EGT3742 Entrepreneurship (Semester 2 2021) (OW) (F)

EGT3742 Entrepreneurship
(Semester 2 2021) [OW] [F]
Started on Wednesday, 8 September 2021,

4:00 PM
State Finished
Completed on Wednesday, 8 September 2021,
4:25 PM
Time taken 24 mins 39 secs
Marks 24/30
Grade 80 out of 100
Question 1
Complete
Mark 0 out of 1
Flag question
Social relations develop to create a team identity
a. adjourning
b. norming
c. performing
d. forming
e. storming
The correct answer is: norming
Question 2
Complete
Mark 1 out of 1
Flag question
This is the most difficult challenge faced by

modern HR professionals in the digital world.
a. Too much low salary
b. None of the answers are correct
c. Love life challenges
d. Possible replacement by AI
The correct answer is: Possible replacement by AI
Question 3
Complete
Mark 1 out of 1
Flag question
Internal analysis enables a firm to determine what

the firm
a. should do.
b. will do.
c. can do.
d. might do.
The correct answer is: can do.
Question 4
Complete
Mark 1 out of 1
Flag question
What are the components of group Cohesion
a. Assign objectives to group members,

communication, assisting one another
b. Communication, Productivity, Mutual Aid
c. Completing objectives, productivity,

communication
d. Productivity, Mutual Aid, Maintaining
Relationships
The correct answer is: Productivity, Mutual Aid,

Maintaining Relationships
Question 5
Complete
Mark 0 out of 1
Flag question
A group of managers is considering pricing

strategy and differentian. At which level of
strategy are the mangers most likely to be
working?
a. Corporate level
b. Operational level
c. Business level
d. Mission and Vision
The correct answer is: Business level
Question 6
Complete
Mark 1 out of 1
Flag question
________ means limitation of organized action.
a. Organizing
b. Planning
c. Controlling
d. Directing
The correct answer is: Directing
Question 7
Complete
Mark 1 out of 1
Flag question
Competitive advantage can best be described as:
a. increased efficiency.
b. intangible resources.
c. a strength of the organization.
d. what sets an organization apart.
The correct answer is: increased efficiency.
Question 8
Complete
Mark 1 out of 1
Flag question
________ is/are the source of a firm’s________,

which is/are the source of the firm’s ________.
a. Core competencies, resources,

competitive advantage
b. Capabilities, resources, core
competencies
c. Resources, capabilities, core
competencies
d. Capabilities, resources, above average
returns
The correct answer is: Resources, capabilities,

core competencies
Question 9
Complete
Mark 1 out of 1
Flag question
Strategic management is
a. Needed mainly when organizational

performance falls.
b. A pure science.
c. Based on the use of quantitative and

qualitative information.
d. Based mainly on intuition.
The correct answer is: Based on the use of

quantitative and qualitative information.
Question 10
Complete
Mark 1 out of 1
Flag question
“A possible and desirable future state of an

organization” is called:
a. None of the mentioned
b. Strategy implementation
c. Mission
d. Vision
The correct answer is: Vision
Question 11
Complete
Mark 1 out of 1
Flag question
The following principle of Personnel management

stresses to make the labour partner to the
business
a. Principle of Dignity of labour
b. Principle of team spirit
c. Principle of fair reward
d. Principle of joint management
The correct answer is: Principle of joint

management
Question 12
Complete
Mark 1 out of 1
Flag question
Strategic management process activate in the

sequence of_______
a. Strategy formulation, Implementation,

control, evaluation, Environmental
scanning
b. Strategy formulation, Environmental
scanning, Implementation, control and
evaluation
c. Environmental scanning, Strategy
Implementation, formulation, control and
evaluation
d. Environmental scanning, Strategy
formulation, Implementation, control and
evaluation
The correct answer is: Environmental scanning,

Strategy formulation, Implementation, control and
evaluation
Question 13
Complete
Mark 1 out of 1
Flag question
Which of the following focuses on supporting the

corporate and business strategies?
a. National strategy
b. Competitive strategy
c. Corporate strategy
d. Mission strategy
e. Operational strategy
The correct answer is: Operational strategy
Question 14
Complete
Mark 1 out of 1
Flag question
Get to know each other and learn how to function

as a team
a. norming
b. performing
c. forming
d. adjourning
e. storming
The correct answer is: forming
Question 15
Complete
Mark 1 out of 1
Flag question
Engineering students are planning a fundraiser to

help a local service organization. They will meet to
discuss the details of the event. This is what stage
of team building?
a. Storming
b. Forming
c. Performing
d. Norming
The correct answer is: Storming
Question 16
Complete
Mark 0 out of 1
Flag question
Successful development of norms allows teams to

handle stressful deadlines
a. storming
b. forming
c. norming
d. adjourning
e. performing
The correct answer is: performing
Question 17
Complete
Mark 1 out of 1
Flag question
Strategic decisions are based on what

managers_____________, rather than on what
they__________.
a. React to; anticipate
b. Know; forecast
c. Forecast; know
d. Compromise with; analyze
The correct answer is: Forecast; know
Question 18
Complete
Mark 1 out of 1
Flag question
________ method of training is connected to real

life problem.
a. Management games
b. Conferences
c. Case study
d. Sensitivity training
The correct answer is: Case study
Question 19
Complete
Mark 1 out of 1
Flag question
In manpower planning, short term plans are

prepared for
a. One month
b. One year
c. Six months
d. Three months
The correct answer is: One year
Question 20
Complete
Mark 1 out of 1
Flag question
When defining strategic management the most

important thing to remember is that it is:
a. A living evolving process
b. Mainly the province of senior managers
c. More conceptual than practical
d. A way of determining responsibilities
e. Not as easy as you think
The correct answer is: A living evolving process
Question 21
Complete
Mark 1 out of 1
Flag question
When an industry relies heavily on government

contracts, which forecasts can be the most
important part of an external audit.
a. technological
b. economic
c. Multinational
d. competitive
e. political
The correct answer is: political
Question 22
Complete
Mark 0 out of 1
Flag question
Conflicts may promote deeper understanding of

others’ perspective
a. performing
b. adjourning
c. forming
d. norming
e. storming
The correct answer is: storming
Question 23
Complete
Mark 1 out of 1
Flag question
What are guides to decision making?
a. rules
b. policies
c. laws
d. procedures
e. goals
The correct answer is: policies
Question 24
Complete
Mark 0 out of 1
Flag question
Which strategy is about how to compete

successfully in particular markets?
a. Operational-level strategy
b. Business level strategy
c. Corporate-level strategy
d. Alliance-based strategy
The correct answer is: Business level strategy
Question 25
Complete
Mark 0 out of 1
Flag question
The new fundraising committee plans a Christmas

raffle. You begin to notice that although Larry is
confident he is not as smart as you had thought. In
fact a quieter person called James is coming up
with great ideas and is speaking up more and
trying to get the group to agree. He seems to be
taking the leaders role now.
a. Norming
b. Storming
c. Forming
d. Performing
The correct answer is: Norming
Question 26
Complete
Mark 1 out of 1
Flag question
The acronym SWOT stands for
a. Services, Worldwide Optimization, and

Transport
b. Special Weapons for Operations
Timeliness
c. Strengths, Weaknesses, Opportunities,
and Threats
d. Strengths Worldwide Overcome Threats
The correct answer is: Strengths, Weaknesses,

Opportunities, and Threats
Question 27
Complete
Mark 1 out of 1
Flag question
Which of the following is a function of personnel

management?
a. Maintaining good relations with people
b. To give a good impression to the man who

is leaving the organization
c. All answers are correct
d. Selection of right type and number of

people inside an organization
The correct answer is: All answers are correct
Question 28
Complete
Mark 1 out of 1
Flag question
A firm’s mission
a. is a statement of a firm’s business in

which it intends to compete and the
customers which it intends to serve.
b. is mainly intended to emotionally inspire
employees and other stakeholders.
c. is developed by a firm before the firm
develops its vision.
d. is an internally-focused affirmation of the
organization’s financial, social, and ethical
goals.
The correct answer is: is a statement of a firm’s

business in which it intends to compete and the
customers which it intends to serve.
Question 29
Complete
Mark 1 out of 1
Flag question
Which one of the following is at the core of

strategic management?
a. Choosing whether to make decisions

autocratically or on the basis of
participation
b. Choosing which organisational objectives
:
Dashboard / My courses /
EGT3742 Entrepreneurship (Semester 2 2020) [JEDSC] [F] /
Online Tests /
Formal Test 3 Units 7-10
Started on Thursday, 5 November 2020, 8:05 PM

State Finished
Completed on Thursday, 5 November 2020, 8:16 PM
Marks 10/20
Grade 50 out of 100
Question 1
Complete
Mark 0 out of 1
Managerial accounting
a. Presents managerial reports prepared in accordance with GAAP

b. Provides information centred on products departments and activities
c. Focuses on reporting in support of business management processes
d. Encompasses more than one of these suggested uses
Question 2
Complete
Mark 1 out of 1
Which phrase best describes the current role of the managerial accountant?
a. Managerial accountants prepare the financial statements for an organization.
b. Managerial accountants make the key decisions within an organization.

c. Managerial accountants facilitate the decision-making process within an organization.
d. Managerial Accountants are solely staff advisors in an organization.
e. Managerial accountants are primarily information collectors.
Question 3
Complete
Mark 0 out of 1
A risk response which involves eliminating a threat is called:
a. Transfer and mitigation
b. Avoidance and tranfer

c. Deflection and mitigation
d. Deflection and transfer
e. Mitigation and transfer

Question 4
Complete
Mark 0 out of 1
Which type of risk framework is expected to improve efficiency by aligning strategy, processes, technology and people?
a. Governance, risk and compliance.
b. Controls, risk and supervision.

c. Corporate, governance and control.
d. Supervision, audit and compliance.
Question 5
Complete
Mark 1 out of 1
The ability of a business organization to achieve its business goals is affected by whether its behaviour is judged to be right or wrong by
a. society.
b. its union members.
c. its employees.
d. its competitors.
e. Parliament.
Question 6
Complete
Mark 0 out of 1
Which of the following are the main components of an industry/target market feasibility analysis?
a. Industry attractiveness and target market attractiveness

b. Industry sufficiency and target market demand
c. Industry attractiveness and product/service demand

d. Industry status and target market status
Question 7
Complete
Mark 0 out of 1
Why are financial statements required to include financial information prepared according to GAAP?
a. It allows external users absolute assurance of financial health.
b. It allows the public to ensure that all companies are using uniform guidelines when preparing information.
c. It helps ensure that the company is in compliance with US laws.
d. It allows regulators to have an absolute verification concerning the financial health of the business.
Question 8
Complete
Mark 1 out of 1
Positive abstractions that capture our sense of what is good or desirable are called ________.
a. Conscience demands
b. Action goals
c. Values
d. Ethical ideas
e. Desirable principles
Question 9
Complete
Mark 0 out of 1
When should a risk be avoided?
a. When the risk event has a low probability of occurrence and low impact
b. A risk event can never be avoided

c. When the risk event is unacceptable -- generally one with a very high probability of occurrence and high impact
d. When it can be transferred by purchasing insurance
Question 10
Complete
Mark 1 out of 1
When a product is sold in as many outlets as possible a(n) ___________ distribution strategy is being used.
a. extreme
b. intensive
c. exclusive
d. selective
Question 11
Complete
Mark 1 out of 1
Which of the following is true about participating in professional networking websites?
a. They are frequently used by employers and recruiters.
b. They are more frequently used by experienced workers.

c. They are less helpful for mid- and late career professionals.
d. They are most helpful to people who are currently employed.

Question 12
Complete
Mark 1 out of 1
Which of the following is an example of how ethics shapes business laws?
a. Bribery is legal for U.S. companies doing business in foreign countries because respecting foreign cultures is part of our community
ethics.
b. Bribery is legal for U.S. companies doing business in foreign countries because foreign businesses can pay bribes and our ethical
inclination is to level the playing field for American businesses.
c. Contract laws require parties to live up to promises because keeping promises is part of our ethical inclination to encourage trust.
d. Contract laws require parties to obey even unenforceable agreements because of our ethical belief that every promise must be kept
at all times.
e. Business law requires companies to put profits above all else, because protecting the rights of shareholders is the ethically proper
course of action.
Question 13
Complete
Mark 0 out of 1
Financial accounting provides which of the following information?
a. Information for external users such as investors

b. Tax return information that is useful to external users
c. All of the vital information that is used by internal users
d. Decision making information for managers
Question 14
Complete
Mark 0 out of 1
Understanding the potential causes of risk events will primarily help an organisation to
a. improve internal audit procedures.
b. comply with corporate governance standards.

c. eliminate all risks.
d. reduce the frequency of loss.
Question 15
Complete
Mark 1 out of 1
A large organisation is assessing a risk using a typical risk management process and has just established and identified the risks to which it
is exposed. What is likely to be the next stage in the process?
a. Eliminating risks.
b. Evaluating risks.
c. Analysing risks.
d. Treating risks.
Question 16
Complete
Mark 1 out of 1
In the business-to-business buying process, what is the next step after the need is described and quantified?
a. Recognizing a need
b. Evaluating proposals
c. Searching for potential suppliers
d. Establishing an order routine
Question 17
Complete
Mark 0 out of 1
Managerial accounting provides information for which target group?
a. Internal users
b. External users
c. Regulatory agencies
d. All users
Question 18
Complete
Mark 1 out of 1
Which of the following presents a problem when considering the theory of ethics known as absolutism?
a. The allegation that an excessive number of followers actually follow consequentialism.
b. The questionable nature of the rules in most absolutist repositories seems overly flexible when applied to different situations.
c. The lack of objectivity.
d. The fact that most individuals associated with this theory have been proven to have acted to the detriment of their followers in one
way or another.
e. The unquestionable nature of the rules in most absolutist repositories seems overly inflexible when applied to different situations.
Question 19
Complete
Mark 1 out of 1
To be ethically effective, marketing plans must be
a. honest and truthful
b. flexible enough to contain differences of opinion
c. varied according to management responsibility level

d. substantially different from compliance requirements
Question 20
Complete
Mark 0 out of 1
An ethical issue is a problem, situation, or opportunity
a. requiring an individual or organization to choose among several actions that must be evaluated as right or wrong, ethical or
unethical.
b. requiring an individual or organization to choose between harming consumers or the environment and earning more profits.
c. that harms consumers.

d. requiring society to choose among several actions that must be evaluated as right or wrong.
e. that harms the environment.
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Semester test ALL UNITS (1-10)

State Finished
Marks 38/50
Grade 76 out of 100
Question 1
Complete
Mark 0 out of 1
Ground rules are established
a. storming
b. performing
c. adjourning
d. forming
e. norming
Question 2
Complete
Mark 0 out of 1
a. It helps ensure that the company is in compliance with US laws.

b. It allows regulators to have an absolute verification concerning the financial health of the business.
c. It allows the public to ensure that all companies are using uniform guidelines when preparing information.
d. It allows external users absolute assurance of financial health.
Question 3
Complete
Mark 1 out of 1
Get to know each other and learn how to function as a team
a. adjourning
b. performing
c. storming
d. forming
e. norming
Question 4
Complete
Mark 0 out of 1
a. Decision making information for managers
b. Information for external users such as investors

d. Tax return information that is useful to external users
Question 5
Complete
Mark 1 out of 1
When considering risk management within a manufacturing organisation, what is a key benefit of conducting a detailed structured analysis
of the entire organisation?
a. It would identify alternative production methods and remove all risks.

b. It would uncover weaknesses and provide valuable information that can be used to improve processes.
c. It would allow the organisation to develop silo-based risk management techniques.

d. It would identify all counterparty risks that affect financial stability.
Question 6
Complete
Mark 1 out of 1
A new venture's business plan is important because ______.
a. Can help demonstrate the viability of the venture.
b. All of the mentioned.

c. Provides a guide for business activities by defining objectives.
d. It helps to persuade others to commit funding to the venture.
Question 7
Complete
Mark 1 out of 1
How can a team best overcome anxiety during the forming stage?
a. Let members pick their own teams, so they know the other team members
b. Create a good team name that allows group members to identify with the team
c. Set clear goals, timelines, and roles so that all members are aware of team expectations
d. Determine a team leader quickly to allow that individual to build team camaraderie
Question 8
Complete
Mark 1 out of 1
Budget is an instrument of
a. none of these
b. both planning and control

c. control only
d. planning only
Question 9
Complete
Mark 1 out of 1
What are the primary financial objectives of any firm?
a. Efficiency, effectiveness, strength, and flexibility

b. Liquidity, profitability, efficiency, and stability
c. Liquidity, control, effectiveness, and power

d. Efficiency, effectiveness, power, and success
Question 10
Complete
Mark 0 out of 1
Something that could kill you must be very risky.
a. False
b. True
Question 11
Complete
Mark 1 out of 1
Positive external trends or changes that provide unique and distinct possibilities for innovating and creating value are called _____________.
a. Opportunities
b. Strengths
c. Weaknesses
d. Threats
Question 12
Complete
Mark 1 out of 1
Personnel management is important for future merchant marine officers.
a. True
b. False
Question 13
Complete
Mark 0 out of 1
One of the primary reasons that an organisation should monitor and regularly review its risk management process is to
a. ensure that all significant risks are eliminated immediately.
b. evidence that all risks are measured in financial terms only.
c. evidence that an internationally-recognised framework is followed at all times.

d. consider whether lessons could be learned for future management of risks.
Question 14
Complete
Mark 1 out of 1
Which of the following is a recognized disadvantage of setting up as a start-up as compared with other routes to market entry?
a. less help from various agencies.

b. there is a high failure rate.
c. less satisfaction of the owners.
d. there are more funds required.
Question 15
Complete
Mark 1 out of 1
A(n) __________is a document that communicates a marketing strategy for an offering.
a. mission statement
b. research paper
c. market plan
d. annual report
Question 16
Complete
Mark 0 out of 1
a. Provides information centred on products departments and activities
b. Focuses on reporting in support of business management processes

c. Presents managerial reports prepared in accordance with GAAP
Question 17
Complete
Mark 1 out of 1
Someone who improves an existing business can be called _________.
a. An intrapreneur.
b. A professional.
c. A changeling.
d. A co-worker.
Question 18
Complete
Mark 1 out of 1
Which of the following is NOT recognized as a misconception about entrepreneurship?
a. Entrepreneurial ventures and small businesses are different.
b. Successful entrepreneurship needs only a great idea.

