another firm’s successful business model is called _______.
(a) Franchising
(b) Leasing
(c) Outsourcing
(d) Network marketing
Answer:
(a) Franchising

Question 27.
The Franchisee is required to pay to the Franchiser _______.
(a) Remuneration
(b) Fees
(c) Pre-determined sum
(d) Royalty
Answer:
(d) Royalty

Question 28.
A BPO contracted outside the companies country is called _______.
(a) Off shore outsourcing
(b) Near shore outsourcing
(c) Far shore outsourcing
(d) Foreign outsourcing
Answer:
(a) Off shore outsourcing

Question 29.
PDA stands for _______.
(a) Personal Data Account
(b) Permanent Direct Account
(c) Private Distributing Agency
(d) Personal Digital Assistance
Answer:
(d) Personal Digital Assistance

Question 30.
Which of the following is not a feature of Franchising?
(a) The franchiser allows the franchisee to use his trade mark
(b) the franchisee is required to follow the franchiser’s policy
(c) The franchiser does not make any arrangement for training the employees
(d) the franchisee agreement is for a limited period of time
Answer:
(c) The franchiser does not make any arrangement for training the employees

Question 31.
ITES stands for _______.
(a) Information Technology Energy System
(b) Information Technology Enabled Software
(c) Information Technology Enabled Services
(d) None of the above
Answer:
(c) Information Technology Enabled Services

Question 32.
Which of the following statement is True?
(a) Franchiser exercises more control as compared to distributor
(b) Franchiser exercises less control as compared to the distributor
(c) Franchiser and distributor have equal control
(d) None of the above
Answer:
(a) Franchiser exercises more control as compared to distributor

Question 33.
Which of the following is not an advantage of E-commerce?
(a) Low start up cost
(b) Quick delivery
(c) Saving of time and effort
(d) All of the above
Answer:
(a) Low start up cost

Question 34.
EDI stands for _______.
(a) Electronic Data Interchange
(b) Employee Data Interchange
(c) Electronic Device Interchange
(d) None of the above
Answer:
(a) Electronic Data Interchange

Question 35.
EFT stands for _______.
(a) Electronic Funds Transfer
(b) Electronic Financial Transfer
(c) Enterprise Financial Transfers
(d) Enterprise Funds Transfers
Answer:
(a) Electronic Funds Transfer

Question 36.
Which one of the following is a category in which Business Process Outsourcing can be categorised?
(a) Back office outsourcing
(b) Front office outsourcing
(c) Offshore outsourcing
(d) All of above.
Answer:
(d) BPO refers to the contracting of a specific business tasks, such as payroll, to a third party service provider. It is of following types:

Back office outsourcing
Front office outsourcing
Off shore outsourcing
Near shore outsourcing

Question 37.
Which among the following is one of the largest ‘Job providers’ in India?
(a) Network marketing
(b) Business process outsourcing
(c) Medical tourism
(d) Film industry.
Answer:
(b) The largest Job provider in India is Business Process Outsourcing. BPO is a subset of outsourcing that involves the contracting of the operation and responsibility specific business function to a third-party service provider.

Question 38.
Which one of the following is a great concern for E-COMMERCE?
(a) Speed
(b) Quality
(c) Security risk
(d) Maintenance cost.
Answer:
(c) The great concern for the E-commerce is the security risk. Security continues to be a problem for online business. Many people are reluctant to give out their credit card number via internet. Customers have to feel confident about the integrity of the process before they commit to purchase.

Question 39.
The online purchase of a book from flipkart.com is an example of—
(a) B2B e-commerce
(b) B2C e-commerce
(c) C2B e-commerce
(d) C2C e-commerce.
Answer:
(b) E-commerce refers to the use of computer networks for buying and selling goods, information and services. It involves various categories like –

B2C i.e. business to customer means the sale by a business enterprise to a direct customer. Thus, online purchase of a book from flipkart.com is an example of B2C as the book sellers are selling books to its customers.

Question 40.
For a car manufacturing firm, which of the following business process is most suitable for outsourcing?
(a) Production Management
(b) Quality Assurance
(c) Customer Relationship
(d) None of the above.
Answer:
(c) Outsourcing refers to the contracting of the operations and responsibilities of a specific function (process) to a third party service provider. It is initially associated with manufacturing firms which outsourced large segments of its supply chain. It includes front office outsourcing, i.e. customer related services such as contact centre services, so, for a car manufacturing firm, customer relationship is most suitable for outsourcing.

Question 41.
What is e-commerce?
(a) It refers to the use of computer network
(b) It refers to the idea of extracting business intelligence
(c) It refers to the buying and selling of goods and services
(d) Both (a) & (c)
Answer:
(b) Customer Care department account for the bulk of call center activities with 24×7 handling of inbound (customer queries and grievances) and out-bound activities (customer surveys, payment follow up and telemarketing). Thus, option B is the correct answer.

Question 42.
Franchiser helps franchisee on setting up business or not-
(a) Yes
(b) No
(c) Partly yes
(d) Can’t say
Answer:
(a) Franchiser helps a lot in setting up a business Hence, option (a) is correct as the franchiser grants a license to the franchisee to use the franchiser’s diverse intellectual property rights & trade secrets along with his proven name.
Besides franchiser provides marketing support & technology to the franchisee. He virtually sets up the business for a franchisee.

Question 43.
Which amongst the following is the disadvantage of E-commerce?
(a) Lower transaction cost
(b) Difficulty in training and maintenance
(c) Security problems
(d) Both (b) and (c)
Answer:
(d) Following are the disadvantages of E-Commerce:

High start-up Cost
High Risk
Training and Maintenance
Fulfillment Problems
Lack of Personal Touch
Security
System & Data Integrity
Corporate Vulnerability
People’s Resistance

Thus answer is both (b) and (c).

Question 44.
BPO not only gives specialised performance, but also provides _______.
(a) Same Cost
(b) Saving in Cost
(c) Different Cost
(c) None of the above
Answer:
(b) BPO provides following advantages:

Cost Saving
Flexibility in operations
Increase in speed
Focus on core areas
Availability of skilled manpower
Growth

Thus, BPO not only gives specialised performance, but also provides saving in Cost.

Question 45.
_______ refers to the idea of extracting business intelligence from the competitive web pages.
(a) Web farming
(b) Web theft
(c) Web heating
(d) None of these
Answer:
(a) Web farming refers to the idea of extracting business intelligence from the competitors web pages.

Question 46.
Write the expanded form of KPO _______.
(a) Knowledge process outsourcing
(b) Knowledgeable process outsourcing
(c) Knowledge product outsourcing
(d) Knowledge process outlets
Answer:
(a) KPO stands for Knowledge Process Outsourcing, it is the process by which the knowledge gaining process is outsourced to someone else. Hence, option (a) is correct.

Question 47.
Online auction comes under _______.
(a) B2B
(b) B2C
(c) C2B
(d) C2C
Answer:
(d) Online auction is nothing but the auction process done through the use of computer networks. It links the two customers. Hence we can say that online auction comes under C2C.

Question 48.
Customer care department in call centre handles:
(a) Does telemarketing only
(b) Inbound and outbound activities
(c) Inbound activities only
(d) Outbound activities only.
Answer:
(b) Customer Care department account for the bulk of call center activities with 24×7 handling of inbound (customer queries and grievances) and out-bound activities (customer surveys, payment follow up and telemarketing). Thus, option B is the correct answer.

Question 49.
E-Commerce results in _______ Transaction cost & _______ margin.
(a) Higher, lower
(b) Lower, lower
(c) Lower, higher
(d) Higher, higher.
Answer:
(c) E-commerce reduces the cost of business transaction substantially. For instance, the number and cost of customer service representatives in a bank can be reduced by using net banking. An e-commerce firm can earn higher margins as the transaction costs are reduced to a great extent.

Question 50.
Who amongst the following allows to use his trademark and provides assistance in business for a particular amount?
(a) Franchisee
(b) Government
(c) Partnership
(d) Company
Answer:
(a) The Franchisee pays to the franchiser a sum of money (called Royalty) for using his business know-how and trade mark.

Question 51.
BPO that is contracted to a company’s neighbouring (or nearby) country is called ________.
(a) off shore outsourcing
(b) near shore outsourcing
(c) on shore outsourcing
(d) None of the above
Answer:
(b) BPO that is contracted to a company’s neighboring (or nearby) country is called near shore outsourcing.

Question 52.
Full form of E-Commerce is ________.
(a) electric commerce
(b) electricity commerce
(c) electronic commerce
(d) None of the above
Answer:
(c) Full form of E-Commerce is ‘Electronic Commerce’.

Question 53.
Which of the following are example of B 2 C?
(a) Online shopping websites
(b) Heavy key industries
(c) Purchase by a wholesaler from manufacturer
(d) None of the above
Answer:
(a) Online shopping websites are the example of business to consumer transactions i.e. amazon, Flipkart etc.

Question 54.
If a person post an advertisement to sell his product on OLX website, it is an example of _______.
(a) B2C
(b) B2B
(c) C2C
(d) C2B
Answer:
(c) If a person posts an advertisement to sell his product on OLX website this is an example of consumer to consumer i.e. C 2 C.

Question 55.
Selling + customer satisfaction = _______.
(a) Network Marketing
(b) E-Commerce
(c) M Commerce
(d) Marketing
Answer:
(d) Selling + Customer satisfaction = Marketing

Question 56.
Automobile parts are being purchased from ABC company, by placing orders through its website. This is an example of ________.
(a) Viral marketing
(b) Network marketing
(c) BPO
(d) E-Commerce
Answer:
(d) Electronic commerce refers to all form of business transactions which are carried out through electronic processing and transmission of data including test sound and visual images. Hence, Automobile parts are being purchased from ABC company by placing orders through its website is an example of E-commerce.

Question 57.
Which one is odd one out?
(a) KPO
(b) LPO
(c) BPO
(d) ILO
Answer:
(d) Outsourcing is popularly associated with IT enabled services and is also known as Business Process Outsourcing (BPO). KPO and LPO are some of the sub-segments of BPO. Thus, ILO is not a part of BPO.

Question 58.
E-commerce relates to:
(a) Dealing in electronic goods
(b) Using internet facility for selling commodities
(c) Using hand bills devices like mobiles, PDA to conduct commerce
(d) All of the above.
Answer:
(b) E-Commerce refers to the use of computer networks for buying and selling goods, information and services.

Question 59.
In M-commerce, what does word ‘M’ indicates?
(a) Mobile
(b) Mobility
(c) Multilevel
(d) None of the above
Answer:
(a) In M-commerce, ‘M’ indicates ‘Mobile’. It refers to the buying and selling of goods and services through wireless hand held device such as mobile.

Question 60.
Customer Care Services presents which office in BPO:
(a) Front Office
(b) BackOffice
(c) Shore Sourcing
(d) Near Source Outsourcing
Answer:
(a) BPO is typically categorized into back office outsourcing which includes business functions such as human resources and front office outsourcing which includes customer related services such as contact centre services.

Question 61.
Outsourcing may allow an entrepreneurship to:
(a) Avoid the maturity stage in a business
(b) Avoid decline stage in a business
(c) Avoid bankruptcy
(d) Deploy capital and resources in more critical areas.
Answer:
(d) Outsourcing may allow an entrepreneurship to deploy capital & resources in more critical areas as focusing more on one of these driven may help a company create a competitive edge.

Question 62.
A _______ industry is an industry that is experiencing slow or no increase in demand.
(a) Global
(b) Declining
(c) Mature
(d) Emerging.
Answer:
(b) A declining industry is an industry that is experiencing slow or no increase in demand. This often is expected at the beginning or end stage of the product. There may be fall in both sale & profit, but still have opportunities for manufacturer to continue and making profit from their product.

Question 63.
Business Process Outsourcing (BPO) is near shore outsourcing when:
(a) That is contracted is a nearby country
(b) That is contracted outside a company’s country
(c) That is contracted in a specific country
(d) That is contracted in a company in the same country.
Answer:
(a) BPO that is contracted to a company’s neighbouring (or nearby) country is called near shore out sourcing involves the contracting of the operations and responsibility of specific business functions to, the third-party service provider.

Question 64.
E-commerce provides of goods.
(a) Defective delivery
(b) Denial of delivery
(c) Delayed delivery
(d) Quick delivery
Answer:
(d) Advantages of E-Commerce:

Global market
Lower cost and Higher margin
Quick Delivery
Saving of Time and Effort
24 x 7 working
Quick supply
Wider choice
Customer convenience
Direct contract
Launching new product

Question 65.
BPO contracted outside a company’s country is technically called:
(a) Upshore outsourcing
(b) Nearshore outsourcing
(c) Outside outsourcing
(d) Offshore outsourcing
Answer:
(d) BPO that is contracted outside company’s country is called offshore outsourcing.

Question 66.
One of the reasons for India being hotspot for outsourcing is:
(a) Availability of huge skilled manpower with proficiency in English
(b) Because there are many persons of Indian origin abroad in IT sector
(c) Because Indians are friendly people
(d) Because in India there is unity in diversity.
Answer:
(a) India is the hottest spot of the IT outsourcing due to many reasons i.e. supportive government policy, huge skilled manpower, advanced technology, and reliable communication facilities. Thus option (a) is correct.

Question 67.
Outsourcing may allow an entrepreneur to _______.
(a) Avoid bankruptcy
(b) Deploy capital and resources in more critical areas
(c) Avoid the maturity stage in a business
(d) Avoid decline stage in a business
Answer:
(b) Outsourcing is a practice in which an individual or company performs tasks, provides services or manufactures products for another company- functions that could have been or is usually done in-house. Outsourcing is typically used by companies to save cost, smooth working for achieving better results and business expansion by deploying capital and resources in more efficient and critical areas.

Question 68.
Business to consumer commerce includes:
(a) Customers should approach only business to buy
(b) Business approaching only customers to sell
(c) Customers should approach only customers to sell
(d) Shopping for physical goods only
Answer:
(b) Electronic commerce has been classified into 4 parts.
B2B Business to Business
B2C Business to Consumer
C2B Consumer to Business
C2C Consumer to Consumer

Question 69.
Which of the sectors of the economy is likely to have maximum impact on environmental developments?
(a) Retailing
(b) Mining
(c) Banking
(d) Information Technology
Answer:
(d) Information Technology is likely to cause maximum impact on the environmental development.

Question 70.
Mark the incorrect option in relation of franchising:
(a) The franchiser has to provide initial financial assistance and support in the form of staff training, advertising etc.
(b) there is a risk of trade secrets getting leaked out in the foreign market. The leakage may cause serious losses.
(c) There is no impact on franchiser’s business out of franchisee’s activities
(d) There is a danger that the franchisee may start an identical business with slightly different brand name.
Answer:
(c) Statement (c) is incorrect because the franchiser business is also affected by franchisee activities because the trade name is one.

Questions 71.
The benefits of information and communication technology function improve:
(a) Improve business through the cost also increases
(b) Improving business process and reduce.cost
(c) Employees can talk highly of there employers
(d) Employer’s can talk highly of their employers
Answer:
(b) Information and communication technology improves the process of business and also reduces the cost.

Question 72.
In IT Enabled Services, which among the following is one of the largest ‘Job Providers’ in India?
(a) Network Marketing
(b) Business Process Outsourcing
(c) Medical Tourism
(d) Film Industry
Answer:
(b) Outsourcing is popularly associated with IT Enabled Services (ITES) and is also known as Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO) and Legal Procsss Outsourcing (LPO) are the sub-agents of business process outsourcing industry.
BPO is also the iargest ‘Job Providers’ in India.

Question 73.
Which of the following is a great concern for E-commerce?
(a) Speed
(b) Quality
(c) Security Risk
(d) Maintenance Cost
Answer:
(c) E-commerce (Electronic Commerce) refers to all form of business transactions which are carried out through electronic processing and transmission of data including text, sound and visual images. E-commerce includes buying and selling of goods e.g. digital camera, music systems, clothes, accessories so, there is great concern of security risk in E-commerce.

Question 74.
KPO stands for:
(a) Knowledge Produce Outgoing,
(b) Knowledge Process Outsourcing
(c) Known Product Outsourcing
(d) None of these.
Answer:
(b) KPO: Knowledge Process Outsourcing.

Question 75.
E-commerce stands for:
(a) Entrepreneurial Commerce
(b) Enterprise Commerce
(c) Executive Commerce
(d) Electronic Commerce
Answer:
(d) E-commerce: Electronic Commerce

Question 76.
Which statement is True, in relation to franchisee ________.
(a) franchisee doesn’t affect by franchiser
(b) More franchisee locations, less will be the profit
(c) franchisee provide more profit and fame to franchiser
(d) None of these
Answer:
(c) More the franchisee more will be the profit and fame of franchiser.

Question 77.
BPO stands for:
(a) Business Product Outsourcing
(b) Business Privacy Outsourcing
(c) Body of Professional Outsourced
(d) Business Process Outsourcing
Answer:
(d) BPO: Business Process Outsourcing

Question 78.
Franchise is derived from Latin Word “ franci” means:
(a) Friends
(b) Chains
(c) Free
(d) None
Answer:
(c) Franchise is derived from the Latin Word “franc” which mean free.

Question 79.
In which of the following Personal Digital Assistants (PDAs) are used for buying and selling of goods and services?
(a) E-commerce
(b) M-commerce
(c) V-commerce
(d) All of the above
Answer:
(b) M-commerce refers to the buying and selling of goods and services through wireless hand held device such as mobile, Personal Digital Assistants (PDAs), etc Therefore in M-commerce PDAs are used for buying and selling of goods and services.

Question 80.
The online purchase of a book from filpkart com is an example of ________.
(a) B2B e-commerce
(b) B2C e-commerce
(c) C2B e-commerce
(d) C2C e-commerce
Answer:
(b) Online shopping websites are example of business to consumer transactions such as Flipkart, Amazon, Myntra etc. Therefore online purchase of a book from flipkart.com is an example of B2C e-commerce.

Question 81.
For a car manufacturing firm. Which of the following business process is most suitable for outsourcing ________.
(a) Production Management
(b) Quality Assurance
(c) Customer Relationship
(d) None of the above
Answer:
(c) Outsourcing refers to the contracting of the operatings and responsibilities of a specific function (process) to a third party services provider. It is initially associated with manufacturing firms which outsourced large segments to its supply chain. It includes front office outsourcing i.e. customer related services such as contact centre services.

Question 82.
India is the hottest spot of the IT outsourcing because:
(a) Supportive government policy
(b) Huge skilled man power is English
(c) Advanced Technology
(d) All of the above
Answer:
(d) India is the hottest spot of the IT outsourcing. The reasons are that India has supportive government policy, advanced technology, reliable communication facilities, huge skilled man power with proficiency in English language.

Question 83.
Customer has always been the key in:
(a) E-commerce
(b) Non E-commerce
(c) Both ‘A’ and ‘B’ .
(d) None of above.
Answer:
(c) Customer is considered to be a king in both e-commerce as well as non-e-commerce market because it is considered to be a business mantra accentuating the importance of customers in the business. A king does not want to be told what to do same as with customers, it is he who demands, not the other way around.

Question 84.
KPO = BPO + + _______.
(a) Greater Business insight + Experienced workforce
(b) Increased productivity + Experienced workforce
(c) Reduce Cost + Increase productivity
(d) None.
Answer:
(a) BPO = Reduce Cost + Increase Productivity
KPO = Reduce Cost + Increase Productivity + Greater business insight + Experienced Workforce
Hence,
KPO = BOP + Greater Business Insight + Experienced Workforce.

CS Foundation Business Environment and Law Notes

Statistics: An Overview – CS Foundation Statistics Notes

December 2, 2022

Statistics: An Overview – CS Foundation Statistics Notes

Statistics is the study of the collection, organization, analysis, interpretation, and presentation of data. It deals with all aspects of data, including the planning of data collection in terms of the design of surveys and experiments. Statistics has perhaps its origin from Latin word ‘Status meaning political state’, word ‘Stato ‘ (Italian) and ‘Statisik’ (German) is also used for statistics. The word statistics is used in two senses

Statistics data
Statistical method

1. Statistics as numerical data
Webster defined Statistics as “The classified facts respecting the condition of the people in a state- especially those facts which can be stated in numbers or in tables of numbers or in any tabular or classified arrangement”.
The basic feature of statistics as quantitative or numerical data is as follows:

Statistics are aggregates of facts.
Statistics does not refer to a single figure but refers to a series of figures. Although the figure may be numerical if there is only one numerical figure it can not be compared. Thus for statistics, it is required that more than one figure be there.
Statistics are numerically expressed.
Statistics must have a numerical value. In the case of statistics data like old young, slow-fast are immaterial unless they have numerical data. This qualitative data is of no use for statistics.
Statistics must be comparable to each other. Thus the figures collected should be comparable. It means the figures collected should be homogeneous for comparison and not heterogeneous.
Statistics are affected to a marked extent by a multiplicity of causes.

2. Statistics as the statistical method
Bowley says “Statistics, may be called the science of counting”. At another place, he says that “Statistics may rightly be called the science of averages”.

3. Stages of statistical enquiry
Different stages of enquiry are

1. Planning the enquiry
Before collecting the data it is to predefine about the purpose, so that only the relevant data is collected The plan section is about how the data will be gathered.. After the purpose is decided, then it is to be decided what all data will be required

2. Collection of data
The collection part is the backbone of the inquiry. If the collection of data is not in proper form, in that case the conclusions drawn can never be reliable. The source of data may be primary i.e., collected directly, or the data may be secondary i.e., available from existing published sources. The first hand collection of data is one of the
most difficult and important tasks faced by file investigator. Primary data is the one that is collected directly from the source by investigator and secondary data is the one which is collected from already published one. Reasons for preferring a primary source

– The secondary source may contain mistakes due to errors which may not be easy to detect.
– The primary source usually includes definitions of terms and units used.
– The primary source often includes a copy of the schedule/questiortnaire and description of the procedures used in selecting the sample and in collecting the data.
– The primary source usually shows data in greater detail. The secondary source may omit some of the information.

3. Organisation of the data
The most important point in organizing a group of data is editing. This is done to correct omission, inconsistencies and wrong calculations in the survey. The classification is done to arrange the data according to some common characteristics. The last step in organisation is tabulation. The object of tabulation is to arrange the data in columns and rows for complete clarity.

4 Presentation of the organised data
After collection and organisation, the data should be presented. Finally the data is given the shape of diagram, chart and graph wherever necessary.

5 Analysing the presented data
Once the data are collected, organized and presented, the next step is that of analysis. The methods most commonly used are measures of Central Tendency and are called measures of the first order. Measures of Dispersion are called measures of the second order. Skewness, Correlation, Regression, Interpolation etc. are called measures of the third order. The analysis of facts based on observation is termed as (a) Scientific analysis, (b) Numerical analysis, (c) empirical analysis.

6 Interpretation of the collected data andforecasting
The last stage of statistical investigation is to derive the results and give comments on the inquiry in question. The interpretation of data is not an easy job and requires a high degree of skill and experience. If the analyzed data are not properly interpreted, the whole object of the inquiry may be erroneous. It is only correct interpretation which may lead to reliable conclusions.

4. Importance and functions of statistics
The various functions performed by statistics in modem times are discussed under:

1. Simplification of Complex Facts
The foremost purpose of the statistics is to simplify huge collection of numerical data. It is beyond the reach of human mind to remember and recollect the huge facts and figures. Statistical method makes it possible to understand the whole in the short span of time and in a better way.

2. Comparison
Comparison of data is yet another function of statistics, simplifying the data; it can be correlated or compared by a certain mathematical questions like averages, ratios, coefficients etc.
Some of the techniques used for comparison are averages, graphs, index numbers etc

3 . Relationship between Facts
Statistical methods are used to investigate the cause and effect relationship between two or more facts.

4. Formulation and Testing of Hypothesis
The most theoretical function of statistics is to test the various types of hypotheses and discover a new theory. For instance, by using appropriate statistical tools we can test the hypothesis of whether a particular coin is fair or not, whether Indian consumers are brand loyal etc.

5. Forecasting
Statistical methods are of great use to predict the future course of action of the phenomenon. It is only on the basis of statistical techniques like time series etc we can forecast.

6. Enrich the Individual Knowledge:
Statistical methods sharpen the faculty of rational thinking and reasoning of an individual. It is a master-key that solves the problems of mankind in every sphere of life.

7. Classification of Data:
Classification refers to a process of splitting up the data into certain parts which helps in the matters of comparison and interpretation of the various features of the data. This is done by the various improved ‘ techniques statistics.

8. To Draw Rational Conclusion:
In various fields of uncertainty like business and commerce, it is very much necessary to draw rational conclusions on the basis of facts collected and analyzed. For this, the mind of the decision-maker should be free from any bias and prejudices.

5. Statistics science or art
Statistics is science as it is the science of collecting, analyzing, presenting, and interpreting data. Governmental needs for census data as well as information about a variety of economic activities provided much of the early impetus for the field of statistics. Currently, the need to turn the large amounts of data available in many applied fields into useful information has stimulated both theoretical and practical developments in statistics.
Statistics can be termed as art because its application is dependent on the knowledge and skill of the person who is using it. It does not tell the facts but instead analyzes and gives us the merit and demerit and explains how to achieve the objective.

Actually, statistics is both sciences as well an art. Statistics is the art and science of deciding:

what are the appropriate data to collect
deciding how to collect them efficiently
then use them to give information

6. Laws of statistics
There are two laws of statistics

1. Law of statistical regularity
2. Law of Inertia of a large number

1. Law of statistical regularity
The law of statistical regularity is the basic assumption in statistics that a random sample taken from a larger group will reflect the characteristics of the larger group. The larger the size of the sample in relation to the whole group, the more accurately it will reflect the group. This law holds good if the sample is large and is random.

2. Law of Inertia of large numbers
It is important because it guarantees stable long-term results for the averages of random events. The theorem is probability theory which states that the number of successes increases as the size of the sample increases.

7. Divisions of statistics

• Descriptive Statistics
Descriptive statistics are those which help reveal patterns in one or more sets of data through numerical analysis, Here the goal is to describe. Numerical measures are used to tell about features of a set of data. Descriptive statistics simply describe data. They include modes, means, ranges, and frequencies which help demonstrate striking trends, similarities, and differences within a set of data or between multiple sets of data. Descriptive statistics is concerned with telling about certain features of a data set. Although this is helpful in learning things as such it can not generalize.

• Inferential Statistics,
Inferential statistics refer to those used after analysis to make conclusions, evaluations, and further predictions based on previous research. Inferential statistics study a statistical sample, and from this analysis is able to say something about the data from which the sample came. Inferential statistics does start with a sample and then generalizes.

• Inductive statistics
The branch of statistics that deals with predictions, estimations, and decisions from data initially presented e.g. forecasting

• Mathematical statistics
It is the study of statistics from a mathematical standpoint, using other branches of mathematics such as linear algebra for analysis. Some of the techniques used are algebra, trigonometry, matrix theory, etc.

• Applied statistics,
This method is used to apply statistical methods to tackle a specific problem. Thus if we have to find out for which product there will be demand in the market we use applied statistics.

• Analytical statistics
A statistical study in which action will be taken on the basis of comparison.

8. Application of statistics
Statistics involves the collection, analysis and interpretation of data. A number of specialties have evolved to apply statistical theory and methods to various disciplines.
The areas where statistics can be applied are many

1. Business and economics.
Statistics in business process applies statistical methods to data sets (often very large) to develop new insights and understanding of business performance & opportunities. Business statistics is the science of good decision making in the face of uncertainty and is used in many disciplines such as financial analysis, econometrics, auditing, production and operations including services improvement, and marketing research.

Thus statistics is able to answer the basic question of economics that is what to produce when to produce and how much to produce out of our limited resources.
Statistics play a major role in economics. On the basis of data economic problems are understood and with the help of various techniques of statistics time series analysis, forecasting etc. Analysis can be done so that on the basis of this analysis suitable policies can be drafted

2. Education
Statistics help to understand the education level in the country. We can analyse on the base of data how many students are going to school ?, how many children from rural area are going to school etc. and on this basis the policies can be drafted by government.

3. State
State authorities are always in need of statistics as it can help them in drafting policies for the government. With the help of data collected the real picture of the work and after results of various policies drafted is revealed. Government has its own agencies which collect data for the government. What are the best combinations of fertilizers, pesticides, etc are all replied with the help of statistics.

4. Social science
It has vast application in this field also. So much information like mortality rate, population control, birth rate, etc are of great importance for our economy and statistics is the answer to sought out such problems.

5. Management
Various functions of management planning, organizing, control, etc need an analytical approach. We need data to make such analyses and take decisions. In business, decisions can not be done on a hit and trial basis thus the techniques of statistics are used to get informed decisions.

6. Natural Science
It helps to find the causes for the diseases, how the disease did spread, how it was controlled, and various other things. In research work also it is of great importance.

9. Limitations of statistics

1. Statistics does not study qualitative phenomena:
Statistics deals with facts and figures. So the quality aspect of a variable or the subjective phenomenon falls out of the scope of statistics. For example, qualities like honesty, intelligence, etc. Which cannot be numerically expressed Can not form part of statistical data. This limits the scope of the subject.

2. Statistical laws are not exact:
Statistical laws are not exact as incase of natural sciences. These laws are true only on average. They hold good under certain conditions. They cannot be universally applied. So statistics has less practical utility.

3. Statistics does not study individuals:
Statistics deals with an aggregate of facts. Single figures are not statistics. This is considered to be a major handicap of statistics. It is the study of group data.

4. Statistics can be misused:
Statistics is mostly a tool of analysis. Statistical techniques are used to analyze and interpret the collected information in an inquiry. As it is, statistics are more dependent on the analyst and his experience. Statistical methods used by fewer expert hands will lead to inaccurate results. Here the fault is not of the data but with the person who makes wrong use of it. Statements supported by statistics are more appealing and are commonly believed. For this, statistics are often misused. Statistical methods rightly used are beneficial but if misused these become harmful.

Statistics: An Overview MCQ Questions

Question 1.
Organization of data does Not include
a. Editing
b. Classification
c. Collection
d. Tabulation
Answer:
c. Collection

Question 2.
Statistics is essential to psychologists because
a. People differ a lot and in many respects.
b. It is compulsory
c. People’s experiences are much the
d. By using statistic psychologist can claim to be the cleverest researchers
Answer:
a. People differ a lot and in many respects.

Question 3.
Descriptive statistics are:
a. The number of adjectives.
b. About whether or not you can generalize from a sample.
c. The methods used to describe the essential characteristics of the data.
d. All of the things.
Answer:
c. The methods used to describe the essential characteristics of the data.

