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:

  1. SWOT Analysis
  2. PEST/PESTLE Analysis
  3. 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
Entrepreneurship - Creativity and Innovation – Business Management Ethics and Entrepreneurship Notes 1

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.

Entrepreneurship - Creativity and Innovation – Business Management Ethics and Entrepreneurship Notes 2

(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.

(c) Rivalry among existing firms:

  • 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.

(c) Directed 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.

CS Foundation Business Management Ethics and Entrepreneurship Notes