c. Entrepreneurship is found only is small businesses.
d. Entrepreneurship is easy.
Question 19
Complete
Mark 1 out of 1
Which of the following defines what business or businesses the firm is in or should be in?
b. Functional strategy
c. Business strategy
d. Corporate strategy
Question 20
Complete
Mark 0 out of 1
a. Deflection and mitigation

c. Transfer and mitigation

Question 21
Complete
Mark 1 out of 1
A ________ franchise is an arrangement in which the franchisor grants to the franchisee the right to buy its products and use its trade name.
a. production plus
b. product and trademark

c. product extension
d. business format
Question 22
Complete
Mark 0 out of 1
A person uncomfortable with his employer’s hiring only black women is experiencing
a. intraorganizational conflict.
b. a feeling of guilt.
c. a conflict of interest.
d. a moral attribute.
e. an ethical issue.
Question 23
Complete
Mark 1 out of 1
Which section of the business plan focuses on the specific segment or target market of an industry to which the firm will try to appeal?
a. Market analysis
b. Operations plan
c. Current status
d. Company summary
Question 24
Complete
Mark 1 out of 1
Long-term objectives should be all of the following except:
a. consistent.
b. measurable.
c. challenging.
d. continually changing.
e. reasonable.
Question 25
Complete
Mark 1 out of 1
An individual who has no prior business ownership experience as a business founder, inheritor of a business, or a purchaser of a business is
called a(n. ____________ entrepreneur.
a. Habitual
b. Novice
c. Serial
d. Portfolio
Question 26
Complete
Mark 0 out of 1
ethics.
b. Contract laws require parties to live up to promises because keeping promises is part of our ethical inclination to encourage trust.
c. Contract laws require parties to obey even unenforceable agreements because of our ethical belief that every promise must be kept
at all times.
d. Bribery is legal for U.S. companies doing business in foreign countries because foreign businesses can pay bribes and our ethical
course of action.
Question 27
Complete
Mark 1 out of 1
____________ is primarily concerned with the identification of the project demand potential and the selection of the optimal technology.
a. Input analysis.
b. Feasibility analysis.
c. Techno-economic analysis.
d. Financial analysis.
Question 28
Complete
Mark 0 out of 1
An electrician working in a small town is the only electrician within a 100-mile radius. He knows that people who have medical equipment at
home have the highest need for power, so he charges them double to fix problems with their electricity, compared with the average customer.
The community is angry about this choice. This business practice is most likely:
a. Unethical because it is against the law for a company to charge one customer more than another.
b. Ethical because owners should focus only on the impact of decisions on the firm.
c. Ethical because it is not illegal for a company to set its prices based on maximizing profits.
d. Unethical because there is only one morally proper thing to do in any situation.
e. Unethical because businesses operate in a community and communities have expectations for behavior of individuals, groups, and
businesses.
Question 29
Complete
Mark 1 out of 1
Businesses seem most concerned with ethical issues that could
a. offend their union employees.

b. affect employees.
c. damage the firm.

d. eliminate competition.
e. show weakness.
Question 30
Complete
Mark 1 out of 1
Suppose a project has many hazards that could easily injure one or more persons and there is no method of avoiding the potential for
damages. The project manager should consider __________ as a means of deflecting the risk.
a. buying insurance for personal bodily injury

b. abandoning the project
c. establishing a contingency fund

d. not acknowledging the potential for injury
e. establishing a management reserve
Question 31
Complete
Mark 1 out of 1
Group dynamics are processes____________.
a. By which groups terminate membership

b. By which groups become cohesive
c. That occur between group members within a group

d. By which groups determine membership
Question 32
Complete
Mark 1 out of 1
Policy formulation is the function of
a. top level management
b. middle level management

c. All of the given options
d. operational management
Question 33
Complete
Mark 0 out of 1
Engineering students are planning a fundraiser to help a local service organization. They will meet to discuss the details of the event. This is
what stage of team building?
a. Performing
b. Forming
c. Norming
d. Storming
Question 34
Complete
Mark 1 out of 1
Which ones are the four basic managerial functions
a. Controlling, Negotiating, Organizing, Motivating
b. Organizing, Negotiating, Planning, Motivating

c. Planning, Organising, motivating, Controlling
d. Planning, Organising, motivating, Negotiating

e. Motivating, Negotiating, Controlling, Planning
Question 35
Complete
Mark 1 out of 1
An individual who initiates, creates and manages a new business can be called _____________.
a. A professional
b. A leader
c. A manager
d. An entrepreneur
Question 36
Complete
Mark 1 out of 1
a. The lack of objectivity.
b. The unquestionable nature of the rules in most absolutist repositories seems overly inflexible when applied to different situations.
c. The questionable nature of the rules in most absolutist repositories seems overly flexible when applied to different situations.
way or another.
e. The allegation that an excessive number of followers actually follow consequentialism.
Question 37
Complete
Mark 0 out of 1
a. Regulatory agencies
b. All users
c. Internal users
d. External users
Question 38
Complete
Mark 1 out of 1
Which of the following statements is false?
a. Market segmentation is a useful process for small businesses to undertake.
b. A benefit is the value of a product feature to a customer.

c. It is a good idea for small businesses to compete solely on price.
d. Selling is essentially a matching process.
Question 39
Complete
Mark 1 out of 1
The three main responsibilities involved with managing an entrepreneurial venture once its up and running include all of the following
EXCEPT:
a. Managing growth
b. Managing bureaucracy
c. Managing processes
d. Managing people
Question 40
Complete
Mark 1 out of 1
Which of the following is (are) true?
a. All answers are correct
b. Personnel management deals with the relations of personnel towards management

c. Personnel management considers that labour is a lifeful item
d. Principles of general management are applicable to personnel management
Question 41
Complete
Mark 1 out of 1
The following is not a function of Personnel management
a. Wages and salary administration

b. Recruitment and selection of manpower
c. Training and development of manpower

d. Production, Planning and control
Question 42
Complete
Mark 1 out of 1
“Identifying and evaluating key social, political, economic, technological and competitive trends and events”. Which of the followings best
describes this statement?
a. Formulating strategy
b. Conducting an internal audit

c. Performing an external audit
d. Developing an effective mission statement
Question 43
Complete
Mark 1 out of 1
Innovative entrepreneurs may have to pay high insurance premiums due to the:
a. The need to protect patents
b. Greater employee liability
c. Greater customer liability

d. Greater trading risks
Question 44
Complete
Mark 1 out of 1
The corporate level is where top management directs:
a. its efforts to stabilize recruitment needs
b. all employees for orientation

c. overall sales projections
d. overall strategy for the entire organization
Question 45
Complete
Mark 1 out of 1
Which of the following is not an advantage of strategic management?
a. It helps orientate management decisions to relevant environmental conditions

b. It helps improve the political, economic, social and technological environment of the organisation
c. It helps organisations be proactive rather than reactive

d. It provides organisations with a clearer sense of direction and purpose
Question 46
Complete
Mark 1 out of 1
a. Managerial accountants make the key decisions within an organization.
b. Managerial accountants prepare the financial statements for an organization.

c. Managerial accountants are primarily information collectors.

e. Managerial accountants facilitate the decision-making process within an organization.
Question 47
Complete
Mark 1 out of 1
The following factor(s) affect(s) manpower planning
a. Working hours
b. Nature of production
c. Performance rate
d. All answers are correct

Question 48
Complete
Mark 1 out of 1
Innovation can best be defined as_______.
a. the successful exploitation of new ideas.
b. the evolution of new ideas.

c. the opposite of creativity.
d. the generation of new ideas.
Question 49
Complete
Mark 1 out of 1
Which one of the following actions by an entrepreneur is most likely to contribute to creative destruction?
a. Take-over of a competitor
b. Reducing prices
c. Issuing shares
d. Development of a new product
Question 50
Complete
Mark 1 out of 1
In a SWOT analysis, SWOT stands for
a. strategies, worth, obligations, time
b. strengths, weaknesses, opportunities, threats

c. strategies, weaknesses, obligations, threats
d. strengths, work requirements, opportunities, time
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[Module code] Formal Test 1
Started on Thursday, 8 October 2020, 3:08 PM

State Finished
Completed on Thursday, 8 October 2020, 3:15 PM
Marks 1/15
Grade 7 out of 100
Question 1
Complete
Mark 1 out of 1
The income statement informs the business owner about profit/loss the business in making
a. True
b. False
Question 2
Complete
Mark 0 out of 1
Pull factors are the reasons entrepreneurs are more successful rather than pull factors
a. True
b. False
Question 3
Complete
Mark 0 out of 1
Intrapreneuership creates wealth for the employee
a. False
b. True
Question 4
Not answered
Marked out of 1
Share capital is a personal right which a shareholder has in a company
a. False
b. True
Question 5
Not answered
Marked out of 1
One principle of a cooperative is that the business services must be provided mostly to its members
a. False
Question 6
Not answered
Marked out of 1
When you are an entrepreneur you do not need to know where your competitors are because you focus on yourself
a. False
b. True
Question 7
Not answered
Marked out of 1
A company may not give financial assistance to a person to acquire shares in the company
a. False
b. True
Question 8
Not answered
Marked out of 1
Franchising is a form of a cooperative
a. False
b. True
Question 9
Not answered
Marked out of 1
Networth is obtained from the income statement
a. True
b. False
Question 10
Not answered
Marked out of 1
Customers consider price to be the only importnat factor when selecting a product
a. False
b. True
Question 11
Not answered
Marked out of 1
Financial management is an operational function of a manager
a. False
b. True
Question 12
Not answered
Marked out of 1
Emigration is an indication of a good domestic entreneurship climate
a. False
b. True
Question 13
Not answered
Marked out of 1
Economic change can be catalysed through entrepreneurial processes
a. False
b. True
Question 14
Not answered
Marked out of 1
Internal rate of return indicates the amount of time it takes to reciver the costs of an investment or reach a break even point
a. True
b. False
Question 15
Not answered
Marked out of 1
When the economic environment is constatntly changing, it is not good for entrepreneurship
a. False
b. True
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State Finished
Overdue 1 min 4 secs
Marks 7/20
Grade 35 out of 100
Question 1
Complete
Mark 0 out of 1
a. It allows regulators to have an absolute verification concerning the financial health of the business.
b. It allows external users absolute assurance of financial health.
d. It helps ensure that the company is in compliance with US laws.
Question 2
Complete
Mark 1 out of 1
What term is used to describe when a customer purchases a product with no planning or forethought?
a. High-involvement purchasing
b. Extended problem solving

c. Evaluation implementation
d. Impulse buying
Question 3
Complete
Mark 1 out of 1
Risk is only to do with industry and accidents at work.
a. False
b. True
Question 4
Complete
Mark 1 out of 1
Which of the following is a key function of “positioning” in marketing campaigns?
a. To distract the customer from considering a competitor’s product.
b. To divert the customer's attention from the product’s flaws.

c. To override the customer’s previous mindset.
d. To provide a reason why the customer should buy the product.
Question 5
Complete
Mark 0 out of 1
a. Tax return information that is useful to external users


Question 6
Complete
Mark 1 out of 1
a. Current status
b. Company summary
c. Market analysis
d. Operations plan
Question 7
Complete
Mark 1 out of 1
b. Managerial Accountants are solely staff advisors in an organization.

d. Managerial accountants prepare the financial statements for an organization.

Question 8
Complete
Mark 1 out of 1

c. Provides information centred on products departments and activities
Question 9
Complete
Mark 1 out of 1
a. It would uncover weaknesses and provide valuable information that can be used to improve processes.
b. It would identify alternative production methods and remove all risks.
c. It would identify all counterparty risks that affect financial stability.

d. It would allow the organisation to develop silo-based risk management techniques.
Question 10
Complete
Mark 0 out of 1
Which of the following is true regarding business ethics?
a. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of virtue
ethics is followed.
b. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of
deontology is followed.
c. Business ethics refers to standards of business conduct but does not result in a set of correct decisions.
d. Business ethics results in a set of correct decisions and does not simply refer to standards of business conduct.
e. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of rule
utilitarianism is followed.
Question 11
Complete
Mark 0 out of 1
How does a pure risk differ from a speculative risk?
a. A pure risk can be measured in probability terms whereas a speculative risk cannot.
b. A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain.
c. A pure risk always has an environmental cause whereas a speculative risk always involves human error.
d. A pure risk is not subject to regulatory control but a speculative risk always is.
Question 12
Complete
Mark 0 out of 1
a. Internal users
b. Regulatory agencies
c. External users
d. All users
Question 13
Not answered
Marked out of 1
In general when people discover unethical behaviour in their own company they usually
a. report it to authorities in the company.

b. gossip and complain about the transgressor.
c. mind their own business.

d. report it to the authorities outside the company.
e. try to right the ethical wrong.
Question 14
Not answered
Marked out of 1
Which of the following are stakeholders of a business?
a. Shareholders, employees, customers, and management

b. Management but not employees
c. Shareholders but not employees

d. Customers but not employees or shareholders
e. Employees but not shareholders
Question 15
Not answered
Marked out of 1
Which of the following is true about how ethical conceptions shape business law and business relationships in different countries?
a. Different ethical understandings prevail in different countries, so ethical conceptions shape business law and business relationships
uniquely in each country.
b. Different ethical understandings exist in different countries, but fairness is the highest ethical standard so countries must create
uniform laws.
c. Business law and business relationships should be the same in all countries because ethics provides one correct ANSWER to all
questions.
d. Business law should be the same in all countries because protecting the rights of shareholders is always the ethically proper course
of action.
e. Ethics does not shape business law or business relationships because law and ethics are separate and not interrelated.
Question 16
Not answered
Marked out of 1
a. consider whether lessons could be learned for future management of risks.

d. ensure that all significant risks are eliminated immediately.
Question 17
Not answered
Marked out of 1
The Chief Risk Officer within a large manufacturing organisation has been asked by the Board of Directors to provide an example of a pure
risk. A suitable example would be
a. a fire occurring in a new manufacturing process line.

b. the purchase of a currency derivative.
c. entering into a contract to purchase a new factory.

d. making a strategic decision that affects the long-term future of the organisation.
Question 18
Not answered
Marked out of 1
What type of segmentation is the primary starting point for most marketers?
a. Demographic
b. Use-pattern
c. Cultural
d. Psychographic
Question 19
Not answered
Marked out of 1
_________________ are especially useful to marketers.
a. Age, income, gender
b. Profitability, reliability, predictability
c. Proactivity, reactivity, alacrity

d. Location, locomotion, liberation
Question 20
Not answered
Marked out of 1
It is most likely, during a takeover attempt, for a firm’s managers to face an ethical issue because
a. the takeover might not be in the shareholders’ best interests.
b. their duties to the firm’s owners may conflict with their competitors’ best interests.
c. their duties to the firm’s owners may conflict with the best interests of society.
d. their duties to the firm’s owners may conflict with their personal interests.
e. their duties to the firm’s owners may be illegal.
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State Finished
Marks 10/20
Grade 50 out of 100
Question 1
Complete
Mark 0 out of 1

b. Provides information centred on products departments and activities
c. Focuses on reporting in support of business management processes
Question 2
Complete
Mark 1 out of 1
b. Managerial accountants make the key decisions within an organization.

c. Managerial accountants facilitate the decision-making process within an organization.
e. Managerial accountants are primarily information collectors.
Question 3
Complete
Mark 0 out of 1
a. Transfer and mitigation

c. Deflection and mitigation

Question 4
Complete
Mark 0 out of 1
Which type of risk framework is expected to improve efficiency by aligning strategy, processes, technology and people?
b. Controls, risk and supervision.

d. Supervision, audit and compliance.
Question 5
Complete
Mark 1 out of 1
The ability of a business organization to achieve its business goals is affected by whether its behaviour is judged to be right or wrong by
a. society.
b. its union members.
c. its employees.
d. its competitors.
e. Parliament.
Question 6
Complete
Mark 0 out of 1
Which of the following are the main components of an industry/target market feasibility analysis?
a. Industry attractiveness and target market attractiveness

b. Industry sufficiency and target market demand
c. Industry attractiveness and product/service demand

d. Industry status and target market status
Question 7
Complete
Mark 0 out of 1
a. It allows external users absolute assurance of financial health.
b. It allows the public to ensure that all companies are using uniform guidelines when preparing information.
c. It helps ensure that the company is in compliance with US laws.
d. It allows regulators to have an absolute verification concerning the financial health of the business.
Question 8
Complete
Mark 1 out of 1
Positive abstractions that capture our sense of what is good or desirable are called ________.
a. Conscience demands
b. Action goals
c. Values
d. Ethical ideas
e. Desirable principles
Question 9
Complete
Mark 0 out of 1
a. When the risk event has a low probability of occurrence and low impact
b. A risk event can never be avoided

c. When the risk event is unacceptable -- generally one with a very high probability of occurrence and high impact
d. When it can be transferred by purchasing insurance
Question 10
Complete
Mark 1 out of 1
When a product is sold in as many outlets as possible a(n) ___________ distribution strategy is being used.
a. extreme
b. intensive
c. exclusive
d. selective
Question 11
Complete
Mark 1 out of 1
Which of the following is true about participating in professional networking websites?
b. They are more frequently used by experienced workers.

c. They are less helpful for mid- and late career professionals.