Question 4.
A procedure used to select a sample of n objects from a population in such a way that each member of the population is chosen strictly by chance, each member of the population is equally likely to be chosen, and every possible sample of a given size, n, has the same chance of selection is known as
a. Statistics thinking
b. Inferential statistic
c. Descriptive
d. All of the above
Answer:
d. All of the above

Question 5.
A specific characteristic of a population is known as an
a. sample
b. parameter
c. statistic
d. descriptive statistic
Answer:
b. parameter

Question 6.
A specific characteristic of a sample is known as an
a. sample
b. parameter
c. statistic
d. information
Answer:
c. statistic

Question 7.
Statistics was also termed as
a. The science of king
b. Science of statecraft
c. Political arithmetic
d. All of the above Data is
Answer:
d. All of the above Data is

Question 8.
a. Collection of information about a person
b. Collection of information regarding the comparative things
c. Both a & b
d. None of the above
Answer:
b. Collection of information regarding the comparative things

Question 9.
Both descriptive and inferential statistic is used to change data into information that in turn is converted into ____________ that lead to better decision making.
a. knowledge
b. a process
c. a forecast
d. a parameter
Answer:
a. knowledge

Question 10.
An observed set of the population that has been selected for analysis is called
a. a sample
b. a process
c. a forecast
d. descriptive statistics
Answer:
a. a sample

Question 11.
Keeping in view of all the statistical methods like tabulation etc. we can call statistics as
a. It’s application depends on the skill 7 experience of the statistician
b. It’s methods are systematic and have general application
c. Both a & b
d. None of the above
Answer:
a. It’s application depends on the skill 7 experience of the statistician

Question 12.
As per the law of statistics given by King
a. If data is chosen randomly from a large group then that data will invariably show the characteristic of the group
b. The law developed by King is more correct if applied to a large group
c. Data sample which is to be taken for a large group should be systematic so that invariably it shows the characteristic of large group
d. Both a &b
Answer:
d. Both a &b

Question 13.
Where conclusions are taken out on the basis of estimates regarding the population. It is _______ type of statistics
a. Inductive statistics
b. Descriptive statistics
c. Applied statistics
d. None of the above
Answer:
d. None of the above

Question 14.
Inferential statistics is a process that involves all of the following EXCEPT
a. estimating a parameter
b. estimating a statistic
c. test a hypothesis
d. analyze relationships
Answer:
b. estimating a statistic

Question 15.
Why do we use inferential statistics?
a. Inferential statistics are used to help us to compare the sample to the whole population.
b. Inferential statistics are used to help us to generalize from the sample to the whole population.
c. Inferential statistics are used to help us to show the difference between the sample and the whole population.
d. All of the above apply to the use of inferential statistics.
Answer:
b. Inferential statistics are used to help us to generalize from the sample to the whole population.

Question 16.
Statistics is an indispensable function of the State as
a. Suitable policies are to be formed
b. It is dispensable if applied only to Central Government
c. Improve the working of the system
d. Both a & c
Answer:
d. Both a & c

Question 17.
The allocation of limited resources in the most appropriate manner amongst unlimited ends is
a. Statistics
b. Economics
c. Market
d. All of the above
Answer:
b. Economics

Question 18.
For studying the various national income components it is required that data should be collected on
a. Expenditure
b. Investments
c. Income
d. All of the above
Answer:
d. All of the above

Question 19.
Business managers also need statistics for planning as
a. Decisions can not be made on a trial basis
b. Always systematically; organized data help in the formation of developing decision policies
c. Both a & b
d. None of the above
Answer:
c. Both a & b

Question 20.
Natural science uses statistics
a. For finding the data related to disease
b. To find IQ
c. For studying fertility
d. All of the above
Answer:
a. For finding the data related to disease

Question 21.
In statistics the facts
a. Should be expressed numerically
b. Should be related to other facts for comparison
c. Should be datum
d. Both a & b
Answer:
d. Both a & b

Question 22.
Statistical data can be collected by
a. Actual counting
b. Estimation
c. Measurement
d. All of the above
Answer:
d. All of the above

Question 23.
Statistical data of estimation should be
a. Able to draw meaningful conclusions
b. Have reasonable accuracy
c. Both a & b
d. None of the above
Answer:
c. Both a & b

Question 24.
We use inferential statistics to generalize from our samples and descriptive statistics to describe our samples.
a. True
b. False
c Partially true
d None of the above
Answer:
a. True

Question 25.
For data to be statistics it should Not
a. Be numerically expressed
b. Be estimated
c. Have predetermined purpose
d. None of the above
Answer:
d. None of the above

Question 26.
You’ve been given a data group that contains 256 students’ first names’ last names’ grades in school, and six standardized test scores. Which of the following is the most appropriate way to I code the names of the students?
a. Sort the date on a first-name basis and assign consecutive numbers to each name beginning with 100.
b. Sort the data on last name basis and assign consecutive numbers to each name beginning with 001.
c. assigns random numbers to students’ names.
d. Sort the data on the basis of test results and assigning consecutive numbers to each rank starting with 001.
Answer:
b. Sort the data on last name basis and assign consecutive numbers to each name beginning with 001.

Question 27.
The definition of statistics explaining statistics to be the collection, presentation, analysis, and interpretation of numerical data was given by
a. A.L. Bowley
b. Lovin
c. Hing
d. Coxton and Cowden
Answer:
d. Coxton and Cowden

Question 28.
Secondary data is the data collected
a. By Investigation
b. From published data
c. From unpublished but collected data
d. Both b & c
Answer:
d. Both b & c

Question 29.
Which of the following statistics would give you the estimate of the typical examination score of a class of 35 students?
a. A correlation coefficient
b. The variance
c. The standard deviation
d. The mean
Answer:
d. The mean

Question 30.
What is a reasonable explanation for a data set of the test scores of 75 students in which the mean score is 81 and the median is 68?
a. An extremely low score
b. A number of typical scores
c. Too many scores
d. Two extremely high scores
Answer:
d. Two extremely high scores

Question 31.
the study of the methods of organization summarization and presentation of statistical data is referred to as
a. inferential statistics
b. descriptive statistics
c. sampling
d. none of the above
Answer:
b. descriptive statistics

Question 32.
The commonly found limitations to statistics are
a. It is dealing for individuals
b. Statistics gives precise and accurate information
c. Results of statistics are based on assumptions
d. All of the Above
Answer:
c. Results of statistics are based on assumptions

Question 33.
Select the principles and methods used in statistics
a. Organization of data
b. Collection of data
c. Interpretation of data
d. All of the above
Answer:
d. All of the above

Question 34.
Descriptive statistics is concerned with ______ while the goal of statistical inference is to ______ with the help of ________
a. generalizing sample data, draw inductive conclusions, probabilities
b. summarizing data, draw inductive conclusions probabilities
c. describing data, draw deductive concussions, probabilities
d. describing data, draw deductive conclusions, histograms
Answer:
b. summarizing data, draw inductive conclusions probabilities

Question 35.
The only science that enables different experts using the same figures to draw different conclusions is called
a. Economics
b. philosophy
c. Statistics
d. Mathematics
Answer:
c. Statistics
Hint
Statistics is the study of the collection, organization, analysis, interpretation and presentation of data. It deals with all aspects of data, including the planning of data collection in terms of the design of surveys and experiments.

Question 36.
The techniques that are used in summarizing and describing the main features of data constitute
a. Descriptive Statistics
b. Inductive Statistics
c. Mathematical Statistics
d. Applied Statistics
Answer:
a. Descriptive Statistics
Hint
Descriptive statistics are those which help reveal patterns in one or more sets of data through numerical analysis, Here the goal is to describe. Numerical measures are used to tell about features of a set of data. Descriptive statistics simply describe data. They include modes, means, ranges and frequencies which help demonstrate striking trends, similarities and differences within a set of data or between 1 multiple sets of data.

Question 37.
One of the following does not qualifies to be called “statistics”
a. Tables of numbers
b. Census results for a number of districts
c. The daily number of cars passing through a traffic intersection
d. A time series of marks scored by a student in each year till class 12<sup>th</sup>
Answer:
a. Tables of numbers
Hint
The basic feature of statistics as quantitative or numerical data are as follows:
– Statistics are aggregates of facts.
– Statistics does not refer to a single figure but it refers to a series of figures. Although the figure may be numerical if there is only one numerical figure it can not be compared. Thus for statistics, it is required that more than one figure be there.
– Statistics are numerically expressed.
– Statistics must have a numerical value. In the case of statistics data like old young, slow-fast are immaterial unless they have numerical data. This qualitative data is of no use for statistics.
– Statistics must be comparable to each other. Thus the figures collected should be comparable. It means the figures collected should be homogeneous for comparison and not heterogeneous.
– Statistics are affected to a marked extent by the multiplicity of causes.

Question 38.
Arrange the following steps in order of a statistical enquiry
(i) Interpretation of data
(ii) Analysis of data
(iii) Collection of data
(iv) Organisation of data
The options are
a. (a) (iii), (iv), (ii), (i)
b. (b) (iv), (iii), (ii), (i)
c. (C) (i), (ii), (iii), (iv)
d. (d) (ii), (iii), (iv), (i)
Answer:
a. (a) (iii), (iv), (ii), (i)
Hint
Stages of statistical inquiry Different stages of enquiry are
1. Planning the enquiry
2. Collection of data
3. Organisation of the data
4. Presentation of the organised data-
5. Analysing the presented data-
6. Interpretation of the collected data and forecasting

Question 39.
Which of the following statements can be ranked as statistics?
a. India’s real per capita income in 2013 is ~ 50,000 whereas in China, Japan, South Korea and other ‘countries it is more than ~1,00,000
b. Neha is taller than Amrita
c. Abdul earns Rs. 5 crores for a single endorsement.
d. Today rainfall was estimated at 6 cm.
Answer:
a. India’s real per capita income in 2013 is ~ 50,000 whereas in China, Japan, South Korea and other ‘countries it is more than ~1,00,000
Hint
The basic feature of statistics as quantitative or numerical data are as follows:
– Statistics are aggregates of facts.
– Statistics does not refer to a single figure but it refers to a series of figures. Although the figure may be numerical but if there is only one numerical figure it can not be compared. Thus for statistics, it is required that more than one figure be there .
– Statistics are numerically expressed.
– Statistics must have a numerical value. In case of statistics data like old young, slow-fast are immaterial unless they have numerical data. This qualitative data is of no use for statistics.
– Statistics must be comparable to each other. Thus the figures collected should be comparable. It means the figures collected should be homogeneous for comparison and not heterogeneous.
– Statistics are affected to a marked extent by the multiplicity of causes.

Question 40.
in the method, the sample is selected on a basis other than on probability considerations. Which one of the following is the correct option to fill in the blank space?
a. Non-random sampling
b. Stratified sampling
c. Systematic random sampling
d. Simple random sampling.
Answer:
b. Stratified sampling
Hint
A type of probability sampling method in which sample members from a larger population are selected according to a random starting point and a fixed, periodic interval.

Question 41.
Arrange the following stages of a statistical inquiry in proper order:
(I) Organisation and presentation of data
(II) Interpretation of data
(III) Collection of data
(IV) Analysis of data
The correct option is –
a. (a) (III), (I), (IV), (II)
b. (b) (I), (II), (III), (IV)
c. (c) (IV), (III), (II), (I)
d. (d) (II), (I), (III), (IV)
Answer:
a. (a) (III), (I), (IV), (II)
Hint
Stages of statistical enquiry Different stages of enquiry are
1. Planning the enquiry
2. Collection of data
3. Organisation of the data
4. Presentation of the organised data-
5. Analysing the presented data- .
6. Interpretation of the collected data and forecasting

Question 42.
Which of the following statements qualifies to be called ‘statistics’?
a. Metro rail length all over India is 600 Kms.
b. Indian automobile industry produced 2 million cars during the year 2012-13
c. The minimum support price for wheat for the crop season 2013-14 has been fixed at Rs.1,800 per quintal, as against Rs. 1,750 in the previous season
d. More people0 are making use of public transport, thereby causing traffic problems.
Answer:
b. Indian automobile industry produced 2 million cars during the year 2012-13
Hint
The basic feature of statistics as quantitative or numerical data are as follows:

Statistics are aggregates of facts.
Statistics does not refer to a single figure but it refers to a series of figures. Although the figure may be numerical but if there is only one numerical figure it can not be compared. Thus for statistics, it is required that more than one figures be there .
Statistics are numerically expressed.
Statistics must have a numerical value. In the case of statistics data like old young, slow-fast are immaterial unless they have numerical data. This qualitative data is of no use for statistics.
Statistics must be comparable to each other. Thus the figures collected should be comparable. It means the figures collected should be homogeneous for comparison and not heterogeneous.
Statistics are affected to a marked extent by a multiplicity of causes.

Question 43.
The quote about the nature of statistics, “Statistics are like they clay from which you can make a God or a devil as you please”, is attributed to-
a. Croxton and Cowden
b. W. I. King
c. A. L. Bowley
d. Lincoln L. Chao.
Answer:
b. W. I. King

Question 44.
Bio-statistics is a part of
a. Biology
b. Management
c. Social-Science
d. Economics
Answer:
c. Social-Science

Question 45.
Which of the following can not be considered as a use of statistics in Business Management:
a. Fertility rate
b. Quality control
c. Forecasting
d. Production planning
Answer:
b. Quality control

Question 46.
From the view of nature, statistics is:
a. An art
b. Neither science nor art
c. Science and art both
d. A science
Answer:
c. Science and art both
Hint
Statistics is science as it is the science of collecting, analyzing, presenting, and interpreting data. Governmental needs for census data as well as information about a variety of economic activities provided much of the early impetus for the field of statistics. Statistics can be termed as art cause its application is dependent on the knowledge and skill of the person who is using it. Actually, statistics is both science as well as art.

Question 47.
The lower limit of class interval 20 – 30 is:
a. 25
b. 20
c. 30
d. 15
Answer:
b. 20

Question 48.
“If a large sample is taken from a population in a random way, it will be fairly representative of the population”. This statement forms the:
a. Doesn’t form any law
b. Law of inertia of large numbers
c. Law of statistical regularity
d. Central limit theorem.
Answer:
c. Law of statistical regularity
Hint
The law of statistical regularity is the basic assumption in statistics that a random sample taken from a larger group will reflect the characteristics of the larger group. The larger the size of the sample in relation to the whole group, the more accurately it will reflect the group This law holds good if the sample is large and is random.

Question 49.
Which of the following is not a function of statistics?
a. Giving Decisions
b. Testing Hypothesis
c. Framing Hypothesis
d. Facilitating comparisons.
Answer:
a. Giving Decisions
Hint
The most theoretical function of statistics is to test the various types of hypotheses and discover a new theory. For instance, by using appropriate statistical tools we can test the hypothesis of whether a particular coin is fair or not, whether Indian consumers are brand loyal etc. Giving decisions is not a function of statistics.

CS Foundation Business Economics Notes

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Selected Areas Of Indian Economy – CS Foundation Economics Notes

December 2, 2022

Selected Areas Of Indian Economy – CS Foundation Economics Notes

The literal meaning of population is the whole number of people or inhabitants in a country or region. (Webster’s dictionary). India is projected to be the world’s most populous country by 2025, surpassing China. The demographics of India are inclusive of the second most populous country in the world, with over 1.21 billion people (2011 census), more than a sixth of the world’s population. When India gained independence sixty years ago, the country’s population was a mere 350 million. Since 1947, the population of India has more than tripled.

In 2000, the country established a new National Population Policy to stem the growth of the country’s population. One of the primary goals of the policy was to reduce the total fertility rate to 2.1 by 2010.

1. Reasons For Increase in Population
India currently faces approximately 33 births a minute, Unfortunately, the resources do not increase as the population increases. Instead, the resources keep decreasing, leading to making survival for a human being more and more competitive even for the basic necessities of life like food, clothing, and shelter.

Some of the factors responsible for the high birth rate are

Illiteracy
early marriage
traditional, superstitious and ignorant population.
our failure is the absence of an effective system for promoting small families.
Moreover, the decline in the death rate has also increased the overall population.
The Indian government had launched the Family Planning Programme in 1951. The program has resulted in significant declines in death rates and infant mortality but the birth rate was far more.
Active measures are required to be taken to control the population growth

2. Effect of population growth on economic development
The influence of population on the economy is seemingly straightforward. It is about having enough resources to meet the needs of the growing number of people. As the population rises, so will poverty. Being a developing country, the increasing growth rate is dragging India into a vicious cycle of population and poverty, which leads to a development trap. This further increases other problems like illiteracy, unemployment, and inflation

Following are the adverse effects of population growth on the Indian Economy:

Adverse effects on savings
Unproductive investment
Slow growth of Per Capita Income
Underutilization of labor
Growing pressure on land
Adverse effect on the quality of the population
Adverse social impact
The natural resources available to each person declines as the population increases.
Rapid population growth, industrialization, and urbanization in the country are adversely affecting the environment.
Increase in unemployment

3. India’s Population policy
There has been an enormous increase in the population of India. While the global population has increased only threefold during the last century, from 2 billion to 6 billion, India’s population has increased nearly five times. Although India was the first developing country to adopt a positive population policy in 1951-52 to stabilize the population at a level the national economy could absorb, yet its achievements in controlling its numbers have been far from satisfactory

The NPP 2000 provides a policy framework for advancing goals and prioritizing strategies during the next decade, to meet the reproductive and child health needs of the people of India, and to achieve net replacement levels (TFR) by 2010

Below mentioned are the National Socio-Demographic Goals to be achieved by 2010

Promote delayed marriage for girls, not earlier than age 18 and preferably after 20 years of age.
Make school education up to age 14 free and compulsory
Achieve universal immunization of children against all vaccine-preventable diseases.
Reduce infant mortality rate to below 30 per 1000 live births
Reduce maternal mortality ratio to below 100 per 100,000 live births
Prevent and control communicable diseases.
Achieve 100 percent registration of births, deaths, marriage, and Pregnancy
Promote vigorously the small family norm to achieve replacement levels of TFR

4. Poverty
Poverty is about not having enough money to meet basic needs including food, clothing, and shelter, poverty is a 1 complex societal issue. Poverty can be viewed as absolute poverty or relative poverty. Thus if people are not able to get the minimum basic requirement of food and nutrition they are called poor and this poverty comes under absolute poverty. When there is a large gap between the incomes amongst people then poverty is termed relative poverty. Relative poverty shows the unequal distribution of wealth. The biggest enemy of health in the developing world is poverty. Thus removal of poverty was a major issue for India. Since the 1950s, the Indian government and non-governmental organizations have initiated several programs to alleviate poverty, including subsidizing food and other necessities,

The causes of poverty are many. Some of them are

high population growth rate- On average 17 million people are added every year to its population which raises the demand for consumption goods considerably
A major cause of poverty among India’s rural people, both individuals, and communities is lack of access to
productive assets and financial resources.
High levels of illiteracy, inadequate health care, and extremely limited access to social services. The rate of economic development in India has been below the required level. Therefore, there persists a gap between the level of availability and requirements of goods and services.
The existence of underemployment and disguised unemployment of human resources also leads to poverty. Diseases are one of the main causes of poverty in India.
The continuous and steep price rise in the price of essential commodities
The social setup is still backward. Laws of inheritance, caste system, traditions, and customs are putting hindrances in the way of faster development India has reduced its poverty level to less than 26 percent but the number of people below the poverty line is still a staggering

Major steps to remove poverty are

Accountability of government
Increasing access to bank finance to rural poor
Land reforms and the abolition of zamindari.
Increasing literacy level.
Relaxation of labor laws
Development of small scale industries and cottage industries to reduce urban poverty
Adequate employment opportunities.
Family planning or family welfare programmes should be effectively implemented
Poverty alleviation programs
Ensure higher credit flow to rural India

5. Poverty Alleviation Programmes
Poverty alleviation has been one of the guiding principles of the planning process in India. Various programs started are

1. Integrated Rural Development Programme/Swamajayanti Gram Swarozgar Yojana
This program was introduced in selected blocks in 1978-79 and universalized from 2 October 1980 has provided assistance to rural poor in the form of subsidy and bank credit for productive employment opportunities through successive plan periods. The IRDP and allied programs, were merged into a single program known as Swarnajayanti Gram Swarozgar Yojana

2. National rural employment program
The main objective was to generate employment in rural areas

3. Jawahar Rozgar Yojna
It was introduced for generating more employment in the country. lt was introduced in 1989-90

4. Training of Rural Youth for Self-Employment (TRYSEM)
The scheme – TRYSEM aimed at providing basic technical and entrepreneurial skills to the rural poor in the age group of 18-35 years. Out of the total beneficiaries, at least 50% should be women.

5. Desert Development Programme
(DDP) was started both in hot desert areas of Rajasthan, Gujarat, and Haryana and the cold deserts of Jammu & Kashmir and Himachal Pradesh in 1977-78. the main activity was water resources development by construction of channels

6. Minimum Needs Programme
Keeping in view “garibi hatao” notion this scheme was started.

7. Employment guarantee scheme
Under this scheme, unemployed are given financial assistance. It was launched in Maharashtra, Kerala etc

8. Prime Minister Rojgar Yojna
This yojna was implemented in 1993 to give employment to 10 lakh people by setting up seven lakh enterprises

9. Prime Minister’s Integrated Urban Eradication Programme (PMIUPEP)
This program was to provide employment to the urban poor.

10. Swaran Jayanti Rozgar Yojna
It began in 1997. Its aim was to provide employment to urban unemployed and underemployed persons

11. Jawahar Gram Samridhi Yojna
To improve the quality of the urban poor. It started in 1999.

6. Unemployment
Unemployment is the state of an individual looking for a paying job but not having one. Unemployment does not include full-time students, the retired, and children. In India, unemployment is in the form of underemployment, disguised unemployment in rural areas, and unemployment amongst the educated youth.

NSS made 3 estimates on unemployment

Principal Status unemployment: These are the people who remained unemployed for the major part of the year.
Weekly status unemployment: At the time of the survey people who did not get even an hour of work in a week come under this category.
Daily status unemployment: People who did not get work for a day or some days during the survey week The government has undertaken many special programs to remove unemployment. These are
Rural Works Program: This program aims at the construction of civil works of permanent nature in rural areas.
Integrated Dry Land Agricultural Development: Under this scheme, permanent works like soil conservation, development of land, and water harnessing are undertaken.
National Rural Employment Program: This program aims to create community assets for strengthening rural infrastructure, like drinking water wells, community irrigation wells, village tanks, minor irrigation works, rural roads, and schools.
The Rural Landless Employment Guarantee Program: It aims at generating gainful employment, creating productive assets in rural areas, and improving the overall quality of rural life. Skill Development: One of the major issues relating to unemployment is skill development. Change in the production methods has led to increasing in demand for skilled labor. A skilled laborer is one who has proper training and education to work in a particular field. Training and education increase the productivity of workers. Skill development means:
To educate and provide specialized training to the labor force in order to increase their productivity.
To ensure continuous employability of labor.
To be able to absorb the new technologies at the work.
To compete with the labor force of the other developed countries.

The eleventh plan identified various problems related to unemployment. Some of them are

Rise in the unemployment in agricultural laborers
Rate of unemployment has increased to 7.3%
There has been negligible growth in average real income in non-agriculture employment.
Rural male casual labor income increased
Despite GDP growth jobs in the organized sector declined.

7. Infrastructure
Infrastructure is a major sector that propels the overall development of the Indian economy. The Secretariat for Infrastructure in the Planning Commission is involved in initiating policies that would ensure the time-bound creation of world-class infrastructure in the country. This section focuses on power, bridges, dams, roads, and urban infrastructure development. Details of the projects, organizations, policies, timelines, schemes, spending on infrastructure are provided for the users. Besides India also provided free and transparent press so that foreign investors are attracted towards making investments in India.

8. Transportation
A well-known and coordinated system of transport plays an important role in the sustained economic growth of a country. The present transport system of India comprises several modes of transport including rail, road, coastal shipping, air transport, etc. Transportation in India has recorded substantial growth over the years both in the spread of networks and in the output of the system. The Ministry of Shipping, Road Transport, and Highways are responsible for the formation and implementation of policies and programs for the development of various modes of transport save the railways and civil aviation. The total length of roads in India is over 30 lakhs km including metalled and unmetalled.

9. Energy
For economic development energy is the basic requirement. Due to rapid economic expansion, India has one of the world’s fastest-growing energy needs. A large number of power projects (XI and XII five-year plans) are under construction to overcome the power shortages and meet the growing energy requirements in the country. Natural gas demand has increased a lot. The Solar Energy Centre (SEC), established in 1982, is a dedicated unit of the Ministry of New and Renewable Energy, Government of India for the development of solar energy

10. Communication
India’s telecommunication network is the third-largest in the world based on the total number of telephone users (both fixed and mobile phones). Telecommunication has supported the socioeconomic development of India and has played a significant role to narrow down the rural-urban digital divide to some extent.

Main initiatives taken for the growth of the Telecom Sector are

Telecom equipment manufacturing was delicensed in 1991 and value-added services were declared open to the private sector in 1992, thus the liberalization process was started.
In 1994, the Government announced the National Telecom Policy which defined certain important objectives, including the availability of telephone on demand, etc.
The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.
The most important milestone and instrument of telecom reforms in India are the New Telecom Policy 1999 (NTP 99). It opened the sector for the private sector

11. Health and education
The Census of India 2001 reveals that despite a host of schemes and programs, only 65.38 percent of the Indian people are literate (75.85 percent men and 54.16 percent women). A staggering number of children, close to 38.41 percent of boys and 51.88 percent of girls in the age group 6-14, are not attending school. Looking at the figure and the importance of education for the overall development of the country many schemes were launched by the government right from the time we got independence.

For the development of the country healthy population is a must. When we look at the data of the country we find that almost 67% of our population does not have access to medicines. In our country, people are undernourished and underfed which leads to unhealthy people. Although children and the mother mortality rate has reduced but not up to mark. More than 50% of the women are anemic. The sanitation facility is also not good. But the government has done a lot to improve health and has started many health schemes.

Selected Areas Of Indian Economy MCQ Questions

Question 1.
In the year 2012 India has almost world
population
a.1.22%
b. 1.154%
c.17.31%
d. 1.95%
Answer:
c.17.31%

Question 2.
Functional unemployment occurs when
a.there is a fall in aggregate demand
b. workers are voluntarily unemployed
c.workers are unemployed due to technology
d. none of these
Answer:
c.workers are unemployed due to technology

Question 3.
How did the population rise affect the scope of economic activity during the eighteenth century?
a.Increase in competition for resources depressed the economy.
b. Increase in demand for goods and services stimulated the economy
c. An increase in competition and increase in demand canceled each other, so there was the little net effect.
d. Europe’s surplus population immigrated to the colonies, making up the bulk of the labor force in them.
Answer:
b. Increase in demand for goods and services stimulated the economy

Question 4.
If a nation has an open economy it means that the nation:
a.Allows private ownership of capital
b. has flexible exchange rates
c.Has fixed exchange rates
d. Conducts trade with other countries
Answer:
d. Conducts trade with other countries

Question 5.
Indian telecommunication is the ________ largest system in world
a.Second
b.Fourth
c.Third
d.Fifth
Answer:
c.Third

Question 6.
NSSOis
a.National survey organization
b.National sample survey organization
c.National security survey organization
d.National unemployment survey organization
Answer:
b.National sample survey organization

Question 7.
Some of the renewable source of energy is
a.Photovoltaic
b.Solar thermal
c.Both a & b
d.Neither a nor b
Answer:
c.Both a & b

Question 8.
Out of the total rail route which is electrified is
a.13000 km
b.63000 km
c.23000 km
d.33000 km
Answer:
a.13000 km

Question 9.
National highway compromise _________% of total road network
a.40
b.2
c.15
d.30
Answer:
b.2

Question 10.
Consequences of the rapid increase in population are
a.Availability of clothes
b.Increase in food production
c.Slower increase in per capita income
d.None of the above
Answer:
c.Slower increase in per capita income

Question 11.
TRAI was established on
a.20th Feb 1997
b.20th Jan 1997
c.20th Mar 1997
d.20th Apr1997
Answer:
a.20th Feb 1997

Question 12.
TRAI is
a.Telecommunication reporting authority of India
b.Telecom regulatory authority of India
c.The telecom Regulations development authority of India
d.None of the above
Answer:
b.Telecom regulatory authority of India

Question 13.
The feature Not present in NTP 99 is
a.Strengthening of the regulator
b.DTP corporatized in 2000
c.National long-distance service to be kept exclusively with public sector
d.Private telecom operators licensed on revenue sharing basis
Answer:
c.National long-distance service to be kept exclusively with public sector

Question 14.
In India the state which has the worst mortality rate is
a.Madhya Pradesh
b.Uttar Pradesh
c.Himachal Pradesh
d.Bihar
Answer:
b.Uttar Pradesh

Question 15.
Invariably the ratio of the teacher is to a student in India is
a.1:40
b.2:40
c.1:50
d.1:80
Answer:
a.1:40

Question 16.
As on March 2010 India has _________ many telephone connections
a.600 million
b.621 million
c.721 million
d.None of the above
Answer:
b.621 million

Question 17.
Unemployment in India is the result of
a.Illiteracy
b.Growth in population
c.Less farming land
d.None of the above
Answer:
b.Growth in population

Question 18.
The death rate in the year 2009-10 showed that the death rate in India is
a.To the level of the death rate of advanced countries
b.To the level of death level of developing countries
c.More than the level of death rate of advanced countries
d.More than the level of death rate of underdeveloped countries
Answer:
a.To the level of the death rate of advanced countries

Question 19.
Major failures that led to the decline in birth rate are
a.Female mortality
b.Absence of social security
c.Low average age of women at the time of marriage
d.Both b & c
Answer:
d.Both b & c

Question 20.
Disguised unemployment in India is mainly related to:
a.agricultural sector
b.rural area
c.factory sector
d.urban area
Answer:
a.agricultural sector

Question 21.
Under milk development plans ______ people were provided employment
a.54 lakh people got employment
b.100 lakh people got employment
c.1 lakh people got employment
d.10 lakh people got employment
Answer:
a.54 lakh people got employment

Question 22.
The plans in Swaran Jayanti Rozgar, which began in Dec. 1997, were ‘
a.Urban wage employment program
b.Nehru Rozgar Yojna
c.Urban self-employment program
d.Both a & c
Answer:
d.Both a & c

Question 23.
As per the standard person year basis if a person is working for 8 hours a day and for _______ days in a year he is regarded as employed
a.280
b.365
c.273
d.None of the above
Answer:
c.273

Question 24.
For calculating an unemployment rate for any reference year generally
a.Open unemployment status is taken
b.Weekly status of unemployment
c.Daily status of unemployment
d.None of the above
Answer:
a.Open unemployment status is taken

Question 25.
The purpose of the employment assurance scheme was
a.To provide 100 days employment for an unskilled manual worker
b.To provide employment for skilled labor
c.To give basic food for people below the poverty line
d.To provide housing facilities for people below the poverty line
Answer:
a.To provide 100 days employment for an unskilled manual worker

Question 26.
The robust increase in employment in 1999¬2005 was of no use because
a.Growth was in the unorganized sector
b.It was mainly in low productivity self-employment
c.There was a decline in rural male agricultural labor
d.Both a & b
Answer:
d.Both a & b

Question 27.
The objective of economic and social development is to
a.Make people productive assets
b. Provide opportunities for people to grow
c. Improve the quality of life people live
d. All of the above
Answer:
d. All of the above

Question 28.
India is being considered a favorable place by foreign institutions for investment because
a.Free press
b. Proper judiciary system
c.Good infrastructure
d. All of the above
Answer:
d. All of the above

Question 29.
In the 5th five year plan for the nation “garibi hatao” program was started by
a.NREP
b. IRDP
c.Minimum needs program
d. Jawahar Yojna
Answer:
c.Minimum needs program

Question 30.
Absolute poverty means
a.Minimum calorie intake required for a person
b. Basic recommended nutritional requirement for a person
c.Difference between the living standard of people
d. Both a & b
Answer:
d. Both a & b

Question 31.
Relative poverty means
a.Minimum calorie intake required for a person
b. Basic requirement of a person
c.Difference between the living standard of people
d. None of the above
Answer:
c.Difference between the living standard of people

Question 32.
Lack of entrepreneurship is a cause of poverty
a.True
b. False
c.Partially true
d. Partially false
Answer:
a.True

Question 33.
Some of the land reforms are
a.Liberty regarding the total land a person can hold
b. Distribution of excessive land to farmers having big land is that the production be increased
c.Abolition of zamindari system
d. All of the above
Answer:
c.Abolition of zamindari system

Question 34.
For the development of cottage 7 small scale industries
a.Loans were provided
b.Some production items were specially reserved
c.Both a & b
d.Neither a nor b
Answer:
c.Both a & b

Question 35.
Rural development programme Scheme was started by Government to
a.Provide loans to rural people
b.To eliminate poverty in rural areas
c.To launch new productive units in rural areas
d.To establish social security in rural areas
Answer:
b.To eliminate poverty in rural areas

Question 36.
It is Uncommon in a zamindari system
a.For land to belong to tiller
b.For land not to belong to tiller
c.That all the cultivated land to belong to zamindar and uncultivated to tiller
d.None of the above
Answer:
a.For land to belong to tiller

Question 37.
Some of the programmes started by Government to eliminate poverty are
a.National family welfare programme
b.NPP
c.NREP
d.All of the above
Answer:
c.NREP

Question 38.
Main featured of India Economy is
a.Rural Poverty
b.Lack of capital
c.Traditional technique of Production
d.none of these
Answer:
d.none of these

Question 39.
In India the dependency force is of the people who are in the age group of
a.Below 14 years
b.Below 15 years
c.Above 14 years
d.15 years
Answer:
a.Below 14 years

Question 40.
Why urban areas not welcomed to be highly populated?
a.Additional demand for sewage system
b.Additional demand for road lighting
c.Additional roads
d.All of the above
Answer:
d.All of the above

Question 41.
In 2001 ___________% of working population was engaged in agriculture
a.37.6%
b.58.2%
c.34.4%
d.43.2%
Answer:
b.58.2%

Question 42.
Which of the following is Not the effect of growing population?
a.Higher per capita income
b.Energy crisis
c.Environmental degradation
d.Mass unemployment
Answer:
a.Higher per capita income

Question 43.
NPP is
a.National population practices
b.National population policy
c.National population priorities
d.None of the above
Answer:
b.National population policy

Question 44.
Which of the following type of employment is found in India?
a.Structural unemployment
b.quasi unemployment
c.disguised unemployment
d.all of these
Answer:
d.all of these

Question 45.
In 1952, India was the first country to
a.Launch the programmed to control death
b.To launch family planning for reducing birth rate
c.To launch family planning for reducing mortality for women
d.All of the above
Answer:
b.To launch family planning for reducing birth rate

Question 46.
IMR is
a.Infant monetary rate
b.Infant mortality rate
c.Indian monetary reserve
d.Indian monetary revenue
Answer:
b.Infant mortality rate

Question 47.
As National family welfare programs were introduced the total fertility rate has reduced from 60 (1951) to ________ 1997
a.3%
b.3.1%
c.3.2%
d.3.3%
Answer:
d.3.3%

Question 48.
Poverty means the incapability of a person to get
a.Food
b.Health
c.Education
d.All of the above
Answer:
d.All of the above

Question 49.
The largest proportion of workforce in India is engaged in the:-
a.External sector
b.Primary sector
c.Secondary sector
d.Tertiary sector
Answer:
b.Primary sector
Hint
The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing, and mining.