Question 12
Complete
Mark 1 out of 1
ethics.
b. Bribery is legal for U.S. companies doing business in foreign countries because foreign businesses can pay bribes and our ethical
c. Contract laws require parties to live up to promises because keeping promises is part of our ethical inclination to encourage trust.
d. Contract laws require parties to obey even unenforceable agreements because of our ethical belief that every promise must be kept
at all times.
course of action.
Question 13
Complete
Mark 0 out of 1
a. Information for external users such as investors

b. Tax return information that is useful to external users
Question 14
Complete
Mark 0 out of 1
Understanding the potential causes of risk events will primarily help an organisation to
a. improve internal audit procedures.
b. comply with corporate governance standards.

c. eliminate all risks.
d. reduce the frequency of loss.
Question 15
Complete
Mark 1 out of 1
A large organisation is assessing a risk using a typical risk management process and has just established and identified the risks to which it
is exposed. What is likely to be the next stage in the process?
a. Eliminating risks.
b. Evaluating risks.
c. Analysing risks.
d. Treating risks.
Question 16
Complete
Mark 1 out of 1
In the business-to-business buying process, what is the next step after the need is described and quantified?
a. Recognizing a need
c. Searching for potential suppliers
d. Establishing an order routine
Question 17
Complete
Mark 0 out of 1
a. Internal users
b. External users
c. Regulatory agencies
d. All users
Question 18
Complete
Mark 1 out of 1
a. The allegation that an excessive number of followers actually follow consequentialism.
b. The questionable nature of the rules in most absolutist repositories seems overly flexible when applied to different situations.
c. The lack of objectivity.
way or another.
e. The unquestionable nature of the rules in most absolutist repositories seems overly inflexible when applied to different situations.
Question 19
Complete
Mark 1 out of 1

Question 20
Complete
Mark 0 out of 1
An ethical issue is a problem, situation, or opportunity
a. requiring an individual or organization to choose among several actions that must be evaluated as right or wrong, ethical or
unethical.
b. requiring an individual or organization to choose between harming consumers or the environment and earning more profits.
c. that harms consumers.

d. requiring society to choose among several actions that must be evaluated as right or wrong.
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Semester test ALL UNITS (1-10)

State Finished
Marks 38/50
Grade 76 out of 100
Question 1
Complete
Mark 0 out of 1
Ground rules are established
a. storming
b. performing
c. adjourning
d. forming
e. norming
Question 2
Complete
Mark 0 out of 1
a. It helps ensure that the company is in compliance with US laws.

b. It allows regulators to have an absolute verification concerning the financial health of the business.
d. It allows external users absolute assurance of financial health.
Question 3
Complete
Mark 1 out of 1
Get to know each other and learn how to function as a team
a. adjourning
b. performing
c. storming
d. forming
e. norming
Question 4
Complete
Mark 0 out of 1
a. Decision making information for managers

d. Tax return information that is useful to external users
Question 5
Complete
Mark 1 out of 1
a. It would identify alternative production methods and remove all risks.

b. It would uncover weaknesses and provide valuable information that can be used to improve processes.
c. It would allow the organisation to develop silo-based risk management techniques.

d. It would identify all counterparty risks that affect financial stability.
Question 6
Complete
Mark 1 out of 1
A new venture's business plan is important because ______.
a. Can help demonstrate the viability of the venture.
b. All of the mentioned.

c. Provides a guide for business activities by defining objectives.
d. It helps to persuade others to commit funding to the venture.
Question 7
Complete
Mark 1 out of 1
How can a team best overcome anxiety during the forming stage?
a. Let members pick their own teams, so they know the other team members
b. Create a good team name that allows group members to identify with the team
c. Set clear goals, timelines, and roles so that all members are aware of team expectations
d. Determine a team leader quickly to allow that individual to build team camaraderie
Question 8
Complete
Mark 1 out of 1
Budget is an instrument of
a. none of these
b. both planning and control

c. control only
d. planning only
Question 9
Complete
Mark 1 out of 1
What are the primary financial objectives of any firm?

b. Liquidity, profitability, efficiency, and stability

d. Efficiency, effectiveness, power, and success
Question 10
Complete
Mark 0 out of 1
Something that could kill you must be very risky.
a. False
b. True
Question 11
Complete
Mark 1 out of 1
Positive external trends or changes that provide unique and distinct possibilities for innovating and creating value are called _____________.
a. Opportunities
b. Strengths
c. Weaknesses
d. Threats
Question 12
Complete
Mark 1 out of 1
Personnel management is important for future merchant marine officers.
a. True
b. False
Question 13
Complete
Mark 0 out of 1
a. ensure that all significant risks are eliminated immediately.

d. consider whether lessons could be learned for future management of risks.
Question 14
Complete
Mark 1 out of 1
Which of the following is a recognized disadvantage of setting up as a start-up as compared with other routes to market entry?
a. less help from various agencies.

b. there is a high failure rate.
c. less satisfaction of the owners.
d. there are more funds required.
Question 15
Complete
Mark 1 out of 1
A(n) __________is a document that communicates a marketing strategy for an offering.
a. mission statement
b. research paper
c. market plan
d. annual report
Question 16
Complete
Mark 0 out of 1
a. Provides information centred on products departments and activities

c. Presents managerial reports prepared in accordance with GAAP
Question 17
Complete
Mark 1 out of 1
Someone who improves an existing business can be called _________.
a. An intrapreneur.
b. A professional.
c. A changeling.
d. A co-worker.
Question 18
Complete
Mark 1 out of 1
Which of the following is NOT recognized as a misconception about entrepreneurship?
a. Entrepreneurial ventures and small businesses are different.
b. Successful entrepreneurship needs only a great idea.

c. Entrepreneurship is found only is small businesses.
d. Entrepreneurship is easy.
Question 19
Complete
Mark 1 out of 1
Which of the following defines what business or businesses the firm is in or should be in?
b. Functional strategy
c. Business strategy
d. Corporate strategy
Question 20
Complete
Mark 0 out of 1
a. Deflection and mitigation

c. Transfer and mitigation

Question 21
Complete
Mark 1 out of 1
A ________ franchise is an arrangement in which the franchisor grants to the franchisee the right to buy its products and use its trade name.
a. production plus
b. product and trademark

c. product extension
d. business format
Question 22
Complete
Mark 0 out of 1
A person uncomfortable with his employer’s hiring only black women is experiencing
a. intraorganizational conflict.
b. a feeling of guilt.
c. a conflict of interest.
d. a moral attribute.
e. an ethical issue.
Question 23
Complete
Mark 1 out of 1
a. Market analysis
b. Operations plan
c. Current status
d. Company summary
Question 24
Complete
Mark 1 out of 1
Long-term objectives should be all of the following except:
a. consistent.
b. measurable.
c. challenging.
d. continually changing.
e. reasonable.
Question 25
Complete
Mark 1 out of 1
An individual who has no prior business ownership experience as a business founder, inheritor of a business, or a purchaser of a business is
called a(n. ____________ entrepreneur.
a. Habitual
b. Novice
c. Serial
d. Portfolio
Question 26
Complete
Mark 0 out of 1
ethics.
b. Contract laws require parties to live up to promises because keeping promises is part of our ethical inclination to encourage trust.
c. Contract laws require parties to obey even unenforceable agreements because of our ethical belief that every promise must be kept
at all times.
d. Bribery is legal for U.S. companies doing business in foreign countries because foreign businesses can pay bribes and our ethical
course of action.
Question 27
Complete
Mark 1 out of 1
____________ is primarily concerned with the identification of the project demand potential and the selection of the optimal technology.
a. Input analysis.
b. Feasibility analysis.
c. Techno-economic analysis.
d. Financial analysis.
Question 28
Complete
Mark 0 out of 1
An electrician working in a small town is the only electrician within a 100-mile radius. He knows that people who have medical equipment at
home have the highest need for power, so he charges them double to fix problems with their electricity, compared with the average customer.
The community is angry about this choice. This business practice is most likely:
a. Unethical because it is against the law for a company to charge one customer more than another.
b. Ethical because owners should focus only on the impact of decisions on the firm.
c. Ethical because it is not illegal for a company to set its prices based on maximizing profits.
d. Unethical because there is only one morally proper thing to do in any situation.
e. Unethical because businesses operate in a community and communities have expectations for behavior of individuals, groups, and
businesses.
Question 29
Complete
Mark 1 out of 1
Businesses seem most concerned with ethical issues that could
a. offend their union employees.

b. affect employees.
c. damage the firm.

e. show weakness.
Question 30
Complete
Mark 1 out of 1
Suppose a project has many hazards that could easily injure one or more persons and there is no method of avoiding the potential for
damages. The project manager should consider __________ as a means of deflecting the risk.

c. establishing a contingency fund

d. not acknowledging the potential for injury
e. establishing a management reserve
Question 31
Complete
Mark 1 out of 1
Group dynamics are processes____________.
a. By which groups terminate membership

b. By which groups become cohesive
c. That occur between group members within a group

d. By which groups determine membership
Question 32
Complete
Mark 1 out of 1
Policy formulation is the function of
a. top level management
b. middle level management

c. All of the given options
d. operational management
Question 33
Complete
Mark 0 out of 1
Engineering students are planning a fundraiser to help a local service organization. They will meet to discuss the details of the event. This is
what stage of team building?
a. Performing
b. Forming
c. Norming
d. Storming
Question 34
Complete
Mark 1 out of 1
Which ones are the four basic managerial functions
a. Controlling, Negotiating, Organizing, Motivating
b. Organizing, Negotiating, Planning, Motivating

c. Planning, Organising, motivating, Controlling
d. Planning, Organising, motivating, Negotiating

e. Motivating, Negotiating, Controlling, Planning
Question 35
Complete
Mark 1 out of 1
An individual who initiates, creates and manages a new business can be called _____________.
a. A professional
b. A leader
c. A manager
d. An entrepreneur
Question 36
Complete
Mark 1 out of 1
b. The unquestionable nature of the rules in most absolutist repositories seems overly inflexible when applied to different situations.
c. The questionable nature of the rules in most absolutist repositories seems overly flexible when applied to different situations.
way or another.
e. The allegation that an excessive number of followers actually follow consequentialism.
Question 37
Complete
Mark 0 out of 1
a. Regulatory agencies
b. All users
c. Internal users
d. External users
Question 38
Complete
Mark 1 out of 1
Which of the following statements is false?
a. Market segmentation is a useful process for small businesses to undertake.
b. A benefit is the value of a product feature to a customer.

c. It is a good idea for small businesses to compete solely on price.
d. Selling is essentially a matching process.
Question 39
Complete
Mark 1 out of 1
The three main responsibilities involved with managing an entrepreneurial venture once its up and running include all of the following
EXCEPT:
a. Managing growth
b. Managing bureaucracy
c. Managing processes
d. Managing people
Question 40
Complete
Mark 1 out of 1
Which of the following is (are) true?
a. All answers are correct
b. Personnel management deals with the relations of personnel towards management

c. Personnel management considers that labour is a lifeful item
d. Principles of general management are applicable to personnel management
Question 41
Complete
Mark 1 out of 1
The following is not a function of Personnel management
a. Wages and salary administration

c. Training and development of manpower

Question 42
Complete
Mark 1 out of 1
“Identifying and evaluating key social, political, economic, technological and competitive trends and events”. Which of the followings best
describes this statement?

d. Developing an effective mission statement
Question 43
Complete
Mark 1 out of 1
Innovative entrepreneurs may have to pay high insurance premiums due to the:
a. The need to protect patents
b. Greater employee liability
c. Greater customer liability

d. Greater trading risks
Question 44
Complete
Mark 1 out of 1
The corporate level is where top management directs:
a. its efforts to stabilize recruitment needs
b. all employees for orientation

c. overall sales projections
d. overall strategy for the entire organization
Question 45
Complete
Mark 1 out of 1
Which of the following is not an advantage of strategic management?
a. It helps orientate management decisions to relevant environmental conditions

b. It helps improve the political, economic, social and technological environment of the organisation
c. It helps organisations be proactive rather than reactive

d. It provides organisations with a clearer sense of direction and purpose
Question 46
Complete
Mark 1 out of 1
b. Managerial accountants prepare the financial statements for an organization.


Question 47
Complete
Mark 1 out of 1
The following factor(s) affect(s) manpower planning
a. Working hours
c. Performance rate
d. All answers are correct

Question 48
Complete
Mark 1 out of 1
Innovation can best be defined as_______.
a. the successful exploitation of new ideas.
b. the evolution of new ideas.

c. the opposite of creativity.
d. the generation of new ideas.
Question 49
Complete
Mark 1 out of 1
Which one of the following actions by an entrepreneur is most likely to contribute to creative destruction?
a. Take-over of a competitor
b. Reducing prices
c. Issuing shares
d. Development of a new product
Question 50
Complete
Mark 1 out of 1
a. strategies, worth, obligations, time

c. strategies, weaknesses, obligations, threats
d. strengths, work requirements, opportunities, time
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[Module code] Formal Test 1
Started on Thursday, 8 October 2020, 3:08 PM

State Finished
Completed on Thursday, 8 October 2020, 3:15 PM
Marks 1/15
Grade 7 out of 100
Question 1
Complete
Mark 1 out of 1
The income statement informs the business owner about profit/loss the business in making
a. True
b. False
Question 2
Complete
Mark 0 out of 1
Pull factors are the reasons entrepreneurs are more successful rather than pull factors
a. True
b. False
Question 3
Complete
Mark 0 out of 1
Intrapreneuership creates wealth for the employee
a. False
b. True
Question 4
Not answered
Marked out of 1
Share capital is a personal right which a shareholder has in a company
a. False
b. True
Question 5
Not answered
Marked out of 1
One principle of a cooperative is that the business services must be provided mostly to its members
a. False
Question 6
Not answered
Marked out of 1
When you are an entrepreneur you do not need to know where your competitors are because you focus on yourself
a. False
b. True
Question 7
Not answered
Marked out of 1
A company may not give financial assistance to a person to acquire shares in the company
a. False
b. True
Question 8
Not answered
Marked out of 1
Franchising is a form of a cooperative
a. False
b. True
Question 9
Not answered
Marked out of 1
Networth is obtained from the income statement
a. True
b. False
Question 10
Not answered
Marked out of 1
Customers consider price to be the only importnat factor when selecting a product
a. False
b. True
Question 11
Not answered
Marked out of 1
Financial management is an operational function of a manager
a. False
b. True
Question 12
Not answered
Marked out of 1
Emigration is an indication of a good domestic entreneurship climate
a. False
b. True
Question 13
Not answered
Marked out of 1
Economic change can be catalysed through entrepreneurial processes
a. False
b. True
Question 14
Not answered
Marked out of 1
Internal rate of return indicates the amount of time it takes to reciver the costs of an investment or reach a break even point
a. True
b. False
Question 15
Not answered
Marked out of 1
When the economic environment is constatntly changing, it is not good for entrepreneurship
a. False
b. True
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Entrepreneurship MCQS Guide
Section 1
1. Which one of the following actions by an entrepreneur is most likely to contribute to creative destruction?
A) Development of a new product
B) Take-over of a competitor
C) Issuing shares
D) Reducing prices
2. An advantage of the small firm in the innovation process?

A) Ability to carry out R&D
B) Ability to raise finance
C) Ability of the entrepreneur to carry out multiple tasks
D) Ability of the entrepreneur to act on new ideas or product development
3.External links may provide incentives to:

A) Raise finance
B) Introduce new working practices
C) Introduce improvements to products
D) Attend business exhibitions
4. Firms located on science parks compared to those located off science parks are:
A) More innovative
B) Less innovative
C) No more or less innovative
D) More growth orientated
5. Innovative small firms are more likely in:

A) Knowledge-based sectors
B) Biotechnology
C) Automobile manufacture
D) Aerospace manufacture
6. Schumpeter considered that innovative entrepreneurs would:

A) Thrive
B) Disappear
C) Be absorbed within large innovative firms
D) Be absorbed within non-innovative firms
7. Innovative entrepreneurs face special issues in raising:

A) Development capital
B) Structured capital
C) Human capital
D) Seed capital
8. Innovative entrepreneurs may have to pay high insurance premiums due to the:
A) The need to protect patents
B) Greater employee liability
C) Greater customer liability
D) Greater trading risks
9. Networking by innovative entrepreneurs may be most encouraged by?

A) Science parks
B) Business incubators
C) Chambers of Commerce
D) Business associations
10. The most likely problem encountered by innovative entrepreneurs in raising finance is:
A) Limited security since R&D is an intangible asset
B) The costs of the patenting system
C) The exhaustion of personal equity in R&D
D) Inability of potential external funders to understand technology
Answer of Multiple Choice Questions

1. (A) 2. (D) 3. (C) 4. (C) 5. (A) 6. (C) 7. (D) 8 (A) 9 (B) 10 (C)
1. Which of the following is NOT recognized as a misconception about entrepreneurship?

A) Successful entrepreneurship needs only a great idea.
B) Entrepreneurship is easy.
C) Entrepreneurship is found only is small businesses.
D) Entrepreneurial ventures and small businesses are different.
2. All of the following are characteristics of small businesses EXCEPT:

A) Small businesses are independently owned, operated, and financed.
B) Small businesses have fewer than 100 employees.
C) Small businesses emphasize new or innovative practices.
D) Small businesses have little impact on industry.
3. Which of the following is NOT on of the three areas in which the importance of entrepreneurship can be shown?
A) Innovation
B) Number of new start-ups
C) Job creation and employment
D) bureaucracy
4. The creation of new firms is important because these new firms contribute to economic development through
benefits that include all of the following EXCEPT:
A) Product-process innovation
B) Increased tax revenues
C) Unemployment
D) Social betterment
5. All of the following represent countries in which the highest level of entrepreneurial activity was found EXCEPT:
A) Australia
B) Korea
C) Norway
D) Japan
6. Positive external trends or changes that provide unique and distinct possibilities for innovating and creating value
are called _____________.
A) Strengths
B) Opportunities
C) Weaknesses
D) Threats
7. An individual who has no prior business ownership experience as a business founder, inheritor of a business, or a
purchaser of a business is called a(n) ____________ entrepreneur.
A) Habitual
B) Novice
C) Serial
D) Portfolio
8. An individual who has prior business ownership experience is called a(n) ____________ entrepreneur.
A) Novice
B) habitual
C) Serial
D) Portfolio
9. All of the following are popular demographic factors about entrepreneurs that have been studied EXCEPT:
A) Self-confidence
B) Gender
C) Education
D) Family birth order
10. The three main responsibilities involved with managing an entrepreneurial venture once its up and running
include all of the following EXCEPT:
A) Managing processes
B) Managing people
C) Managing bureaucracy
D) Managing growth

1. (D) 2. (C) 3. (D) 4. (C) 5. (D) 6. (B) 7. (B) 8 (B) 9 (A) 10 (C)
.
.
Section 2
1. An individual who initiates, creates and manages a new business can be called
_____________.
A. A leader
B. A manager
C. A professional
D. An entrepreneur
ANSWER: D
2. Someone who improves an existing business can be called _________.

A. An intrapreneur.
B. A professional.
C. A co-worker.
D. A changeling.
ANSWER: A
3. Which could provide an individual with the motivation to start a new business venture?
A. The financial rewards.

B. A desire to be independent.
C. Risk taking
D. All the above.
ANSWER: D
4. Which industrial sector tends to naturally promote small-scale businesses and
Entrepreneurship, and
generally has lower barriers to market entry?
A. Service.
B. Manufacturing.
C. Distribution.
D. Agriculture.
ANSWER: A
5. The UK government has implemented a number of policies to encourage Entrepreneurship in

schools.
One such initiative is _________.
A. Young Enterprise.
B. Youth venture.
C. Young Business.
D. Young Initiative.
ANSWER: A
6. Why are small businesses important to a country's economy?

A. They give an outlet for entrepreneurs.
B. They can provide specialist support to larger companies.
C. They can be innovators of new products.
D. All the above.
ANSWER: D
7. Intellectual Property laws can protect _________.

A. Trademarks.
B. Copyright.
C. Patents.
D. All the above.
ANSWER: D
8. A business arrangement where one party allows another party to use a business name and sell
its
products or services is known as__________.
A. A cooperative.
B. A franchise.
C. An owner-manager business.
D. A limited company.
ANSWER: B
9. Which of the following is the reason for business failure __________.

A. Lack of market research.
B. Poor financial control.
C. Poor management.
D. All the above.
ANSWER: D
10. The use of informal networks by entrepreneurs to gather information is known as _______.
A. Secondary research.
B. Entrepreneurial networking.
C. Informal parameters.
D. Marketing
ANSWER: B
11. Good sources of information for an entrepreneur about competitors can be Obtained
from_________.
A. Websites.
B. Product information leaflets.
C. Company reports and published accounts.
D. All the above.
ANSWER: D
12. A new venture's business plan is important because ______.

A. It helps to persuade others to commit funding to the venture.
B. Can help demonstrate the viability of the venture.
C. Provides a guide for business activities by defining objectives.
D. All the above.
ANSWER: D
13. Primary data is________.

A. the most important data.
B. the data that is collected first.
C. new data specifically collected for a project.
D. data that is collected second.
ANSWER: C
14. Innovation can best be defined as_______.

A. the generation of new ideas.
B. the evolution of new ideas.
C. the opposite of creativity.
D. the successful exploitation of new ideas.
ANSWER: D
15. Which of these statements best describes the context for entrepreneurship?
A. Entrepreneurship takes place in small businesses.
B. Entrepreneurship takes place in large businesses.
C. Entrepreneurship takes place in a wide variety of contexts.
D. Entrepreneurship does not take place in social enterprises.
ANSWER: C
16. Entrepreneurs are motivated by _________.

A. money.
B. personal values.
C. pull influences.
D. All the above.
ANSWER: D
17. Which of the following is least likely to influence the timing of new business births?
A. Government policies.
B. Profitability.
C. Consumer expenditure.
D. Weather conditions.
ANSWER: D
18. Which of the following statements is false?

A. Market segmentation is a useful process for small businesses to undertake.
B. Selling is essentially a matching process.
C. A benefit is the value of a product feature to a customer.
D. It is a good idea for small businesses to compete solely on price.
ANSWER: D
19. The purpose of all good small business strategy is__________.

A. to increase turnover.
B. to increase profitability.
C. to achieve competitive advantage.
D. to achieve stated objectives.
ANSWER: D
20. Which of the following is a recognized disadvantage of setting up as a start-up as compared

with other
routes to market entry?
A. less satisfaction of the owners.
B. less help from various agencies.
C. there are more funds required.
D. there is a high failure rate.
ANSWER: D
21. Someone legally appointed to resolve the financial difficulties of an insolvent firm is
called____________.
A. an administrator.
B. a predator.
C. an auditor.
D. a turnaround consultant.
ANSWER: A
22. Goods or services reach the market place through ________.

A. marketing channels.
B. multilevel pyramids.
C. monopolies.
D. multiplication.
ANSWER: A
23. To provide financial assistance to entrepreneurs the government has set up a number
of___________.
A. financial advisors.
B. financial intermediaries.
C. Industrial estates.
D. financial institutions.
ANSWER: D
24. _____________ can be defined as a specifically evolved work plan densed to achieve a
specific
objective within a specific period of time
A. Idea generation.
B. Opportunity Scanning.
C. Project.
D. Strategy.
ANSWER: C
25. Large investment is made in fixed assets, the project will be termed as __________.
A. Capital Intensive.
B. Labour Intensive.
C. Product Intensive.
D. Market Intensive.
ANSWER: A
26. PERT stands for __________.

A. Programme Evaluation and Research Techniques.
B. Project Evaluation and Review Techniques.
C. Programme Evaluation and Review Techniques.
D. Project Evaluation and Research Techniques.
ANSWER: C
27. _____________ is used to accomplish the project economically in the minimum available
time with
limited resources
A. Project Scheduling.
B. Network Analysis.
C. Budget Analysis.
D. Critical Planning.
ANSWER: A
28. ______________ is a form of financing especially for funding high technology, high risk and
perceived
high reward projects
A. Fixed capital.
B. Current capital.
C. Seed capital.
D. Venture capital.
ANSWER: D
29. In _________, machines and equipments are arranged in the order or sequence in which they
are to be
used for manufacturing the product
A. Factory Layout.
B. Product Layout.
C. Process Layout.
D. Combined Layout.
ANSWER: B
30. The term ___________ denotes bonus or financial aid which is given by a government to an
industry to
help it compete with other units
A. Incentive.
B. Subsidy.
C. Bounty.
D. Concession.
ANSWER: C
31. The granting of cash subsidy on the capital investment is called __________.
A. Concessional finance.
B. Quantum of Subsidy.
C. Interest Subsidy.
D. Central Investment Subsidy.
ANSWER: D
32. ____________ is primarily concerned with the identification of the project demand potential
and the
selection of the optimal technology.
A. Techno-economic analysis.
B. Feasibility analysis.
C. Input analysis.
D. Financial analysis.
ANSWER: A
33. Decisions taken by an entrepreneur on behalf of his enterprise are known as _________.
A. Organizational decisions.
B. Personal decisions.
C. Routine decisions.
D. Strategic decisions
ANSWER: A
34. Decisions which are concerned with policy matters and exercise fundamental influence on
the
objectives of the organization are called as____________.
D. Strategic decisions.
ANSWER: D
35. _________________ implies the availability or otherwise of plant and machinery and
technical know
how to produce the product.
A. Economic viability.
B. Financial feasibility.
C. Technical feasibility.
D. Managerial competence
ANSWER: C
36. Which of the list below does not form Intellectual Property?
A. Trade marks.
B. Patents.
C. Tangible assets.
D. Copyright.
ANSWER: C
37. A business arrangement where one party allows another party to use a business Name and
sell its
A. A cooperative.
B. A franchise.
ANSWER: B
38. What is the role of a Business Angel?

A. To provide small business advice.
B. To provide capital for business development in exchange for a stake in the Business
ownership.
C. To set up a franchise business.
D. To assist an entrepreneur to open a lifestyle business.
ANSWER: B
39. Which one of the following describes unemployment?

A. The number of people who voluntarily choose not to work.
B. The number of people who are jobless and are actively seeking work.
C. The number of people who are not actively seeking work.
D. The number of people actively seeking work who find work.
ANSWER: B
40. Idea of new product is tested in potential consumers to determine consumer acceptance at
_________
stage.
A. Concept.
B. Product development.
C. Test marketing.
D. Commercialization.
ANSWER: C
42. Which one of the following is not considered as one of the building blocks of the model
entrepreneur?
A. technical skills.
B. management competencies.
C. business awareness.
D. personal attributes.
ANSWER: C
43. An entrepreneur who owns more than one business at a time is called ________.
A. an intrapreneur.
B. a corporate entrepreneur.
C. a portfolio entrepreneur.
D. None of the above.
ANSWER: C
44. Industries producing complete articles for direct consumption & also processing industries is
called
as_______________.
A. Manufacturing industries.
B. Feeder Industries.
C. Service Industries.
D. Mining or Quarrying.
ANSWER: A
45. _____________ is primarily concerned with the identification, qualification and evaluation
of the
project resources.
C. Input analysis.
ANSWER: B
the
ANSWER: D
47. Decisions which are non-repetitive and novel nature and required to solve unstructured
problem is
called as ___________.
A. Programmed decisions.
B. Non -programmed decisions.
ANSWER: B
48. Seed capital assistance ___________.

A. a long-term assistance.
B. initial assistance
C. a help for the purchase of seeds.
D. a short-term assistance.
ANSWER: B
49. Business means ________.

A. Commerce.
B. industry and commerce.
C. trade and commerce.
D. selling and buying of goods.
ANSWER: B
51. Promoter is a person who ________.

A. takes part in the incorporation of a company .
B. is a director.
C. is a relative of the managing director.
D. works to publicity to the company.
ANSWER: A
52. Business risks can be ______.
A. avoided.
B. reduced.
C. ignored.
D. erased.
ANSWER: B
53. The oldest form of business organization is ______.

A. Partnership.
B. sole proprietorship.
C. joint stock company.
D. co-operative undertaking.
ANSWER: B
54. Memorandum of association of a firm contains _______.

A. rules regarding the internal management of the company.
B. rules regarding the constitution and activities of the company.
C. rules regarding the external management.
D. rules regarding the constitution.
ANSWER: B
55. A person owning and running a small firm, is known as________.

A. A manager-owner.
B. An owner-manager.
C. A professional adapter.
D. An enterprise worker.
ANSWER: B
56. Which of the following is a characteristic typical of _________?Most entrepreneurs

A. Choose high risk ventures.
B. Choose low risk ventures.
C. Choose moderate (or calculated) risk ventures.
D. Choose no risk ventures.
ANSWER: C

schools.
B. Youth venture.
C. Young Business.
ANSWER: A
58. One of the disadvantages of a franchise business for a franchisee is ________.
A. Lack of independence.
B. Franchise businesses typically have a high failure rate.
C. Lack of brand identity.
D. Training is not normally provided by the franchisor.
ANSWER: A
59. The Markets and Competitors section of a business plan should contain ____________.
A. A statement of the target market.
B. The size of each market segment.
C. The key characteristics of buyers in each business segment.
D. All the above.
ANSWER: D
60. As a new company grows, the entrepreneur will need to _________.

A. be responsive to changes in the market.
B. ensure financial controls are maintained.
C. build a management team.
D. all the above.
ANSWER: D
61. An entrepreneur into the hosiery business found out the reason his hosiery was not selling
was due to
its color. What could be the best source of this information?
A. Supplier.
B. Retailer.
C. Competition.
D. Government bureau.
ANSWER: B
62. Entrepreneurship can best be described as _________.

A. a process that requires setting up a business.
B. taking a significant risk in a business context.
C. having a strong vision.
D. a process involving innovation, new products or services, and value creation.
ANSWER: D
63. Every entrepreneur should draw an ------------ for his project to ensure the timely completion
of all
activities involved in setting up an enterprise.
A. cost structure
B. implementation plan
C. market structure
D. production structure
ANSWER: B
64. Entrepreneurial development is the key to achieve all-round ---------------- through
acceleration of
industrial and entrepreneurial activities.
A. economic development
B. increase in profits
C. shareholders value
D. business development
ANSWER: A
VINOBA BHAVE UNIVERSITY
Entrepreneurship Development Program
MODEL QUESTION PAPER
Multiple Choice Questions.
1. An individual who starts, creates and manages a new business can be called
_____________.
A. A leader
B. A manager
C. A professional
D. An entrepreneur
ANSWER: D
2. Trademarks relate to _______.

A. Practice and knowledge acquired through experience
B. The protection of proprietary information of commercial value
C. The right to reproduce ones own original work
D. Brand identity
ANSWER: D
C. Risk taking
D. All the above.
ANSWER: D
4. Which of the following factors should not be included in PESTLE analysis?

A. Government re-cycling policy.
B. Proposed reduction in interest rates.
C. Competitor activity.
D. Demographic changes.
ANSWER: C
5. Which industrial sector promotes small-scale businesses and

Entrepreneurship, and has lower barriers to market entry?
A. Service.
B. Manufacturing.
C. Distribution.
D. Agriculture.
ANSWER: A

D. All the above.
ANSWER: D
its products or services is known as__________.
A. A cooperative.
B. A franchise.
ANSWER: B

C. Poor management.
D. All the above.
ANSWER: D

D. Marketing
ANSWER: B
10. Good sources of information for an entrepreneur about competitors can be obtained
from_________.
A. Websites.
D. All the above.
ANSWER: D

D. All the above.
ANSWER: D

ANSWER: C

ANSWER: D
ANSWER: C

A. money.
B. personal values.
C. pull influences.
D. All the above.
ANSWER: D
16. Which of the following are described as one of the Big Five personality traits?
A. tolerance of others.
B. need for achievement.
C. propensity to leadership.
D. locus of control.
ANSWER: B
B. Profitability.
ANSWER: D

ANSWER: D

ANSWER: D

with other routes to market entry?
ANSWER: D
21. Someone legally appointed to resolve the financial difficulties of an insolvent firm
is called____________.
B. a predator.
C. an auditor.
ANSWER: A

C. monopolies.
D. multiplication.
ANSWER: A
23. To provide financial assistance to entrepreneurs the government has set up a

number of___________.
ANSWER: D
24. State Industrial corporations engage in the development of__________.

A. industrial estates.
B. institutional estates.
C. individual investors.
D. agricultural entrepreneurs.
ANSWER: A
25. ________ is the first development bank of the country.

A. ICICI.
B. IDBI.
C. SFC.
D. IFCI.
ANSWER: D
26. IFCI stands for_____________.

A. Industrial finance corporation of India.
B. Institutional finance corporation of India.
C. Industrial funding corporation of India.
D. Indian finance corporation and institution.
ANSWER: A
27. IFCI has been converted into a________.

A. joint stock company.
B. co-operative society.
C. partnership firm.
D. sole proprietorship.
ANSWER: A
28. SIDBI was set up as a subsidiary of_________.

A. IDBI.
B. IFCI.
C. ICICI.
D. SFC.
ANSWER: A
29. Which of the following is a function of SIDBI?

A. Extension of seed capital.
B. Discounting of bills.
C. Providing factoring services.
D. All of the above.
ANSWER: D
30. SFC is prohibited from granting financial assistance to any company whose aggregate paid
up capital exceed__________.
A. 1 crore.
B. 1.5 crores.
C. 2 crores.
D. 2.5 crores.
ANSWER: A
31. SIPCOT's financial assistance is in the form of __________.

A. term loan.
B. seed capital scheme.
C. underwriting the capital issues.
D. All of the above.
ANSWER: D
32. The business development department of SIPCOT guides entrepreneurs in ______.

A. applying for licences.
B. approval on collaboration.
C. allocation of scarce raw materials.
D. All the above.
ANSWER: D
33. TIIC is sponsored by the__________.

A. Government of Karnataka.
B. Government of Andhra Pradesh.
C. Government of Kerala.
D. Government of Tamil Nadu.
ANSWER: D
34. In backward areas, term loans for expansion or setting up a new unit are available at
__________ .
A. concessional terms.
B. differential terms.
C. standard terms.
D. specific terms.
ANSWER: A
35. A commercial banker would prefer a ____________ debt-equity ratio over the years as it
indicates financial strength of a unit.
A. Declining.
B. Increasing.
C. Stable.
D. Fluctuating.
ANSWER: A
36. EDPs course contents contains ___________.

A. General introduction to entrepreneurs.
B. Motivation training.
C. Managerial skills.
D. All the above.
ANSWER: D
37. Entrepreneurial Guidance Bureau(EGB) was set up by____________.

A. SISI.
B. SIPCOT.
C. IIC.
D. SIDCO.
ANSWER: C
specific objective within a specific period of time
A. Idea generation.
C. Project.
D. Strategy.
ANSWER: C
ANSWER: A

ANSWER: C
time with limited resources
C. Budget Analysis.
ANSWER: A
42. ______________ is a form of financing especially for funding high technology, high
risk and perceived high reward projects
A. Fixed capital.
B. Current capital.
C. Seed capital.
D. Venture capital.
ANSWER: D
43. In _________, machines and equipments are arranged in the order or sequence in which
they are to be used for manufacturing the product
A. Factory Layout.
B. Product Layout.
C. Process Layout.
D. Combined Layout.
ANSWER: B
industry to help it compete with other units
A. Incentive.
B. Subsidy.
C. Bounty.
D. Concession.
ANSWER: C
45. he granting of cash subsidy on the capital investment is called __________.
ANSWER: D
46. New Small Scale industries are exempted from the payment of income tax under section 80J
is called __________
A. Development Rebate..
B. Investment Allowance.
C. Rehabilitation Allowance.
D. Tax Holiday
ANSWER: B
47. ____________ is primarily concerned with the identification of the project demand
potential and the selection of the optimal technology.
C. Input analysis.
ANSWER: A
48. _____________ refers to some action which is a time consuming effort necessary to
complete a specific event.
A. A Network.
B. An Activity.
C. An Event.
D. A Node.
ANSWER: B
49. _____________ is a graphical representation of the various activity and event relating to a
project.
A. Network analysis.
B. Scheduling technique.
C. Logical Model.
D. Network Diagram
ANSWER: D
50. Activities which must be finished before a given event can occur are termed as _________.
A. Preceeding Activities.
B. Succeeding Activities
C. Concurrent Activities
D. Dummy Activities.
ANSWER: A
51. Activities which can be accomplished simultaneously are termed as ___________.

A. Preceeding Activities.
B. Succeeding Activities.
C. Concurrent Activities
D. Dummy Activities.
ANSWER: C
52. EST stands for ____________.

A. Earliest Start Time.
B. Event Start Time.
C. Effective Start Time.
D. Essential Start Time.
ANSWER: A
53. Additional time which a non-critical activity can consume without increasing the project
duration is called _____________.
A. Total Float.
B. Free Float
C. Independent Float.
D. Dependant Float
ANSWER: A
54. ______________ is an event-oriented approach .

A. CPM.
B. GERT.
C. PERT.
D. WASP.
ANSWER: C
55. _______________ is an activity-oriented approach.

A. CPM
B. PERT
C. GERT
D. WASP
ANSWER: A
56. _______________ is the analysis of costs and benefits of a proposed project with the goal
of assuming a rational allocation of limited funds.
A. Project formulation.
B. Project evaluation.
C. Project appraisal .
D. Project Design.
ANSWER: C
57. ______________ may be defined as the excess of present value of project cash inflows over
that of out flows.
A. Net present value technique.
B. Average rate of return.
C. Benefit-Cost ratio.
D. Internal rate of return
ANSWER: A
ANSWER: A
the objectives of the organization are called as____________.
ANSWER: D
60. __________________ is a problem -solving technique designed to produce numerous ideas

in a short period
A. Synectics.
B. Delphi technique.
C. Brain storming.
D. Nominal group technique.
ANSWER: C
61. . __________________ is the systematic development of a project idea for the

eventual purpose of arriving at an investment decision.
A. Project identification.
B. Project formulation.
C. Project feasibility.
D. Project evaluation.
ANSWER: B
62. The process of preparing an inventory of skills needed for effective implementation of
the project is called as ____________.
D. Managerial competence.
ANSWER: D
technical know how to produce the product.
ANSWER: C
64. CPM stands for____________.
A. Continuous Path Method.
B. Clear Path Method.
C. Critical Path Method.
D. Critical Probabilistic Method.
ANSWER: C
65. _______________ is granted to small scale units under section 33B of the Income tax act,
1961.
A. Depreciation Allowance.
B. Development Debate.
C. Investment Allowance.
D. Rehabilitation Allowance.
ANSWER: D
66. DGTD stands for __________.