Question 50.
In terms of total population, India is the
largest country in the world.
a.First
b.Second
c.Third
d.Not among the first ten
Answer:
b.Second
Hint
The demographics of India are inclusive of the second-most populous country in the world, with over 1.21 billion people (2011 census), more than a sixth of the world’s population.

Question 51.
The highest literacy rate in India is observed in the state of-
a.Punjab
b.Haryana
c.Kerala
d.Andhra Pradesh
Answer:
c.Kerala
Hint

Question 52.
A country experiences population explosion when it gets stuck for long in a stage of demographic transition in which:—
a.Birth rate is high and the death rate is high.
b.Birth rate is low and the death rate is low.
c.Death rate falls steeply but the birth rate continues to be high.
d.Both birth rate arid death rate falls steeply.
Answer:
c.Death rate falls steeply but the birth rate continues to be high.
Hint
Population explosion refers to the rapid and dramatic rise in world population that has occurred over the last few hundred years. A country experiences a population explosion when it gets stuck for long in a stage of demographic transition in which the death rate falls steeply but the birth rate continues to be high

Question 53.
A country is said to be ready to enjoy demographic dividends when
a. The proportion of youth in the total population increases fast
b. The death rate falls across all the age groups
c. The birth rate falls across all the age groups
d. The number of elder citizens rises very fast.
Answer:
a.The proportion of youth in total population increases fast

Question 54.
The primary aim of the Mahatma Gandhi National Rural Employment Guarantee Programme is not to-
a.Lift the household above the poverty
b.Provide, self equipment opportunities to households living below the line of poverty
c.Create and set up rural productive assets
d.Transform rural areas into urban areas
Answer:
d.Transform rural areas into urban areas

Question 55.
Disguised unemployment is a state in which
a.Marginal product of labor rises
b.Marginal product of labour is nil
c.The number of persons available for work is less than the input requirement
d.None of the above
Answer:
b.Marginal product of labour is nil
Hint
Disguised unemployment exists where part of the labor force is either left without work or is working in a redundant manner where worker productivity is essentially zero.

Question 56.
The poverty ratio in India has been falling. It implies that-
a.The number of persons living below poverty. line must have decreased
b. The unemployment ratio in the economy must have fallen
c. The inequality in income distribution must have come down
d. The number of persons living below the poverty line might have increased
Answer:
a.The number of persons living below poverty. line must have decreased
Hint
The national poverty headcount ratio is the percentage of the population living below the national poverty lines. India has reduced its poverty level to less than 26 percent but the number of people below the poverty line is still staggering.

Question 57.
Find the odd one out among the following employment generation programmes:-
a.Urban self-employment programme
b.Urban wage-employment programme
c.Training of rural youth for self-employment
d.Integrated rural development program
Answer:
d.Integrated rural development program
Hint
The government has undertaken many special programs to remove unemployment.These are

Rural Works Program
Integrated Dry Land Agricultural Development
National Rural Employment Program
The Rural Landless Employment Guarantee Program
Skill Development

Question 58.
One of the following is not a renewable source of energy-
a.Oil
b.Water
c.Wind
d.Solar Energy
Answer:
a.Oil
Hint
Renewable energy is energy generated from natural resources such as sunlight, wind, rain, tides and geothermal heat

Question 59.
The density of population is defined as the number of persons per square-
a.Kilometre
b.Centimetre
c.Millimetre
d.Decimetre
Answer:
a.Kilometre
Hint
Population density is midyear population divided by land area in square kilometers.

Question 60.
Land reforms program in India has aimed at-
a.Fragmentation of holdings
b.Subdivision of holdings
c.Consolidation of holdings
d.Collectivization of holdings.
Answer:
c.Consolidation of holdings
Hint
Land consolidation is a planned readjustment and rearrangement of land parcels and their ownership. Consolidation of fragmented agricultural land was an integral part of land reforms in India.

Question 61.
During the year 2013, the real gross domestic product of a country increased by 8% over the preceding year. During this year population of the country also got increased by 1 6%. In that particular country, the rate of growth of per capita income during 2013 would be:
a.6.4%
b.9.6%
c.5.0%
d.12.8%
Answer:
c.5.0%
Hint
Rate of growth per capita income = 8/1.6 = 5%

Question 62.
In India, at present 100 percent Foreign Direct Investment (FDI) is allowed in:
a.Defence
b.Drugs and Pharmaceuticals
c.Cable Networks
d.Insurance
Answer:
b.Drugs and Pharmaceuticals

Question 63.
In which state or union territory is the literacy rate highest in the country?
a.Delhi
b.Chandigarh
c.Karnataka
d.Kerala
Answer:
d.Kerala

Question 64.
Which one of the following is correct? Over the years the: –
a.Agricultural production has been falling
b.The.Industrial production has been falling
c. The share of the service sector and manufacturing sector in India’s GOP has been stagnant
d. The share of the agricultural sector in India’s GOP has been falling.
Answer:
d.The share of the agricultural sector in India’s GOP has been falling.
Hint
In 2006-07 contribution of the agricultural sector in GDP was 18.5% and in 2010-11 was 14.2%.

Question 65.
The fastest rate of growth in terms of income generated has been recorded in the past couple of decades, in the:
a.Agricultural sector
b.Industrial sector
c.Services sector
d.All of the above
Answer:
c.Services sector
Hint
In India, growth in services sector has been linked to the liberalisation and reforms of the 1990s.

Question 66.
Demographic dividend refers to a phenomenon in which:
a.Life expectancy improves and normally people begin to live longer life
b. The share of elderly persons in the total population rises
c. The proportion of working-age population rises and dominates the age-composition
d.The proportion of children in the total population rises.
Answer:
a.Life expectancy improves and normally people begin to live a longer life
Hint
Demographic dividend refers to a period usually 20 to 30 years when fertility rates fall due to significant reductions in child and infant mortality rates. As women and families realize that fewer children will die during infancy or childhood, they will begin to have fewer children to reach their desired number of offspring, further reducing the proportion of non-productive dependents. This fall is often accompanied by an extension in average life expectancy that increases the portion of the population that is in the working age group.

Question 67.
Which one of the following is the regulating authority for governing the Insurance companies in India?
a.TRAI
b.IRDA
c.PFRDA
d.SEBI
Answer:
c.PFRDA

Question 68.
In terms of contribution made to the GDP, the predominant sector in the Indian economy is –
a.Agricultural sector
b.Manufacturing sector
c.Industrial sector
d.Service sector
Answer:
d.Service sector
Hint
In India, growth in the services sector has been linked to the liberalization and reforms of the 1990s. Service Sector-of Indian Economy contributes to around 55 percent of India’s GDP during 2006-07. This sector plays a leading role in the economy of India.

Question 69.
A good measure of economic welfare in an economy is
a.An increase in normal GDP
b.An increase in real GDP
c.An increase in real per capita income
d.An increase in the supply of money and ATM cards
Answer:
c.An increase in real per capita income
Hint
Economic welfare is the level of prosperity and standard of living of either an individual dr a group of persons. Economic welfare is usually measured in terms of Real Income, real GDP.

Question 70.
Demographic dividend accrues to an economy due to a change in
a.Density of population
b.Sex composition of the population
c.Age composition of the population
d.Rural-urban distribution of population
Answer:
c.Age composition of the population
Hint
Demographic dividend refers to a period usually 20 to 30 years when fertility rates fall due to significant reductions in child and infant mortality rates. As women and families realize that fewer children will die during infancy or childhood, they will begin to have fewer children to reach their desired number of offspring, further reducing the proportion of non-productive dependents. This fall is often accompanied by an extension in average life expectancy that increases the portion of the population that is in the working age-group

Question 71.
The current account deficit of a country measures the excess of –
a.Monetary value of exports of merchandise over the monetary value of imports of merchandise
b.Monetary value of imports of goods over the monetary value of exports of goods during a year
c.Monetary value of imports of goods and services over the monetary value of exports of goods and services
d.Receipts of foreign capital over the withdrawal of foreign capital.
Answer:
b.Monetary value of imports of goods over the monetary value of exports of goods during a year
Hint
Current Account Deficit is a measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports.

Question 72.
A distinguishing feature of unemployment in India is largely the presence of-
a.Disguised unemployment
b.Seasonal unemployment
c.Technological unemployment
d.Cyclical unemployment
Answer:
a.Disguised unemployment
Hint
In India, unemployment is in the form of underemployment, disguised unemployment in rural areas, and unemployment amongst the educated youth.

Question 73.
Which of the following is the regulator for the telecommunication sector in India?
a. TRAI
b. RBI
c. IRDA
d. PFRDA
Answer:
a. TRAI
Hint
The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

Question 74.
Arrange the following poverty alleviation programs in the ascending order of the year of launch/implementation:
(I) Employment Assurance Scheme
(II) Prime Minister Rozgar Yojana (PMRY)
(III) Swaran Jayanti Rozgar Yojana
(IV) Jawahar Gram Sarpridhi Yojana
Correct option is
a. (a) (I), (II), (III), (IV)
b. (Ml), (IV), (I), (II)
c. (b) (II), (I), (III), (IV)
d. (IV), (III), (II), (I)
Answer:
b. (Ml), (IV), (I), (II)
Hint
Poverty alleviation has been one of the guiding principles of the planning process in India. Various programs started are

Integrated Rural Development Programme/Swarnajayanti Gram Swarozgar Yojana
National rural employment program
Jawahar Rozgar Yojna -It was introduced in 1989-90
Training of Rural Youth for Self-Employment (TRYSEM)
Desert Development Programme- In 1977-78.
Minimum Needs Programme
Employment guarantee scheme -1994
Prime Minister Rojgar Yojna-This yojna was implemented in 1993
Prime Minister’s Integrated Urban Eradication Programme (PMIUPEP)
Swaran Jayanti Rozgar Yojna -It began in 1997
Jawahar Gram Samiridhi Yojna -1999

Question 75.
TRAI was established in-
a.1997
b.1999
c.1970-7-1
d.1stApril,1999
Answer:
a.1997
Hint
The Telecom Regulatory Authority of India (TRAI) was established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

Question 76.
Which is the world’s most populous country?
a.India
b.China
c.Sri Lanka
d.USA
Answer:
b.China
Hint
India is projected to be the world’s most populous country by 2025, surpassing China. The demographics of India are inclusive of the second-most populous country in the world, with over 1.21 billion people (2011 census), more than a sixth of the world’s population. Presently China is the most populous country.

Question 77.
Disguised unemployment is found in which sector?
a.Telecommunication
b.Industrial
c.Agricultural
d.All of the above Questions from December 2014
Answer:
c.Agricultural
Hint
In India, unemployment is in the form of underemployment, disguised unemployment in rural areas and unemployment amongst the educated youth.

Question 78.
How was Telecom Regulatory Authority of India (TRAI) established?
a.By a resolution of Government of India
b.By Constitution of India
c.By an Act of Parliament
d.By Partnership Act
Answer:
c.By an Act of Parliament
Hint
The Telecom Regulatory Authority of India (TRAI) was established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services.

Question 79.
Unemployment means that:
a.People are not willing to work at the going wage rate.
b.There are some people who will not work at the going wage rate
c.At the going wage rate, there are people who want to work but cannot find work
d.There is excess demand in the labour market
Answer:
c.At the going wage rate, there are people who want to work but cannot find work
Hint
Unemployment is the state of an individual looking for a paying job but not having one. Unemployment does not include full-time students, the retired, children.

Question 80.
Which of the following means Relative Poverty?
a.The number of people living below a certain income threshold
b.The number of households unable to afford certain basic goods and services
c.The extend to which a household financial resources falls below an average income threshold for the economy
d.People given poverty certificates by government.
Answer:
c.The extend to which a household financial resources falls below an average income threshold for the economy
Hint
Relative poverty is the condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live. When there is a large gap between the income amongst people then the poverty is termed as relative poverty . Relative poverty shows unequal distribution of wealth.

Question 81.
Unemployment in which some workers are temporarily out of work while changing their job is called:
a.Seasonal unemployment
b.Cyclical unemployment
c.Frictional unemployment
d.Voluntary unemployment
Answer:
c.Frictional unemployment
Hint
Frictional unemployment is the time period between jobs when a worker is searching for or transitioning from one job to another.

Question 82.
Before the establishment of TRAI, which of the following was responsible for the fixation of tariff for telecom?
a.State Government
b.Central Government
c.BSNL
d.Companies themselves
Answer:
b.Central Government
Hint
The Telecom Regulatory Authority of India (TRAI) was, thus, established with effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory Authority of India Act, 1997, to regulate telecom services, including fixation/revision of tariffs for telecom services which were earlier vested in the Central Government.

CS Foundation Business Economics Notes

Also Read: C Program to Draw Sine Wave Using C Graphics

Recent Trends in Management – Business Management Ethics and Entrepreneurship Notes

November 29, 2022

Recent Trends in Management – Business Management Ethics and Entrepreneurship Notes

“The world hates the change, yet that is the only thing that has brought progress”. ‘ – Charles Kettering
Meaning of Change end Its Causes:

it is an open system content.
Change refers to the variation in the established way of life to which people are accustomed to in the organisation.
It is a natural phenomenon.
It is necessary for the management of every enterprise to anticipate change and deal with it effectively.
Change may take place in the internal or external environment of an organisation.

It can be:
(i) natural, or
(ii) re-active

Change basically results from stimuli- both outside and inside the enterprise.
Organisational success lies in operational adjustment to the forces of change.

External Forces:
These are the forces of the external environment of the organisation.
It Includes:

Educational and Cultural forces
Economic forces
Technological forces
Political forces
Social forces.

Internal Forces:
These are the forces arising within the organisation.
It includes:

Composition and policy of top management
Changes of personnel
Change of physical facilities due to retirement, promotion and so on and aspirations.
Changes in employee attitudes
Changes fn work allocation etc.

Both the above forces are interlinked and interdependent.

Resistance to Change:
Most of the organisations and their members resist change.
Resistance can take the following forms:

overt
implicit
immediate
deferred.
Overt – Eg: Threat to go on strike
Implicit – Eg: increased errors or mistakes
Immediate – It results in immediate response to change.
Deferred – Response to the change is deferred or stockpiled for some time.
Resistance to change can also contribute to better decision making and can be a source of functional conflict.

Reasons for People’s Resistance to Change:

People find easy, to continue doing their routine jobs rather than learning anything new.
Opposed by people who are negatively affected by redistribution of power occurring due to it.
Resisted if people face failure once.
Resisted by less educated and less intelligent people because of the fear that change will expose their inefficiency.
Those who stand to lose the most by the change tends to oppose it the most.
People know that change will expose their inadequacies and inefficiency.
Types of Resistance to Change:

Logical:

Resistance arises due to time and effort required to adjust the change.
It represents the true cost borne by the employees.
It involves rational objections.
Psychological:
It is logical in relation to attitudes and feelings of individual employees about change.

Sociological:

Powerful forces of social values.
It is logical in terms of group interests and values.
Group resistance may be due to individual resistance to change.
To illustrate group resistance to change one may cite example of group norms, values and informal role prescriptions.
Management can face active resistance if the change is likely to alter the existing informal group composition.
Sources of Organisational factors lie in factors like –
Limited focus of change.
Structural inertia
Threat to established resource allocations
Power relationships.

Overcoming Resistance to Change Change Through Management Hierarchy:

Minor changes may be introduced by executives.
However, major changes should be decided and implemented by top management.
Subordinates view it as a legitimate right and thus, comply with it.
It does not pay much attention to facts like group dynamics, peoples attitude etc.
Specialised planning units are formed for this purpose.
Sometimes, outside management consultants are also preferred.
People show less resistance to change when it is recommended and managed by an outsider; rather than it is initiated & administered internally.

Lewin’s Three-Step Model:
According to Kurt Lewin, any change should follow three steps.

Unfreezing the status quo,
Movement or changeoVer to a new state,
Refreezing the new change to make it permanent.

This requires a rebalancing of the driving and restraining forces.

Action Research:
It refers to a method of scientific inquiry into the circumstances
necessitating change and action to be taken thereof.
It is based on scientific collection and data analysis.

Its process consists of five steps:

(i) diagnosis
(ii) prognosis
(iii) feedback
(iv) action
(v) evaluation

it is a problem-focused approach.
In many cases organisation changes is solution-focused.
It makes the process of change an ongoing and organization-wide exercise.

Crisis Management:
it refers to the management and coordination of an organization’s responses to an Incident that threatens to harm or has harmed that organization’s people, structures or reputation.

Thus, it is the process of responding to an event that might threaten the operations, staff, customers, reputation o the legal and financial status of an organization.

Its aim is to minimize the damage.
It was originated in 1980s.
The defining quality is the need for change.

crisis Management Vs Risk Management:

Crisis Management means dealing with threats after they have occurred.
Risk Management means assessing the potential threats and finding ways to avoid those threats.
Venette argues that crisis is a process of transformation where the old system can no longer be maintained”.

Types of Crisis:

Natural Disaster: These are Acts of God” Eg – earthquake, volcanic eruptions etc.
Technological CrIsis: These are caused due to human application of science and technology.
Eg – Chernobyl disaster.
It occurs when technology is complex and something goes wrong.
Confrontation Crisis: These are caused due to the discontented individuals and/or groups for the non-acceptance of their demands and expectations by fighting with government or other interest groups.
These are boycotts, Sit-ins, ultimatums, blockade or occupation, disobeying police.
Workplace Violence: It is caused by one employee committing violence against other employees on organisational grounds.
Crises of Organisational Misdeeds: It is caused because of the management taking actions causing harm to stakeholder’s risk without any precautions.
Rumours: Any rumour i.e. false information about the organisation or its products causes harm to its reputation.

Total Quality Management:

TOM means improving the quality of products at the best prices through better planning control management and inspection it aims at long-term loyalty towards the company.
Today, every organisation has to offer quality products to its customers at competitive prices to be successful.
Quality is the most important factor in determining the success or failure of an organisation.
Good quality generates satisfied customers.
TQM was developed in a post-war research by management consultants like Dr. Joseph Juran and W. Edward Deming.
Growth of service sector has increased the requirements of TOM.
European Economic Community collectively established a common set of quality standards known as ISO 9000.
Series ISO 9000 – ISO 9003 is a reference for external quality assurance.
ISO 9004 is a reference for internal quality management.
These standards aim at achieving TOM.

It is composed of two related systems –

management system,
technical system
It involves use of various terms like:
system
process
structure
technique.

System refers to the interrelated set of plans, policies, processes, procedures, people and technology required to meet the objectives of an organization.

Process consists of policies, procedures, steps, techniques, and personnel needed to carry out a significant segment of operations with In an organization.

tructure refers to a formal or informal organizational entity, that is developed to perform a certain process or set of task.

technique means a systematic approach, procedure and associated technology required to carry out a task.

Quality is the responsibility of everyone in the organisation, from operators on the production department to the CEO of any organisation.

TechnIcal System Involves:
1. Quality of design and performance process

Product ánd process design structure
Inspection and measurement structure.

2. Quality of conformance process

Statistical process control techniques
Sampling techniques
Statistical and sampling techniques are employed for the identification of quality problems and for controlling the quality of production process.
Economic considerations and TQM plays an important role in tying together the management and technical systems.

Principles of TQM:
TQM is an approach that organisations can use to improve their internal processes and increases customer satisfaction.

Quality can and must managed: Problem must be realised and effectively controlled.
Processes, not people, are the problem: First, processes should be corrected and then people should be trained.
Don’t treat symptoms, look for the cure: Solution for the problem has to be searched from the very source of the problem.
Every employee is responsible for quality: Every employee, from worker to the CEO has an important part to play in quality management.
Quality must be measurable: This system is effective if the results can be quantified.
Quality improvements must be continuous: It has to take place continuously for increasing the customer’s satisfaction.
Quality is a long-term investment: It provides an organisation a long- term success.

Risk Management:

It has its origin from the field of corporate insurance.
It refers to the identification of opportunities and avoiding or mitigating losses.
It helps the organisation to minimise losses and maximise opportunities.
It is considered as a structured approach in managing uncertainty related to a threat.
It is a scientific approach to deaf with pure risks by anticipating possible accidental losses and designing and implementing procedures which minimise the occurrence of loss.
Rigorous risk management occurs in the departments whose core objective is to protect the environment and public health and safety.
Each department and the executives are directly and indirectly involved in the risk management.
It refers to a process dealing with uncertainty within a public environment.
It is a systematic approach for setting the best course of action under uncertainty.

Its characteristics are:-

systematic discipline
provides a system of making choices.
way for better understanding of potential liability.
guide for responding to undesirable events.
Integral component of good management & decision making at all levels.

Objectives of Risk Management:
2. Monitors new projects, and ongoing operations, so that no problem or new risks emerge.
It provides advantages to an organisation in the form of –

Better informed decision making in assessing new opportunities
Less chance of major problems in new and present activities
Increased likelihood of achieving the corporate objectives.

Benefits of Risk Management:

Taking and managing risk is the very essence of business survival and growth. It provides clear and structured approach in identifying risks. Following are its benefits-
Makes a company more flexible and responsive to changing customer’s needs.
Companies can gain an early-mover advantage by responding to changes earlier than their rivals.
Helps the company in meeting its business objectives.
Improves the company’s credit rating.
Saves the company’s valuable resources.
Protects the reputation and public image of the organisation.
Prevents or reduces legal liability and increases the stability of operations.
Risks with the greatest loss and greatest probability of its occurrence are handled first, followed by risks with lower loss and lower probability of its occurrence.
It is often mishandled.
A new type of risk i.e. risk with 100% probability of occurring has been identified by intangible risk management but ignored due to lack of identification ability.
Relationship risk occurs due to ineffective collaboration.
Process engagement risk occurs when ineffective operational procedures are applied.
It faces difficulty in allocating resources.
Risk is unavoidable – action needs to be taken to bring it to a tolerable level. Staff should be kept aware of the relevance of risk to the achievement of their objectives.

Effective risk management helps in improving the performance objectives by contributing to:

Better service
Focus on doing things properly
Basis for strategy setting
Efficient use of resources
Reduction of management time
Improved innovation
Reduced waste and fraud
Better value for money
Achievement of competitive advantage.

Private sector focus mainly on shareholder’s return and preservation of shareholder’s value
Public sectors mainly focus on implementing programs cost-effectively in accordance with governments rules and regulations.

Scope and Applicability of Risk Management:

It should be rigorously applied where critical decisions have to be made.
It depends upon whether risk relates to long, medium or short term goals.

Strategic Decisions:

It is concerned with long term goals
Have to be reviewed on regular basis

Program and Project Level:

It is concerned with medium-term goals
Narrower in scope

Operational Level:

It emphasises on short term goals
It ensures ongoing continuity of business services
It must support long and medium-term goals.
Risks with the greatest loss and greatest probability of its occurring are handled first, followed by risks with lower loss and lower probability its occurrence.
It is often mishandled.
A new type of risk i.e. risk with 100% probability of occurring has been identified by intangible risk management but ignored due to lack of identification ability.
Relationship risk occurs due to ineffective collaboration.
Process engagement risk occurs when Ineffective operational procedures are applied.
It faces difficulty in allocating resources.
Risk is unavoidable – action needs to be taken to bring it to a tolerable level.
Staff should be kept aware of the relevance of risk to the achievement of their objectives.

Effective risk management helps in improving the performance objectives by contributing to:

Better service
Focus on doing things properly
Basis for strategy setting
Efficient use of resources
Reduction of management time
Improved innovation
Reduced waste and fraud
Better value for money
Achievement of competitive advantage.

Risk Mangement Process:

Risk identification:

All the possible risks that may affect the business, either positively or negatively, have to be identified.
Threats, vulnerabilities and the associated risks are also identified
No risk should be excluded
These risks may prevent degrade, delay or enhance the achievement’ of objectives.

Risk Assessment:

All the identified risks have to be assessed
It is required to generate awareness among the employees.
Risk measurement and analysis:

It involves determination of:

probability of occurrence of losses
impact of such losses on the financial affairs of the company.
ability to predict losses.
It helps in making decisions about committing resources to control the risks.
Under risk analysis, the level of risk and its nature is assessed.
It helps in finding out the most cost-effective risk treatment.

Features of International Business:
Large Scale Operations :

All operations are conducted on a large scale.
First, goods are sold in local market, the surplus is then exported.

Integration of Economies :

It helps in integrating the economies of various countries
It uses resources of various countries, produces in various other countries and sells in other countries.

Dominated by Developed Countries and MNCs :

Developed countries e.g. USA, Europe, Japan etc. dominate the market by producing good quality products at low cost
This is. possible because they have huge financial resources.

Benefits to Participating Countries :

Developed countries get maximum benefits.
It results in economic development of developing countries by providing rapid industrial development and more employment opportunities.

Rigorous Competition :

Developing countries have to face competition with developed countries
They both are unequal partners
Developed countries and MNC’s are always in a better position as they provide better quality goods at low prices.

Sensitive Nature :

Any change in economic policies, technology, etc. have great impact on it.
Importance of International Business

Foreign Exchange Earnings :

It helps in earning valuable foreign exchange by export of goods and services.
This strengthens the country’s economy.

Optimum Utilisation of Resources:

This is possible because goods are produced on large scale.
Finance and technology of rich countries are used while raw materials and labour of poor countries are used.

Achieving Objectives:

Its main objective is to earn high profits.
It achieves this objective by producing high-quality goods at lowest possible price.

Spreading Business Risks :

Risk of one country can be easily transferred to that of other country.
This helps in minimising risks.

Improving Organisation’s Efficiency :

They use all modern techniques to gain efficiency.
This enables them to face competition in international market.

Get benefits from Government:

It helps in bringing foreign exchange
Thus, get many financial and tax benefits from the government.

Expand and Diversify :

Its activities can be expanded because it earns high profits and also get financial help.
Increase Competitive Capacity :
It produces high-quality goods at low prices.
It also spends a lot on advertising.
This makes it more competitive.

Role of an International Manager:

It has to be responsive to foreign customers, employees and suppliers.
It has to be organised as a worldwide company with various divisions.
It has to have an open communication system where problems and grievances of employees have to be quickly heard.

Company has to go through three stages:
Pre-international Stage: It involves finding ways to export the product which requires appointing export manager and finding foreign partners.

International Division Stage: Company has to defend and expand its foreign market position by establishing its operations in more than one host countries in order to remove cost disadvantages occurring due to different laws and regulations of host country.

Global Structure Stage: A company must fulfil the following criteria-

International and domestic markets should be of some importance
Senior officials must possess both foreign and domestic experience.
International sales represent 25 to 35% of its total sales.

Staffing :

Employees should be hired and trained carefully.
Management should be familiar with the country’s national labour laws.

Directing:

Cultural differences make directing function difficult.
Language barrier creates communication difficulty.
Managers have to be * trained properly through cross-cultural management which enables them to interact with several cultures.

Controlling:

It becomes difficult due to geographical distance and language differences.
Meetings, reportings and inspections are typically part of the international control system.
Controlling is a crucial function for multinational managers.

Remote work Systems: Remote working a situation in which an employee works mainly from home and communicates with the company through technology and an internet (i.e. Gmail, hangouts etc.). A remote workforce provides access to a much broader talent pool, especially when you are looking for a specific skill set.

New work tools increase transparency: In the past, managers have typically determined how employees spend their time. These days, it is more common for managers to empower employees to self-organize, which lead to more transparency.

Retail and workplace flexibility:
Technology has helped e-commerce companies see explosive growth, while challenging traditional retail with the result being larger. More companies are using modern logistics and automation to operate their business. With the rise of new technology and trends renting out large multi-office spaces is no longer necessary. This economy of space goes hand-in-hand with cost savings for business owners.

Business Ecosystem:
Group of firms which together provide complex products and related services to meet end-to end requirements of users across the value chain. – Prof. Carlyss Y. Baldwin

The move to mobile has employees driving tech choices:
Employee empowerment lead to big change in the workplace today. trusting employees to set their goal and priorities themselves results happier employers and more productive companies.

Sustainability and Corporate Social Responsibilities:
HBS Dean Nitin Nohria feels that in the coming decade, we are likely see a lot of focus directed towards applying management principles solutions of complex social Issues such as environmental sustainability, every security, access to healthcare etc.