A. Directorate General of Technical Development.
B. District General of Technical Development.
C. District General of Taxation Deduction.
D. Directorate General of Taxation Deduction.
ANSWER: A
67. A provisional SSI registration certificate is valid for a period of __________.

A. four Years.
B. three Years.
C. two Years.
D. one year.
ANSWER: D
68. National Alliance of Young Entrepreneurs (NAYE) Sponsored an

Entrepreneurial Development scheme with Bank of India in______________.
A. January 1920.
B. August 1920.
C. January 1972.
D. August 1972.
ANSWER: D
69. Which of the following is not one of the 4 Ms?

A. motivation.
B. management.
C. materials.
D. money.
ANSWER: C
A. Trade marks.
B. Patents.
C. Tangible assets.
D. Copyright.
ANSWER: C
71. The 'T' in a PESTLE analysis refers to ___________.

A. Time.
B. Technology.
C. Training.
D. Talent.
ANSWER: B
sell its products or services is known as__________.
A. A cooperative.
B. A franchise.
ANSWER: B

B. To provide capital for business development in exchange for a stake in the
Business ownership.
ANSWER: B
74. A key aspect of the financial section of the business plan is _________.
A. A statement of management skills.
B. A realistic sales forecast.
C. Production capacity.
D. A description of competitors.
ANSWER: B

ANSWER: B
_________ stage.
A. Concept.
C. Test marketing.
ANSWER: C
entrepreneur?
ANSWER: C
78. Which of the following factors does the macro-environment not include?
A. political and regulatory factors.
B. customer needs in a given market.
C. social and demographic factors.
D. technological changes.
ANSWER: B
79. Which of the following statements is false? Electronic commerce:

A. can allow new ventures to compete on more or less equal terms with large firms.
B. can lead to small businesses having reduced contact with its customers.
C. is rarely used in small businesses.
D. is used in many different industries and markets.
ANSWER: C
80. Strategic entrepreneurial marketing has been summarised as the 4Is: identification of target
markets, interactive marketing methods, informal intelligence gathering and what is the fourth?
A. independence.
B. instructiveness.
C. innovation.
D. internet.
ANSWER: C
A. an intrapreneur.
ANSWER: C
82. Industries producing complete articles for direct consumption & also processing industries
is called as_______________.
ANSWER: A
of the project resources.
C. Input analysis.
ANSWER: B
84. LOB stands for____________.

A. Line of Business.
B. Line of Balance.
C. Loss of Business.
D. Loss of Balance
ANSWER: B
85. Underestimation of project cost leads to ___________.

A. Time under run.
B. Cost under run
C. Time over run.
D. Cost over run
ANSWER: D
86. New entrepreneurs entering the field of medium industry for the first time can have market
studies with the subsidiary of ___________.
A. 75% of the cost or Rs.15000 whichever is less.
B. 75% of the cost or Rs.15000 whichever is high
C. 50% of the cost or Rs.15000 whichever is less.
D. 50% of the cost or Rs.15000 whichever is high
ANSWER: A
the objectives of the organization are called as____________.
ANSWER: D
88. Section 80 HHB provides for a deduction of ____________________ of profits and gains
earned by a resident Indian company.
A. 65%.
B. 60%.
C. 55%.
D. 50%
ANSWER: D
problem is called as ___________.
ANSWER: B
90. The application for registration of a small scale unit should be submitted to the _______ .
A. General manager, DIC.
B. Director, DIC.
C. General manager. NSIC.
D. Director, NSIC.
ANSWER: A
91. The type of diversification in which the company adds complementary to the existing
product or service line is _________.
A. conglomerate diversification.
B. horizontal integration.
C. vertical integration.
D. concentric integration.
ANSWER: C
92. Which of the following is not an aspect of appraisal of term loans by commercial banks?
A. Financial feasibility.
B. Technical feasibility.
C. Economic feasibility.
D. Societal feasibility.
ANSWER: D
93. The type of diversification in which the company adds up same type of products at the same
level of production is ____________.
ANSWER: B
94. When a firm enters into some business which is related with its present business in terms of
technology, marketing or both it is called as _____________.
ANSWER: D
95. When a firm enters into business which is unrelated to its existing business both in terms of
technology and marketing ______________.
D. concentric integration
ANSWER: A
96. District Industries Centres are located ____________.

A. in each district.
B. in each state.
C. only in selected districts.
D. only in selected states.
ANSWER: A
97. The purpose of soft loan scheme is to encourage units to undertake ___________.
A. modernization of plant and machinery.
B. replacement of plant and machinery.
C. renovation of plant and machinery.
D. all the above
ANSWER: D

ANSWER: B
99. EXIM bank is a __________.

A. State-level institution.
B. Regional -level institution.
C. All India institution.
D. International institution.
ANSWER: C
100. DIC is headed by General Manager in the rank of ___________.

A. Joint Director of industries.
B. Assistant Director of industries.
C. Non-departmental officer.
D. Departmental officer.
ANSWER: A
101. Institutional agencies grant financial assistance to small scale industries for _________.
A. participation in equity capital only.
B. acquisition of fixed assets.
C. working capital assistance.
D. all of the above.
ANSWER: D
102. Under section 80J of the income tax act, 1961, small-scale industries are exempted from
the payment of income tax on their profits at ___________.
A. 6% p.a.
B. 6% p.m.
C. 5% p.a.
D. 5% p.a.
ANSWER: A
103. The policy which stressed the role of cottage and small-scale industries for balanced
industrial development of the country is ___________.
A. IPR 1940.
B. IPR 1948.
C. IPR 1956.
D. IPR 1977.
ANSWER: B
104. The policy which emphasized the need of promoting small-scale industries through
integrated industrial development is_____________.
A. IPR 1948.
B. IPR 1956.
C. IPR 1977.
D. IPR 1980.
ANSWER: C
105. The small scale unit wishing to export has to obtain exporters code number from
_________.
A. The Reserve Bank of India.
B. The Central Bank of India.
C. Any Regional Bank.
D. Any International Bank.
ANSWER: A
106. The expenses incurred on the setting up of the enterprise are called as _________.
A. Cost of financing.
B. Cost of promotion..
C. Cost of fixed assets.
D. Cost of current assets.
ANSWER: B
107. Over - capitalization arises due to___________.

A. excess of assets over the liabilities.
B. excess of liabilities over the assets.
C. actual earnings are lower than the expected earnings.
D. actual earnings are higher than the expected earnings.
ANSWER: C
108. Under-capitalization arises due to __________.

A. excess of assets over the liabilities.
B. excess of liabilities over the assets.
C. actual capitalization is higher than the proper capitalization.
D. actual capitalization is lower than the proper capitalization.
ANSWER: D
109. Which of the following leads to over-capitalization?
A. acquiring fixed assets on excessive amounts.
B. under-estimation of initial rate of earnings.
C. using lower-rate of capitalization.
D. under estimation of required funds.
ANSWER: A
110. Which of the following leads to under-capitalization?

A. raising of more money by issue of shares.
B. acquiring fixed assets on excessive amounts.
C. over-estimation of earnings for enterprise.
D. under-estimation of initial rate of earnings.
ANSWER: D

A. Commerce.
ANSWER: B
112. A valid definition of a business purpose is to ______.

A. create a customer.
B. maximize profits.
C. serve the society.
D. increase the wealth of the firm.
ANSWER: B
113. Reserve bank of India is a/an _______.

A. statutory corporation.
B. company limited by guarantee.
C. company limited by shares.
D. unlimited company.
ANSWER: A
114. A public corporation means _____.

A. public company.
B. government company.
C. statutory corporation.
D. department of union government
ANSWER: C

B. is a director.
ANSWER: A
116. The term Capitalization is used in relation to ______.

A. sole-proprietorship.
B. Partnership.
C. joint stock companies.
D. co-operative societies
ANSWER: C
117. Which of the following sources is not use for medium term financing?
A. Issue of equity shares.
B. Issue of debentures.
C. Term loans from banks.
D. Sale of current asset.
ANSWER: A
118. Which of the following securities proves a burden on finances of the company,
when company is not earning profits?
A. Equity shares.
B. Preference shares.
C. Redeemable preference shares.
D. Debentures.
ANSWER: D
119. Investment in which of the following is most risky?

A. Equity shares.
B. Preference shares.
C. Debentures.
D. Land.
ANSWER: C
120. A project, which may not add to the existing profits, should be financed by _________
A. debentures.
B. preference share capital.
C. equity capital.
D. public deposits.
ANSWER: A

A. avoided.
B. reduced.
C. ignored.
D. erased.
ANSWER: B
122. O & M refers to ____________

A. overall efficiency of business.
B. efficiency of office and administrative work.
C. office work measurement.
D. office and management study.
ANSWER: D

A. Partnership.
ANSWER: B

ANSWER: B
125. A Company is called an artificial person because ____.

A. it does not have the shape of a natural person.
B. it cannot be used in the court of law.
C. it is invisible and intangible.
D. it exists only in contemplation of law.Answer:
C ANSWER: C
126. The charter of a company is its ______.

A. prospectus.
B. statement lieu of prospectus.
C. memorandum of association.
D. articles of association.
ANSWER: A

A. A manager-owner.
ANSWER: B

ANSWER: C
129. The UK government has implemented a number of policies to encourage Entrepreneurship

in schools. One such initiative is _________.
B. Youth venture.
C. Young Business.
ANSWER: A

ANSWER: A
D. All the above.
ANSWER: D

D. all the above.
ANSWER: D
was due to its color. What could be the best source of this information?
A. Supplier.
B. Retailer.
C. Competition.
ANSWER: B

ANSWER: D
135. ____________, which is included in the project cost, is estimated on the basis of the year
when the enterprise breaks even.
A. working capital
B. cost of capital
C. cost of production
D. cost of equity
ANSWER: A
136. The minimum amount of------------------,irrespective of such private participation,could be

specified at a minimum 17.5 per cent of project costs by lending institutions.
A. bank loans
B. promotors contribution
C. fixed capital
D. working capital
ANSWER: B
137. __________ set up for the purpose of financing, facilitating, and promoting foreign trade
of India.
A. Repco bank
B. SBI
C. EXIM bank
D. HDFC
ANSWER: C
138. Which of the following is not considered to be a characteristic of a project?

A. An established objective
B. Complex tasks
C. A clear beginning and end
D. Only for internal use
ANSWER: D
139. Project management is ideally suited for a business environment requiring all of the
following except _________.
A. Flexibility
B. Innovation
C. speed
D. Repetability
ANSWER: D
140. Integration of project management with the organization takes place with the
_______________.
A. master budjet
B. strategic plan
C. Process of managing actual projects
D. both b and c
ANSWER: D
141. The content of the final report typically includes the following topics __________.
A. Executive summary
B. review and analysis
C. recommendations
D. If all the above are correct.
ANSWER: D
142. Project mission and objectives, procedures and systems used, and organization resources
used typically appear in the _____ section of the final project report.
A. Analysis
B. Recommendation
C. lessons learned
D. financial feasibility
ANSWER: A
143. what are the components of then project report ________.

A. requirement of funds
B. location
C. manpower
D. all the above
ANSWER: D
144. market potential of the project report includes ________.

A. demand and supply conditions
B. market strategy
C. after sales service
D. all the above
ANSWER: D
145. Every entrepreneur should draw an _______ for his project to ensure the timely
completion of all activities involved in setting up an enterprise.
A. cost structure
C. market structure
ANSWER: B
146. ______________ describes the direction, the enterprise is going in, what its goals are,
where it wants to be,and how it is going to get there.
A. project report
B. technical anlaysis
C. market analysis
D. financial analysis
ANSWER: A
147. Today, many companies are using managerial techniques that are designed to encourage
_________.
A. increasing profits
B. legal compliances
C. Ethical behaviour
D. shareholders value
ANSWER: C
148. Entrepreneurial development is the key to achieve all-round __________ through

ANSWER: A
149. Swot Analysis is a _____________ tool

A. Conceptual
B. Modern
C. Scientific
D. Traditional
ANSWER: A
150. NABARD is a Bank for _____________ development

A. Urban
B. Agricultural and Rural
C. Scientific
D. Agriculture and research
ANSWER: B
Strategic Management MCQ: Multiple Choice Questions and Answers on Strategic
Management
1. The fundamental purpose for the existence of any organization is described by its
a. policies
b. mission
c. procedures
d. strategy
Ans. b
2. The fundamental purpose of an organization’s mission statement is to
a. create a good human relations climate in the organization
b. define the organization’s purpose in society
c. define the operational structure of the organization
d. generate good public relations for the organization
Ans. b
3. The acronym SWOT stands for
a. Special Weapons for Operations Timeliness
b. Services, Worldwide Optimization, and Transport
c. Strengths Worldwide Overcome Threats
d. Strengths, Weaknesses, Opportunities, and Threats
Ans. d
4. Which of the following is not a characteristic of strategic management that makes it
different from other types of management?
a. It is interdisciplinary.
b. It has an external focus.
c. It has an internal focus.
d. It concerns the present direction of the organization.
Ans. d
5. Which of the following is an issue considered in developing corporate strategies?
a. What business(es) are we in?
b. What direction are we going?
c. What resources do we have to implement our strategies?
d. What businesses are we in and what to do with those businesses?
Ans. c
6. Which of the following is NOT a major element of the strategic management process?
b. Implementing strategy
c. Evaluating strategy
c. Assigning administrative tasks
Ans. d
7. Competitive advantage can best be described as:
ADVERTISEMENTS:
b. what sets an organization apart.
d. intangible resources.
Ans. a
8. ________________ is the foundation of blue ocean strategy.
a. Innovation
ADVERTISEMENTS:
b. Value creation
c. Value innovation
d. value cost trade-off
Ans. c
9. The various organizational routines and processes that determine how efficiently
and effectively the organization transforms its inputs into outputs are called:
a. strengths.
ADVERTISEMENTS:
b. core competencies.
c. capabilities.
d. customer value.
Ans. b
10. When defining strategic management the most important thing to remember is that
it is:
a. Not as easy as you think
ADVERTISEMENTS:
c. A living evolving process
d. More conceptual than practical
e. A way of determining responsibilities
Ans. c
11. An organisation’s strategy:
a. remains set in place longer than the mission and objectives
b. generally forms over a period of time as events unfold
c. tends to be formed at the same time the mission is developed and objectives are formulated
d. is usually conceived at a single time when managers sit down and work out a
comprehensive strategic plan for the next 3-5 years
Ans. b
12. The primary focus of strategic management is:
a. strategic analysis
b. the total organisation
c. strategy formulation
d. strategy implementation.
Ans. b
13. Which of the following is not an advantage of strategic management?
a. It provides organisations with a clearer sense of direction and purpose
b. It helps improve the political, economic, social and technological environment of the
organisation
c. It helps orientate management decisions to relevant environmental conditions
d. It helps organisations be proactive rather than reactive
Ans. b
14. Which of the following defines what business or businesses the firm is in or should
be in?
a. Business strategy
b. Corporate strategy
c. Functional strategy
d. National strategy
Ans. b
15. Which of the following defines how each individual business unit will attempt to
achieve its mission?
Ans. a
16. Which of the following focuses on supporting the corporate and business
strategies?
a. Competitive strategy
c. Operational strategy
e. Mission strategy
Ans. c
17. Which one of the following is not a primary task of strategic managers?
a. Establishing strategic objectives
b. Developing the steps to follow in implementing operational level plans
c. Defining the business and developing a mission
d. Developing a strategy
e. Implementing and evaluating the chosen strategy
Ans. b
18. The task of strategy choice involves:
a. developing plans and activities which will improve the organisation’s performance and
competitive position
b. determining how the organisation can be more market and efficiency oriented
c. monitoring whether the organisation is achieving good financial performance
d. keeping the organisation free of debt
Ans. a
19. Which one of the following is at the core of strategic management?
a. Choosing which organisational objectives to focus on
b. Being alert for opportunities to change work responsibilities
c. Adapting the organisation to a changing external environment
d. Choosing whether to make decisions autocratically or on the basis of participation
Ans. c
20. The corporate level is where top management directs:
a. all employees for orientation
b. its efforts to stabilize recruitment needs
c. overall strategy for the entire organization
d. overall sales projections
Ans. c
21. The three organizational levels are:
a. corporate level, business level, functional level
b. corporate level, business unit level, functional level
c. corporate strategy level, business unit level, functional level
d. corporate strategy level, business level, specialist level
Ans. a
22. Which of the following is an example of competing on quick response?
a. a firm produces its product with less raw material waste than its competitors
b. a firm offers more reliable products than its competitors
c. a firm’s products are introduced into the market faster than its competitors’
d. a firm’s research and development department generates many ideas for new products
Ans. c
23. Which one of the following is NOT included in the Porter’s Five Forces model:
a. Potential development of substitute products
b. Bargaining power of suppliers
c. Rivalry among stockholders
d. Rivalry among competing firms
Ans. c
24. What is meant by the term ‘Stakeholder’?
a. A person who is not related with a business.
b. A person who is related with a business.
c. A person who owns a business.
d. A person who purchases the shares of a business.
Ans. b
25. Of the following, which one would NOT be considered one of the components of a
mission statement?
a. The target market for XYZ is oil and gas producers as well as producers of chemicals.
b. XYZ shall hire only those individuals who have with sufficient educational levels so as to be
of benefit to our customers
c. The customers of XYZ shall include global and local consumers of gas and oil products and
domestic users of nontoxic chemicals
d. The technologies utilized by XYZ shall focus upon development of alternative sources of gas
and oil so as to remain competitive within the industry
Ans. b
26. The strategic management process is
a. a set of activities that will assure a temporary advantage and average returns for the firm.
b. a decision-making activity concerned with a firm’s internal resources, capabilities, and
competencies, independent of the conditions in its external environment.
c. a process directed by top-management with input from other stakeholders that seeks to
achieve above-average returns for investors through effective use of the organization’s
resources.
d. the full set of commitments, decisions, and actions required for the firm to achieve above-
average returns and strategic competitiveness..
Ans. d
27. The goal of the organization’s__________ is to capture the hearts and minds of
employees, challenge them, and evoke their emotions and dreams.
a. vision
b. mission
c. culture
d. strategy
Ans. a
28. A firm’s mission
a. is a statement of a firm’s business in which it intends to compete and the customers which
it intends to serve.
b. is an internally-focused affirmation of the organization’s financial, social, and ethical goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
Ans. a
29. The environmental segments that comprise the general environment typically will
NOT include
a. demographic factors.
b. sociocultural factors.
c. substitute products or services.
d. technological factors.
Ans. c
30. An analysis of the economic segment of the external environment would include all
of the following EXCEPT
a. interest rates.
b. international trade.
c. the strength of the U.S. dollar.
d. the move toward a contingent workforce.
Ans. d
31. Product differentiation refers to the:
a. ability of the buyers of a product to negotiate a lower price.
b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
Ans. c
32. Which of the following is NOT an entry barrier to an industry?
a. expected competitor retaliation
b. economies of scale
c. customer product loyalty
d. bargaining power of suppliers
Ans. d
33. Switching costs refer to the:
a. cost to a producer to exchange equipment in a facility when new technologies emerge.
b. cost of changing the firm’s strategic group.
c. one-time costs suppliers incur when selling to a different customer.
d. one-time costs customers incur when buying from a different supplier.
Ans. d
34. New entrants to an industry are more likely when (i.e., entry barriers are low
when…)
a. it is difficult to gain access to distribution channels.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
Ans. c
35. Suppliers are powerful when:
a. satisfactory substitutes are available.
b. they sell a commodity product.
c. they offer a credible threat of forward integration.
d. they are in a highly fragmented industry.
Ans. c
36. The highest amount a firm can charge for its products is most directly affected by
a. expected retaliation from competitors.
b. the cost of substitute products.
c. variable costs of production.
d. customers’ high switching costs.
Ans. b
37. All of the following are forces that create high rivalry within an industry EXCEPT
a. numerous or equally balanced competitors.
b. high fixed costs.
c. fast industry growth.
d. high storage costs.
Ans. c
38. According to the five factors model, an attractive industry would have all of the
following characteristics EXCEPT:
a. low barriers to entry.
b. suppliers with low bargaining power.
c. a moderate degree of rivalry among competitors.
d. few good product substitutes.
Ans. a
39. Internal analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. a
40. An external analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. d
41. ________ is/are the source of a firm’s________, which is/are the source of the
firm’s ________.
a. Resources, capabilities, core competencies
b. Capabilities, resources, core competencies
c. Capabilities, resources, above average returns
d. Core competencies, resources, competitive advantage
Ans. a
42. In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are
all examples of capabilities that are
a. rare.
b. causally ambiguous.
c. socially complex.
d. valuable.
Ans. d
43. Firms with few competitive resources are more likely
a. to not respond to competitive actions.
b. respond quickly to competitive actions.
c. delay responding to competitive actions.
d. respond to strategic actions, but not to tactical actions.
Ans. c
44. Competitors are more likely to respond to competitive actions that are taken by
a. differentiators.
b. larger companies.
c. first movers.
d. market leaders.
Ans. d
45. What can be defined as the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its
objectives?
a. Strategy formulation
b. Strategy evaluation
c. Strategy implementation
d. Strategic management
e. Strategic leading
Ans. d
46. Which of the following is not a cultural product?
a. Rites
b. Emotions
c. Rituals
d. Sagas
e. Symbols
Ans. b
47. Which individuals are most responsible for the success and failure of an
organization?
a. Strategists
b. Financial planners
c. Personnel directors
d. Stakeholders
e. Human resource managers
Ans. a
48. Which of the following is an element of a firm’s remote external environment?
a. Competition
b. Political agencies
c. Suppliers
d. Trade union
Ans. b
49. Long-term objectives should be all of the following except:
a. measurable.
b. continually changing.
c. reasonable.
d. challenging.
e. consistent.
Ans. b
50. What are guides to decision making?
a. laws
b. rules
c. policies
d. procedures
e. goals
Ans. c
51. According to Greenley, strategic management offers all of these benefits except that
a. it provides an objective view of management problems.
b. it creates a framework for internal communication among personnel.
c. it encourages a favorable attitude toward change.
d. it maximizes the effects of adverse conditions and changes.
e. it gives a degree of discipline and formality to the management of a business.
Ans. d
52. The vision and mission statement can often be found
a. in the SEC report.
b. in annual reports.
c. on customer receipts.
d. on supplier invoices.
e. on community news bulletins
Ans. b
53. Which group would be classified as a stakeholder?
a. Communities
b. Banks
c. Suppliers
d. Employees
e. All of these
Ans. e
54. The process of performing an external audit needs to include:
a. only top level managers, as it’s a planning function.
b. as many managers and employees as possible.
c. primarily front-line supervisors
d. between 15 to 20 managers for it to be valid
e. stockholders and external government agencies
Ans. b
55. Which of the following is not a stage of strategy formulation techniques?
a. Formulation Framework
b. Matching stage
c. External factor evaluation
d. Decision stage
Ans. b
56. ST Strategies is an important strategy to
a. Match weakness with opportunities of the firm
b. Overcome external threats
c. Obtain benefit from its resources
d. Overcome its weakness and reducing threats
Ans. b
57. The immediate external environment includes:
a. Divisions
b. S. B. U. s
c. Competitors
d. Management
Ans. c
58. The________ comprises economic and social conditions, political priorities and
technological developments, all of which must be anticipated, monitored, assessed and
incorporated into the executive’s decision making.
a. Internal environment
b. Task environment
c. Operating environment
d. Societal environment
Ans. d
59. Strategic management involves the_______, directing, _______ and controlling of a
company’s strategy-related decisions and actions.
a. Financing; marketing
b. Planning; financing
c. Planning; organizing
d. Marketing; planning
Ans. c
60. A strategy is a company’s
a. Value statement
b. Pricing policy
c. Game Plan to outsmart competitor
d. Long-term objective
Ans. c
61. Strategy-formulation concepts and tools
a. Do not differ greatly for different size and type of organizations
b. Differ greatly for different size and type of organizations
c. Do not differ greatly for profit or nonprofit organizations but differ in small and large
organizations
d. None of the mentioned options
Ans. a
62. Annual objectives
a. Are not critical to success
b. Serve as guidelines for action, directing and channeling efforts and activities of
organization members
c. Are not important for employee motivation and identification
d. Do not provide a basis for organizational design
Ans. b
a. Need not to be consistent
b. Should be easily achievable
c. Should be measurable
d. Should be confidential and not to be communicated throughout the organization
Ans. c
64. Which of the following resources is used by all organizations to achieve desired
objectives?
a. Financial resources,
b. Physical resources,
c. Human resources
d. All of the mentioned options
Ans. d
65. Strategic management is
a. A pure science.
b. Based mainly on intuition.
c. Needed mainly when organizational performance falls.
d. Based on the use of quantitative and qualitative information.
Ans. d
66. Large-scale, future-oriented plans, for interacting with the competitive
environment to achieve company objectives refers to its
a. Strategy
b. Goals
c. Competitive analysis
d. Dynamic policies
Ans. a
67. Strategic issues require which level of management decisions?
a. Operative
b. Top
c. Front-line
d. Middle
Ans. b
68. Which of these basic questions should a vision statement answer?
a. What is our business?
b. Who are our employees?
c. Why do we exist?
d. What do we want to become?
Ans. d
69.________ is not part of an external audit.
a. Analyzing competitors
b. Analyzing financial ratios
c. Analyzing available technologies
d. Studying the political environment
Ans. b
70. Strategic management process activate in the sequence of_______
a. Environmental scanning, Strategy formulation, Implementation, control and evaluation
b. Strategy formulation, Environmental scanning, Implementation, control and evaluation
c. Environmental scanning, Strategy Implementation, formulation, control and evaluation
d. Strategy formulation, Implementation, control, evaluation, Environmental scanning
Ans. a
71. KAPKAL Power’s interested to achieve a 10 percent return on equity (ROE) in their
core electric utility, 14 percent ROE on water resource operations, and 15 percent ROE
on support businesses. It is _____________
a. Mission
b. Strategy
c. Objective
d. Policy
Ans. c
72. “A possible and desirable future state of an organization” is called:
a. Mission
b. Vision
d. None of above
Ans. b
73. Strategic decisions are based on what managers_____________, rather than on what
they__________.
a. Know; forecast
b. React to; anticipate
c. Forecast; know
Ans. c
74. “To improve economic strength of society and function as a good corporate citizen
on a local, state, and national basis in all countries in which we do business”. This is a
mission statement that contains:
a. Self-concept
b. Economic concern
c. Products or Services
d. Concern for Public Image
Ans. d
75. Strategic-management audit is known as:
a. Environmental scanning
b. Strategy formulation
c. Strategy control
d. Strategy evaluation
Ans. a
76. Forecasting tools can be broadly categorized into two groups. Those are:
a. Qualitative, Operational
b. Quantitative, Operational
c. Qualitative, Quantitative
d. Regression and time series analysis
Ans. c
77.____________ identifies a firm’s major competitors and their particular strengths and
weaknesses in relation to a sample firm’s strategic position.
a. Competitive Profile Matrix
b. External Factor Evaluation matrix
c. Internal Factor Evaluation Matrix
d. Boston consulting group matrix
Ans. a
78. Organizing means an identifiable group of people contributing their efforts
towards the attainment of same goal. It is important at the time of:
c. Strategy Implementation
Ans. c
79. In a turbulent and competitive free enterprise environment, a firm will succeed
only if it takes a(n) _____________ stance towards change.
a. Reactive
b. Proactive
c. Anti-regulatory or anti-government
d. Vision and not mission
Ans. b
80. Which statement best describes intuition?
a. It represents the marginal factor in decision-making.
b. It represents a minor factor in decision-making integrated with analysis.
c. It should be coupled with analysis in decision-making.
d. It is better than analysis in decision-making.
e. It is management by ignorance.
Ans. c
81. What are the means by which long-term objectives will be achieved?
a. Strategies.
b. Strengths.
c. Weaknesses.
d. Policies.
e. Opportunities.
Ans. a
c. Why do we exist?
e. Who are our competitors?
Ans. d
83. When an industry relies heavily on government contracts, which forecasts can be
the most important part of an external audit.
a. economic
b. political
c. technological
d. competitive
e. Multinational
Ans. b
q. Analyzing available technologies
e. Analyzing social, cultural, demographic and geographic forces
Ans. b
organization?
a. Strategists
d. Stakeholders
Ans. a
a. Measurable.
b. Continually changing.
c. Reasonable.
d. Challenging.
e. Consistent.
Ans. b
a. laws
b. rules
c. policies
d. procedures
e. goals
Ans. c
a. Communities
b. Banks
c. Suppliers
d. Employees
e. All of the given options
Ans. e
89. Typically how many strategic decision levels are in the corporate decision-making
hierarchy?
a. 3
b. 4
c. could be more than 5
d. 2
Ans. a
90. Which type of trend can be exemplified by the increasing numbers of two- income
households in a society?
a. Social
b. Economic
c. Cultural
d. Technological
Ans. b
91. External assessment is performed in which of the strategic management phase?
a. Strategy formulation stage
b. Strategy implementation stage
c. Strategy evaluation stage
d. All of the given options
Ans. a
92. Political variables have a significant effect on
a. Strategy formulation and implementation
b. Strategy formulation and evaluation
c. Strategy implementation and evaluation
d. Strategy formulation, implementation and evaluation
Ans. a
93. Strategic decisions ostensibly commit the firm for
a. 1 -2 years
b. The short term
c. one years
d. A long time, typically five years
Ans. d
94. Social responsibility is a critical consideration for a company’s strategic decision
makers since
a. Stockholders demand it
b. The mission statement must express how the company intends to contribute to the
societies that sustain it
c. It increases a company’s profits
d. It helps make decisions
Ans. b
95. “The perfect search engine would understand exactly what you mean and give back
exactly what you want”, this statement is included in the mission statement of an
online firm and is showing which one of the following components?
a. Self-concept
b. Concern for public image
c. A declaration of attitude
d. Philosophy
Ans. b
96. Which of the following are signs of weakness in a company’s competitive position?
a. A return-on-equity is below 25% and earnings per share of less than Rs. 2.00
b. A price set by the firm higher than its rivals
c. A declining market share, poor product quality and few sales in market
d. Lower revenues and profit margin and narrow product line than the market leader
Ans. c
97. It directs at developing new products before competitors do at improving product
quality or at improving manufacturing processes to reduce costs.
a. Marketing
b. Opportunity analysis
c. Research and development
d. Management
Ans. c
98. “Identifying and evaluating key social, political, economic, technological and
competitive trends and events”. Which of the followings best describes this statement?
a. Developing an effective mission statement
d. Formulating strategy
Ans. c
99. What is the central purpose of strategic evaluation?
a. Evaluate effectiveness of strategy to achieve organisational objectives.
b. Evaluate effectiveness of control system to measure achievements.
c. Evaluate effectiveness of strategies to be implemented efficiently.
d. Evaluate effectiveness of the strategy implementation process.
Ans. a
100. Strategy evaluation at the_____________ level involves using specific performance
measures-qualitative and quantitative-for each functional area.
a. organizational
b. operational
c. functional
d. production
Ans. c
Introduction to Human Resource Management
Unit 1
Multiple Choice Questions with Answer Key
1. Personnel management is also called as
a. Personnel Administration
b. Manpower management
c. Both (A) and (B)
d. None of the above
Answer: c

2. Personnel management specifically deals with human resources
in respect of
(A) Their procurement
(B) Their development
(C) Their motivation
(D) All of the above
Answer: d

3. Which of the following is (are) true?
a. Principles of general management are applicable to personnel

management
b. Personnel management considers that labour is a life-full item
c. Personnel management deals with the relations of personnel
towards management
d. All of the above
Answer: d

4. Personnel management is a (an)
a. Approach
b. Point of view
c. Technique of thinking
d. All of the above
Answer: d

5. The subject matter of personnel management is
a. Profit
b. Capital investment
c. Human being
d. Wages and incentives
Answer: c

6. The following is not a function of Personnel management
a. Training and development of manpower

c. Wages and salary administration
Answer: d

7. The following principle of Personnel management stresses to
make the labour partner to the business
a. Principle of fair reward

b. Principle of joint management
c. Principle of Dignity of labour
d. Principle of team spirit
Answer: b

8. Personnel policies are the ______ of the organisation.
a. Constitution
b. Epic
c. Foundation
Answer: a

9. The following is not Principle of Personal Policies
a. Principle of common interest

b. Principle of Development
c. Principle of recognition of trade unions

Answer: d

10. In manpower planning, short term plans are prepared for
a. One month
b. Three months
c. Six months
d. One year
Answer: d

11. The following factor(s) affect(s) manpower planning
a. Working hours
c. Performance rate
d. All of the above
Answer: d

12. Satisfactory resolution of the disputes may avoid the following
a. None co-operative actions

b. ill will
c. Strikes
d. All of the above
Answer: d

13. If the productive man hours lost are less, their available
productive hours will be
a. More
b. Less
c. Same
Answer: a

14. ________ method of training is connected to real life problem.
a. Conferences
b. Case study
c. Management games
Answer: b

15. Personnel man must be a person who must have the following.
a. Sensibility
b. Conceptual skill
c. Human relation skill
d. All of the above
Answer: d

16. Advantage(s) of career planning is(are)
a. Reduces turnover
b. Tap potentials of employees
c. Motivates employees
d. All of the above
Answer: d

17. To be ethical and social towards needs of society is _____

objective of HRM
a. Societal
b. Operational
c. Functional
d. None of the Above
Answer: a
18. The fundamental objective of every organisation is
a. Survival
b. Achieving Targets
c. Profit
d. Compete in competition
Answer: a
19. The characteristics of human resources are ____ in nature.
a. Homogenous
b. Heterogenous
c. Ductility
Answer: b
20. The scope of human resource management includes
a. Procurement
b. Development
c. Compensation
d. All of the above
Answer: d
21. Human Resource management helps improve
a. Production
b. Productivity
c. Profit
d. Power
Answer: b
22. Personnel management is
a. Proactive
b. Continuous
c. Multi discipline
d. Routine
Answer: d
23. KSA represents
a. Knowledge, Skill, Aptitude

b. Knowledge, System, Aptitude
c. Knowledge, Skill, Approach
d. Knowledge, Skill, Attitude
Answer: d
24. In modern scenario, a company’s long term advantage lies in
a. Technology
b. Business Location
c. New Market
d. Human Resource
Answer: d
25. The functions of HRM doesn’t include the following head
a. Managerial
b. Analytical
c. Developmental
d. Departmental
Answer: d
26. The functions of HRM is pertained to
a. Particular Department
b. Top level management
c. Whole organisation
d. Line mangers
Answer: c
27. Managerial functions of HRM is must for ____ of the

organisation
a. Administration
b. Smooth running
c. Financial stability
Answer: b
28. The managerial functions of HRM does not include
a. Innovation
b. Employee relations
c. Planning
d. Coordination
Answer: b
29. _____ functions are the HR functions that are required to

administrate the manpower in the organisation.
a. Managerial
b. Analytical
c. Operational
d. Research
Answer: c
30. The planning function in managerial function of HRM includes

plan for
a. Acquiring best employees

b. Engaging the employees
c. Proper training to employees
d. All of the above
Answer: d
31. ______ states the way about what are the activities that need to
be conducted, when it is to be conducted and how to conduct it.
a. Planning
b. Organising
c. Decision Making
Answer: a
32. Human Resource Planning is a part of _____ function of the