The study of Psychology:
Prof. Amabile feels that with more evolved tools, and access to ever-growing information databases, managers will have the power substantially improve both the practice of business and welfare society.

Nature of Management and its Process MCQ Questions

1. Change is resisted when people in the course of doing or learning a new system experience failure.
(a) True
(b) False
(c) Partly true partly false
(d) None of the above.
Answer:
(a) True

2. The three types of resistance to change are-logical, psychological and
(a) Geographical
(b) Sociological
(c) Temporary
(d) None of the above.
Answer:
(b) Sociological

3. Changes should be introduced in ……………….. .
(a) Totality
(b) Minimised way
(c) Impact lull way
(d) Stages.
Answer:
(b) Minimised way

4. …………….. training can also be used to overcome resistance to change
(a) Sociological
(b) Logical
(c) Sensitivity
(d) None of the above
Answer:
(c) Sensitivity

5. ……………. arued that successful change should f oliow three steps.
(a) Kurt Lewin
(b) Taylor
(c) Fayot
(d) George. R terry.
Answer:
(a) Kurt Lewin

6. …………….. management is the process by which an organisation deals with a major event that threatens to harm thR organisation. its stakeholders or the general public.
(a) Risk management
(b) Crisis management
(c) Total quality management
(d) None of the above.
Answer:
(b) Crisis management

7. …………………… is one which involves assessing potential threats and finding ways to avoid those threats.
(a) Crisis management
(b) Total quality management
(c) Administrative management
(d) Risk management.
Answer:
(d) Risk management.

8. crisis are caused by human applicätion of science and technology.
(a) Confrontation
(b) Organisation misdeed
(c) Technoloical
(d) Natural crisis.
Answer:
(c) Technological.

9. One of the objectives of risk management is to minimise the use of resources.
(a) True
(b) False
(c) Partly true Partly False
(d) None of the above.
Answer:
(b) False

10. Risk management is about managing risk against the
(a) Reward
(b) Decision
(c) Activity
(d) Opportunities.
Answer:
(a) Reward

11. ………………. management identities a new type of risk- a risk which iias 100 %. probability of occurring but ¡s ignored by the organisation due to each of identification ability.
(a) Relationship risk
(b) Process engagement
(c) Intangible risk
(d) None of the above.
Answer:
(c) Intangible risk.

12. ……………… is an essential ând integral step in the risk management process.
(a) Risk Treatment
(b) Risk assessment
(c) Risk identification
(d) Risk monitoring and review.
Answer:
(d) Risk monitoring and review.

13. …………………… management is the practice ot managing business operations in more than one country.
(a) Business
(b) International
(c) Risk
(d) Crisis.
Answer:
(b) International

14. Middle management provides motivating climate for employee, directs them in proper procedures and assists them in eliminating sources of error.
(a) True
(b) False
(c) Partly true partly false
(d) None of the above.
Answer:
(b) False

15. TQM As used to increase the overall customer satisfaction.
(a) True
(b) False
(c) Partly true partly false
(D) None of the above.
Answer:
(a) True

16. Who saki these lines The world hates change, yet that is the only thing that has brought progress”?
(a) Charles Darwin
(b) Chailes Kettering
(c) Philip Kotler
(d) Kohier
Answer:
(b) Charles Kettering

17. Which of the following are not the external forces which affects changE
(a) Technological forces
(b) Economic forces
(c) Ecological forces
(d) Social forces
Answer:
(c) Ecological forces

18. ……………………………. is logical in terms of group interest arid values.
(a) Logical
(b) Psychological
(c) Sociological
(d) None of the above
Answer:
(c) Sociological

19. Which of the following ¡s not the process of action research?
(a) Diagnosis
(b) Prognosis
(c) Attention
(d) Action
Answer:
(c) Attention.

20. Successful implementation of change, should íirst facilitate unlearning by increasing the .
(a) Driving force
(b) Restraining force
(c) Both (a) & (b)
(d) None of the above
Answer:
(a) Driving force

21. ……………………. difference make the directing function more difficult fo the international manager.
(a) Sociological
(b) Language
(c) Physiological
(d) Cultural
Answer:
(d) Cultural.

22. Which of the following does not complicate controlling function?
(a) Geographic Distance
(b) Legal Restrictions
(c) Geographic Dispersion
(d) No language Barrier
Answer:
(d) No language Barrier.

23. Identify the phases of structural change in organisation Senior officials in the company possess both foreign and domestic experience”
(a) Pro-international
(b) International Division
(c) Global Structure
(d) None of the above
Answer:
(c) Global Structure.

24. Which of the following key factors should not be kept in mind of international manager to develop forecast?
(a) Competition from government
(b) Currency stability
(C) Pressure from government
(d) Intense competition
Answer:
(b) Currency stability.

25. Which uf the following are not the feature of international business?
(a) Large Scale Operations
(b) Rigorous Competition
(c) Achieving Objective
(d) Sensitive Nature
Answer:
(c) Achieving Objective

26. Which of the following are not importance of International Business?
(a) Expand and diversify
(b) Foreign Exchange Earning
(c) Spreading Business Risk
(d) Integration of Economies
Answer:
(d) Integration of Economies.

27. …………………………. is the phase where the level of the risk and its nature are assessed and understood.
(a) Risk Assessment
(b) Risk Analysis
(c) Risk Measurement
(d) Risk Evaluation
Answer:
(b) Risk Analysis

28. Which of the following are not the objectives of Risk Management?
(a) Minimising of opportunities
(b) Optimising the use of resources
(c) Improved Organisational
(d) Identify and evaluate risk Efficiency
Answer:
(a) Minimising of opportunities

29. “Chernobyl disaster” is a type of which crisis?
(a) Natural disaster
(b) Technological crisis
(c) Confrontation crisis
(d) Workplace Violence
Answer:
(c) Confrontation crisis

30. “Resisting or disobeying police” is a type of which crisis
(a) Natural Disaster
(b) Technological crisis
(c) Confrontation crisis
(d) Rumours
Answer:
(c) Confrontation crisis

31. International sales represent ………………… to ……………………. percent of total sales and the technology used in the domestic division has far outstripped that of the international division
(a) 25, 35
(b) 45, 55
(c) 35, 45
(d) 55, 65
Answer:
(a) 25, 35

32. A business owner should aim to choose, …………………… and implement the most appropriate combination of treatments.
(a) Evaluate
(b) Prioritize
(c) Assertive
(d) None of the above.
Answer:
(b) Prioritize

33. Which of the following are riot the advantage of Risk Management?
(a) Better informed decision making
(b) Less chance of major problem in
(c) Increase likelihood of achieving new and ongoing activities corporate objective
(d) System of making choices
Answer:
(d) System of making choices.

34. …………….. must commit the resources and provide the leadership necessary to set the tone and carry out the requirement of an ongoing dynamic quality policy.
(a) First line supervisor
(b) Middle Management
(c) Top Management
(d) None of the above
Answer:
(c) Top Management.

35. Who said this statement crisis is a process of transformation where the old system can no longer be maintained”?
(a) Charles Kettering
(b) Kohler
(c) Kotlei
(d) Venelle
Answer:
(d) Venelle.

36. Which one of the following is not a correct principle of Total Quality Management?
(a) Quality can and must be managed
(b) People are the problems not the processes
(c) Every employee is responsible for the quality
(d) Quality must be measurable.
Answer:
(b) TQM was developed in a post war research by management consultants like. Dr. Joseph Juran and W. Edward Dening. Quality is the most important factor in determining the success or failure of an organisation.

Principles of TQM are:

Quality can and must be managed.
Processes, not people, are the problem.
Don’t treat symptoms look for the cure.
Every employee is responsible for quality.
Quality must be measurable.
Quality improvement must be continuous.
Quality is a long-term investment.

Thus, (b) option is not correct.

37. Which statement of the following is correct?
(a) Investing ₹ 5,000 @ 6% simple interest
(b) Investing ₹ 5,000 @ x% compound interest for two years
(c) Investing ₹ 5,000 @ x% simple interest for two years
(d) Investing ₹ 5,000 @ 6% compound interest for two years
Answer:
(d) Among the given options, option (d) is optimum since all the required information regarding amount, rate and the time period is given in it as compared to other options.

38. Which one of the following is not an example of confrontation crisis?
(a) Boycotts
(b) Rumours
(c) Disobeying police
(d) Picketing
Answer:
(b) Confrontation crisis are caused due to the discontented individuals and/ or groups for the non acceptance of their demands and expectations by fighting with government or other interest groups. Examples of confrontation crisis are: Boycotts, Disobeying police, picketing, etc. Thus rumours are not an example of confrontation crisis.

39. Which one of the following involves assessing potential threats and finding ways to avoid those threats?
(a) Crisis management
(b) Total quality management
(c) Administrative management
(d) Risk management
Answer:
(d) Risk Management involves potential threats and finding way to avoid those th reats risk management basically refers to identification of opportunities and avoiding or mitigating losses.

40. ……………………… is an approach that organisations use to improve their internal processes and increase customer satisfaction.
(a) Total Quality Management (TQM)
(b) Customer Management
(c) Risk Management
(d) Financial Management.
Answer:
(a) TQM is an approach that organisations use to improve their internal processes and increase customer satisfaction. When properly implemented ,lt can lead to decreased costs related to corrective or preventive maintenance, better overall performance and an increased number of satisfied and loyal customers.

41. Which type of management is considered as a structured approach in managing uncertainty related to threat?
(a) Total Quality Management
(b) Supply Chain Management
(c) Risk M9agement
(d) None of te1 above.
Answer:
(c) Risk Management refers to the identification of opportunities arid avoiding or mitigating losses. Thus, Risk Management is considered as a structured approach in managing uncertainty related to threat.

42. TQM is used to increase the overall satisfaction of customer —
(a) True
(b) False
(c) Partly True
(d) Partly False.
Answer:
(a) Total Quality Management [TQM] is an approach that organisations uses to improve their internal processes and increases the overall customer’s satisfaction. Thus, we can say that the statement given about TQM is true.

43. Lewin three step model was given by.
(a) Kurt Lewin
(b) Douglas Me’ Gregor
(c) Koontz and O’ donnell
(d) George Lewin
Answer:
(a) Kurt Lewin argued that the successful change in organisations should follow three steps.

Unfreezing the status quo.
Movement or changeover to a new state.
Refreezing the new change to make it permanent.

This model was known as Lewin three steps model.

44. What is the meaning of “status quo” ?
(a) Equilibrium state
(b) Increasing state
(c) Decreasing state
(d) None of the above
Answer:
(a) “Status quo” means Equilibrium state.

45. Which of the following is not a common reason that people resist – change ?
(a) Uncertainty
(b) Loosing comfort zone
(c) Overconfidence
(d) Concern over personal loss.
Answer:
(d) Reasons for people’s resistance to change:

Opposed by people who are negatively effected by redistribution of power occurring due to it.
Resisted if people face failure once.
Resisted by less educated and less intelligent people because of the fear that change will expose their inefficiency.
Those who stand to lose the most by the change tends to oppose it the most.

Thus, option d is correct answer i.e. people resist to change who concern over personal loss.

46. Which is the first step in Risk Management?
(a) Risk Measurement
(b) Risk Identification
(c) Risk Evaluation
(d) Risk Control.
Answer:
(b) Risk management process involves:

Risk identification
Risk assessment
Risk measurement & Analysis
Risk evaluation
Risk treatment
Risk monitoring & Review

Hence, option (b) Risk identification is first step in Risk Management Process.

47. The process of responding to an event that might threaten the operation, staff, customers, reputation or the legal and financial status of an organisation is known as:
(a) TQM
(b) Stress management
(c) MBO
(d) Crisis management.
Answer:
(b) Stress management is the process of responding to an event that might threaten the operations, staff, customers reputation on the legal and financial status of an organisation.

48. Which cause of resistance to change is most likely to occur when previous changes were not well understood or resulted in negative Consequences?
(a) Objectives
(b) Self – interest
(c) Lack of trust
(d) Loss of power.
Answer:
(d) Since change almost invariably brings with it a redistribution of power and influence it tends to be opposed by those individuals and groups who are negatively affected by it.

49. The process of responding to an event that might threaten the operation, staff, customers, reputation or the legal and financial status ot an organisation is known as:
(a) TQM
(b) Stress management
(c) MBO
(d) Crisis management.
Answer:
(a) According to Venette, crisis is a process of transformation where the old system can no longer be maintained.

50. Which cause of resistance to change is most likely to occur when previous changes were not well understood or resulted in negative Consequences?
(a) Objectives
(b) Slf – interest
(c) Lack of trust
(d) Loss of power.
Answer:
(d) Since change almost invariably brings with it a redistribution of power and influence it tends to be opposed by those individuals and groups who are negativ&y affected by it.

51. It is a process of transformabon where the oLd system can no longer be maintained:
(a) Crisis
(b) Stress Management
(c) TQM
(d) MBO
Answer:
(a) According to Venette, crisis is a process of transformation where the old system can no longer be maintained.

52. To compete with rival company X, company Y changes its management structure. This is an example of …………….. .
(a) an internal change causing another internal change
(b) an external change causing another external change
(c) an internal change causing another external change
(d) an external change causing an internal change.
Answer:
(c) To compete with rival company X, Company Y changes its management structure. This is an example of an internal change as this lie in the external environment causing an internal change which are the pressures arising from within the organisation, These forces are interhnked and react on each other.

53. ………………….. refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations.
(a) Internal Business
(b) International Business
(c) Dometic Business
(d) Foreign Licericing
Answer:
(b) International Business refers to all those business activities which involves cross border transactions of goods, services, resources between two or more nations. Transactions of economic resources include capital skills, people etc.

54. Risk mitigation can be defined as the Art and Science of risk.
(a) mediating
(b) avoiding
(c) identifying
(d) managing
Answer:
(c) It is basically concerned with identifying options for treating or controlling risk, in order to either reduce or eliminate negative consequences, or to reduce the likelihood of an adverse occurrence. Risk treatment should also aim at enhancing positive outcomes. It is often neither not possible nor cost-effective to implement all treatment strategies. Hence, risk cannot be managed until it is identified.

55. The concern with software piracy in some Asian Countries is an example of ……………………. risk.
(a) Political
(b) Economic
(c) Demographic
(d) Legal
Answer:
(d) Software Piracy is a Legal risk.

56. The Sarbanes – Oxley Act, 2002 was enacted and passed in USA to:
(a) Punish those who committed accounting frauds in the late 1990s
(b) Improve corporate profits
(c) Help laid-off employees get their jobs back
(d) Help restore confidence in Corporate America.
Answer:
(d) Sarbanes – Oxley Act, 2002 was enacted and passed in USA to help restore confidence in Corporate America.

57. Which one of the following involves assessing potential threats and finding ways to avoid those threats?
(a) Crisis management
(b) Total quality management
(c) Administrative management
(d) Risk management.
Answer:
(d) Risk management is one of the management which involves assessing potential threats and finding ways to avoid those threats.

60. MitIgation of loss is covered under:
(a) Risk Management
(b) Crisis Management
(c) Both (a) and (b)
(d) None of these.
Answer:
(b) Mitigation of loss is covered under crisis management.

61. Total quality management refers to:
(a) Offering good quality product at competitive price
(b) Offering good quality at highest price
(c) Making profit and comprise with product quality
(d) None of these
Answer:
(a) Total Quality Management: refers to offering good quality product at competitive price. It help to improve internal process of the organisation and increase customer satisfaction.

62. What is first step of Risk Management
(a) Identify the Risk
(b) Analyse the Risk
(c) Establish the Context
(d) Evaluate the Risk.
Answer:
(c) Process of Risk Management Establish the Context Identification of Risk Analysis of Risk Evaluation of Risk Treatment of Risk.

63. By which process/management we can skip a destructive and unexpected event that threatens to harm the organisation or its stakeholders.
(a) Crisis Management
(b) Organisation Process
(c) Planning Process
(d) Risk Management.
Answer:
(d) Risk Management is the process by which an organisation deals with a disruptive and unexpected event that threatens to harm the organisation or its stakeholders.

64. ……………………… is the process of adjusting future actions based upon information about past performance.
(a) Ratio Analysis
(b) Organisational Suitability
(c) Feedback
(d) Network Analysis
Answer:
(c) ‘Feedback’ is the process of adjusting future actions based upon information about past performance.

65. ……………….. is an approach that organisation use to improve their internal processes and increase customer satisfaction.
(a) Total Quality Management (TQM)
(b) Customer Management
(c) Risk Management
(d) Financial Management.
Answer:
(a) Total Quality Management‘TQM’is an approach that organisation use to improve their internal processes and increase consumer satisfaction.

66. A company operates its bank account only through –
(a) Shareholder
(b) Investors
(c) Persons authorized by the Board of Directors
(d) Company Secretary.
Answer:
(c) A company operates its bank account only through ‘Persons authorized by the Board of Directors.

64. Risk Management has its origin from
(a) Corporate Insurance
(b) Industrial Revolution
(c) Rumours
(d) All of the above
Answer:
(a) Risk management has its origin in the field of corporate insurance. Presently it is recognized as a distinct and important function of all business organizations. Although the term risk management is a recent phenomenon, yet the actual practice of risk management is as old as civilization itself.

CS Foundation Business Management Ethics and Entrepreneurship Notes

Direction and Co-ordination – Business Management Ethics and Entrepreneurship Notes

November 27, 2022

Direction and Co-ordination – Business Management Ethics and Entrepreneurship Notes

Introduction:

Directing involves supervision, communication, leadership to
subordinate and motivating them to constitute their best.
Coordination is the synchronization/unification/integration of the efforts of group members in order to provide unity of action for achieving common goals.
It is hidden force that binds all other management functions.
Management achieves coordination through its basic management functions.
It is not a separate management function but is essence of management and is implicit and inherent in all functions of management.

Direction: Direction is the life-spark of the enterprise.

It is another function of management.
It refers to an initiating function which actuates plans and the organisation.
It involves communicating to the subordinates, leading and motivating them to contribute the best of their capability for achieving the organisational objectives.
It initiates with issuing orders and instructions to the subordinates and getting things done by them along with their satisfaction.
It is a continuous function;

Essential Elements:

Issuing orders and instructions
Guiding, counselling and teaching the subordinates the proper way doing the job.

Supervising the work of subordinates to ensure that their performance conforms to the plan.
Motivating the subordinates to direct their behaviour in a clesirec pattern.
Maintaining discipline and rewarding effective performance.

Concepts of Direction:

Taylor pointed out that effective direction depends upon the, harmony of objectives.’
these are given by Henry Fayol.
having a thorough knowledge of the personnel.
eliminating the incompetent.
being well versed with the agreements binding the business and its employees.
setting a good example.
conducting periodical audit of the organisation and use summarised charts to further this.
bringing together chief assistants through conferences.
infusing unity, energy, initiative and loyalty among the subordinates.
Taylor said that direction depends upon “harmony of objectives”.

Features of Direction:

Important management function. Management is able to initiate action in organisation.
Required at every management level
Continuous process, throughout the life of organisation
Initiated at top level and flows to the bottom level.

Two main objectives:

Helps in getting things done by the subordinates.
Enables the superior to focus on more important work.

importance of Direction:
Initiating Action:
Organisation involves both human and non-human resources. It initiates the individual’s action by motivating them to get the desired results.

Integrates Employee’s Efforts:
Subordinate’s efforts are interdependent. Thus, they should be integrated to achieve the desired objectives.
Attempts to bring out Maximum from Individuals Proper motivation is required to bring out the maximum from lndividual.
subordinates through proper motivation, leadership and communication.
Direction provides the way to utilize these capabilities and it also helps in increasing capabilities.

Facilitating changes in Organisation Individuals have to be directed and motivated ¡n order to make them responsive to changes.

Provides Stability and balance In the Organisation:
It keeps the various part of organisation balanced, thus enabling it to on for a long period, and enables its parts to work In a harmonious way.

Essential elements of Direction:

→Issuing orders and instructions

→ Guiding the subordinates about the proper way of doing a particular job.

→ Supervising the subordinate’s work for ensuring it to confirm with the desired plan.

→ Motivating the subordinates for directing their behaviour as desired.

→ Maintaining discipline among subordinates.

→ Rewarding the subordinates for effective performance.

Note:
In short, essential elements are

Supervision
Motivation
Leadership
Communication

Supervision:

it refers to the direct guidance and control over the subordinate’s performance, In order to achieve the desired objectives.
Supervision ¡s guiding and directing efforts of employees and othe resources to accomplish stated world outputs. – George R. Terry and Stephen G. Franklin

Features of Supervision:
Done at all management levels.
More pronounced at the lowest level of management.

Notes:
Supervising managers are called supervisors, foremen, superintendents, overseers or section officers.
Guides the subordinates in their work performance by assigning work, issuing orders, creating team spirits and controlling work output.

Factors of effective supervision:

Supervisor’s skills and abIlities: which includes technical, human relations and conceptual skills.
Requisite leadership position: leadership is an influencing process.
Supervisor should be given proper place and given requisite authority enable him exercise effective leadership, over the group and motivate them to perform better.
Nature of supervision: whether general or close. General supervision has a more favorable impact.
Group cohesiveness: should be high as it enables group work for attainment of common goals.

Note:
Group cohesiveness refers to the degree of attraction that each member has or the group.
Improved relations with the superiors: ReLation h€tween the two must be cordial.

Motivation:

It is derived from Latin word movere, which means to move.
It refers to the inner state that energizes, activates or moves and direct an individuals behaviour towards goals.
Joe Kelly said that it “has to do with the forces that maintain and alter the direction, quality and intensity of behaviour.”
M. R Jones defined management “how behaviour get started is energized, is sustained, is directed, is stopped and what kind subjective reaction is present in the organisation while all this is going on.

It is a complex process because:

Its exact reason cannot be seen but can be only inferred.
Difficult to say which need or expectation is forcing a person to at that moment.
People’s needs are satisfied in different ways.
Satisfaction of a particular need is not a sure indicator of motivation. for e.g. A highly paid empLoyee may still want more money to work more.
Goal-directed behaviour does not satisfies the need always.

Motivation Process:

It is the process of interaction between human needs and incentives.
Need refers to the feeling that something is required.

Usefulness of Motivation in Management:

Managers cannot get the best of work from his subordinates without knowing what motivates them.
Responsibility of management is to “built into the entire system factors
that will induce people to contribute”.
Helps in motivating the employees, which results in creation and maintenance of a healthy environment
Enables the employees to work effectively and efficiently.
Chester Bernard recognised the willingness to work or co-operate as an important element in success of an organisation.

Psychological Motivation:
Developing this concept further, Dr. Eric Berne devised a scientific method to study human behaviour known as Transactional Analysis (TA).

Transactional Analysis (T.A.):

As per Eric Berne,” transaction is the unit of social intercourse.”
Transactional stimulus refers to the situation when two or more people encounters each other, they will speak or will give some indication of acknowledging each other’s presence, sooner or later.
Transactional response refers to the act or anything which the other person says in relation to the stimulus.
T.A. helps in finding out ‘why people do as they do’.
PAC ego states i.e. Parent, Adult and Child ego states refers to the parts of the multiple nature of an individual which are recorded in the brain and are replayed in course of a transaction.
Parent: At the early 5 years, whatever the child sees his parent doing and whatever he hears from them is recorded straight in his mind.
These recordings are available for replay throughout his life.
It is a taught concept of life.
Child: It refers to the response of the child to what he hears and sees.
Most of the reactions are ‘feelings’ It is a felt concept of life.
Adult: Recording of adult starts

It begins with self-actualisation:
→ He has to examine the data in parent and also has to examine the child’s feelings
→ It is a thought concept of life.
→ It cannot change or erase the recordings in parent and child.

Cross Transaction:
Any social intercourse may be parallel or crossed.
Parallel Transactions-

Parent- parent
Child – child
Adult-adult

They are complementary and can go on indefinitely

Crossed Transactions-

Parent-child
Child – parent
Parent-child
Adult – parent, etc.

Benefits of Transactional Analysis:

Employees can give an insight into their own personalities
II helps them to understand the reason of other’s responses.
Helps in improving interpersonal communication.
Useful areas like Sales, etc. where success of firm depends upon customer relations.

Important elements:
Leadership: ‘Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor which binds a group together and motivates it towards goals” ‘ – Keith Davis

Leader is a part of the group, still must maintain a separate identity.
It contemplates interpersonal influence and a close man to man relationship.
It is a dynamic and never-ending process.
It involves influencing individual behaviour to guide them in right direction.

Types of Leaders:

Managers are leaders having formal authority to direct, motivate and lead people. This is called formal or managerial leadership.
Informal leadership is a part of informal organisation.
Informal leaders are not delegated any authority to lead.
Informal organisation provides good support if, properly handled.

Cultivated leadership attitudes:
Awareness:
Must know his job, people involved and situational considerations clearly to ensure effectiveness.
To bring effectiveness. manager should be aware otther factors resulting in success or failure like his job, his subordinates etc.

Empathy –
Leader must put himself in the position of his subordinates, understand their situation and then take any decision.

Objectivity:
Subordinate’s problems and its causes must be taken care of by leaders objectively and unemotionally.

Self-knowledge:
Leader must know the effect of his attitude and behaviour on his subordinates in order to Improve them, thus creating a favourable response.

Communication:
It refers to the exchange of facts, ideas, opinions or emotions by two or more persons so as to bring about mutual understandings confidence It may be intra personal or interpersonal.
Feedback is its essential aspect.
It may be through words, symbols, letters or actions.

Elements :

Co-ordination: “Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals.”

Mooney and Relay “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding.” Charles Worth

“Co-ordination is the ‘Plus Value’ of the group.” Mary Parker Follett “Co-ordination is the effort to assure a smooth interplay of the functions and forces of the different component parts of an organisation to the end that its purpose will be realised with a minimum of friction and a maximum of collaborative effectiveness.” – Tead

It refers to the orderly synchronisation of group efforts so as to provide unity of action in the pursuit of common purpose. It is the essence of management.

Features of Co-ordination:

It is not a distinct function but the very essence of management.
It is the basic responsibility of the management and can be achieved through managerial functions.
It does not arise spontaneously or by force. It is the result of conscious and concentrated action by management.
The heart of coordination is the unity of purpose which Involves fixing the time and manner of performing various activities.
It is a system concept in the sense that it regards an organisation as system of cooperative efforts.
It is relevant only for group efforts.
It is a continuous and dynamic process.
It is directly proportional to the degree of integration in the performance of various functions.
It is the responsibility of every manager.

Importance of Co-ordination:
Unity in diversity: In a large organisation, different employees have different backgrounds. These diversified activities will be efficient only in the presence of coordination.

Teamwork or Unity of Direction: Diversified skills and efforts of various employees are integrated by coordination which eliminates duplication of work.

Functional differentiation: Activities of various departments have to be integrated to attain common objectives.

Specialization: One specialist needs to know the importance of other specialist’s work to avoid disputes.

Reconciliation of Goals: It helps in reconciling the employees individual goals with both departmental and organizational goals.

Congruity of Flows: It means smooth and continuous flow of information from one direction to another.

Differentiation and integration: It helps in facilitating the process of authority delegation to various levels. This is necessary to achieve group efforts.

Limitations of Co-ordination
Lack of Administrative Talent: Inefficient candidates do not understand the administrative procedure properly which results in ineffective coordination.

Misunderstanding: Lack of coordination occurs due to misunderstanding among the employees. ‘

Types of Co-ordination

Internal Coordination:

It is established to coordinate the activities of managers, executives, divisions, branches and other workers.
Vertical Coordination: It refers to the coordination in which a superior coordinates his work with that of his subordinates and vice-versa.
Horizontal Coordination: It refers to the establishment of coordination between people at same level.

Fayol has suggested 3 things for effective internal coordination.

Work in proper harmony
Group task activity
Working schedule should be constantly changed according to changing circumstances.

External Coordination:
It Is established to co-ordinate the activities of employees of the organisation and the people outside the organisation.
Outsiders includes:

Market agencies
Government
Customers.
Competitors, etc., Media and TecInoIoglcaI Agencies
General Public
Commercial organisation
Financial institutions.

Public Relations Officer (PRO) is a person to whom this job of coordination is entrusted.

Various management functions leads to better coordination.
it is involved in every management function like planning, directing, staffing etc.

Reasons for co-ordination to be the essence of management:
Co-ordination Vs Co-operation:

Both are different
Co-ordination refers to an art of synchronisation of efforts so as achieve some common goals.
Co- operation refers to a voluntary collective action to serve a common purpose.

Nature of Management and its Process MCQ Questions

1……………………….. is a function of management which involves communicating and providing leadership to the subordinates.
(a) Direction
(b) Co-ordination
(c) Controlling
(d) Commanding
Answer:
(a) Direction

2. …………………. said that effective direction depends upon the harmony of objective
(a) Fayol
(b) Mooney
(c) Taylor
(d) Larry and Greiner.
Answer:
(c) Taylor

3. Three types of skills required by the supervisor are technical, human and
(a) Experience
(b) Conceptual
(c) Scientific
(d) Productive
Answer:
(b) Conceptual.

4. General supervision has a favourable impact on the ……………. of the subordinates.
(a) Initiative
(b) Morale/productivity
(c) Skills
(d) None of the above.
Answer:
(b) Morale/productivity.

5. ………………….. is defined as the degree of attraction that each member has for the group.
(a) Motivation
(b) Performance Appraisal
(c) Co-ordination
(d) Group cohesiveness
Answer:
(d) Group cohesiveness.

6. ……………………… is the method fo examining social inter-course of different employees.
(a) Transactional analysis
(b) Crossed transaction
(c) Psychological motivation
(d) None of the above.
Answer:
(a) Transactional analysis

7. Transactional analysis is useful in states and other areas where success depends on customer relations.
(a) True
(b) False
(c) Partly True
(d) None of the above.
Answer:
(a) True

8. Which theory assumes that people feel highly motivated when they are rewarded with more money.
(a) Equity Theory
(b) Herzberg Theory
(c) Monistic/Economic Theory
(d) Hierarchy of Needs Theory
Answer:
(c) Monistic/Economic Theory.

9. ………………….. suggested the “hierarchy of needs theory.
(a) Fayol
(b) Maslow
(c) Taylor
(d) George R. Teny
Answer:
(b) Maslow.

10. The approach towards directing the subordinates will depend upon the situation only.
(a) True
(b) False
(c) Partly True
(d) None of these.
Answer:
(b) False.

11. Which theory is also called the two-factor theory?
(a) Herzberg Theory
(b) Equity Theory
(c) Monistic Theory
(d) Theory of Douglas Mc, Gregor
Answer:
(a) Herzberg Theory.

12. The fundamental assumption of ………………… theory is that full advantage of employee potential can be taken by motivating them to accept organisational objectives.
(a) Theory X
(b) Equity theory
(C) Monistic theory
(d) Theory Y
Answer:
(d) Theory Y.

13. Which theory says that a man is inherently resistant to change and passive to organisational needs.
(a) Mc. Gregor Theory Y
(b) Mc. Gregor Theory X
(C) Equity Theory
(d) Herzberg Theory.
Answer:
(b) Mc. Gregor Theory X

14. ……………….. gave the two-factor theory.
(a) Frederick Herzberg
(b) Douglas Mc. Gregor
(c) Taylor
(d) Fayol
Answer:
(a) Frederick Herzberg

15. Context factors are also known as factors.
(a) Intrinsic
(b) Indifferent factors
(c) Hygienic/extrinsic factors
(d) None of the above.
Answer:
(c) Hygienic/extrinsic factors.

16. Transaction Analysis can give the employees fresh insights into their own personalities.
(a) True
(b) False
(c) Partly True
(d) None of the above.
Answer:
(a) True.

17. ………………… said leadership is the activity of influencing people to strive willingly for group objectives.
(a) Koontz & O’Donnell
(b) Henry Fayol
(c) Taylor
(d) George R. Terry
Answer:
(d) George R. Terry.

18. Which theory fails to pinpoint the intensity and extent to which each of the agreed traits should be present in an individual.
(a) Style Theory
(b) Blake and Mouton
(c) Traits Theory
(d) None of the above.
Answer:
(c) Traits Theory.

19. ………………….. approach has selective application. Under this leader depends upon the members to establish their own goals.
(a) Autocratic style
(b) Laissez fair-style
(c) Democratic style
(d) None of the above.
Answer:
(b) Laissez fair style.

20. Which theory divides the leadership style in a managerial grid In which different styles of leadership are located in four quadrants.
(a) Lewin, Lippit and White
(b) Ohio State University
(c) University of Michigan
(d) Blake and Mouton
Answer:
(d) Blake and Mouton.

21. While decoding the message, the sender determines the method of transmission.
(a) True
(b) False
(c) Partly True
(d) None of the above.
Answer:
(b) False

22. The path and behaviour of grapevine Is unpredictable.
(a) True
(b) False
(c) Partly True Partly False
(d) None of the above.
Answer:
(a) True

23. ……………………….. communication is also called diagonal communication.
(a) Formal
(b) Informal
(c) Cross-wise
(d) Horizontal
Answer:
(c) Cross-wise

24. ………………….. network of communication is also useful for disseminating information in the general interest of the organisation.
(a) Formal
(b) Informal
(c) Vertical
(d) Horizontal
Answer:
(b) Informal

25. Goals are similar to needs but imply that the object is social not merely physiological.
(a) False
(b) True
(c) Partly True
(d) None of the above
Answer:
(a) False

26. format channels of communication are referred to as communication through the chain of command.
(a) True
(b) False
(c) Partly True
(d) None of the above
Answer:
(a) True.

27. A confession of make may lead to material gains In terms of promotion and pay increase,
(a) True
(b) False
(c) Partly True
(d) None of the above
Answer:
(b) False

28. Four kinds of Management systems as leadership styles was given by
(a) Black and Moultrie
(b) Renris Likert
(c) MC. Gregor
(d) Hertzberg
Answer:
(b) Renris Likert.

29. ……………………… is the unification, integration, synchronization of the efforts of group members so as to provide unity of action In the pursuit of common goals.
(a) Controlling
(b) Co-ordination
(c) Directing
(d) Commanding
Answer:
(b) Co-ordination.

30. Directing is the guidance, the inspiration, the leadership of those men and women that constitute the real core 01 the responsibilities of management”. Who said this statement?
(a) Brech
(b) Urwicks
(c) Both (a) & (b)
(d) Mc Farland
Answer:
(c) Both (a) & (b).

31. ………………………. said that unity of command cannot exist without unity of direction, but does not flow from it.
(a) Fayol
(b) Taylor
(c) Mooney
(d) Larry and Greener.
Answer:
(a) Fayol.

32. Synchronization of varied objectives” is based on which principle of direction.
(a) Unity of Command
(b) Unity of Direction
(c) Direct Supervision
(d) Harmony of objectives
Answer:
(d) Harmony of objectives.

33. ………………….. refers to the direct and immediate guidance and control of subordinates In performance of their work.
(a) Motivation
(b) Leadership
(c) Supervision
(d) Communication
Answer:
(c) Supervision.

34. The word motivation is derived from the ………………… word ‘movere”.
(a) Greek
(b) Latin
(c) French
(d) Roman
Answer:
(b) Latin.

35. A social intercourse maybe ………………… .
(a) Parallel
(b) Crossed
(c) Both (a) & (b)
(d) None
Answer:
(c) Both (a) & (b).

36. Which principle of Taylor relates to the Monistic theory of Motivation?
(a) Differential price rates
(b) Abolishing of old rule of thumb
(c) Functional foremanship
(d) Training of workers.
Answer:
(a) Differential price rates

37. “L = f (I, f, s)” is the leadership function. What does “f” signify?
(a) Friend
(b) Follower
(c) Family
(d) None of the above.
Answer:
(b) Follower

38. Which of the leadership style is not identified by Ohio State University?
(a) Consideration
(b) Initiating structure
(c) Employee Centered
(d) None of the above
Answer:
(c) Employee Centered.

39. Which of the following is not the principle of communication?
(a) Principle of Integrity
(b) Principle of Disintegration
(c) Principle of Clarity
(d) Principle of Strategic use of Informal Organisation
Answer:
(b) Principle of Disintegration.

40. Which of the following is not the example of “Crossed Transaction”?
(a) Parent-Child
(b) Child – Parent
(c) Parent – Adult
(d) Adult – Adult
Answer:
(d) Adult – Adult.

41. ……………………. Co-ordination is the establishment of a relationship between the employees of the organisation and outsiders of the organisation
(a) Internal
(b) External
(c) Both (a) & (b)
(d) None of the above.
Answer:
(b) External.

42. The work of the establishment of a relationship between the employees of the organisation and the outsider is entrusted to a person who is designated as ……………….. .
(a) Chairman
(b) Secretary
(c) PRO (Public Relation Officer)
(d) Director
Answer:
(c) PRO (Public Relation Officer).

43. “Sales manager co-ordinates his work with the activities of the supervision of the sale” is a type of which internal coordination.
(a) Vertical Co-ordination
(b) Horizontal Co-ordination
(c) Both (a) & (b)
(d) Upward Co-ordination
Answer:
(b) Horizontal Co-ordination.

44. ……………………. is characterized by the emergence of spontaneous channels through which facts, half truths, and rumours pass.
(a) Formal communication
(b) Informal communication
(c) Mix communication
(d) None of the above
Answer:
(b) Informal communication

45. ……………….. is a third type of communication medium.
(a) Pictures
(b) Media
(c) Action
(d) Written communication
Answer:
(c) Action

46. “Message communicated through words may be distorted intentionally”, is a type of which barrier?
(a) Perfunctionery Action
(b) Semantic Distortion
(c) Premature Evaluation
(d) Resistance to Change
Answer:
(b) Media

47. Different functions of management when effectively carried out leads to better ……………….. .
(a) Co-ordination
(b) Controlling
(c) Directing
(d) Organising
Answer:
(a) Co-ordination.

48. ………………….. is a voluntary collective action to serve a common purpose,
(a) Co-ordination
(b) Controlling
(c) Cooperation
(d) None of the above
Answer:
(c) Cooperation

49. Which type of leadership is characterized by ‘centralisation of authority’?
(a) Autocratic style
(b) Democratic style
(c) Laissez-faire style
(d) None of the above
Answer:
(a) In Autocratic style of leadership the leader centralises his authority and keeps decision making with himself and very limited participation by subordinates of the group. The autocratic leadership accomplishes the results through use of authority, fear of deprivation punishment and other coercive measures.

50. The Hierarchy of Needs Theory was propounded by –
(a) A. H. Maslow
(b) Mc. Gregor
(c) Henry Fayol
(d) Henry Lawrence Gantt
Answer:
(a) Hierarchy of Needs Theory was developed by A.H. Maslow, a psychologist. It is based on human needs which are arranged in a particular order from the lower to higher.

51. With which management functions, ‘mentoring’ is primarily associated-
(a) Planning
(b) Organising
(c) Leadership
(d) Control
Answer:
(c) Leadership Is a means of directing and represents that part of an executive’s activities by which he guides and influences the behaviour of his subordinates and the group towards some specified goals by personally working with them and understanding their feeling and problems, hence leadership is primarily monitoring or providing direction, drive arid good representation, thus proving that it ¡s an essential part of successful management.

52. Which one of the following is not considered as an element of direction?
(a) Supervision
(b) Organisation
(c) Motivation
(d) Communication.
Answer:
(b) Direction refers to an initiating function which actuates plans and the organisation. It involves:

SupervIsion
Motivation
Leadership
CommunIcation

Thus, organisation is not an element of direction.

53. Which one of the following theories postulates that people are not concerned merely with the reward they get for their contributions, rather they compare their efforts and rewards with those of others?
(a) Economic theory of motivation
(b) Motivation – hygiene theory
(c) Equity theory of motivation
(d) Hierarchy of needs theory.
Answer:
(c) As per Equity Theory of Motivation, people are not concerned merely with the reward they get for their contributions; rather they compare their efforts and rewards with those of others. If he feels that his getting less rewards than others for the same contribution and outcome, he is resorted to -negative behaviour.

54. Which one of the following theories assumes that man is inherently resistant to change and passive to organisational needs?
(a) Theory – X
(b) Theory – Y
(c) Theory – Z
(d) Theory – U
Answer:
(a) There are certain conventional assumptions relating to motivation of people in the organisation that are widely accepted as valid. These assumptions are termed by Mc Gregor as “Theory X”. The important assumptions underlying this theory are:

The average individual is by nature indolent and will avoid work if he can.
The average person lacks ambition, dislikes responsibilities and prefers to be led.
An average human being is inherently self-centered.
Man is inherently resistant to change and passive to organisational needs.
Most people want security above all.

55. Which one of the following is a form of informal communication?
(a) Vertical Communication
(b) Grapevine
(c) Horizontal Communication
(d) None of the above.
Answer:
(b) Informal communication is based upon Informal relationship. It Is the result of operation of social forces at workplace.

It is known grapevine as It runs in all directions irrespective of the formal structure.
It contains any communication about the company and personal matters outside the official network.

56. The fundamental assumption of is that full advantage of employee potential can be utilised by motivating them to accept organizational objectives.
(a) Theory – X
(b) Equity theory
(c) Monistic theory
(d) Theory-Y.
Answer:
(d) The fundamental Implication of theory Y is that full advantage of the personal and professional potential of employees can be taken by motivating them to accept organizational objectives, more particularly when their physiological and safety needs are well satisfied.

57. ………………. is an important function of management which involves communicating and providing leadership to the subordinates and motivating them to contribute to the best of their capacity for the achievement of organisational objectives.
(a) Motivation
(b) Directing
(c) Discipline
(d) Coordination.
Answer:
(b) Directing is an important function of management which involves communicating and providing leadership to the subordinates and motivating them to contribute to the best of their capability for the achievement of organisational objectives.

It starts with issuing orders and instructions to subordinates and ends with getting things done by satisfaction of various needs of subordinates.

58. …………………. co-ordination refers to that co-ordination n which a superior authority coordinates his work with that of his subordinates and vice versa.
(a) Internal
(b) Vertical
(c) Horizontal
(d) External.
Answer:
(b) Vertical Coordination refers to that co-ordination In Which a superior authority coordinates his work with that of his subordinates and vice-versa.

59. Grapevine consists of a complex network of communication.
(a) Crosswise
(b) Formal
(c) Informal
(d) None of the above.
Answer:
(c) Informal organisation emerges spontaneously within every formal organisation and along with it grows the informal channels of communication, commonly referred to as the grapevine.
Any informal communication about company and personal matters outside the official network constitutes grapevine. Thus, the grapevine consists of a complex network of Informal communication.

60. The essence of management which is all-pervasive and permeates every function of management is …………………. .
(a) Staffing
(b) Co-ordination
(c) Reporting
(d) Budgeting.
Answer:
(b) Co-ordination is considered as the essence of management because different functions of management are exercised in coordination. Hence, the essence of management which is all-pervasive and permeates every function of management is Coordination.

61. Which concept of lite is described under parent –
(a) Thought concept of life
(b) Taught concept of life
(c) Felt concept of life
(d) None of the above.
Answer:
(b) Taught concept of Life is described under parent conditions. Under this, hostility of parents is recorded with terror and the love with pleasure.

62. Which function is described as an integration or synchronization of group effort in the organisation.
(a) Direction
(b) Cooperation
(c) Co-ordination
(d) Staffing.
Answer:
(c) Co-ordination is an integration or synchronization of group efforts in the organisation. So as to provide unity of action in the pursuit of common purpose.

63. Crosswise communication is also known as –
(a) Horizontal Communication
(b) Diagonal Communication
(c) Upward Communication
(d) Downward Communication.
Answer:
(b) Crosswise communication is also known as diagonal communication which signifies the communication between different departments of equal, higher or lower position.

64. Which theory says that people are not only concerned merely with their reward but also compare their efforts and rewards with others:
(a) Equity Theory of Motivation
(b) Theory X
(c) Theory Y
(d) None.
Answer:
(a) As per Equity Theory of Motivation, people are not concerned merely with the reward they get for their contributions. rather they compare their efforts and rewards with those of others. li he feels that he is getting less rewards than others for the same contribution and outcome, he is resorted to negative behaviour.

65. Theory X is propounded by:
(a) Douglas Mc’ Gregor
(b) Henry Hlntzberg
(c) Lewin Lippu and White
(d) 1.0. Mooney
Answer:
(a) The late Douglas Mc Gregor has applied the fundamental content of the theory of Maslow to leadership and management theory. There are certain conventional assumptions relating to motivation of people. These assumptions are termed by McGregor as Theory X’s.

66. Motivation hygiene theory was given by.
(a) Henry Hintzberg
(b) Fredrick Taylor
(c) Frederick Herzberg
(d) George. R. Terry
Answer:
(c) Herzberg’s Motivation – Hygiene Theory, also known as the two-factor theory was developed by Fredrick Herzberg.

67. “leadership is influencing people to follow in the achievement of a specialised goal”. This definition of leadership is given by
(a) Koontz and O’ Donnell
(b) Henry fayol
(c) George R. Terry
(d) Henry Mintzberg
Answer:
(a) According to Koontz and O’ Donnell, Leadership Is influencing people to follow in the achievement of a specialised goals.

68. Parent, child and adult are the terms used In:
(a) Management
(b) Transaction Analyses
(c) Communication
(d) Emotional Intelligence.
Answer:
(b) Transactional analysis is the method of examining the social intercourse of the parts of the multiple nature of an individual which are recorded in the brain and are replayed in the course of a transaction are: parent, child & adult., PCA ego states.

69. Parents, child and adult are the terms used in:
(a) Management
(b) Transactional Analysis
(c) Communication
(d) Emotional Intelligence
Answer:
(b) Transactional analysis helps in finding out ‘why people do as they do’. Parents, child and adult are terms used in Transactional Analysis.

70. Which of the following is not the external coordination:
(a) Market agencies
(b) Competitors
(c) Horizontal Coordination
(d) Media
Answer:
(c) External co-ordination:

Market agencies
General public
Competitors
Customers
Union government, State Government and other Government.
Different Institution rendering services
Financial Institution
Media
Technology Agencies

Thus, option, (c) Le. horizontal coordination is not external coordination.

71. Allowing substantial participation by members of the group in management and decision-making process, is a characteristic of which style of leadership?
(a) Autocratic style
(b) Dramatic style
(c) Democratic style
(d) Laissez faire style.
Answer:
(c) Democratic style Is characterised by allowing substantial participation by members of the group in management and in the decision making process by the leaders. This style substantially contributes to satisfaction on the part of subordinates.

72. “Unity of command cannot exist without unity of direction, but does not flow from it. This statement was given by:
(a) George Tenny
(b) Koontz & ‘O’ Donriefl
(c) Frederick Taylor
(d) Henry Fayol.
Answer:
(d) Henry Fayol emphasized that Unily of command cannot exist without unity of direction, but does not flow from it as unity of direction results from sound organisation structure, whereas unity of command leads to effective function of the subordinates.

73. The important function of management, “Direction” is exercised at:
(a) All the levels of management
(b) Middle level of management
(c) Top-level of management
(d) Lower level of the management
Answer:
(a) Features of Direction:

Direction initiates action in the organisation
It Is performed at every level of management
It is a continuous process
Initiates at the top level in organisation and flows to the bottom following hierarchy
Director ‘is has dual objectives.

74. The flow or patterns of communication in an organisation may not be ………………… .
(a) Downward
(b) Hexagonal
(c) Upward
(d) Diagonal.
Answer:
(b) Different kinds of communication:

Downward Communication
Upward Communication
Diagonal Communication

75. The abbreviation PAC ego states stands for
(a) Public, Action, Council
(b) Public, Authority, Council
(c) Policy, Action, Course
(d) Parent, Adult, Child.
Answer:
(d) The parts 01 the multiple nature of an individual which are recorded in the brain arid are repaid course of a transaction are described as: Parents, Adult and Child (PAC) ego states.

76. Allowing substantial participation by members of the group in management and decision-making prócess, is a characteristic of which style of leadership?
(a) Dramatic style
(b) Autocratic style
(c) Laissez-faire style
(d) Democratic style.
Answer:
(d) Democratic Style of Leadership is characterized by allowing substantial participation by members of the group in management and in the decision-making process by the leaders. Subordinates are frequently consulted by the manager on wide-ranging problems and are allowed sufficient freedom to communicate with the leader and also with their fellow subordinates.

77. As per Taylor, effective direction depends upon the:
(a) Growth of objectives
(b) Size of objectives
(c) Definition of objectives
(d) Harmony of objectives.
Answer:
(d) Directing is an important function of management which involves communicating with and providing leadership to the subordinates and motivating them to contribute their best for the achievement of organizational objectives. Taylor pointed out that effective direction depends upon the “harmony of objectives”.

78. Relatively enduring characteristics of a person are called
(a) Experiences
(b) Traits
(c) Knowledge
(d) Attitudes.
Answer:
(b) Persons personality is linked to relatively enduring characteristics know as traits, which can predict behavior and other transient emotional responses or moods.

79. Efficiency implies different meanings to expert, a union leader, a worker, or a manager. This barrier to communication is stated as:
(a) Semantic distortion
(b) Perfunctory attention
(c) Loss of information
(d) Premature evaluation
Answer:
(a) One of the barriers to communication ¡s Semantic Distortion which means that a word may means different to different people based on their knowledge, orientation and experience.

80. Which of the following quality experts advanced the use of statistics for constant quality improvement and assisted Japanese business leaders after world war?
(a) Philip Crosby
(b) Henry Fayo
(c) W Edward Deming
(d) Armand V. Feigenbaum
Answer:
(c) W Edward Deming assisted the Japanese business leaders after World War II.

81. The leader depending largely upon the group and its members to establish their own goods and make their own decisions is a characteristic of which style of leadership?
(a) Dramatic style.
(b) Automatic style
(c) Laissez faire style
(d) Democratic Style
Answer:
(c) In Laissez-faire style, the leader assumes roles of just any other member of the group and depend largely upon the group and its member to establish their own goal and make their own goal and decision.

82. It essentially signifies the existence of only one supervisor and one plan for a group of activities which have the same objective:
(a) Unity of functions
(b) Performance Appraisal
(c) Unity of command
(d) Unity of Direction
Answer:
(d) Unity of direction essentially signifies the existence of only one superior and one plan for a group of activities which have the same objective.

83. According to decision theory approach which one of the following is the Core of management?
(a) Leadership
(b) Decision-making
(c) Motivation
(d) Planning
Answer:
(b) Decision-Making is Core of the Management If we follow ‘decision theory of approach’.

84. Business must first be responsible to:
(a) Employees
(b) Customers
(c) Owners
(d) Bankers
Answer:
(c) Business must pay so many obligations and there are so many obligations for which business has to liable and these are:

Liability to pay Employees
Liability to pay Customers
Liability to pay Owners
Liability to pay Bankers

Business must first be responsible to owners and then rest others as owner is only one who start business by investing capital.

85. Communication by the CEO of the Organisation to the purchase officer is an example of:
(a) Upward communication
(b) Downward communication
(c) Horizontal communication
(d) Informal communication.
Answer:
(b) The process of passing information from one person to another with aid of some medium is termed as Communication. There are two types of Communication which are:-

Downward Communication
Upward Communication

Communication by CEO of the Organisation to the Purchase Officer is an example of Downward Communication.

86. Crosswise Communication ¡s also known as Communication.
(a) Vertical
(b) Horizontal
(c) Diagonal
(d) None of the above.
Answer:
(c) Crosswise Communication is also known as Diagonal Communication as it implies shape like a diagonal.

87. Parent, Child. Adult are part of:
(a) Transactional Analysis: EGO States
(b) Transformation Approach
(c) Psychological Motivation
(d) Nono of these.
Answer:
(a) Transactional analysis is the method of examination of social intercourse; are described as Parent, Adult, Child (PAC) ego states.

88. Work hard, do not worry, everything will be ok who understand this
(a) Parent
(b) Child
(C) Adult
(d) None of these
Answer:
(a) Work hard, do not worry, everything will be ok”, is understood by Parent under Transaction analysis: PAC ego states.

89. The essence of management which is all-pervasive and permeates every function of management Is –
(a) Staffing
(b) Co-ordination
(c) Reporting
(d) Budgeting.
Answer:
(b) Co-ordination means the synchronisation of different efforts of the various departments. ft is the essence of management which is all-pervasive and permeates every function of management.

90. …………………………. is an important function of management which involves communicating and providing leadership to the subordinates and motivating them to contribute to the best of their capacity for the achievement of organisational objectives.
(a) Motivation
(b) Directing
(c) Discipline.
(d) CoordInation.
Answer:
(b) ‘Directing’ is an important function of management which involves communicating and providing leadership to the subordinates and motivating them to contribute to the best of their capacity for the achievement of organisational objectives.

91. Coordination refers to that coordination in which a superior authority coordinates his work with that of his subordinates and vice versa.
(a) lnterrl
(b) Vertical
(c) Horizontal
(d) External
Answer:
(b) ‘Vertical’ Co-ordination refers to that coordination in which a superior authority co-ordinates his work with that of his subordinates and vice versa.

92. Caveat Emptor means:
(a) Let the buyer be aware
(b) Let the seller be aware
(c) Both
(d) None
Answer:
(a) Cavtat Emptor stands for “Let the buyer be aware” arid the world Caveat Vendor standS for ‘Let the seller be aware.

93. Sender can be:
(a) Recipient
(b) Receiver
(C) Communication
(d) None of the above.
Answer:
(c) Sender Is a person who sends the message. The sender may want to change the receiVers’ minds, or secure concessions towards a negotiated agreement. Hence sender is also known as communicator.

94. CoordInating is ‘Plus-Value’ of group according to which writer:
(a) Charles worth
(b) Mary Parker F0llett
(c) Moon ley
(d) Koontz O Donnel.
Answer:
(b) According to Mary Parker Follett, co-ordinating is the “Plus-value of the group”. That is, if there is good co-ordinating between the groups then the combined achievement of the groups will be greater than the total of the achievement of the individual group, i.e. 3 + 2 = 6.
This is impossible In the physical world, but it is possible in human affairs through co-ordinating.

CS Foundation Business Management Ethics and Entrepreneurship Notes

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Entrepreneurship – Creativity and Innovation – Business Management Ethics and Entrepreneurship Notes

November 24, 2022

Entrepreneurship – Creativity and Innovation – Business Management Ethics and Entrepreneurship Notes

Introduction:

A successful entrepreneurship requires continuous innovation and innovation demands creativity.
Creativity and innovation are central to the entrepreneurial process.
All three are interlinked.
Let us study them in detail:

Creativity:

Creativity is the ability to create something new.
It is an art of creating something using skills and intellect.

Characteristics of creativity:

Creativity is an ability to create new ideas.
Creativity is an attitude.
Creativity is a continuous process.
Creativity requires passion and commitment.
Creativity is a process of using skills and binging into existence something new.
Creativity should be supported by interest, satisfaction and zeal of the creator.
It is all about to invest into a new form and to produce through imaginative skill.

Components of creativity:
Creativity requires

Expertise
Creative thinking skills
Motivation.

Expertise: li refers to the specialised knowledge or technical ability of a person for a particular thing.

Creative thinking: It refers to the ability to explore new ideas for solving various problems.

Motivation: It refers to the desire, passion and zeal to do something. People become creative when they feel motivated primarily by the interest, satisfaction and challenge of the situation.

Innovation:

Innovation is the process of creating new values.
It is a process by which an idea or invention is translated into goods or services.
According to Schuiipeter. innovation is a process of “creative destructions.”

Characteristics of Innovation:

Innovation involves looking into things with a new perspective.
Innovation is a process and not an activity.
Innovation has no set dimensions.
Innovation creates demand in the market.

Principles of Innovation:
Innovation will become a success only if following factors/principles are followed:

Doing the work which you desire and what you love.
Set a vision for your innovation.
Create your own ideas and work on them.
Try to influence people with your innovation and not with the product.
Take chances.
Put a dent in the universe. Principles of innovation by Steve Jobs in the famous book “The Innovation Secrets of Steve Jobs.

1. Do what you love (People with passion can change world)
2. Put a dent in the universe (two people can see exactly the same thing but perceive it differently based on their vision)
3. Kick start your brain (creativity is connecting things)
4. Sell dreams, not products
5. Say no to 1000 things (innovatiòn means eliminating the unnecessary so that necessary may speak)
6. Create insanely great experiences
7. Master the message. (you can have the most innovative idea in the world but if you cannot let people excited about It, it does not matter)

Relationship between Creativity and Innovation:

Creativity is the starting point for innovation.
Creativity is the seed of a new idea which when grows becomes a tree i.e. innovation.
Innovation is the implantation of creative inspiration.
In simple words, we can say creativity is a subset of innovation. This means creativity is necessary for innovation but is not sufficient.
All innovations begin with creative ideas.
No innovation is possible without creativity.
Entrepreneurship is a vehicle that drives creativity and innovation.
Entrepreneurship is an innovatory process involved in the creation of an economic enterprise based on a new product or service which differs from existing ones.

Environment Scanning:

Companies which scan their business environment are proven to achieve higher profit & importance of it was realised by life insurance firms in late 1970s.
It refers to the monitoring of an organisation’s external and internal environment for detecting early signs of opportunities and threats that may influence current and future plans.
Environment scanning is done to gather responses of the business from the environment and then making adjustments in the strategies.
Innovation requires environmental scanning. [A market analysis is required before launching any new idea or product into the market].
It helps in analysing and interpreting the outcomes of the innovation.

Environment scanning can be performed using various methods/techniques:

SWOT Analysis
PEST/PESTLE Analysis
Industry Analysis

SWOT Analysis:

It was originated by Albert S Humphery in the 1 960s
It refers to the analysis of a company’s strengths, weakness, opportunities and threats
Components of SWOT Analysis

Components of SWOT Analysis

SWOT Analysis is also known as Internal-External Analysis and SWOT Matrix as lE matrix.

Here is a SWOT Analysis of a Company
INTERNAL:

STRENGTH	WEAKNESS
Better product	Non-availability of funds
Strong brand image	Non-availability of latest technology
Wide range of product	Poor customer base
Strong R & D facility	Weak distribution network

EXTERNAL:

OPPORTUNITIES	THREATS
Rising product demand	Changing government regulations
Expansion into new segments	New entrants
Falling trade barriers	Recession in the market
Acquisition of rival firms	Intense competition

(v) Environmental scanning is done by using the above analysis.

MACRO ENVIRONMENTAL FACTORS:

PESTLE stands for:
P – Political
E – Economic
S – Sociological
T – Technological
L- Legal
E – Environmental

As per this analysis, the environment is scanned with respect to the above factors.

It helps to ascertain the effect of these factors on the business of the entrepreneur.

PESTLE ANALYSIS:

1. PolitIcal factors:

Tax policy
Political stability

2. EconomIc factors:

Economic growth, inflation rates
Stage of business cycle

3. SocIal factors:

Age distribution
Health awareness

4. Technological factors:

R & D Activity
Impact of emerging technologies

5. Legal factors:

Taxation laws
Licensing framework

6. Environmental factors:

Environmental impact
Waste disposal

Approach to Industry Analysis:

It refers to the process of analysing the existing industry before undertaking innovation.
It is important because it helps the entrepreneur to know the extent of competition which he is exposed to.
The best tool for industry analysis is the Porter’s Five Forces Model.
As per this model, an enterprise Is exposed to competition from the following forces conducted.
It is also conducted for the survey of existing industry before setting up entrepreneurial endeavour.

(a) Supplier Power:

Suppliers may raise the prices of the materials.
The more we are dependent on a particular supplier, the more powerful he becomes.

(b) Buyers Power:

Buyers may switch to other products.
The more number of buyers, the more will be their bargaining power and hence will become more powerful.

Rivalry means competitive firms selling substitutes or same products.
The more rival firms are there in the market, the weaker wtll be the position of the business (as both the buyers and suppliers can make alternative choices).

(d) Threat of New Entry:

The power of an enterprise is also affected by the possibility new players to enter into the market.
If a firm has strong barriers to entry, the more powerful position can maintain.

(e) Substitute Goods Threat of Substitution:

Presence of substitutes of your product may hamper your position.
The more substitutes are available, the weaker will be your position.

Process of Environmental Scanning:
Scanning refers to screening large amount of information for some particular bit of information. It involves the following steps:
Searching for information resources
↓
Selecting/Choosing information resources for scanning
↓
Identifying the criteria for scanning
↓
Carrying out scanning process
↓
Ascertaining scanning results and taking corrective actions if required.

Types of Environmental Scanning:
(a) Passive Scanning
(b) Active Sàannlng
(c) Directed Scanning

(a) Passive Scanning:

Effortless scanning is passive scanning.
It is performed cõntinuously.
The results of this type of scanning help in taking ad-hoc decisions only.

(b) Active Scanning:

It requires higher degree of attention.
It involves scanning through existing sources (literature) or continuous source (magazines or journals) which requires more attention.
It involves selecting continuous resources and supplementing them with existing resources as needed for better results of scanning.

Active scanning of a specific item is called directed scanning.
Here scanning is done using existing resources only.

Market Assessment:
Before launching a nw idea or innovation it is important to perform market analysis.
Market assessment refers to the process of assessing the demand of the new idea in the market.

Importance of assessing market:
(a) Helps to prepare us to enter into new market.
(b) Helps In successful launching of a product service.
(c) Helps in commencement of a new business.

Steps for performing market assessment
Defining the problem
↓
Analysis of the situation
↓
Obtaining data that is specific to the problem
↓
Analysing and interpreting data
↓
Solving of the problem! fostering ideas
↓
Designing a plan

Note That:

Analysis of the situation is an informal survey of what information is available in the problem area.
Analysis of a situation should focus on both primary and secondary market research.

Primary Research	Secondary Research
(i) It is the research created for a specific purpose.	It does not focus on a specific purpose.
(ii) The first research of a particular thing is primary research.	This type of research has already been conducted in the past.
(iii) It is done through surveys, focus groups, phone interviews etc.	It is done through existing information in libraries, online periodicals etc.

A marketing plan shows the specifics of how the entrepreneur will market or attempt to sell his product or service.

Assessment of Business Opportunities
Business Plans:

Business plan refers to an idea of starting a business.
This require management’s focus on present as well as future.
Business plan is a roadmap to reach the ultimate business goals/dreams.
They analyse the business’s strengths and capitalize on them.
The most significant benefit of a business plan is the periodic review of actual results.
Business plans are time-bound, they can be long term or short term.
Business plans can be a simple outline, they need not necessarily contain complex charts, diagrams etc.

Misconceptions about business plane:

Business plans may require too much work but may result in no or fewer benefits.
Business plans are specifically for large companies.

Components of a business plan:

It should have goals (either long term or short term) with a timeline for the completion of each.
It should have a strategy in each functional area.
The business plan should adequately include budget and cash flow projections.
A review segment shows the reviews of the goals, objectives and strategies made.