organisation.
a. Operational
b. Managerial
c. Analytical
d. Planning
Answer: a
33. The operational function of HRM does not include
a. HRP
b. HRIS
c. Employee Safety
d. Employee engagement
Answer: d
34. _____ functions are the functions that are required to enhance
the skill and knowledge of the employees.
a. Developmental
b. Managerial
c. Operational
Answer: a
35. The development functions of HRM includes
a. HRD
b. Training and Development
c. TQM
d. All of the above
Answer: d
36. Which is not the goal of HRM
a. Attracting applicants
b. Separating Employees
c. Retaining Employees
d. Motivating Employees
Answer: b
37. HRM function does not include
a. Cost control
b. Planning
c. Selection
d. Orientation
Answer: a
38. HRM aims to maximise organisational ______
a. Economy
b. Effectiveness
c. Earnings
d. Profitability
Answer: b
39. HRM is primarily concerned with
a. Sales
b. Dimension of people
c. Profit
d. External environment
Answer: b
40. Demand for Human Resource is created by
a. Expansion of industry
b. Shortage of labour
c. Abundance of capital
d. Labour laws
Answer: a
41. HRM helps to build a bridge between employees at ____ level
a. Top
b. Every
c. Middle
d. Lower
Answer: b
42. The role of HRM is _____ for a specific period
a. Not only
b. Only for
c. Planned
d. Pertained
Answer: a
43. HRM is _______ in nature
a. Temporary
b. Persistent
c. Specific
d. Flexible
Answer: b
44. HRM is present in _______ organisation
a. NGO
b. Private
c. Government
d. Every
Answer: d
45. _____ is/are main concern of HRM
a. Machines
b. Technology
c. People
d. Management
Answer: c
46. The scope of HRM does not include
a. Separation
b. Outsourcing
c. Promotion
d. Market entry
Answer: d
47. Every action of HRM is directed towards accomplishment of ___
a. Targets
b. HRM goals
c. Organisational goals
Answer: c
48. _____ is a tool through which organisational development can

be implemented
a. T&D
b. HRM
c. Outsourcing
d. HR Research
Answer: b
49. In today’s market HR department needs to act as _____ to the
management.
a. Controller
b. Friend
c. Customer
d. Business Partner
Answer: d
50. Human Resource Management activities will benefit
a. Employees
b. Organisation
c. Neither a nor b
d. Both a and b
Answer: d
TECEP® Test Description for MAN-230-TE
INTRODUCTION TO ENTREPRENEURSHIP
This exam assesses the process by which individuals pursue opportunities without regard to resources
they currently control. The essence of entrepreneurial behavior is identifying opportunities and putting
useful ideas into practice. The tasks called for by this behavior can be accomplished by either individuals
or a group and typically require creativity, drive, and a willingness to take risks. This exam evaluates
students’ understanding of the entrepreneurial process and the way it typically unfolds. It assesses
students’ knowledge and application of this four-step process that includes: deciding to become an
entrepreneur; developing successful business ideas; moving from an idea to an entrepreneurial firm; and
managing and growing the entrepreneurial firm. (3 credits)
● Test format:
o 45 multiple choice (1 point each)
o 5 short answers (5 points each)
o 3 essays (10 points each)
● Passing score: 65% (65/100 points). Your grade will be reported as CR (credit) or NC (no
credit).
● Time limit: 3 hours
OUTCOMES ASSESSED ON THE TEST
● Define entrepreneurship
● Identify the characteristics of successful entrepreneurs
● Identify the critical components of an effective business plan
● Discuss the competitive forces that determine industry profitability
● Articulate a new venture’s business model
● Explain the business planning process
● Describe how to create strong ethical culture in an entrepreneurial venture
● Explain the advantages and disadvantages of different types of business ownership
● Describe financial planning and cash flow analysis
TECEP Test Description for MAN-230-TE by Thomas Edison State University is licensed under a Creative Commons
Attribution-NonCommercial 4.0 International License.
● Identify the financing options for new venture start-ups
● Analyze issues critical to venture success: market segmentation/branding; intellectual property;

franchising
TOPICS ON THE TEST AND THEIR APPROXIMATE DISTRIBUTION
The table below indicates the main topics covered by this exam and the approximate percentage of the
exam devoted to each main topic. Under the main topic heading is a list of related–but more
specific–topics. It is important to review these topics to determine how much prior knowledge you have
and/or how much additional study is necessary. To assist with refreshing and enhancing your knowledge
of the ideas, concepts, and theories for this subject, links to free and openly licensed review materials are
included for each topic.
Deciding to become an entrepreneur (10%)
Topic Resource
Boundless Management
Introduction to entrepreneurship ● Chapter 1: Introduction to Management
○ Entrepreneurship
Introduction to Management
● Module: Entrepreneurship
The importance of entrepreneurship
○ Reading: The Importance of Small
Business to the U.S. Economy
BUS305: Small Business Management

The changing demographics of ● Unit 1: Elements of Entrepreneurship
entrepreneurs in the U.S. ○ Chapter 2: What Makes Someone an
Entrepreneur?
Getting Started as an Entrepreneur

The entrepreneurial process
● Entrepreneurship Is...
Introduction to Business
● Module: Entrepreneurship
○ Reading: Advantages and Disadvantages
Approaches that entrepreneurs use to
of Business Ownership
identify opportunities
○ Reading: Is Entrepreneurship for You?
○ Reading: Twenty Questions Before
Starting a Business
Creating Services and Products

Techniques for generating ideas
● Chapter 6: Facilitating Creativity and Innovation
Opportunity assessment (25%)
Topic Resource
Developing New Products and Services

The importance of a thorough feasibility
● Chapter 12: Developing a Business Plan
analysis prior to launch
○ 12.11: Due Diligence
Marketing Principles
Industry analysis ● Chapter 10: Gathering and Using Information:
Marketing Research and Market Intelligence
Business Fundamentals
Competitor analysis
● Competitive intelligence - Definition
South African Journal of Economic and Management

Sciences
The business model of a start-up ● Potential Entrepreneurs’ Assessment of
Opportunities Through the Rendering of a
Business Plan
Business Fundamentals
● Chapter 8: Securing and Managing External
Strategic resources and partnerships Relationships
○ Section 8.3: Marketing Exchanges and
Partnerships
Business and organizational planning (25%)
Topic Resource
Developing New Products and Services

Writing and presenting the business plan
● Chapter 12: Developing a Business Plan
BUS101: Introduction to Business

● Unit 2: Entrepreneurship and Legal Forms of
Forms of business organization
Business
○ 2.1: Legal Forms of Business
Preparing the proper ethical and legal
● Module 6: Business Ethics and Corporate
foundation for the business
Responsibility
International Journal of Business and Social Research

Creating a new venture team ● Entrepreneurial Intention, Culture, Gender and
New Venture Creation: Critical Review
Role of professional advisors Finding a Business Mentor
Financial analysis and financing the new venture (25%)
Topic Resource
Financial management of a start-up ● Module 2: Economic Environment
● Module 4: Financial Markets and System
Boundless Accounting
Preparation of financial statements
● Chapter 3: Overview of Financial Statements
Boundless Finance
Financial statements forecasting
● Chapter 4: Forecasting Financial Statements
Boundless Finance
● Chapter 14: Obtaining Capital: Methods of
Venture financing options
Long-Term Financing
○ Venture Capital
Managing an entrepreneurial firm (15%)
Topic Resource
Boundless Marketing
Selecting a market and establishing a
● Chapter 4: Consumer Marketing
position
○ Market Segmentation
Key marketing issues for new ventures Entrepreneurship
The importance of intellectual property ● Module 5: Legal Environment
○ Intellectual Property
The Legal Environment and Business Law: Executive

The various forms of intellectual property MBA Edition
● Chapter 10: Intellectual Property
Franchising and its issues ● Module 7: Business Ownership
○ Franchises
STUDY MATERIALS
This is a comprehensive list of the materials used in this test description. We encourage you to explore
these resources to make sure that you are familiar with multiple perspectives on the topics above. All of
these resources are openly licensed, which means that they are free to be revised, remixed, reused,
redistributed, and retained, so long as their unique terms are followed. You can learn more about open
licensing here.
Resource Licensing Guide
Title License
(2019). Small Business Management [Saylor course]. Washington, D.C.: Saylor See License
Academy.
C4DLab University of Nairobi. (2016). Introduction to Business and CC BY-SA 3.0

Entrepreneurship.
U.S. Small Business Administration: Starting & Managing Public Domain
Boundless’ Introduction to Business [Boundless course]. Portland, OR: Lumen CC BY-SA 4.0
Learning.
Boundless’ Marketing [Boundless course]. Portland, OR: Lumen Learning. CC BY-SA 4.0
Boundless’ Finance [Boundless course]. Portland, OR: Lumen Learning. CC BY-SA 4.0
Boundless’ Accounting [Boundless course]. Portland, OR: Lumen Learning. CC BY-SA 4.0
Botha, M., & Robertson, C. L. (2014). Potential entrepreneurs' assessment of CC BY-NC 3.0
opportunities through the rendering of a business plan. South African Journal of
Economic and Management Sciences, 17(3), 249-265.
Williams, L., et al. (n.d.). Introduction to Business [Lumen course]. Portland, OR: Various
Lumen Learning.
(2012). Developing New Products and Services (v. 1.0). Washington, D.C.: CC-BY-NC-SA 3.0
Saylor Academy.
Business Fundamentals. OpenStax CNX. CC BY 4.0
(2012). Principles of Marketing (v. 2.0). Washington, D.C.: Saylor Academy. CC BY-NC-SA 3.0
SAMPLE QUESTIONS
The questions below are designed to help you study for your TECEP. Answering these questions does
not guarantee a passing score on your exam.
Please note that the questions below will not appear on your exam.
Multiple choice: Select the best answer. (1 point each)
1. What is the primary opportunity that exists for startups in emerging industries?
a. Consolidating the industry and establish industry leadership as a result of doing so
b. Winning customers by placing an emphasis on service and process innovation
c. Pursuing a niche strategy that focuses on a narrow segment of the industry
d. Capturing a first-mover advantage
2. Which of the following are the main components of an industry/target market feasibility analysis?
a. Industry status and target market status

b. Industry attractiveness and target market attractiveness
c. Industry sufficiency and target market demand
d. Industry attractiveness and product/service demand
3. The majority of Americans work for
a. individual franchises
b. small businesses
c. large corporations
d. sole proprietorships
4. What are the two types of disruptive business models?
a. High-end and low-end

b. New-product and new-market
c. New-market and low-end
d. New-channel and high-quality
5. __________ research consists of data that has been collected by the person completing the
analysis. __________ research uses data that has been collected previously.
a. Secondary, Primary
b. Primary, Secondary
c. Indirect, Direct
d. Direct, Indirect
6. The most essential role of the executive summary in the business plan is to
a. describe the company’s goals in detail

b. explain the business plan’s objectives in detail
c. identify the means by which company performance will be measured
d. attract investors
7. Which form of business organization combines the advantages of a partnership and a C
corporation?
a. Subchapter S corporation
b. Limited partnership
c. General partnership
d. Sole proprietorship
8. The price of prescription medicine is high, partly because when someone is sick there is no real
alternative to buying medicine. Which of Porter's Five Forces explains how this aspect of the
prescription medicine industry helps keep its profitability high?
a. Rivalry among existing firms

b. Threat of new entrants
c. Threat of substitutes
d. Bargaining power of buyers
9. _________ costs remain the same despite the volume of goods or services produced.
_________ costs vary proportionally with the volume of goods or services provided.
a. Expense; Non-standard
b. Standard; Non-Standard
c. Fixed; Variable
d. Non-Standard; Standard
10. Which type of business plan is intended as the blueprint of a company's activities and is directed
to an internal audience?
a. Operational
b. Full
c. Summary
d. Tactical
11. A ________ partnership is a modified form of a general partnership.
a. joint
b. limited
c. partial
d. mutual
12. Which section of the business plan focuses on the specific segment or target market of an
industry to which the firm will try to appeal?
a. Current status
b. Market analysis
c. Company summary
d. Operations plan
13. A(n) ________ director on a board of directors is NOT employed by the firm.
a. outside
b. inside
c. external
d. impartial
14. What are the primary financial objectives of any firm?

b. Efficiency, effectiveness, power, and success
d. Liquidity, profitability, efficiency, and stability
15. Which type of financial statement projects the firm's financial situation in the future based on
current trends and assumptions?
a. Chronological
b. Pro forma
c. Concurrent
d. Historical
16. The statement of cash flows is divided into ____________activities.
a. profitability, stability, and investing

b. stability, earning, and financing
c. pending, earning, and capital
d. operating, investing, and financing
17. The difference between sales revenue and cost of goods sold is known as the
a. net profit
b. debt
c. break-even point
d. gross profit or gross margin
18. The most common way to compute the cost of sales is to use the percent-of-sales method, which
expresses each expense item as a percentage of
a. net sales
b. gross profit
c. net income
d. operating income

19. What are the primary reasons that startups need funding?
a. Cash flow challenges, capital investments, and lengthy product development cycles
b. Business research, cash flow challenges, and costs associated with building a brand
c. Bonuses for members of the new venture team, legal fees, and lengthy product
development cycles
d. Attorney fees, capital investments, and marketing research
20. An entrepreneur who starts a business without external funding is utilizing a technique referred to
as
a. networking
b. capitalizing
c. prospecting
d. bootstrapping
21. The 4 P's of a firm's marketing mix consists of
a. product, price, promotion, and place

b. passion, pride, principle, and premium
c. parity, passion, product, and pay
d. place, promotion, passion, and performance
22. Value-based pricing takes a ________-oriented approach.
a. product
b. company
c. customer
d. cost
23. What are the three types of patents?
a. Manufacturing; process; plant

b. Usefulness; purpose; genetic
c. Explicit; implicit; plant
d. Utility; design; plant
24. A ________ franchise is an arrangement in which the franchisor grants to the franchisee the right
to buy its products and use its trade name.
a. product and trademark

b. product extension
c. business format
d. production plus
25. Companies often falter because the founders can't adjust quickly enough to their new roles and
because the firm lacks a "track record" with outside buyers and sellers. This is referred to as the
a. innovator's affliction
b. creator's dilemma
c. liability of newness
d. burden of inexperience

Short answer questions: Answer in two to four sentences. (5 points each)
26. What are the two primary guidelines for deciding whether intellectual property protection should
be pursued for a specific intellectual asset?
27. What is a copyright? What type of material does it cover?
28. When is franchising appropriate, from the business owner's point of view? Provide an example.
Essay questions: Answer in two to four paragraphs. (10 points each)
29. Describe the purpose of industry/target market feasibility analysis. Identify the two primary issues
that should be considered. What is the difference between a firm's industry and its target market?
30. What is a business model? Why is it important for a firm to have a business model? Provide and
discuss an example of a specific company's business model to illustrate your answer.
ANSWERS TO SAMPLE QUESTIONS
Multiple-choice questions
1. (d) 10. (a) 19. (a)

2. (c) 11. (b) 20. (d)
3. (b) 12. (b) 21. (a)
4. (c) 13. (a) 22. (c)
5. (b) 14. (d) 23. (d)
6. (d) 15. (b) 24. (a)
7. (b) 16. (d) 25. (c)
8. (c) 17. (d)
9. (c) 18. (a)
Short answer questions
26. First, a firm should determine whether the intellectual property in question is directly related to its
competitive advantage. Second, a firm should determine whether the item has independent value
in the marketplace. If either or both of these conditions exist, intellectual property protection for an
asset should be considered.
Scoring Rubric
Provides the two guidelines for deciding whether

3 points
to pursue intellectual property protection
Provides appropriate discussion for each 2 points
27. A copyright is a form of intellectual property protection that grants to the owner of a work of
authorship the legal right to determine how the work is used and to obtain the economic benefits
from the work. The work must be in tangible form, such as a book, operating manual, or
magazine article. If something is not in a tangible form, such as a speech that has never been
recorded or saved as a computer file, copyright law does not protect it.
Scoring Rubric
Appropriately explains copyright 3 points
Provides appropriate discussion of what

2 points
materials copyright covers
28. Franchising is appropriate when a firm has a strong or a potentially strong trademark, a
well-designed business method, and a desire to grow. Panera Bread is an example, because it
possesses all three of these qualities.
Scoring Rubric
Explains when franchising is appropriate 3 points
Provides appropriate example 2 points
Essay questions
29. Industry/target market feasibility analysis is an assessment of the overall appeal of the industry
and the target market for the product or service being promoted.
For industry/target market feasibility analysis, there are two primary issues that a proposed
business should consider: industry attractiveness and target market attractiveness. There is a
distinct difference between a firm's industry and its target market. An industry is a group of firms
producing a similar product or service, such as computers, cars, or electronic games. A firm's
target market is the limited portion of the industry that it goes after or to which it wants to appeal.
Most firms do not try to service their entire industry. Instead, they select or carve out a specific
target market and try to service that market very well.
Scoring Rubric
Provides the purpose of feasibility analysis 3 points
Provides two appropriate issues that must be

3 points
considered
Explains the difference between a firm's industry

4 points
and its target market
30. A business model is a firm's plan or recipe for how it creates, delivers, and captures value for its
stakeholders. A firm's business model also describes how the core aspects of what it does fit
together and complement one another.
Business models are fundamental to a firm's ability to succeed both in the short and long term.
Dropbox, for example, has what's referred to as a freemium business model. It offers customers a
free account with a set amount of storage space, and makes money by selling premium accounts
with more capacity. Dropbox could charge all of its users a monthly fee based on the amount of
storage that they use, but that's not its business model. Its business model is based on the belief
that by introducing users to its service through a free account, it will ultimately sign up more paid
users.
Scoring Rubric
Provides appropriate explanation of a business

3 points
model
Provides appropriate explanation why a firm

3 points
needs to have a business model
Provides appropriate example and discussion of