Setting up of a successful business:
Initializing of the business venture requires the following things to be kept in mind:

There is no shortcut to success
Recognize a business opportunity and start with customers. First, find someone who can buy your idea.
Inculcate the skill to find essential resources for exploiting opportunities.

Skills needed for a successful business-

Engineering skills
Manufacturing skills
Selling skills
Business skills (making profit from above three)

Engineering + Selling skills = Needed for start of a business
Manufacturing + Business = Needed for running the business.

Process of starting a new business:
Identification and evaluation of opportunity
↓
Development of a business plan
↓
Determination of required resources
↓
Management of resulting enterprise

1. Identification and evaluation of opportunity:

It is the primary task of starting a venture.
While identifying and evaluating the opportunity following factors should be considered: length of the opportunity, real and perceived value, risks and returns associated with it, its suitability to the organisational goals and its uniqueness in the competitive environment.
Market size and length of opportunity are primary bases for determining risks and rewards.
Opportunity assessment or analysis refers to the method of evaluating an opportunity.

It includes:
→Description of the product.
→ Assessment of opportunity
→ Assessment of entrepreneur and his team
→ Specifications of activities needed to convert the opportunity into a business.
→ Source for financing capital

Are opportunity analysis and business plan same thing?

Opportunity Analysis	Business Plan
→ It refers to the evaluation of an opportunity.	→ Business plan includes evaluation as well as other activities performed for starting a business (like defining goals)
→ It is a narrower concept than business plan.	→ It is broader than opportunity analysis.
→ It focuses on a particular opportunity	→ It focuses on various other aspects of the whole venture.
→ It results into a decision that whether opportunity should be taken or not.	→ It results into the formation of a business.

2. DevelopIng a business plan:
(i) Business planning is the process of setting goals, explaining the objectives and mapping out a document to achieve those goals and objectives.
(ii) Business plan is the articulation and explanation of the entrepreneurial company’s plan for managing the risks and challenges involved in building or expanding the business.

(iii) Myths about the business plans

Business plans are only for start-up companies.
Business plans should be as detailed as possible, the longer the plan the better are chances for procuring finance
Business plans should emphasize ideas and concepts, but not people
Only the founding entrepreneur should prepare a business plan
Optimism should prevail over realism.

3. DetermIne the resources required:

The entrepreneur should first consider the existing resources and then determine the other resources needed.
Estimation should be made for the amount of resources required.
An effort should be made to obtain the resources at lowest possible prices by searching alternatives.

4. Manage the enterprise:

Managing involves the process of putting all resources together and implementing the business plan.
It also involves the establishment of a control system for quick problem solving.

Nature of Management and its Process MCQ Questions

1. Components of creativity does not include:
(a) Expertise
(b) Creative thinking
(c) Motivation
(d) Self-efficacy
Answer:
(d) Self-efficacy.

2. ……………………………. is the process by which an idea or invention is translated into goods or services.
(a) Innovation
(b) Creativity
(c) Creative thinking
(d) Motivation
Answer:
(a) Innovation

3. Who stated that ‘innovation is the process of creative destruction?
(a) Alfred Marshall
(b) Jacob Viner
(c) Schumpeter
(d) Samuelson
Answer:
(c) Schumpeter

4. Who gave the seven secrets of innovation?
(a) Schumpeter
(b) Jacob Viner
(c) Samuelson
(d) Steve Jobs
Answer:
(d) Steve Jobs.

5. Innovation is the starting point of creativity. This statement is:
(a) True
(b) False
(c) Partly true
(d) None
Answer:
(b) False

6. ……………………………….. is the vehicle that drives creativity and innovation.
(a) Entrepreneurship
(b) Intrapreneurship
(c) Motivation
(d) All of these
Answer:
(a) Entrepreneurship

7. Environmental scanning includes monitoring of:
(a) Only internal environment
(b) Only external environment
(c) Both (a) and (b)
(d) None of these
Answer:
(c) Both (a) and (b)

8. Which of these is not a method of environmental scanning?
(a) SWOT Analysis
(b) Industry Analysis
(c) GE Model
(d) PESTLE Analysis
Answer:
(c) GE Model

9. Albert S. Humphery was the originator of:
(a) SWOT Analysis
(b) Industry Analysis
(c) GE Model
(d) PESTLE Analysis
Answer:
(a) SWOT Analysis

10. Threat is a ……………………. while strength is a ………………………….. component.
(a) External, Internal
(b) Internal, External
(c) Internal, Internal
(d) External, External.
Answer:
(a) External, Internal

11. Expansion into new line of business is a ……………………. of the firm.
(a) Strength
(b) Weakness
(c) Opportunity
(d) Threat
Answer:
(c) Opportunity

12. In PESTLE Analysis, The word NE” stands for:
(a) Expansion
(b) Economical
(c) Environmental
(d) Ecological
Answer:
(b) Economical

13. Porter five force model is used to explain:
(a) Industry Analysis
(b) Competitive analysis
(c) Environmental Analysis
(d) None of these
Answer:
(b) Competitive analysis

14. According to Porters five force model which of these is not a competitive force for a firm-
(a) Substitute products
(b) Buyers power
(c) Suppliers power
(d) None of these
Answer:
(d) None of these

15. Which of these is not a type of environmental scanning?
(a) Passive
(b) Active
(c) Directed
(d) Specific
Answer:
(d) Specific

16. Directed scanning is a ……………………….. scanning for a specific item.
(a) Specific
(b) Active
(c) Passive
(d) None of these
Answer:
(b) Active

17. The methods of survey, focus groups, interviews are used under
(a) Primary Research
(b) Secondary Research
(c) Both (a) and (b)
(d) None
Answer:
(a) Primary Research

18. The most significant benefit of a business plan is:
(a) Lead to timely completion of goals
(b) Lays down goals and objectives
(c) Facilitate periodic review of actual results
(d) All of these
Answer:
(c) Facilitate periodic review of actual results

19. Components of a business plan includes:
(a) Goals
(b) Review
(c) Strategy
(d) All of these
Answer:
(d) All of these

20. Which of these skills is not required for a successful business:
(a) Engineering skill
(b) Management Skill
(c) Selling Skill
(d) Business Skills
Answer:
(b) Management Skill

21. …………………… and ……………………………. skills are needed for starting a business.
(a) Engineering + Selling
(b) Selling + Management
(c) Engineerin+ Business
(d) Business + Manufacturing
Answer:
(a) Engineering + Selling

22. Primary task for starting a venture is ………………………..
(a) Identification of opportunity
(b) Developing a plan
(c) Conceiving an idea
(d) Arrangement tor resources
Answer:
(a) Identification of opportunity

23. Opportunity analysis includes a business plan. The statement
(a) True
(b) False
(c) Partly true
(d) None
Answer:
(b) False

24. The word motivation has been derived from a ………………………. word which means to move”.
(a) Latin
(b) French
(c) Greek
(d) English
Answer:
(a) Latin

25. Motivation can be:
(a) Diverse
(b) Multiple
(c) Dynamic
(d) All of these
Answer:
(d) All of these

26. ……………………… is the tool of Entrepreneurship
(a) Capital
(b) Business
(c) Knowledge
(d) Innovation
Answer:
(d) Innovation

27. ………………….. is an attitude, the ability to accept changes, a flexibility of outlook.
(a) Talent
(b) Innovation
(c) Experience
(d) Creativity
Answer:
(d) Creativity

28. Which one of the following is not a component of creativity.
(a) Expertise
(b) Motivation
(c) Creative thinking skills
(d) Experience
Answer:
(d) Experience

29. ………………………………… is the process of bringing the best ideas into reality.
(a) Innovation
(b) Creativity
(c) Motivation
(d) Expertise
Answer:
(a) Innovation

30. The theory as per which an innovation creates a new demand which destroys the existing market and so on is called the theory of:
(a) Innovative destruction
(b) Creative destruction
(c) Technological destruction
(d) Penodical destruction
Answer:
(b) Creative destruction

31. The seven principles responsible for success through innovation are given by
(a) Schumpeter
(b) Bill Gates
(c) Steve Jobs
(d) None of the above
Answer:
(c) Steve Jobs

32. Which of the following is not a principle as per the 7 Principles given by Steve Jobs.
(a) Kick start your Brain
(b) Do what you love
(c) Say no to 1000 things
(d) Be Positive
Answer:
(d) Be Positive

33. ……………………….. is an innovatory process involved ¡n the creation of an economic enterprise.
(a) Management
(b) leadership
(c) Entrepreneurship
(d) Environment scanning
Answer:
(d) Environment scanning

34. …………………….. is required to anticipate and interpret the results of business innovation.
(a) Market Assessment
(b) Planning
(c) Controlling
(d) Environmental Scanning
Answer:
(d) Environmental Scanning

35. The importance of environmental scanning was first realised by
(a) Life insurance firms
(b) Banks
(c) Software firms
(d) None of the above
Answer:
(a) Life insurance firms

36. In Swot analysis ‘O’ stands for
(a) Optimising
(b) Opportunity
(c) Organisation
(d) None of the above
Answer:
(a) Life insurance firms

37. SWOT analysis was originated in the year
(a) 1975
(b) 1960
(c) 1999
(d) 1940
Answer:
(b) 1960

38. SWOT Analysis, PESTLE Analysis and Industry Analysis are techniques of
(a) Environmental Scanning
(b) Innovation
(c) Competition Analysis
(d) Marketing
Answer:
(a) Environmental Scanning

39. In PESTLE Analysis, ‘L’ stands for
(a) Long term
(b) Legal
(c) Leadership
(d) Level
Answer:
(b) Legal

40. ………………………….. is an audit of environmental influences on the business idea for using this information for decision making.
(a) PESTLE Analysis
(b) Industry Analysis
(c) SWOT Analysis
(d) None of the above
Answer:
(a) PESTLE Analysis

41. …………………. merges the external factors affecting the business with the internal factors.
(a) SWOT Analysis
(b) PESTLE Analysis
(c) Industry Analysis
(d) None of the above
Answer:
(a) SWOT Analysis

42. The theory of Industry Analysis was given by
(a) Porter
(b) Taylor
(c) Fayol
(d) Donald
Answer:
(a) Porter

43. Which of the following is not an important force in determining the competitive power as per the Porter’s Model.
(a) Supplier Power
(b) Change in technology
(c) Threat of substitution
(d) Threat of New entry
Answer:
(b) Change in technology

44. What is the second step in the Environmental Scanning Process
(a) Searching for Information Resources
(b) Identifying the Criteria by which to scan
(c) Scanning
(d) Selecting information resources to scan
Answer:
(d) Selecting information resources to scan

45. Which of the following is not a type of Environmental Scanning.
(a) Passive Scanning
(b) Active Scanning
(c) Directed Scanning
(d) Indirect Scanning
Answer:
(d) Indirect Scanning

46. What is the last step ¡n the process of Market Assessment.
(a) Posturing ideas and problem solving
(b) Designing a Plan
(c) Analysing the data
(d) Defining the problem
Answer:
(b) Designing a Plan

47. Conducting a marketing assessment helps in
(a) Entering new market
(b) Launching a new product
(c) Start a new business
(d) All of the above
Answer:
(d) All of the above

48. Which of the following statement is True?
(a) Primary research is proactively created.
(b) Secondary research is a research that has already been conducted for a specific purpose.
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(c) Both (a) and (b)

49. Which of the following is NOT an essential skill of successful business?
(a) Engineering Skills
(b) Manufacturing skills
(c) Selling skills
(d) Motivational skills
Answer:
(d) Motivational skills

50. …………………………….. refers to delivering the goods consistently and reliably with quality, service and price.
(a) Engineering Skills
(b) Manufacturing Skills
(c) Selling skills
(d) Business skills
Answer:
(b) Manufacturing Skills

51. What is the last step in the process of making a business plan?
(a Determining the resources required
(b) Development of the business plan
(c) Evaluation of opportunities
(d) Management of the resulting enterprise
Answer:
(d) Management of the resulting enterprise.

52. ………………………… are the best source of ideas for a new venture.
(a) Employees
(b) Consumers
(c) Competitors
(d) None of the above
Answer:
(b) Consumers

53. The process of setting goals, explaining the objectives arid mapping out a document to achieve these goals is called
(a) Business Planning
(b) Organising
(c) Business Assessment
(d) Industry Analysis
Answer:
(a) Business Planning

54. Which of the following statement is true?
(a) Business plans are only for start-up companies.
(b) Business plan should emphasize on ideas and concepts and not on people.
(c) Realism should prevail over-optimism
(d) Only the founding entrepreneur should prepare business plans
Answer:
(c) Realism should prevail over-optimism

55. An inner or environmental stimulus to action force or factors responsible for initiation, sustaining behaviour is called.
(a) Motivation
(b) Leadership
(c) Innovation
(d) Experience
Answer:
(a) Motivation

56. Motivation can be
(a) Diverse
(b) Multiple
(c) Dynamic
(d) All of the above
Answer:
(d) All of the above

57. Which of the following statement is not true in respect of Passive Scanning?
(a) It has been a major source of information about the external world.
(b) It is almost at an unconscious level
(c) The criterion for passive planning is specified
(d) The criteria for passive planning keeps on changing.
Answer:
(c) The criterion for passive planning is specified

58. The active scanning of an existing resource for a specific item is called as
(a) Directed Scanning
(b) Active Scanning
(c) Passive Scanning
(d) Specified Scanning
Answer:
(a) Directed Scanning

59. Which of the following is not an element of PESTLE analysis?
(a) Economics
(b) Environment
(c) Entrepreneurship
(d) Legal
Answer:
(c) Entrepreneurship

60. The belief in one’s capabilities to organize and execute the courses of action required to manage prospective situations is called as
(a) Self Efficacy
(b) Creativity
(c) Risk-taking
(d) Leadership
Answer:
(a) Self Efficacy

61. Strengths and weakness are
(a) Internal components of SWOT Analysis
(b) External Components of SWOT Analysis
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(a) Internal components of SWOT Analysis

62. Opportunities and threats are
(a) External factors of SWOT Analysis
(b) Internal Components of SWOT Analysis
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(a) External factors of SWOT Analysis

63. SWOT matrix is also called as
(a) GE Matrix
(b) lE matrix
(c) OT matrix
(d) SW matrix
Answer:
(b) lE matrix

64. Who coined the concept of “Industry Analysis”?
(a) Michael Porter
(b) HN Hansen
(c) Koontz O Donnel
(d) Joseph Schumpeter
Answer:
(a) Michael Porter:
Michael Porter coined the concept of ‘Industry Analysis. It is an important tool for environment scanning. It means to take survey of existing industry if any, before setting up on entrepreneurial endeavour.

65. As per Porter’s model, which one of the following is not a market force:
(a) Bargaining power of suppliers
(b) Technological advantage
(c) Bargaining power of customers
(d) Threats of new entrants.
Answer:
(b) Technological advantage:
Porter’s is five forces analysis assumes that there are five important forces that determine competitive power in a business situation. These are Supplies Power, Buyer Power, Competitive Rivalry, Threat of substitution and threat of new entry. Technological advantage according to porter is not a market force.

66. Which of the following is the internal factor to an organisation?
(a) Weaknesses and opportunities
(b) Strength and opportunities
(c) Strength and weaknesses
(d) Weaknesses and threats
Answer:
(c) Strength and weaknesses:
Strength and weakness are often internal to an organisation while opportunities and threats generally relate to external factors. Internal factors comprises of company’s resource analysis and strength and weakness identification.

67. ‘Age distribution’ is a term related to:
(a) Culture factors
(b) Resources factors
(c) Structure factors
(d) Social factors
Answer:
(d) Social factors:
Under PESTLE Analysis, an audit of environmental Influences on the business idea. It is an analysis of companies macro environment. Among various factors to be analysed, one of the factor is social factors which involves: health awareness, population growth rate, age distribution etc.

68. Which statement is wrong about a business plan?
(a) Preparing business plan is a forward-looking activity
(b) Preparing business plan is useful only for big organisations.
(c) Business plan assist in periodical review pf actual results.
(d) Past data is also useful in preparing business plan.
Answer:
(b) Preparing business plan is useful only for big organisations.
Business plans are for small companies as well as large. The small company can benefit from even a simple plan that is prepared in earnest. To facilitate completing the plan, an objective third party can effectively guide a business through process. Thus, the company gets benefit without the administrative burden. Hence it is incorrect to say that preparing a business plan is useful only for big organisations.

69. The general forces of environment have an impact on.
(a) All business enterprises
(b) Some specific business enterprises
(c) An individual enterprise only
(d) None of the above.
Answer:
(a) All business enterprises
General forces of environment refers to the macro forces which affects all the business enterprises in a particular industry altogether.

70. What is the result of early identification of opportunities?
(a) Gives an edge to an organisation
(b) Does not make a difference
(c) Causes high cost
(d) All of the above.
Answer:
(a) Gives an edge to an organisation
Opportunity identification and evaluation is a very difficult task yet very primary. Early identification of opportunities provides an edge to an organisation which helps them in preparation of their business plans.

71. This is not a principle of innovation’:
(a) Doing what you love
(b) Put a dent in the universe
(c) Kick start your brain
(d) All were there.
Answer:
(d) All were there:
Innovation requires fresh way of looking at things and understanding of people and an entrepreneurial willingness to take risk and to work hard. Steve Jobs has given 7 principles largely responsible for success through innovation. Which are as follows:
– Do what you love
– Put a dent in the universe
– Kick start your brain
– Sell dreams, not products
– Say no to 1.000 things
– Create insanely great experiences
– Master the message.
Thus, answer is all of the above.

72. ‘S’ in the acronym SWOT stands for:
(a) Social
(b) Strengths
(c) Scanning
(d) None
Answer:
(b) Strengths
SWOT Analysis was originated by Albert & Humphrey In 1960. SWOT is the analysis of companies:
S – Strengths
W – Weaknesses
O – Opportunities
T- Threats.
Thus, S stand for Strengths.

73. PESTLE Analysis is a part of:
(a) External environment
(b) Microenvironment
(c) Macro environment
(d) Internal and microenvironment
Answer:
(c) Macro environment:
PESTLE analysis is a scan of external macro-environment which are likely to influence the business idea and can be expressed in terms of Political, Economic, Social, Technological, Legal and Environmental factors.

74. In the acronym SWOT ‘O’ stands for:
(a) Obstacles
(b) Opportunities
(c) Openings
(d) Objections.
Answer:
(b) Opportunities:
In the acronym SWOT, ‘O’ stands for Opportunities. Entrepreneur is able to access the feasibility of his goals and objectives using the outcome of SWOT analysis and identification of the company opportunities.

75. In the acronym PESTLE, S stands for:
(a) Scientific
(b) Social
(c) Search
(d) Sound.
Answer:
(b) Social:
In the acronym PESTLE, S stands for social factors, which includes health awareness, population growth rate, age distribution, emphasis on safety, population health, education and social mobility etc.

76. Albert S. Humphrey was the originator of:
(a) SWOT Analysis
(b) Industry An&ysis
(c) GE Model
(d) BOG Matrix.
Answer:
(a) SWOT Analysis:
SWOT Analysis was originated by Albert S. Humphrey in 1 960s. SWOT analysis is as useful now as it was then. SWOT is the analysis of company’s Strengths, Weaknesses, Opportunity and threats to identify a strategic niche that the company could exploit.

77. Components of creativity do not include:
(a) Expertise
(b) Creative thinking
(c) Motivation
(d) Self-efficacy.
Answer:
(d) Self-efficacy:
Creativity is marked by the ability to create, bring into existence to invent into a new form, to produce through imaginative skill, to make to bring into existence something new. It contains only 3 components: Expertise, Creative thinking skills and motivation. Thus, creativity do not include self-efficacy.

78. Which one of the following is correct about business plan?
(a) Business plan is necessary only for big companies
(b) Business plan lays down the best growth path and strategy
(c) Business plan is substitute for strategic planning
(d) Business plan should emphasize on ideas and concepts only.
Answer:
(b) Business plan lays down the best growth path and strategy:
Business plan lays out the best growth path and strategy, as well as the rationale for the selection of the strategy over other alternatives. So the correct option is the business plan lays down the best growth path and strategy.

79. Which one of the following is not a method of environmental scanning?
(a) SWOT Analysis
(b) Industry Analysis
(c) GE Model
(d) PESTLE Analysis.
Answer:
(c) GE Model:
Entrepreneur need to carry out environmental scanning to anticipate and interpret the results that their business innovation would result in. The method of environment scanning are SWOT analysis, Industry analysis and Pestle Analysis. Thus GE Model is not a method of environment scanning.

80. Who coined the statement “sell dreams, not products?
(a) Joseph Schumpeter
(b) Jacob Viner
(c) Alfred Marshall
(d) Steve Jobs.
Answer:
(d) Steve Jobs.
To Steve Jobs, people who buy apple products are not consumers. They are the people with hopes, dreams and ambitions. He build products to help people to achieve their dreams. So the statement, “sell dreams not products” is given by Steve Jobs.

81. Expansion into new line of business is:
(a) Strength of the firm
(b) Weakness of the firm
(c) Opportunity of the firm
(d) Threat of the firm.
Answer:
(c) Opportunity of the firm:
The new line of business is an opportunity of the firm. The opportunity is identified by using input from consumers, business associates. The opportunity, must fit the personal skills and goals of the entrepreneur.

82. According to the Porter’s Five Forces Model, which one of the following is not a competitive force for a firm?
(a) Substitute products
(b) Buyer’s power
(c) Supplier’s power
(d) Unique selling proposition.
Answer:
(d) Unique selling proposition:
The five forces analysis assumes that there aro five important forces: Supplier Power, Buyer Power, competition rivalry, threat of substitution, threat of new entry. So as per Porter’s five forces model, unique selling proposition ¡s not a competitive force for a firm.

83. Primary task for running a successful venture is:
(a) Identification of opportunity
(b) Developing a plan
(c) Conceiving an idea
(d) Arrangement of resources.
Answer:
(a) Identification of opportunity:
Opportunity identification and evaluation is a very difficult task yet very primary. Opportunity must lit the personal skills and goals of the entrepreneur. It is particularly important that the entrepreneur be able to put faith, the necessary time and effort required to make the venture succeed. So the primary task for running a successful venture is Identification of opportunity.

84. In a business environment, which one of the following is not a political factor?
(a) Tax policy
(b) Employment laws
(c) Environment regulations
(d) Exchange rate.
Answer:
(d) Exchange rate
The Business Environment contains the following factors like tax policy, environmental laws, environmental regulation, political stability, etc. In Business Environment, the exchange rate is not a political factor because it is an economic factor.

85. The careful monitoring of an organisation’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans means –
(a) Environment Scanning
(b) Market Analysis
(c) SWOT Analysis
(d) PESTLE Analysis.
Answer:
(a) Environment Scanning:
Environment Scanning refers to the monitoring of an organisation’s external and internal environment for detecting early signs of opportunities and threats that may influence its current and future plans. In this concept, businesses gather information from the environment to achieve a sustainable competitive advantage.

86. PESTLE analysis is a useful tool for understanding the ‘big picture’ of the ……………………………… in which an entrepreneur is planning to operate –
(a) Environment
(b) Strategy
(c) Position
(d) Marketing proposition.
Answer:
(a) Environment:
PESTLE analysis is a useful tool for understanding the ‘big picture’ of the environment in which an entrepreneur is planning to operate. It helps to understand risks associated with several markets.

87. Research which is pro-actively carried out for a specific purpose is caused –
(a) Primary Research
(b) Secondary Research
(c) Active Scanning
(d) Creative Destructions.
Answer:
(a) Primary Research:
Primary research is the research created for a specific purpose. It is done through surveys, focus groups, phone interviews etc. In other words, it ¡s the first research of a particular thing.

88. Which of the following is also known as Internal-External (lE) Matrix?
(a) PESTLE Analysis
(b) Pareto Analysis
(c) SWOT Analysis
(d) Industry Analysis.
Answer:
(c) SWOT Analysis:
SWOT analysis, i.e. analysis of strengths, weakness, opportunity and threats of the business. Strength and weakness are often internal to organisation while opportunities and threats relates to external factors. For this reason, SWOT Analysis is sometimes called Internal-External Analysis and the SWOT matrix is sometimes called an lE Matrix.

89. In which type of environmental scanning, ad hoc decisions are made?
(a) Passive Scanning
(b) Active Scanning
(c) Directed Scanning
(d) None of the above.
Answer:
(a) Passive Scanning
Passive Scanning is effortless scanning which is performed continuously and helps in taking ad hoc decisions only.

90. Which one of the following is not a myth about business plans?
(a) Business plans are required only for start-up companies
(b) Business plans should be optimistic
(c) Business plans should be concise and well written
(d) Business plans should emphasize upon ideas and concepts.
Answer:
(c) Business plans should be concise and well written:
In developing a business plan, entrepreneurs generally have myths and misconceptions about the process, Among these most common are:

Business plans are only for straight-up companies.
Business plans should be as detailed as possible, the longer the plan, the better chance that the company will be financed.
Business plans should emphasize ideas and concepts, not people.
Only the founding entrepreneur should prepare business plans.
Optimism should prevail over reason.

Thus, business plan should be concise and well written is not a myth about business plan.

91. Who said Innovation is a means by which entrepreneurs exploit changes as an opportunity for a different business or a different service’?
(a) Steve Jobs
(b) Peter F. Drucker
(c) Joseph Schumpeter
(d) Paul H. Wilken.
Answer:
(a) Steve Jobs:
Steve Jobs said,” Innovation is a means by which entrepreneurs exploit changes as an opportunity for a different business or a different service”.

92. Which of the following are characteristics of a person with weak sense of self-efficacy?
X. Recovering quickly from setbacks and disappointments
Y. Focusing on personal failings and negative outcomes
Z. Avoiding challenging tasks
The correct option is –
(a) X and Y
(b) Y and Z
(c) X and Z
(d) X, Y and Z.
Answer:
(b) Y and Z:
Characteristics of a person with weak sense of self-efficacy are:
– Avoid challenging tasks.
– Believe that diffæult tasks and situations are beyond their capabilities.
– Focus on personal failings and negative outcomes.
– Quickly lose confidence n personal abilities. Hence, Y and Z are characteristics of person with a weak sense of self-efficacy while recovering quickly from setbacks and disappointment are the Traits of people with a strong sense of self- efficacy.

93. Environmental scanning includes-
(a) Internal
(b) External
(c) Both (a) & (b)
(d) None of the above
Answer:
(c) Both (a) & (b):
Environmental scanning refers to internal as well as external screening large amount of information for some particular bit of information. Hence, option (c) is correct

94. Principles of Steve Jobs
(i) Put a dent in the universe
(ii) Sell dreams not products
(iii) Kick start your brain
(iv) Do what you love
Write in serial order-
(a) (ii), (iv), (iii), (i)
(b) (i), (ii), (iii), (iv)
(c) (iii), (iv), (i), (ii)
(d) (iv), (i), (iii), (ii)
Answer:
(d) (iv), (i), (iii), (ii)
The Principles of Steve Jobs, the founder of Apple Mac, were as follows:

Do what you love.
Put a dent ¡n the universe.
Kick start your brain.
Sell dreams not products.

Hence, option (d) is the correct serial order.

95. Arrange the process of developing effective business plans of starting new venture in proper order
(i) Identification & evaluation of opportunity.
(ii) Determination of required resources.
(iii) Development of business plans.
(iv) Management of the resulting enterprise.
(a) (i), (ii), (iii), (iv)
(b) (iv), (i), (ii), (iii)
(c) (i), (iii), (ii), (iv)
(d) (i), (iv), (iii), (ii)
Answer:
(c) (i), (iii), (ii), (iv)
The proper order of the process of developing effective business plans of starting new venture is:

Identification and evaluation of opportunity.
Development of business plans.
Determination of required resources.
Management of the resulting enterprise.

Hence, option (c) is correct.

96. ……………………………………. is a person’s belief in his/her ability to succeed in a particular situation.
(a) Creativity
(b) Self Efficacy
(c) Leadership
(d) Risk-taking
Answer:
(b) Self Efficacy:
According to Albert Bandura, self-efficacy is a person’s belief in his /her ability to succeed in a particular situation.
Hence, option (b) is correct.

97. Which factor is most important to undertake risk-bearing?
(a) Sell – Efficacy
(b) Creativity
(c) Motivation
(d) Profit
Answer:
(d) Profit:
Profit & risk-bearing are the two sides of the same coin. In order to earn profit, the entrepreneur must take the risks regularly. Hence, profit motive is the most important factor of risk-bearing.

98. Who propounded SWOT AnaJysis?
(a) Peter F Drucker
(b) Albert S. Humphrey
(c) Joseph Schumpeter
(d) Henry Fayol
Answer:
(b) Albert S. Humphrey:
SWOT Analysis was originated by Albert S. Humphrey in 1960s. SWOT analysis is as useful now as ¡t was then. SWOT is the analysis of company’s Strengths, Weakness, Opportunity and Threats to identify a strategic niche that the company could exploit.

99. Why is environmental scanning done?
(a) For setting a vision
(b) For finding/scanning a problem
(c) For gathering the responses of the business
(d) For deriving the creativity and innovation.
Answer:
(c) For gathering the responses of the business:
Environmental scanning refers to the monitoring of an organisation’s external and internal environment. It is done to gather responses of the business from the environment and then, making adjustments in the strategies.

100. Expanded form of WSWO
(a) Strength; Weakness; Organisation; Threats
(b) Strength; Weakness; Opportunity; Threats
(c) Strength; Wasting; Opportunity; Threats
(d) Social; Weakness; Opportunity; Threats.
Answer:
(b) Strength; Weakness; Opportunity; Threats:
SWOT analysis was originated by Albert & Humphrey in 1960. SWOT is the analysis of companies:
S Strengths
W – Weaknesses
O – Opportunities
T – Threats.

101. Scanning at unconscious level is
(a) Active
(b) Passive
(c) Directed
(d) Relative
Answer:
(b) Passive:
Passive scanning refers to the effortless scanning. It is performed continuously. This scanning is done at the unconscious level.

102. Which amongst the following is not related to the Principle of Innovation by Steve Jobs?
(a) Put a dent in the universe
(b) Sell dreams not products
(c) Say no to 100 things
(d) Do what you love
Answer:
(c) Say no to 100 things
Following are the principles of Steve Jobs:

Do what you love
Put a dent in the universe
Kick start your brain
Sell dreams, not products
Say no to 1000 things
Create insanely great experience
Master the message.

Thus, option (c) is the correct answer.

103. Porter’s approach to the industry analysis does not include
(a) Bargaining power of suppliers
(b) Technological Advantage
(c) Bargaining power of customers
(d) Threat to new entrants.
Answer:
(b) Technological Advantage:
Porter’s five forces analysis assumes that five important forces that determine competitive power in a business situation. These are supplier’s power, buyers power, competitive rivalry, threat of substitution and threat of new entry. Thus, Technological Advantage is included in porters industry analysis.

104. The word motivation has come from the word movere which means
(a) To come
(b) To boost
(c) To go
(d) To move
Answer:
(d) To move:
The word motivation has its origin in the Latin word movere” meaning “to move”.

105. External environmental scanning includes scanning of …………………….. .
(a) Technical strength of organisation
(b) Legal Environment
(c) Manpower
(d) Resources.
Answer:
(b) Legal Environment:
In external environmental scanning, three correLated environments should be analysed:

immediate/industry environment
national environment
broader social-economic environment/macro-environment.
While analysing of macro environment Includes exploring macro-economics, social, government, legal, technological and international factors that may influence the environment.
Hence, external environmental scanning includes scanning of legal environment while technical strength of organisation, manpower and resources as internal factors.

106. In the word SWOT, ‘S’ stands for:
(a) Strength
(b) Strange
(c) Social
(d) Strong.
Answer:
(a) Strength:
SWOT stands for
S = Strengths
W = Weaknesses
O = Opportunities
T = Threats
In, the word SWOT ‘S’ stands for strength.

107. Early identification of opportunities:
(a) Does not makes a difference
(b) Always results in success
(c) Handles the problems without any hurdles
(d) Gives an edge to an organisation.
Answer:
(b) Always results in success:
While developing a business plan an entrepreneur should have early identification of opportunities, so that he can plan a good business and it will always result in success.

108. In the acronym PESTLE, ‘L’ stands for:
(a) Legal
(b) Logical
(c) Losses
(d) Language.
Answer:
(a) Legal
PESTLE stands for:
P = Political
E = Economic
S = Sociological
T = Technological
L = Legal
E = Environmental
So, in the acronym PESTLE, ‘L’ stands for Legal.

109. Which according to Joseph Schumpeter is not a vital function performed by the entrepreneurs?
(a) Regional development
(b) Creative destruction
(c) Challenging accepted ways of doing things
(d) Revolutionising current patterns of production.
Answer:
(b) Creative destruction:
Joseph Schumpeter believes that the concept of innovation, described as the use of an invention to create a new commercial product or service, is the key force in creating new demand and thus, new wealth. Innovation creates new demand and entrepreneurs bring the innovations to the market. This destroys the existing markets and creates new ones, which will in turn be destroyed by even newer products or services. Schumpeter calls this process, “creative destructions”.

110. When advising John of what to include in the production plan of his business plan his entrepreneurial venture, what would you not include in your commendation:
(a) Manufacturing process
(b) Product price
(c) Names of suppliers of raw materials
(d) Physical plant.
Answer:
(b) Product price:
A good business plan must be developed in order to exploit the defined opportunity. It refers to an idea of starting a business. These require management’s focus on present as well as future. The business plan should adequately include Budget and Cash flow projection. When advising for a production plan, focus should be on inputs and process, i.e. plant & machinery used, material to be used, suppliers details, process of manufacturing. Hence, while advising John, a manufacturer of what to not include in production plan is product price.

111. Which of the following is not true for social entrepreneurs?
(a) Overwhelming sense of social conscience and social responsibility.
(b) Deep desire to improve upon or fundamentally change prevailing and detrimental social-economic, educational environmental or health conditions.
(c) Fierce ambition to alter the present reality of conditions she/he deems unacceptable or inhuman.
(d) Driven to engage in certain activities because of the promise of political career.
Answer:
(d) Driven to engage in certain activities because of the promise of political career:
Social Entrepreneurship is the process of pursuing innovative solutions to social problems. Social entrepreneur takes into account a positive return to society. Social entrepreneurship typically involves social, Cultural, environmental goals. Thus, option (d) is not correct le. driven to engage in certain activities because of the promise of political career.

112. Who plays a role of an innovator?
(a) Employee
(b) Manager
(c) Investor
(d) Entrepreneur.
Answer:
(d) Entrepreneur:
Entrepreneurship has been identified with the individuals as success of enterprise depending upon imagination, vision, innovative. The entrepreneur carries Out “new combinations” thereby helping render old industry obsolete. Therefore, it can be said that creativity and innovation are two key elements of entrepreneurship. Hence, Entrepreneur plays a role of an innovator.

113. According to Porter, which one is usually the most powerful of the five competitive forces:
(a) Potential development of substitute products
(b) Bargaining power of suppliers
(c) Rivalry among competing firms
(d) Bargaining power of consumers.
Answer:
(c) Rivalry among competing firms:
According to Porter, Rivalry among competing firms is usually the most powerful of the five competitive forces. In competitive Rivalry, what is important here is the number and capability of competitors. If there are many competitors to the new product, who offer equally attractive products and services, then the product will most likely have little power in this situation, because suppliers and buyers will have alternate choices to make, in case they do not get a good deal. On the other hand, if no one else can do what you do, then you can often have tremendous strength.

114. Passive Scanning s done:
(a) Consciously or unconsciously
(b) Actively
(c) Unconsciously
(d) Consciously.
Answer:
(c) Unconsciously:
In Passive Scanning: everyone scans continually. Ongoing scanning at an almost unconscious level is passive scanning.

115. Entrepreneurship is a constant process that relies on:
(a) The ability to win over the consumer
(b) Creativity, innovation and application in the marketplace
(c) Creativity, innovation and profit
(d) Intellectual property rights.
Answer:
(b) Creativity, innovation and application in the marketplace:
Innovation is the tool of entrepreneurship. In addition both innovation and entrepreneurship demand creativity. Entrepreneurship is a constant process that relies on creativity, innovation and application in the marketplace.

116. Situation analysis involves the process of
(a) Analysing the current environment of the organisation
(b) Designing and choosing appropriate organisational strategies
(c) Evaluating the internal aspects of the organisation
(d) Analysing the external environment only.
Answer:
(b) Designing and choosing appropriate organisational strategies:
An analysis of the situation is an informal survey of what information is available in the problem area. The analysis will help define the problem and ascertain the needs for additional information. Situation analysis involves the process of designing and choosing appropriate organisational strategies.

117. ………………………. is process of creating new value:
(a) CreativIty
(b) Motivation
(c) Creative thinking
(d) Innovation
Answer:
(d) Innovation:
Innovation is the process of bringing the best ideas into reality, which cause a creative idea. It is the creation of new values. It is the process that transforms new ideas Into new value.

118. What is opportunity and threats SWOT analysis?
(a) Internal Component
(b) External Component
(c) Both Internal & External Component
(d) None.
Answer:
(b) External Component:
SWOT is the analysis of a company’s Strengths, Weakness, Opportunities, and Threats to identify a strategic niche that the company could exploit. It merges the external factors i.e. opportunities and threats identification with internal factors i.e. company’s strengths and weakness identification.

119. Who is the originator of SWOT Analysis?
(a) Alfred Marshall
(b) Jacob Viner
(c) Albert S. Humphery
(d) Schumpeter
Answer:
(c) Albert S. Humphery:
SWOT analysis was originated by Albert S Humphrey in the 1960s.

120. Principle of innovation was given by:
(a) Joseph Schumpeter
(b) HM. Honsen
(c) Steve Jobs
(d) Porter
Answer:
(c) Steve Jobs:
Steve Jobs has given 7 principles largely responsible for success through Innovation.

121. Business plan are only for start-up companies. It is:
(a) Myth
(b) Reality
(c) Both (a) and (b)
(d) None of the above
Answer:
(a) Myth :
In developing a business plan, entrepreneurs are generally found apprehensive of myths and misconceptions about the process. These are the most common myths:

Business plans are only for start-up companies
Business plans should emphasize on ideas and concepts, not people.
Only the founding entrepreneur should prepare business plans.
Optimism should prevail over realism
Business plans should be as detailed as possible, the longer the plan the better chance that the company will be financed. Thus, This statement is a Myth, option (a) is correct.

122. SWOT Analysis is also known as:
(a) TE Matrix
(b) OT Matrix
(c) lE Matrix
(d) UE Matrix
Answer:
(c) lE Matrix:
Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors, for this reason the SWOT analysis is sometimes called Internal: External Analysis and also called lE matrix.

123. Political Environment includes:
(a) Legislature
(b) Ecology
(c) Demographics
(d) EXIM Policy.
Answer:
(a) Legislature:
Political environment includes legislature as one of the three political institutions ¡n shaping, directing, developing and controlling business activities.

124. Business plans for start-ups and existing business are similar, however:
(a) The focus varies slightly
(b) The plan for an existing business has no executive summary
(c) The plan is for a start-up has no executive summary
(d) The plan for an existing business does not need a section on location because the business has already got a site.
Answer:
(d) The plan for an existing business does not need a section on location because the business has already got a site: Business plans for start-ups and existing business are similar as companies at all stages of development need to prepare business plan related to financing, expansion financing merger, acquisition, overall improvement. Though existing business with respect to section on location do not need emphasis being already got a site, it do need plan to raise a necessary capital to reach next stage.

125. Environmental scanning applies to:
(a) Both external and internal environment
(b) Either external or internal environment
(c) External environment only
(d) Internal environment only.
Answer:
(a) Both external and internal environment:
Environmental scanning is careful monitoring of an organisation’s internal and external environment for detecting early signs of opportunities and threats that may influence its current and future plans.

126. When developing creative solutions to modem problems, entrepreneurs must:
(a) Remember what has worked in the past only
(b) Go beyond merely using whatever has worked in the past
(c) Limit the creative process to only profitable ventures
(d) Pay attention to limiting factors.
Answer:
(b) Go beyond merely using whatever has worked in the past:
Developing creative solutions to modern problems, entrepreneurs must go beyond merely using whatever has worked In the past as that is how he can approach problems and solutions – the capacity to put existing ideas together in new combinations.

127. Opportunities and threats are ……………………….. to the organization.
(a) Internal factors
(b) Factors not belonging
(c) Internal and external factors
(d) External factors.
Answer:
(d) External factors.
SWOT Analysis includes analysis of Strength, Weakness, Opportunities and Threats of an Organisation. Strength and Weakness are internal to an Organisation whereas Opportunities and Threats are external to an Organisation.

128. Marketing assessment does not help in:
(a) Starting a new business
(b) Finding best employees
(c) Preparation to enter new markets
(d) Launch of a new product.
Answer:
(b) Finding best employees:
Conducting a market assessment helps to:

Prepare to enter a new market
Launch a new product
Start a new business.

129. Observing business environmental changes on a continuous basis to ascertain the future value, is called:
(a) Monitoring
(b) Assessing
(c) Scanning
(d) Forecasting
Answer:
(c) Scanning
Environmental Scanning is careful monitoring of an organisation’s internal and external environment for detecting early signs of opportunities and threats that may influence its future and current plans.

130. AIl of the following represent barriers to creativity that entrepreneurs impose upon themselves except:
(a) Focusing on being too logical
(b) Blindly following rules
(c) Searching for more than one answer
(d) Being too practical.
Answer:
(c) Searching for more than one answer:
Generally in a business searching for more than one answer is not a barrier rather than it is a routine business analysis process.

131. A (n) ………………………………. is a written document that describes all the aspects of a business venture in a concise manner.
(a) Business Plan
(b) Operations Plan
(c) Corporate Plan
(d) Technical Model
Answer:
(a) Business Plan:
A Business plan is a written document that describes all the aspects of a business venture in a concise and systematic manner.

132. Tax jurisdiction is an example of which environmental factor?
(a) Political
(b) Technological
(c) Social
(d) Legal
Answer:
(d) Legal:
PESTLE Analysis stands for Political, Economic, Sociological, Technological, Legal and Environmental. The environment is scanned with respect to the above factors. Tax jurisdiction falls under the legal factors as these are covered under the taxation laws. Thus, option (d) is correct.

134. Which of the following is not an aim of doing PESTLE analysis?
(a) To identify the current external factors affecting an organisation
(b) To exploit the opportunities or defend againsithe threats better than the competitors would do
(c) To identify the external factors that may change n the future
(d) To identity strengths and weakness of a firm.
Answer:
(d) To identity strengths and weakness of a firm:
PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental, it gives a bird’s eye view of the whole environment from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan. Thus, option (d) is correct as this do not include analyzing strength and weakness.

135. Which of the following is not a strength in SWOT analysis for a business?
(a) Strong management team
(b) Strong regulations
(c) Adequate financial resources
(d) Recognised as market leader
Answer:
(d) Recognised as market leader:
SWOT analysis refers to the analysis of strengths, weakness, opportunities and threats. The strength can be better product, maintaining strong image, wide range of products etc. Thus, recognized as the market leaders is not considered as strength.

136. An entrepreneur creates new business ín the face of risk and uncertainty for the purpose of achieving profit and growth by identifying.
(a) Workers
(b) Suppliers
(c) Opportunities
(d) Jobs
Answer:
(c) Opportunities:
An entrepreneur creates new business in the face of risk and uncertainty for the purpose of achieving profits and growth by identifying the opportunities. Opportunities are a combination of different circumstances at a given time that offer a positive outcome, If taken advantage of.

137. SWOT stands for:
(a) Show Without Timing
(b) Stop Working Over Time
(c) Strength, Weakness, Opportunities and Threats
(d) Stop Working on Time
Answer:
1. (c) SWOT stands for
S = Strength
W = Weakness
O = Opportunity
T = Threats,

138. Strategic plan of a company should be:
(a) Based on projects and highest growth possibilities
(b) Based on practical and achievable projections
(c) Based on dreams
(d) Based on competitors plan only
Answer:
(b) Based on practical and achievable projections:
Strategic plan should be based on practical and achievable projections.

139. Active Scanning is done:
(a) Consciously or Unconsciously
(b) Unconsciously
(c) Consciously
(d) As per the provisions of the Companies Act, 2013
Answer:
(c) Consciously:
Active scanning involves conscious selection of continuous resources from time to time supplementing them with existing resources needed.

140. ‘Motivation’ has its origin in the:
(a) Greek word ‘motive
(b) French work ‘motia’
(c) Latin word ‘mover
(d) English word ‘motive’
Answer:
(c) Latin word ‘movere’:
Motivation is derived from the Latin word ‘Movere’.

141. Albert S. Humphery was the Originator of:
(a) SWOT Analysis
(b) Industry Analysis
(c) GE Model
(d) BCG Matrix
Answer:
(a) SWOT Analysis:
Albert S. Humphrey was the originator of SWOT analysis.

142. Components of creativity do not include:
(a) Expertise
(b) Creative Thinking
(c) Motivation
(d) Self Efficacy
Answer:
(d) Self Efficacy:
Creative Thinking, Motivation, Expertise come under components of creativity but self-efficacy does not come under components of creativity.

143. Which one of the following is not a method of environmental scanning?
(a) SWOT Analysis
(b) Industry Analysis
(c) GE Model
(d) PESTLE Analysis
Answer:
(c) GE Model:
SWOT Analysis, Industry Analysis and PESTLE Analysis all are methods of Environmental Scanning. GE model is not the method of Environment Scanning.

144. According to the Porter’s five forces model, which one of the following is not a competitive force for a firm?
(a) Substitute products
(b) Buyer’s power
(c) Supplier’s power
(d) Unique selling proposition
Answer:
(d) Unique selling proposition:
Unique selling proposition does not come under Porter’s five forces model and it does not constitute competitive force of firm.

145. Primary task for running a successful venture is:
(a) Identification of opportunity
(b) Developing a plan
(c) Conceiving an idea
(d) Arrangement of resources
Answer:
(c) Conceiving an idea:
Business or any venture can not start without any idea. If any business or venture starts without conceiving any idea then it can lead into failure but business or work start after conceiving idea lead into success.

146. SWOT Analysis also called:
(a) lE Matrix
(b) lE Analysis
(c) OT Matrix
(d) All of these
Answer:
(a) lE Matrix:
SWOT analysis is also called lE Matrix: Internal and External Matrix.

147. Media is a factor
(a) Internal factor
(b) External Factor
(c) Both (a) and (b)
(d) None of these
Answer:
(b) External Factor:
Media is a External factor or force in business that is beyond the control of an organisation.

148. Social Impact Bonds were launched in:
(a) UK
(b) USA
(c) India
(d) Australia.
Answer:
(a) UK:
The social impact bond, deserves special notice for its ability to help governments fund infrastructure and services, especially as public budgets are cut and municipal bond markets are stressed. Launched in the UK ¡ri 2010, this typo of bond is sold to private investors who are paid a returns only it the public project succeeds.

149. …………………….. is the form of pooling technique.
(a) Microfinance
(b) Small funding
(c) None of these
(d) Budgeting
Answer:
(a) Microfinance:
The pooling model has spread globally, with innovators such as IFMR Trust in Chennai, engaged in the securitization and structured finance of microfinance loan portfolios in which they retain an investment share.

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CS Foundation Business Management Ethics and Entrepreneurship Notes

Audit Plan – CS Foundation Fundamentals of Accounting and Auditing Notes

November 22, 2022

Audit Plan – CS Foundation Fundamentals of Accounting and Auditing Notes

→ Audit planning procedures are the first and perhaps the most important step in carrying out a successful audit. While developing an audit plan auditor should see that audit procedures should compliy with the Standard on Auditing (SAs) Matters to be considered before planning an audit are

The auditor should check the nature of the engagement and the client’s business and industry trends at the beginning of planning.
Should keep a check on various responsibilities levied on him under various legislations
Auditor should determine the form and timing of the report
The auditor should check about recent developments like merger etc. in the company that may cause the audit to differ from prior years.
If accounting policies followed by company do affect the audit plan then confirm if there has been any change in the policy
Prepare a complete list of items needed from the client
Identify the areas which have greater audit risk so that the planning can be done accordingly
Prepare drafts of footnotes for new accounting standards so that there is smooth working while doing the audit and it becomes easy to explain the client regarding the new standards.
As each and every accounting entry can not be checked thus make some materiality level for example examining all entries where expense is more than Rs 10000.
To assess the internal control so that auditor can decide how much reliable is the information that is provided to him
Review the work of internal auditors
Auditor has to assess how much staff is required and how much time is required from each staff.

→ Audit Program: An audit program is a set of policies and procedures that dictate how an evaluation of a business is done. This generally involves specific instructions as to what, and how much, evidence must be collected and evaluated, as well as who will collect and analyze the data and when this should be done. Audit program depends on the size of the organization and there is no standard audit program. Audit plan is followed by audit program which has the set of instructions to be followed when doing audit. Audit program is documented in the audit working papers.

→ Advantages of Audit Program

Every essential part of the work of audit can be duly carried on and there is less chance of its being overlooked or omitted.
It gives a set of instructions to the audit team
It gives specific responsibility to each of the staff doing audit
It is a mean to control and record the proper execution of the audit work and also to review the audit work.
Complete coverage of audit work without any duplication.
Supervision and control of the work can be undertaken in a planned manner.
It serves as a guide for future references.
On completion of audit it works as audit record
It serves as a ready checklist of procedures to be applied

→ Disadvantages of Audit Program

The audit work conducted becomes too mechanical.
Auditors may have covered the whole field but it can not be said with certainty that all the necessary work have been done
It kills the initiative of capable persons assistant can not suggest any improvement in the plan.
It needs change every year and if changes not made it may become too rigid in nature
Audit program is suitable only for large audits
New areas may be overlooked.

→ Remedy of disadvantage

To introduce flexibility in the audit program
To encourage audit staff to tell if any defects in the audit program
To encourage audit staff to explore unusual transactions when required and not to adhere literally to the audit program

→ Audit evidence: Audit evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with established criteria. The amount and type of auditing evidence considered varies considerably based on the type of firm being audited as well as the required scope of the audit.

→ Essentials of good evidence: some of the essential requirements which make evidence good enough are

Sufficient – Sufficiency is a measure of the quantity of audit evidence required, thus evidence that are obtained should be sufficient
Relevant – must pertain to the audit objective being tested.
Independent – evidence from outside the client is a stronger form of evidence
Appropriate- The quality of all audit evidence is affected by the quality and reliability of the information it is based on.
Effectiveness of client internal controls – good internal controls can mean better information
Auditor direct knowledge – auditor determinations are stronger that client comnts
Degree of objectivity – objective evidence is stronger than subjective evidence

→ Rules that determine the appropriateness of the evidence

Documentary evidence are better than testimonial evidence
Original documents are better than photocopy
Information from audited organizations is more reliable
Evidences from creditworthy third party is better than evidence generated within the organization.
Evidences obtained by auditor are better than evidence obtained indirectly

→ Techniques of obtaining evidence

enquiry – seeking information from knowledgeable people within and outside the entity, ranging from formal written enquiries to informal discussions
observation – observing the information
inspection – examining records or documents in paper or electronic form observation—looking at a process or procedure being performed by others
external confirmation – obtaining a written confirmation directly from a third party, such as a bank or debtor
recalculation – checking the mathematical accuracy of documents or records
Independent execution – independently re-performing procedures or controls that were originally performed as part of the entity’s internal control
analytical procedures – evaluating financial information made by a study of plausible relationships among both financial and non-financial data.

→ Working Papers: Audit working papers contain information from accounting and statistical records, personal observations, the results of interviews and inquiries, and other available sources. These papers are support to the audit work and provide assurance that audit was performed with the relevant auditing standards. Audit working papers are generally prepared at the time audit work is performed. Audit papers are link between clients records and audited accounts. Information in working papers is required to be kept confidential and if disclosed then it is a professional misconduct.

→ Importance of working papers

Working papers are important because they are necessary for audit quality control purposes
provide assurance that the work delegated by the audit partner has been properly completed as per audit programme.
in future if client files any suit against the auditor for negligence then such papers are useful for auditor to defend himself as working papers are the property of auditor and remains with him.
provide evidence that an effective audit has been carried out ,
increase the economy, efficiency, and effectiveness of the audit
contain sufficiently detailed and up-to-date facts which justify the reasonableness of the auditor’s conclusions
retain a record of matters of continuing significance to future audits

→ Types of working papers
There are two types of Working papers
A. Permanent Audit file
B. Current Audit file

→ Permanent files composed of documents, scheduled and other data that will be of continuing significance to several years audit. It is kept to record all data of a permanent nature which provides the necessary background information to the auditor from year to year.

→ Whereas current Audit files composed of the evidence gathered and conclusions reached in the audit for that year. It is kept to record all audit work programs and working papers for the year under review.

→ Documents contained in each file
A. Permanent audit file- Below mentioned are permanent audit file

the memorandum and Articles of Association.
The nature of the business.
Loan agreements
Documents related to internal control
The management set up.
The organization’s major Accounting policies
Leases
Significant audit observation of earlier years
Copies of important documents including title deed, agreements,, debentures deeds and letters of engagement.

B. Current Audit file – Below mentioned are current audit file

An index to the file which guides its orderly compilation.
A copy of the duly signed financial statement being Audited and the trial balance.
Extract of minutes of meetings and correspondences relevant to the year under review.
adjusting journal entries
completion check list.
Letter of representation of attorneys
Audit programs
Internal control questionnaires
A scheduled of each major items in the balance sheet.
A schedule of each major items in the profit and loss account.
List of queries and their dispositions.

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Audit Plan MCQ Questions – CS Foundation Fundamentals of Accounting and Auditing

Question 1.
Auditing should be
a. Independent
b. Compulsory
c. On the request of government
d. None of the above
Answer:
a. Independent

Question 2.
Function of audit is to
a. Detect errors
b. Detect fraud
c. t Safeguard the interest of now management persons
d. All of the above
Answer:
d. All of the above

Question 3.
Which of the following is least likely to be required in an audit?
a. Test appropriateness of journal entries and adjustment
b. Review accounting estimates for biases
c. Evaluate the business rationale for significant, unusual transactions
d. Make a legal determination of whether fraud has occurred
Answer:
d. Make a legal determination of whether fraud has occurred

Question 4.
Which of the following is most likely to be an overall response to fraud risks identified in an audit?
a. Supervise members of the audit team less closely and rely more upon judgment.
b. Use less predictable audit procedures.
c. Only use certified public accountants on the engagement.
d. Place increased emphasis on the audit of objective transactions rather than subjective transactions
Answer:
b. Use less predictable audit procedures.

Question 5.
Responsibility fixing is a feature of
a. Audit plan
b. Audit
c. Audit programme
d. All of the above
Answer:
c. Audit programme

Question 6.
Auditing gives ___________ regarding the financial statements
a. True & fair view
b. Correct view
c. Fair view
d. Completely true
Answer:
a. True & fair view

Question 7.
Which is NOT the function of an auditor?
a. To give a true & fair view
b. To take care of ail the statutory acts applicable
c. To do arithmetic checking
d. To prepare accounts
Answer:
d. To prepare accounts

Question 8.
It is not uncommon in auditing
a. Giving the satisfaction to the owner regarding the profits made.
b. Protecting the rights of shareholders
c. Helping to give true & fair profits of the organization
d. All of the above
Answer:
d. All of the above

Question 9.
The basic requirement which is absent in auditing is
a. Exact accounts
b. Certainty in financial statements
c. Conclusive evidence
d. All of the above
Answer:
d. All of the above

Question 10.
To check a lapse that is present in the reports _____________ is done.
a. Auditing
b. Investigation
c. Checking
d. Correction
Answer:
b. Investigation

Question 11.
It is always voluntary
a. Auditing
b. Investigating
c. Both a & b
d. None of the above
Answer:
b. Investigating

Question 12.
Auditing is done to protect the interest of
a. Shareholders
b. Owners of the company
c. Directors of the company
d. Both a & b
Answer:
d. Both a & b

Question 13.
Auditing has all features except
a. Done every financial year
b. Based on conclusive evidence
c. Mandatory for companies
d. None of the above
Answer:
b. Based on conclusive evidence

Question 14.
Verification of assets in case of auditing is the work of
a. Chartered accountant
b. Management
c. Accounts department
d. None of the above
Answer:
a. Chartered accountant

Question 15.
Investigation is
a. For specific purpose
b. Systematic
c. Voluntary
d. All of the above
Answer:
d. All of the above

Question 16.
GAAP tells
a. Accounting policies
b. Accounting procedures
c. Accounting statements
d. Both a & b
Answer:
d. Both a & b

Question 17.
The area of work is determined by registration pattern of the company. It is
a. Co-operative society audit
b. Insurance audit
c. Internal audit
d. Both a & b
Answer:
d. Both a & b

Question 18.
The area of work is determined by management.
a. Insurance audit
b. Sole proprietorship audit
c. Internal audit
d. Bank audit
Answer:
c. Internal audit

Question 19.
Internal audit is required for below mentioned areas of an enterprise.
a. Financial statements
b. Business practices
c. Both a & b
d. None of the above
Answer:
c. Both a & b

Question 20.
Internal audit has an objective
a. to the see the effectiveness of the internal control
b. to check on the organizational business process
c. to detect any fraud in the financial system
d. all of the above
Answer:
d. all of the above

Question 21.
Internal audit is
a. Negative in nature
b. positive in nature
c. a liability for an organization
d. a compulsion for all enterprise
Answer:
b. positive in nature

Question 22.
Internal audit is a helpful tool as
a. it pinpoint the place where the lacuna is there
b. it helps the external auditor
c. it determines the liability of an employee
d. all of the above
Answer:
d. all of the above

Question 23.
_______________ audit helps in finding out the weak points of an organization by other auditor
a. Financial audit
b. Internal audit
c. Cost audit
d. Tax audit
Answer:
b. Internal audit

Question 24.
_______________ audit assists the management in finding out new ideas for marketing and other business areas.
a. Secretarial audit
b. Insurance audit
c. Internal audit
d. Tax audit
Answer:
c. Internal audit

Question 25.
The first general standard rule observed is that regardless of how capable an individual may be in other fields, the individual can not meet the requirements of the auditing standards without the proper
a. Business and finance course.
b. Quality control and peer review.
c. Education & experience in auditing.
d. Supervision and review skills.
Answer:
c. Education & experience in auditing.

Question 26.
_________________ audit assists in the maximunrv utilization of assets
a. Internal audit
b. Secretarial audit
c. Cost audit
d. None of the above
Answer:
a. Internal audit

Question 27.
Audit papers are
a. Documents showing audit was adequately supervised
b. Documents given by company to auditors
c. Documents.that show vouchers
d. Documents showing trial balance and belong to company
Answer:
a. Documents showing audit was adequately supervised

Question 28.
Internal audit starts
a. When the year ends
b. When accounting ends
c. When year begins
d. All of the above
Answer:
b. When accounting ends

Question 29.
Financial audit is good tool as it assists in
a. Investment from inventory
b. Taking loans from banks
c. Both a & b
d. Good management control
Answer:
c. Both a & b

Question 30.
Auditors can only be appointed by
a. Shareholders
b. Directors
c. Government
d. All of the above
Answer:
d. All of the above

Question 31.
Which Act deals regarding the appointment of auditor?
a. Companies Act 2013
b. Chartered Accountants Act 1952
c. ICAI
d. All of the above
Answer:
a. Companies Act 2013

Question 32.
Which amongst the below mentioned is not a compulsory audit.
a. Cost audit
b. Secretarial audit
c. Both a & b
d. Tax audit
Answer:
b. Secretarial audit

Question 33.
The auditor must have a thorough understanding of the entity, the client’s business strategies, processes, and measurement indicators for critical success. This analysis helps the auditor
a. Decide if they want to accept the engagement.
b. identify risks associated with the client’s strategy that could affect the financial statements.
c. assess the level of materiality that is appropriate for the audit.
d. identify the potential for fraud in the financial reporting process.
Answer:
b. identify risks associated with the client’s strategy that could affect the financial statements.

Question 34.
Cost audit is compulsory for
a. Sugar Industry
b. Bulk drugs
c. Soap
d. Both a & b
Answer:
d. Both a & b

Question 35.
Tax audit is compulsory if turnover or gross receipts of a business are
a. Rs. 60,000
b. Exceeds Rs. 60,000
c. Rs. 50,000
d. Net compulsory
Answer:
b. Exceeds Rs. 60,000

Question 36.
It is a compliance audit. Select from the below mentioned.
a. Cost audit
b. Tax audit
c. Secretarial audit
d. None of the above
Answer:
c. Secretarial audit

Question 37.
For an auditor doing the bank audit following are of significant importance
a. Bad assets of the bank
b. NPA
c. Fair view of financial books
d. All of the above
Answer:
d. All of the above

Question 38.
Co-operative society
a. has a separate legal identity
b. has no separate legal identity
c. owners have the ultimate authority
d. none of the above
Answer:
a. has a separate legal identity

Question 39.
Management of the co-operative society is in the hands of
a. elected members
b. all members
c. government
d. all of the above
Answer:
a. elected members

Question 40.
Auditor auditing the financial statement has to report ____________ for co-operative society
a. management skills of the elected members
b. technical skills of the management
c. accounting skills of the management
d. all of the above
Answer:
d. all of the above

Question 41.
The factor that makes the audit of co-operative society a compulsion is
a. Management is in the lands of governments
b. Management is in the hands of elected members
C. Management is in the hands of selected members
d. Management is in the hands of all members
Answer:
b. Management is in the hands of elected members

Question 42.
Who all are benefited from the audit of the trust?
a. Beneficiary
b. Trusted
c. Both a & b
d. Employees
Answer:
c. Both a & b

Question 43.
Auditor doing the audit of insurance company should be aware of
a. Companies Act
b. Insurance Act 1999
c. Insurance Regulatory and Development Act 1999
d. Insurance Regulatory Act 1999
Answer:
c. Insurance Regulatory and Development Act 1999

Question 44.
Insurance audit checks whether insurance company
a. has made appropriate number of insurance policies for a financial year
b. No of insurance policies issued during the financial year are not less than prescribed
c. Insurance premium has been received
d. All of the above
Answer:
c. Insurance premium has been received

Question 45.
Which of the following is least likely to be required in an audit?
a. Test appropriateness of journal entries and adjustment
b. Review accounting estimates for biases
c. Evaluate the business rationale for significant, unusual transactions
d. Make a legal determination of whether fraud has occurred
Answer:
d. Make a legal determination of whether fraud has occurred

Question 46.
Partnership audit assists in
a. Getting loans
b. Proper distribution of profits amongst partners
c. Valuation of goodwill
d. All of the above
Answer:
d. All of the above

Question 47.
Which is not true for partnership audit?
a. It is done on financial year basis
b. It is compulsory
c. It is carried out as per the terms of partnership deed.
d. Useful for raking loans.
Answer:
b. It is compulsory

Question 48.
Which is of relevance in case of partnership audit?
a. Partnership deed
b. Partnership
c. Both a & b
d. None of the above
Answer:
c. Both a & b

Question 49.
For proprietor, audit gives him
a. Moral support
b. That financial statement are property prepared
c. He has done all the work
d. None of the above
Answer:
b. That financial statement are property prepared

Question 50.
Which of the following is least likely to be included in an auditor’s inquiry of management while obtaining information to identify the risks of material misstatement due to fraud?
a. Are financial reporting operations controlled by and limited to one location?
b. Does it have knowledge of fraud or suspect fraud?
c. Does it have programs to mitigate fraud risks?
d. Has it reported to the audit committee the nature of the company’s internal control?
Answer:
a. Are financial reporting operations controlled by and limited to one location?

Question 51.
Union government audit is the duty of
a. ICAI
b. Chartered accountants association
c. Cost accountants associations
d. Comptroller and auditor general of India.
Answer:
d. Comptroller and auditor general of India.

Question 52.
Secretarial audit is most useful for
a. Independent directors
b. Shareholders
c. Management
d. All of the above
Answer:
d. All of the above

Question 53.
C & AG are doing audits for
a. State government
b. Union government
c. Government companies
d. All of the above
Answer:
d. All of the above

Question 54.
Actual performance versus targeted performance of management is the part of
a. Internal audit
b. Management audit
c. Functional audit
d. All of the above
Answer:
b. Management audit

Question 55.
Audit which helps in finding fractious expenditure is
a. Functional audit
b. Propriety audit
c. Efficiency audit
d. Management audit
Answer:
b. Propriety audit

Question 56.
For finding out the efficiency of a system _____________ type of audit is not uncommonly done.
a. Efficiency audit
b. Functional audit
c. Management audit
d. None of the above
Answer:
a. Efficiency audit

Question 57.
The work of an auditor is
a. To prepare the statement
b. To check the management policies
c. To plan the audit
d. All of the above
Answer:
c. To plan the audit

Question 58.
Auditor doing any audit should check all of the below mentioned except
a. Time schedule of the audit
b. To streamline the area only on that area and leave the other areas
c. To keep a track on all the rules and regulations applicable
d. To keep a track if there has any changes in the accounting policies and standards.
Answer:
b. To streamline the area only on that area and leave the other areas

Question 59.
_________________ is an effective tool for audit plan
a. Internal control of company
b. Amount of work load
c. Both a & b
d. None of the above
Answer:
a. Internal control of company

Question 60.
Only test check is required if
a. Internal control is good in a company
b. Internal control is not good in a company
c. Statutory auditors are able and efficient people
d. None of the above
Answer:
a. Internal control is good in a company

Question 61.
Audit programme is
a. Detailed audit plan
b. Instructions for the audit
c. People involved in audit
d. Mental ability of people doing audit
Answer:
b. Instructions for the audit

Question 62.
Pick the odd one
a. Audit programme helps in distribution of work amongst the people doing audit
b. Audit programme is mechanical
c. Audit programme acts as a evidence against change of negligence
d. Audit programme helps in covering all the areas where audit is required
Answer:
b. Audit programme is mechanical

Question 63.
It is uncommon in audit programme
a. That the staff gives any improvement plan
b. It ignores internal control of the organization
c. It is rigid
d. All of the above
Answer:
d. All of the above

Question 64.
Audit programme is a failure if
a. Instructions are not followed property
b. Audit plan is not made correctly
c. The instructions are ambiguous
d. All of the above
Answer:
d. All of the above

Question 65.
Strategy development is the part of
a. Audit plan
b. Audit programme
c. Auditing
d. Making the financial statements
Answer:
a. Audit plan

Question 66.
Pick the odd one
a. Checking the vouchers
b. Preparation of vouchers
c. Evaluation of internal control
d. None of the above
Answer:
b. Preparation of vouchers

Question 67.
For a good evidence of audit it should have following characteristic
a. Source of evidence reliable
b. Evidence is relevant
c. Evidence is immaterial in nature
d. Both a & b
Answer:
d. Both a & b

Question 68.
Pick the most appropriate. Auditing evidence is more reliable when
a. Received from third party
b. Received from reliable third party
c. Received from audited organization resources
d. Both a & b
Answer:
b. Received from reliable third party

Question 69.
Which is NOT a technique of obtaining evidence?
a. Correction
b. Computation
c. Confirmation
d. Both a & b
Answer:
a. Correction

Question 70.
Accounting is BEST described as:
a. The use of financial data
b. The collection of financial data
c. The collection and use of financial data only
d. The collection and use of financial and non- financial data
Answer:
d. The collection and use of financial and non- financial data

Question 71.
Audit papers are
a. Documents that belong to auditors
b. Evidence showing the procedure used by the auditor for doing auditing
c. Both a & b
d. Papers prepared by company for the auditors
Answer:
c. Both a & b

Question 72.
Checking the internal control of an organization is
a. Compulsory
b. Aids in the auditing
c. Is the wish of auditor
d. Both a & c
Answer:
d. Both a & c

Question 73.
Loan agreement are the integral parts of
a. Permanent audit file
b. Current audit file
c. Temporary audit file
d. None of the above
Answer:
a. Permanent audit file

Question 74.
Working trial balance is the part of
a. Permanent audit
b. Current audit file
c. Temporary audit file
d. None of the above
Answer:
b. Current audit file

Question 75.
Which is NOT a current audit file?
a. Audit report
b. Leases
c. Letters of attorneys
d. Record of audit exceptions
Answer:
b. Leases

Question 76.
The first standard of field work recognizes that early appointment of the independent auditor has many advantages to the auditor and the client. Which of the following advantages is least likely to occur as a result of early appointment of the auditor?
a. The auditor will be able to complete the audit work in less time.
b. The auditor will be able to perform the examination more efficiently.
c. The auditor will be able to better plan for the observation of the physical inventories.
d. The auditor will be able to plan the audit work so that it may be done expeditiously.
Answer:
a. The auditor will be able to complete the audit work in less time.

Question 77.
The primary objective of the ordinary examination of financial statement by an auditor is the expression of an opinion on
a. The competence of management in accounting matters which is implied by whether the opinion is qualified or not.
b. The conformity of the statements with the book of account.
c. The conformity of the financial statements with generally accepted auditing standards applied on a basis consistent with that of the prior year.
d. The fairness with which the financial statements present cash flows and results of operations.
Answer:
d. The fairness with which the financial statements present cash flows and results of operations.

Question 78.
Auditing firms should establish quality control policies and procedures for personnel management in order to provide reasonable assurance that
a. Employees promoted possess the appropriate characteristics to perform competently.
b. Personnel will have the knowledge required to fulfill responsibilities assigned.
c. The extent of supervision and review in a given instance will be appropriate.
d. All of the above are reasons.
Answer:
b. Personnel will have the knowledge required to fulfill responsibilities assigned.

Question 79.
In pursuing its quality control objectives with respect to independence, an auditing firm may use policies and procedures such as
a. Emphasizing independence of mental attitude in firm training programs and in supervision and review of work.
b. Prohibiting employees from owning stock of public companies.
c. Suggesting that employees conduct their banking transactions with banks that do not maintain accounts with client firms.
d. Assigning employees who may lack independence to research positions that do not require participation in field audit work:
Answer:
a. Emphasizing independence of mental attitude in firm training programs and in supervision and review of work.

Question 80.
Which of the following is an element of quality control?
a. Supervision
b. Inspection
c. Personnel management
d. Consultation
Answer:
c. Personnel management

Question 81.
Adequate planning and design of an audit is necessary for an auditor to restrict which type of audit risk?
a. Control Risk
b. Detection Risk
c. Sufficiency Risk
d. Inherent Risk
Answer:
a. Control Risk

Question 82.
Which of the following is most likely to be presumed to present a fraud risk on an audit?
a. Capitalization of repairs and maintenance expense into the property, plant and equipment asset account
b. Improper revenue recognition
c. Improper interest expense accrual
d. Introduction of significant new products
Answer:
b. Improper revenue recognition

Question 83.
An audit plan is a:
a. Detailed plan of analytical procedures and all substantive tests to be performed in the course of the audit.
b. document that provides an overview of the company and a general plan for the audit work to be accomplished, timing of the work, and other matters of concern to the audit.
c. Generic document that auditing firms have developed to lead the process C) of the audit through a systematic and logical process.
d. Budget of the time that should be necessary to complete each phase of the audit procedures.
Answer:
b. document that provides an overview of the company and a general plan for the audit work to be accomplished, timing of the work, and other matters of concern to the audit.

Question 84.
Which statement best describes the interaction of the systems and substantive approaches in the audit plan?
a. The systems approach focuses on testing controls to make sure they are effective, while the substantive approach is the detailed testing of specific accounts for accuracy.
b. The systems approach focuses on detailed testing of specific accounts for accuracy, while the substantive approach is the testing controls to make sure they are effective.
c. The systems approach focuses on the use of computer systems to aid in the audit while the substantive approach focuses on more manual tests.
d. A thoroughly designed systems approach to auditing can eliminate
Answer:
a. The systems approach focuses on testing controls to make sure they are effective, while the substantive approach is the detailed testing of specific accounts for accuracy.

Question 85.
Tracing from source documents to journals, most directly addresses which financial statement assertion?
a. Completeness
b. Existence
c. Valuation
d. Rights
Answer:
b. Existence

Question 86.
Internal sources of audit evidence for an entity includes the following EXCEPT:
a. associated companies of the entity
b. Accounting systems, records and documents
c. Non-financial data and records
d. Management representation and discussion
Answer:
b. Accounting systems, records and documents

Question 87.
Which of the following is NOT true about the procedure for the final audit?
a. Comparisons
b. Reviews
c. investigation
d. Representations
Answer:
c. investigation

Question 88.
The principal objective of an audit is the examination of financial statements of an enterprise with a view for the auditor to form and express an independent opinion on the truth and fairness for the benefit of which one of the following?
a. The members
b. Corporate Governance
c. The Corporate Affairs Commission
d. Government authorities
Answer:
a. The members

Question 89.
Which of the following is NOT a matter to be considered in determining whether confidential information may be disclosed?
a. When disclosure is authorized
b. When disclosure is required by law
c. When there is a professional duty or right to disclose
d. Public duty demands it
Answer:
b. When disclosure is required by law

Question 90.
The responsibility for the preparation of the financial statements and the accompanying footnotes belongs to
a. both management and the auditor equally.
b. management for the statements and the auditor for the notes.
c. the auditor
d. management.
Answer:
d. management.

Question 91.
The factor which distinguishes an error from fraud and other irregularity is
a. whether it is a dollar amount or a process.
b. Intent.
c. materiality.
d. whether it is a caused by the auditor or the client.
Answer:
b. Intent.

Question 92.
XYZ Limited decided that it wanted to improve earnings. To do this, they understated their expenses by omitting unpaid expenses from the accrued liabilities account at year end. Which management assertion has been violated?
a. rights and obligations
b. completeness
c. existence
d. disclosure
Answer:
b. completeness

Question 93.
After testing a client’s internal control activities, an auditor discovers a number of significant deficiencies in the operation of a client’s internal controls. Under these circumstances the auditor most likely would
a. Issue a disclaimer of opinion about the internal controls as part of the auditor’s report.
b. Increase the assessment of control risk and increase the extent of substantive tests.
c. Issue a qualified opinion of this finding as part of the auditor’s report.
d. Withdraw from the audit because the internal controls are ineffective.
Answer:
b. Increase the assessment of control risk and increase the extent of substantive tests.

Question 94.
Which of the following procedures would be most effective in reducing attestation risk?
a. Discussion with responsible individuals.
b. Examination of evidence.
c. Inquiries of senior management.
d. Analytical procedures.
Answer:
b. Examination of evidence.

Question 95.
Which of the following is an inherent imitation in internal control?
a. Incompatible duties.
b. Lack of segregation of duties.
c. faulty human judgment.
d. Lack of an audit committee.
Answer:
c. faulty human judgment.

Question 96.
Secretarial Audit is
a. compulsory in companies having paid-up share capital of less than Rs. 50 lakhs
b. compulsory where the statutory audit reveals inadequacy of internal check in secretarial department
c. optional and would help the Board of Directors and the Registrar of Companies in regard to compliance aspects, mainly under the Companies Act, 1956
d. compulsory in such companies as may be notified by the Central Government
Answer:
c. optional and would help the Board of Directors and the Registrar of Companies in regard to compliance aspects, mainly under the Companies Act, 1956

Question 97.
Various types of quality audits are:
a. process
b. management (system)
c. registration (certification)
d. All of above
Answer:
d. All of above

Question 98.
When the auditor is an employee of the organization being audited, the audit is classified as a quality audit.
a. internal
b. external
c. compliance
d. Both A & B
Answer:
a. internal

Question 99.
The most comprehensive of audit is the system audit, which examines suitability and effectiveness of the system as a whole.
a. Quantity
b. quality
c. Preliminary
d. Sequential
Answer:
b. quality

Question 100.
Each of the three parties involved in an audit ____________. plays a role that contributes to its
success.
a. the client, the auditor, and the auditor
b. the client, the auditor, and the audite
c. the client, the moderator, and the audite
d. the client, the auditor, and the audite
Answer:
d. the client, the auditor, and the audite

Question 101.
Audit is usually conducted in three steps:
1. a pre-examination or opening meeting with the audite marks the beginning of the process.
2. involves a suitability audit of the documented procedures against the selected reference standard.
3. the auditor examines in depth the implementation of the quality system.
a. True
b. False
c. partially false
d. none of the above
Answer:
a. True

Question 102.
The time required and costs involved in an external audit are much higher as compared to internal audits.
a. True
b. False
c. Not known
d. Irrelevant
Answer:
a. True

Question 103.
Audit is a fact-finding process that compares actual results with
a. Specified standards and plans
b. expected results
c. premature results
d. preliminary results
Answer:
a. Specified standards and plans

Question 104.
Which of the following statement is TRUE?
a. An external auditor is required for all types of entity
b. External auditors are appointed by an entity’s management
c. Staff auditors make a report for the baseline employees
d. Staff auditors work is to identify potential risk areas for a company
Answer:
d. Staff auditors work is to identify potential risk areas for a company

Question 105.
The risk for the company that an auditor may issue an unqualified report due to auditor’s failure to detect some misstatement either due to fraud or error is
a. Financial accounting risk
b. Analytical risk
c. Taxation risk
d. Audit risk
Answer:
d. Audit risk

Question 106.
From the initial client interview to the preparation of audit report an auditor must keep a record of all the work you do in
a. Audit file
b. Audit report
c. Audit papers
d. None of the above
Answer:
a. Audit file

Question 107.
The small audit firms provide the following services EXCEPT:
a. Liquidation and receivership work, fraud auditing
b. financial management and system consultancy
c. Financial system planning and preparation
d. Tax management and statutory form filling
Answer:
c. Financial system planning and preparation

Question 108.
Which of the following is one of the major professional accountancy bodies in the India?
a. Institute of Chartered Accountants of India
b. Chartered Association of Accountants
c. Indian Institute of Chartered Accountants
d. Institute of Company Accountants
Answer:
a. Institute of Chartered Accountants of India

Question 109.
Which of the following activities is not an accounting function?
a. Auditing
b. Costing
c. Annual general meeting
d. Taxation
Answer:
c. Annual general meeting

Question 110.
Auditing should be done by
a. A professional accountant.
b. a certified management accountant
c. a competent and independent person.
d. a chartered accountant.
Answer:
c. a competent and independent person.

Question 111.
Which of the following characteristics of accounting information primarily allows user of financial statements to generate predictions about an organization?
a. Reliability
b. Timeliness
c. Neutrality.
d. relevance.
Answer:
d. relevance.

Question 112.
An accountant records information. But an auditor requires, the abilities such as
a. requirement to possess education beyond the bachelor’s degree.
b. accumulation and interpretation of evidence.
c. ability to interpret generally accepted accounting principles.
d. organize and summarize economic events
Answer:
b. accumulation and interpretation of evidence.

Question 113.
A reason for private companies to be audited is
a. having a professional accountant perform their bookkeeping
b. facilitating access to capital.
c. complying with the laws requiring them to be audited.
d. ensuring that their financial statement do not contain errors.
Answer:
b. facilitating access to capital.

Question 114.
Amit is recording sales transactions in the accounting system so that they can be summarized in a logical manner for the purpose of providing financial information for decision-making. Amit is doing
a. management consulting.
b. review.
c. accounting.
d. auditing
Answer:
c. accounting.

Question 115.
What type of organizations use auditing services?
a. Non-for-profit organizations
b. Businesses
c. Governments
d. All of the above
Answer:
d. All of the above

Question 116.
To operate effectively, an internal auditor must be independent of
a. the line functions of the organizations.
b. the employer-employee relationship, which exists for other employees in the organization.
c. the entity
d. all of the above
Answer:
a. the line functions of the organizations.

Question 117.
The internal auditor typically reports directly to
a. the management of the company
b. the audit committee and the management of the company
c. the audit committee and the board of director
d. the board of director and the external auditor
Answer:
c. the audit committee and the board of director

Question 118.
Which of the following functions listed below is NOT the role of an accountant?
a. Directing and co-coordinating the work of book-keeping staff.
b. Taking vital decisions within the organization.
c. Providing periodic financial statements for decision making.
d. Safeguarding and controlling the assets of an organization
Answer:
b. Taking vital decisions within the organization.

Question 119.
The overall responsibility for the accounting information contained in the financial statements of a business organization rests with the
a. Financial Controller
b. Auditor
c. Managing Director
d. Board of Directors
Answer:
d. Board of Directors

Question 120.
All of the following refer to an internal auditor’s competence except
a. The party in the entity to which the internal Auditor reports
b. The quality of internal audit documents and reports
c. Professional certification
d. Supervision and review of internal audit activities
Answer:
a. The party in the entity to which the internal Auditor reports

Question 121.
Which of the following is not a typical analytical procedure?
a. Study of relationships of the financial information with relevant nonfinancial information
b. Comparison of the financial information with similar information regarding the industry in which the entity operates
c. Comparison of recorded amounts of major disbursements with appropriate invoices
d. Comparison of the financial information with budgeted amounts
Answer:
c. Comparison of recorded amounts of major disbursements with appropriate invoices

Question 122.
Select the main object of an audit
a. to show the exact position of the company
b. Detection and Prevention of fraud and error
c. Both (a) and (b)
d. Depends on the type of audit
Answer:
d. Depends on the type of audit

Question 123.
For better assessing the audit risk, auditor inquires different groups in the organizations EXCEPT:
a. Board of governance and top level management
b. Legal counsel
c. Middle level management
d. Stakeholders
Answer:
d. Stakeholders

Question 124.
internal sources of audit evidence for an entity includes the following EXCEPT:
a. associated companies of the entity
b. Accounting systems, records and documents
c. Non-financial data and records
d. Management representation and discussion
Answer:
a. associated companies of the entity

Question 125.
The risk that an auditor’s procedures will lead to the conclusion that a material misstatement does not exist in an account balance when, in fact, such misstatement actually does exist is
a. Audit risk
b. Sampling risk.
c. Control risk
d. Detection risk.
Answer:
d. Detection risk.

Question 126.
Obtaining an understanding of an internal control involves evaluating the design of the control and determining whether the control has been
a. Authorized
b. Implemented
c. Tested
d. Monitored
Answer:
b. Implemented

Question 127.
Prior to commencing field work, an auditor usually discusses the general audit strategy with the client’s management. Which of the following details do management and the auditor usually agree upon at this time?
a. The specific matters to be included in the communication with the audit committee.
b. The minimum amount of misstatements that may be considered to be reportable conditions.
c. The schedules and analyses that the client’s staff should prepare.
d. The effects that inadequate controls may have over the safeguarding of assets.
Answer:
c. The schedules and analyses that the client’s staff should prepare.

Question 128.
Which of the following is NOT part of the planning phase of auditing?
a. Internal control review
b. Evaluation of audit risk
c. Developing the audit programme
d. Audit testing
Answer:
d. Audit testing

Question 129.
Which of the following is the least concern to an auditor regarding the client’s internal control system?
a. efficiency and effectiveness of operations
b. Controls related to the reliability of financial reporting
c. Controls over classes of transactions
d. Auditors are equally concern with each of the given issues
Answer:
a. efficiency and effectiveness of operations

Question 130.
For measuring the quality of audit evidence auditors used the tool of appropriateness; in case if auditor wants to measure quantity of audit evidence which tools from the following should be adopted?
a. Relevance
b. Reliability
c. Sufficiency
d. Effectiveness
Answer:
c. Sufficiency

Question 131.
Which of the following is NOT a compulsory audit?
a. Co-operative societal audit
b. Audit of HUF
c. Both a&b
d. None of the above
Answer:
b. Audit of HUF

Question 132.
Cost audit pinpoints at
a. Lacunae at the production point
b. Efficiency of a unit
c. Optimum utilization of expenditure
d. All of the above
Answer:
d. All of the above

Question 133.
Primary responsibility for the adequacy of financial statements disclosures rests with-
a. Auditor
b. Management
c. Auditor’s Staff
d. Central Government
Answer:
b. Management

Hint:
The primary responsibility for the adequacy of disclosure in the financial statements of a company rests with the management, Matters to be considered before planning an audit are

The auditor should check the nature of the engagement and the client’s business and industry trends at the beginning of planning.
Should keep a check on various responsibilities levied on him under various legislations
Auditor should determine the form and timing of the report
The auditor should check about recent developments like merger etc. in the company that may cause the audit to differ from prior years.
If accounting policies followed by company do affect the audit plan then confirm if there has been any change in the policy
Prepare a complete list of items needed from the client
Identify the areas which have greater audit risk so that the planning can be done accordingly
Prepare drafts of footnotes for new accounting standards so that there is smooth working while doing the audit and it becomes easy to explain the client regarding the new standards.
As each and every accounting entry can not be checked thus make some materiality level for example examining all entries where expense is more than Rs 10000.
To assess the internal control so that auditor can decide how much reliable is the information that is provided to him
Review the work of internal auditors
Auditor has to assess how much staff is required and how much time is required from each staff

Question 134.
Which one shall be kept in mind while carrying out audit?
a. High risk areas should be checked as others
b. High risk areas should be checked in detail
c. High risk areas should not be checked
d. High risk areas should be checked briefly
Answer:
c. High risk areas should not be checked

Hint:
Techniques of obtaining evidence

enquiry
observation
inspection
external confirmation
recalculation
Independent execution
analytical procedures

Question 135.
Which of the following is not a method of obtaining evidence
a. Observation
b. Confirmation
c. Declaration
d. Analytical review
Answer:
a. Observation

Hint:
Permanent files composed of documents, scheduled and other data that will be of continuing significance to several years audit. It is kept to record all data of a permanent nature which provides the necessary background information to the auditor from year to year.
Permanent audit file – Below mentioned are permanent audit file

the memorandum and Articles of Association.
The nature of the business.
Loan agreements
Documents related to internal control
The management set up.
The organization’s major Accounting policies
Leases
Significant audit observation of earlier years
Copies of important documents including title deed, agreements,, debentures deeds and letters of engagement,

Question 136.
Articles of Association of a company should be stored in a ………………………………..
a. Permanent audit file
b. Current audit’ file
c. System audit file
d. None of the above
Answer:
c. System audit file

Hint:
At the planning stage, the auditor sets the materiality levels.

Question 137.
In audit assignment, who among the following set the level of materiality?
a. Shareholders
b. Board of Directors
c. Auditor
d. Manager of the entity/department concerned.
Answer:
c. Auditor

Question 138.
Audit working papers are the property of:
a. Owner
b. Government
c. Auditor
d. Income Tax Department.
Answer:
c. Auditor

Question 139.
Primary responsibility for the adequacy of financial statement disclosures rest with The:
a. Auditor
b. Management
c. Auditor’s staff
d. Central Government.
Answer:
b. Management

Hint:
The primary responsibility for the adequacy of disclosure in the financial statements of a company rests with the management,

Question 140.
Which of the following is not an advantage of the preparation of audit working paper?
a. To provide a basis for review of audit work
b. To provide a basis for subsequent audits
c. To ensure audit work is being carried out as per program
d. To provide a guide for advising another client on similar issues.
Answer:
d. To provide a guide for advising another client on similar issues.

Hint:
Importance of working papers

Working papers are important because they are necessary for audit quality control purposes
provide assurance that the work delegated by the audit partner has been properly completed as per audit programme.
in future if client files any Suit against the auditor for negligence then such papers are useful for auditor to defend himself as working papers are the property of auditor and remains with him.
provide evidence that an effective audit has been carried out
increase the economy, efficiency, and effectiveness of the audit
contain sufficiently detailed and up-to-date facts which justify the reasonableness of the auditor’s conclusions
retain a record of matters of continuing significance to future audits

Question 141.
Which of the following is not true about audit plan?
a. Audit plan lays out the strategies to be followed to conduct an audit
b. Audit plan is made to ensure that audit assignment is done smoothly
c. Audit plan is not made from audit programme
d. Audit plan is prepared considering the terms of engagement and statutory responsibilities.
Answer:
c. Audit plan is not made from audit programme

Hint:
Audit planning procedures are the first and perhaps the most important step in carrying out a successful audit.
Audit plan is followed by audit program which has the set of instructions to be followed when doing audit.
Following are the features of audit plan:

It lays out the strategies to be followed to conduct an audit.
Audit plan is made to ensure that audit assignment is done smoothly
Audit plan is prepared considering the terms of engagement and statutory responsibilities.

Question 142.
The nature, time and extent of audit procedure are covered under –
a. Audit Programme
b. Audit Execution
c. Audit Plan
d. None of the above.
Answer:
c. Audit Plan

Hint:
Audit Plan covers, the nature, timing and extent of audit procedure for conducting audit by engagement of team members.

Question 143.
Which of the following technique is used to ascertain the correctness of debtors balance in books?
a. Observation
b. Enquiry
c. Computation
d. Confirmation.
Answer:
d. Confirmation.

Hint:
Confirmation is a technique to obtain audit evidences.
External confirmation: obtaining a written confirmation directly from a third party, such as a bank or debtor.

Question 144.
For auditors, which of the following document generally contains the scope of work
a. Appointment letter
b. Terms of engagement
c. Offer letter
d. None of the above.
Answer:
b. Terms of engagement

Hint:
Before planning for an audit, the auditor form the terms of engagement.

Question 145.
Which of the following are techniques of gathering audit evidence?
X. Inspection
Y. Enquiry
Z. Observation
Correct option is
a. X and Y
b. Y and Z
c. X and Z
d. X, Y and Z.
Answer:
d. X, Y and Z.

Hint:
Techniques of obtaining evidence

enquiry
observation
inspection
external confirmation
recalculation
Independent execution
analytical procedures

Question 146.
Who is the custodian authority for audit working papers?
a. Shareholders
b. Managing Director
c. Company Secretary
d. Auditor.
Answer:
d. Auditor.

Hint:
Audit working papers are the property of auditor.

Question 147.
Audit working papers acts as a link between
a. Client records and audit reports
b. Audit report and financial statements
c. Auditor and his staff
d. None of these.
Answer:
a. Client records and audit reports

Hint:
Importance of working papers

Working papers are important because they are necessary for audit quality control purposes
provide assurance that the work delegated by the audit partner has been properly completed as per audit programme.
in future if client files any suit against the auditor for negligence then such papers are useful for auditor to defend himself as working papers are the property of auditor and remains with him

Question 148.
Which of the following is not recorded in current Audit Working file?
a. Financial statement in audit report
b. Audit programme
c. Confirmation responses
d. Articles of Incorporation
Answer:
d. Articles of Incorporation

Hint:
Current Audit file -Below mentioned are current audit file

An index to the file which guides its orderly compilation.
A copy of the duly signed financial statement being Audited and the trial balance.
Extract of minutes of meetings and correspondences relevant to the year under review.
adjusting journal entries
completion check list.
Letter of representation of attorneys
Audit programs
Internal control questionnaires
A scheduled of each major items in the balance sheet.
A schedule of each major items in the profit and loss account.
List of queries and their dispositions

Question 17.
Which of the following is dis-advantage of Audit programme?
a. Reduces scope of misunderstanding
b. Serve as evidence
c. Against charge of negligence
d. New area may be overlooked.
Answer:
d. New area may be overlooked.

Hint:
Disadvantages of Audit Program:

The audit work conducted becomes too mechanical.
Auditors may have covered the whole field but it can not be said with certainty that all the necessary work have been done
It kills the initiative of capable persons assistant can not suggest any improvement in the plan.
It needs change every year and if changes not made it may become too rigid in nature
Audit program is suitable only for large audits
New areas may be overlooked

Question 18.
Terms of engagement between auditor and client are given in
a. Audit Engagement Letter
b. Audit Plan
c. Audit Programme
d. None of these.
Answer:
a. Audit Engagement Letter

Hint:
The auditor and the client should agree on the terms of the engagement. The agreed terms would need to be recorded in an audit engagement letter

Question 19.
Which of the following is an example of external:
a. Carbon Copies of cheques
b. Bank statements
c. Employees time reports
d. Purchase order of company purchases
Answer:
b. Bank statements

Hint:
Bank statements are the statement which are given by the bank of a customer of his banking transactions. So, it is an example of external source.

Question 20.
Which of the following factors would least likely affect the quantity and content of an auditors working papers.
a. The nature of auditors report
b. The assessed level of control risk
c. The possibility of peer review
d. The content of management representation letter
Answer:
a. The nature of auditors report

Hint:
Audit working papers contain information from accounting and statistical records, personal observations, the results of interviews and inquiries, and other available sources. These papers are support to the audit work and provide assurance that audit was performed with the relevant auditing standards. Audit working papers are generally prepared at the time audit work is performed. Audit papers are link between clients records and audited accounts. Information in working papers is required to be kept confidential and if disclosed then it is a professional misconduct

Question 21.
An audit plan is an integral part of which of the:
a. Closing
b. Initiation
c. Reporting
d. Preparation
Answer:
b. Initiation

Hint:
Audit planning procedures are the first and perhaps the most important step in carrying out a successful audit. While developing an audit plan auditor should see that audit procedures should compliy with the Standard on Auditing (SAs)

Question 22.
The format of Audit programme is:
a. Prescribed in Companies Act
b. Prescribed in Chartered Accountants Act
c. Prescribed by appointing authority
d. Not prescribed in any law.
Answer:
d. Not prescribed in any law.

Hint:
Audit program depends on the size of the organization and there is no standard audit program.

Question 23.
The evidence gathered during investigation exercise are:
a. Corroborative
b. Corroborative and conclusive
c. Persuasive
d. Corroborative and Persuasive.
Answer:
b. Corroborative and conclusive

Question 24.
The methodology of audit planning is:
a. Not prescribed in any law
b. Prescribed in Companies Act, 2013
c. Prescribed in Chartered Accountants Act, 1949
d. Prescribed by the appointing authority.
Answer:
a. Not prescribed in any law

Question 25.
Which of the following are techniques of gathering audit evidence? (x) Inspection (y) Enquiry (z) Observation. Correct option is:
a. x and z only
b. y and z only
c. x and y only
d. x, y and z.
Answer:
d. x, y and z.

Hint:
Techniques of obtaining evidence

enquiry
observation
inspection
external confirmation
recalculation
Independent execution
analytical procedures

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