4 points
a specific business model
TECEP® Test Description for MAR-201-TE
INTRODUCTION TO MARKETING
This exam assesses students’ knowledge and application of key marketing concepts for today's business
practices. It evaluates students’ knowledge of the essential techniques managers need to compete
successfully, whether in large companies or small businesses, profit-oriented firms or not-for-profit
organizations. Topics include customer-oriented marketing strategies, buyers and markets, target market
selection, and the marketing variables of products (and services), price, promotion, and distribution. (3
credits)
● Test format:
o 74 multiple choice questions (1 point each)
o 8 short answer questions (2 points each)
o 2 essay questions (5 points each)
● Passing score: 65% (65/100 points). Your grade will be reported as CR (Credit) or NC (No
Credit).
● Explain contemporary customer-oriented marketing strategies
● Identify key aspects of affective consumer and business-to-business marketing
● Outline ways to research, establish, and develop target markets
● Discuss the essential decisions markets make regarding products and services
● Explain the processes used in marketing channels and supply-chain management
● Describe various means for promoting products and services
● Identify common pricing concepts and strategies
TECEP Test Description for MAR-201-TE by Thomas Edison State University is licensed under a Creative Commons
Using Strategy and Research in Marketing (25%)
Topic Resource
Universal functions
● Chapter 1: What Is Marketing?
● Chapter 2: Strategic Planning
Strategic/tactical planning
Boundless Marketing
● Chapter 2: Marketing Strategies and Planning
○ The Strategic Planning Process
Market research and intelligence
● Chapter 10: Gathering & Using Information
Boundless Marketing
Market environment and planning ● Chapter 3: The Marketing Environment
○ The Marketing Environment
Boundless Marketing
Pricing ● Chapter 8: Pricing
○ Defining Price
Understanding Consumers: From the Decision Process to Target Market Identification (20%)
Topic Resource
Consumer behavior
● Chapter 3: Consumer Behavior
Customer satisfaction and loyalty ● Chapter 14: Customer Satisfaction, Loyalty, &
Empowerment
Principles of Marketing
Decision process ● Module 7: Consumer Behavior
○ Buying-Process Stages
Social influence
○ Section 3.1: Factors that Influence
Consumers' Buying Behavior
Segmentation, targeting, and position ● Chapter 5: Market Segmenting, Targeting, &
Positioning
● Chapter 13: Professional Selling
○ Section 13.4: Ethics in Sales and Sales
Ethics Management
Boundless Marketing
● Ethics in Marketing
Defining Business Marketing (15%)
Topic Resource
Boundless Marketing
● Chapter 5: Business-to-Business Marketing
○ Business Markets
Business-to-business marketing
○ Business Customers
○ Industrial Classification
○ The Business Buying Decision Process
Business buying behavior
● Chapter 4: Business Buying Behavior
Boundless Marketing
● Chapter 7: Global Marketing
○ Introduction to Global Marketing
○ The Global Marketing Environment
Global marketing
○ Important International Bodies and
Agreements
○ Types of International Business
○ Global Marketing Mix
Boundless Marketing
Non-profit marketing ● Chapter 17: Introduction to Nonprofit Marketing
○ Nonprofit Marketing
Identifying Products, Services and Channels Utilized in Marketing (15%)
Topic Resource
Boundless Marketing
● Chapter 9: Products
○ New Product Development
Development of product and services
● Module 10: Product Marketing
○ New Product Development Process
Boundless Marketing
○ Managing Existing Products
Management of product and services
● Chapter 7: Developing and Managing Offerings
○ Section 7.2: Managing New Products
● Chapter 8: Using Marketing Channels to Create
Value for Customers
Boundless Marketing
Marketing channels ● Chapter 11: Marketing Channels
○ Marketing Channels in the Supply Chain
○ Channel Intermediaries
○ Channel Structures
○ Channel Strategy Decisions
○ Marketing Channel Relationships
● Module 12: Place: Distribution Channels
○ Why It Matters: Place: Distribution
Channels
○ Using Channels of Distribution
○ Managing Distribution Channels
Supply chains and logistics
○ Retailers As Channels of Distribution
○ Integrated Supply Chain Management and
the Distribution Strategy
○ Putting It Together: Place: Distribution
Channels
○ Discussion: Distribution Strategy
Communications (25%)
Topic Resource
● Module 13: Promotion: Integrated Marketing
Direct marketing
Communication (IMC)
○ Direct Marketing
Integrated marketing ● Chapter 11: Integrated Marketing Communications
and the Changing Media Landscape
Personal selling and promotion
RESOURCE LICENSING GUIDE
This is a comprehensive list of the materials used in this test description, as well as other useful study
materials. We encourage you to explore these resources to make sure that you are familiar with multiple
perspectives on the topics above. All of these resources are openly licensed, which means that they are
free to be revised, remixed, reused, redistributed, and retained, so long as their unique terms are
followed. You can learn more about open licensing here.
Title License
Principles of Marketing [Saylor course]. Washington, D.C.: Saylor Academy. See License
Principles of Marketing [Lumen course]. Portland, OR: Lumen Learning. CC BY-NC-SA 3.0
Boundless Marking [Boundless course]. Portland, OR: Lumen Learning. CC BY-SA 4.0
Tanner, J., & Raymond, M. A. (2012). Marketing Principles (v. 2.0). 2012 Book CC BY-NC-SA 3.0
Archive.
International Review of Management and Marketing. ISSN: 2146-4405 CC BY 4.0
SAMPLE QUESTIONS
1. Which element of the marketing mix includes the distribution of products?
a. Product
b. Price
c. Place
d. Promotion
2. To be ethically effective, marketing plans must be

3. A(n) __________is a document that communicates a marketing strategy for an offering.
a. research paper
b. market plan
c. mission statement
d. annual report
4. In a SWOT analysis, SWOT stands for
a. strategies, weaknesses, obligations, threats

c. strengths, work requirements, opportunities, time
d. strategies, worth, obligations, time
5. Raw data transforms to information when
a. it is calculated
b. a manager is aware that it exists
c. it becomes useful
d. a manager looks at it
6. Which of the following is true about participating in professional networking websites?

b. They are less helpful for mid- and late career professionals.
c. They are more frequently used by experienced workers.
7. _________________ are especially useful to marketers.

b. Location, locomotion, liberation
c. Profitability, reliability, predictability
d. Proactivity, reactivity, alacrity
8. What term is used to describe when a customer purchases a product with no planning or
forethought?
a. Extended problem solving

b. Impulse buying
c. High-involvement purchasing
d. Evaluation implementation
9. What type of segmentation is the primary starting point for most marketers?
a. Psychographic
b. Use-pattern
c. Demographic
d. Cultural
10. In the business-to-business buying process, what is the next step after the need is described and
quantified?
a. Searching for potential suppliers

c. Establishing an order routine
d. Recognizing a need
11. Which of the following is a skill that could advance career goals in global marketing?
a. Ability to speak two or more languages

b. Experience in a single geographical area
c. Computer literacy
d. Having a foreign driver’s license
12. When a product is sold in as many outlets as possible a(n) ___________ distribution strategy is
being used.
a. selective
b. intensive
c. extreme
d. exclusive
13. What is a useful way to empower customers?
a. Ask customers to participate in product design.

b. Conduct customer feasibility studies.
c. Refer customers to competitors for quality comparisons.
d. Give customers free products.
14. Which of the following is a key function of “positioning” in marketing campaigns?
a. To provide a reason why the customer should buy the product.

d. To distract the customer from considering a competitor’s product.
15. A(n) ____________ explains how an offering will be launched.
a. offering transaction
b. business document
c. customer base
d. communication plan
16. _________ is defined as the variety of marketing communications an organization utilizes.
a. Promotional mix
b. Personal selling
c. Advertising
d. Publicity
17. Which of the following are social media?
a. Corporate investor pages

b. Media release distribution websites
c. Downloadable company brochures
d. Public networking websites
18. What is the generally accepted view about using sex and humor themes in cross-cultural
marketing campaigns?
a. Humor and sex themes are acceptable.

b. Humor and sex themes are encouraged.
c. Humor and sex themes can be used if they are very mild.
d. Humor and sex themes are not appropriate.
19. The channel through which communication takes place is known as the
a. information
b. medium
c. communication
d. transference
Short answer questions: Answer in two to four complete sentences. (2 points each)
20. Determine an advantage for using a product life cycle mode.
21. Provide an advantage for using segmentation, targeting, and positioning in developing marketing
strategies.
22. Provide one benefit and one drawback of using a viral market channel.
Essay questions: Answer in six to eight complete sentences. (5 points each)
23. Describe major differences between strategic and tactical planning.
24. Define micromarketing and discuss its importance in integrated marketing communications
programs.
1. (c) 8. (b) 15. (d)

2. (a) 9. (c) 16. (a)
3. (b) 10. (a) 17. (d)
4. (b) 11. (a) 18. (d)
5. (c) 12. (b) 19. (b)
6. (a) 13. (a)
7. (a) 14. (a)
20. Using a product life cycle to manage the activities of a product or service allows a company to
map out a long-term strategy for more effective planning. Companies can plan for the evolution of
price, product features, promotion and placement in a way that is seamless and continuous for
both the customer, as well as the firm’s operations.
Scoring Rubric
Score Response Features
● Fully explains the benefits for using a product life cycle model
Meets
Expectations
● Uses complete sentences with correct spelling and grammar
(2 pts)
● Errors do not impact readability
● Partially explains the benefits for using a product life cycle

model
Partially Meets
Expectations
● Uses complete sentences with some minor errors in spelling
and grammar
(1 pt)
● Does not explain the benefits for using a product life cycle
model
Needs
Improvement
● Uses incomplete sentences with some significant errors in
spelling and grammar
(0 pts)
● Errors impact readability
21. Targeting, marketing and positioning provide opportunities to reach a specific market and identify
the characteristics of the market. Additionally, positioning can cater to a particular market rather
than an entire universe. For instance, products such as Tesla, Porsche and Maserati are
positioned to a different market than Ford, Chevy and Buick. This allows a market to develop and
deliver personalized messages to different audiences rather than focusing on one message to
everybody.
Scoring Rubric
● Fully identifies and explains an advantage for using one of the

following in developing marketing strategies: targeting,
Meets
marketing and positioning
Expectations
(2 pts)
● Partially identifies and explains an advantage for using one of

the following in developing marketing strategies: targeting,
Partially Meets marketing and positioning
Expectations
(1 pt) and grammar
● Does not identify or explain an advantage for using one of the

Needs marketing and positioning
Improvement
(0 pts) spelling and grammar
22. Viral marketing is an advertisement tied to e-mail or another online communication designed to
have one person pass on the content to another. Major benefits of such marketing are speed of
transmission and the ability of consumers to share with like-minded friends; drawbacks include
changes in the marketing message as it is passed from one person to another and the loss of
control for the instigating firm as the messaging has the potential to change significantly from its
original intent.
Scoring Rubric
● Fully provides a benefit and drawback of viral marketing

Meets
Expectations
(2 pts)
● Partially provides a benefit and drawback of viral marketing

Partially Meets
Expectations ● Uses complete sentences with some minor errors in spelling
and grammar
(1 pt)
● Does not provide a benefit and drawback of viral marketing

Needs
Improvement ● Uses incomplete sentences with some significant errors in
(0 pts)
Essay questions
23. All companies plan both strategically as well as tactically. There are four major differences
between strategy and tactics in organizational planning: context, scale, rationale and time frame.
In terms of context, strategic planning is largely concerned with overall plan design, while tactics
addresses implementation of a plan in practical terms. In the area of scale, strategic planning
typically is concerned with a large framework that would affect the organization as whole, while
tactics are smaller in scale and more specific in their focus, usually at the department or division
level. Strategy explains why an action will take place and its necessity; tactics explain how the
end result will be achieved step-by-step. This difference is fundamental to their rationale. Finally,
strategy takes place over a long time frame and often it continues for years. Yet, tactics are put
into place much more quickly, and are monitored more frequently, often on a daily basis.
Scoring Rubric
Identifies the two planning approaches: strategic planning, tactical planning
Appropriately identifies key planning elements: context, scale, rationale, time

frame
Appropriately discusses the differences between the two planning approaches
24. Micromarketing, often called niche marketing, is a marketing strategy that concentrates on a
specific customer characteristic in order to achieve a high degree of targeting focus. This
characteristic can be demographic or psychographic.
Integrated marketing communications seeks to coordinate marketing efforts across a number of

media. This coordination is built on customer commonalities as determined via research methods.
In terms of demographics, these commonalities could be geographic location, income bracket,
age or education; psychographic categories can be based on lifestyles, such as those
categorized in the VALS research methodology. Micromarketing segments are customer building
blocks built on such specific commonalities and as such are key components of integrated
marketing communications campaigns. The more precise marketing communications can be, i.e.,
driven by micromarketing, the more effective.
Scoring Rubric
Correctly defines micromarketing and targeting focus, use of

demographics/psychographics
Correctly describes IMC and gives specific examples utilizing precision targeting
Explains the importance of micromarketing to IMC: targeting, ability to aggregate

consumers
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Introduction to Human Resource Management

Unit 1
Multiple Choice Questions with Answer Key
1. Personnel management is also called as
a. Personnel Administration
b. Manpower management
c. Both (A) and (B)
Answer: c

2. Personnel management specifically deals with human resources
in respect of
(A) Their procurement
(B) Their development
(C) Their motivation
(D) All of the above
Answer: d

3. Which of the following is (are) true?
a. Principles of general management are applicable to personnel

management
b. Personnel management considers that labour is a life-full item
c. Personnel management deals with the relations of personnel
towards management
d. All of the above
Answer: d

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4. Personnel management is a (an)
a. Approach
b. Point of view
c. Technique of thinking
d. All of the above
Answer: d

5. The subject matter of personnel management is
a. Profit
b. Capital investment
c. Human being
d. Wages and incentives
Answer: c

6. The following is not a function of Personnel management
a. Training and development of manpower

c. Wages and salary administration
Answer: d

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7. The following principle of Personnel management stresses to
make the labour partner to the business
a. Principle of fair reward

b. Principle of joint management
c. Principle of Dignity of labour
Answer: b

8. Personnel policies are the ______ of the organisation.
a. Constitution
b. Epic
c. Foundation
Answer: a

9. The following is not Principle of Personal Policies
a. Principle of common interest

b. Principle of Development
c. Principle of recognition of trade unions

Answer: d

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10. In manpower planning, short term plans are prepared for
a. One month
b. Three months
c. Six months
d. One year
Answer: d

11. The following factor(s) affect(s) manpower planning
a. Working hours
c. Performance rate
d. All of the above
Answer: d

12. Satisfactory resolution of the disputes may avoid the following
a. None co-operative actions

b. ill will
c. Strikes
d. All of the above
Answer: d

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13. If the productive man hours lost are less, their available
productive hours will be
a. More
b. Less
c. Same
Answer: a

14. ________ method of training is connected to real life problem.
a. Conferences
b. Case study
c. Management games
Answer: b

15. Personnel man must be a person who must have the following.
a. Sensibility
b. Conceptual skill
c. Human relation skill
d. All of the above
Answer: d

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16. Advantage(s) of career planning is(are)
a. Reduces turnover
b. Tap potentials of employees
c. Motivates employees
d. All of the above
Answer: d

17. To be ethical and social towards needs of society is _____

objective of HRM
a. Societal
b. Operational
c. Functional
Answer: a
18. The fundamental objective of every organisation is
a. Survival
b. Achieving Targets
c. Profit
d. Compete in competition
Answer: a
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19. The characteristics of human resources are ____ in nature.
a. Homogenous
b. Heterogenous
c. Ductility
Answer: b
20. The scope of human resource management includes
a. Procurement
b. Development
c. Compensation
d. All of the above
Answer: d
21. Human Resource management helps improve
a. Production
b. Productivity
c. Profit
d. Power
Answer: b
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22. Personnel management is
a. Proactive
b. Continuous
c. Multi discipline
d. Routine
Answer: d
23. KSA represents
a. Knowledge, Skill, Aptitude

b. Knowledge, System, Aptitude
c. Knowledge, Skill, Approach
d. Knowledge, Skill, Attitude
Answer: d
24. In modern scenario, a company’s long term advantage lies in
a. Technology
b. Business Location
c. New Market
d. Human Resource
Answer: d
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25. The functions of HRM doesn’t include the following head
a. Managerial
b. Analytical
c. Developmental
d. Departmental
Answer: d
26. The functions of HRM is pertained to
a. Particular Department
b. Top level management
c. Whole organisation
d. Line mangers
Answer: c
27. Managerial functions of HRM is must for ____ of the

organisation
a. Administration
b. Smooth running
c. Financial stability
Answer: b
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28. The managerial functions of HRM does not include
a. Innovation
b. Employee relations
c. Planning
d. Coordination
Answer: b
29. _____ functions are the HR functions that are required to

administrate the manpower in the organisation.
a. Managerial
b. Analytical
c. Operational
d. Research
Answer: c
30. The planning function in managerial function of HRM includes

plan for
a. Acquiring best employees

b. Engaging the employees
c. Proper training to employees
d. All of the above
Answer: d
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31. ______ states the way about what are the activities that need to
be conducted, when it is to be conducted and how to conduct it.
a. Planning
b. Organising
c. Decision Making
Answer: a
32. Human Resource Planning is a part of _____ function of the

organisation.
a. Operational
b. Managerial
c. Analytical
d. Planning
Answer: a
33. The operational function of HRM does not include
a. HRP
b. HRIS
c. Employee Safety
d. Employee engagement
Answer: d
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34. _____ functions are the functions that are required to enhance
the skill and knowledge of the employees.
a. Developmental
b. Managerial
c. Operational
Answer: a
35. The development functions of HRM includes
a. HRD
b. Training and Development
c. TQM
d. All of the above
Answer: d
36. Which is not the goal of HRM
a. Attracting applicants
b. Separating Employees
c. Retaining Employees
d. Motivating Employees
Answer: b
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37. HRM function does not include
a. Cost control
b. Planning
c. Selection
d. Orientation
Answer: a
38. HRM aims to maximise organisational ______
a. Economy
b. Effectiveness
c. Earnings
d. Profitability
Answer: b
39. HRM is primarily concerned with
a. Sales
b. Dimension of people
c. Profit
d. External environment
Answer: b
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40. Demand for Human Resource is created by
a. Expansion of industry
b. Shortage of labour
c. Abundance of capital
d. Labour laws
Answer: a
41. HRM helps to build a bridge between employees at ____ level
a. Top
b. Every
c. Middle
d. Lower
Answer: b
42. The role of HRM is _____ for a specific period
a. Not only
b. Only for
c. Planned
d. Pertained
Answer: a
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43. HRM is _______ in nature
a. Temporary
b. Persistent
c. Specific
d. Flexible
Answer: b
44. HRM is present in _______ organisation
a. NGO
b. Private
c. Government
d. Every
Answer: d
45. _____ is/are main concern of HRM
a. Machines
b. Technology
c. People
d. Management
Answer: c
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46. The scope of HRM does not include
a. Separation
b. Outsourcing
c. Promotion
d. Market entry
Answer: d
47. Every action of HRM is directed towards accomplishment of ___
a. Targets
b. HRM goals
c. Organisational goals
Answer: c
48. _____ is a tool through which organisational development can

be implemented
a. T&D
b. HRM
c. Outsourcing
d. HR Research
Answer: b
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49. In today’s market HR department needs to act as _____ to the

management.
a. Controller
b. Friend
c. Customer
d. Business Partner
Answer: d
50. Human Resource Management activities will benefit
a. Employees
b. Organisation
c. Neither a nor b
d. Both a and b
Answer: d
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Strategic Management MCQ: Multiple Choice Questions and Answers on Strategic

Management
1. The fundamental purpose for the existence of any organization is described by its
a. policies
b. mission
c. procedures
d. strategy
Ans. b
2. The fundamental purpose of an organization’s mission statement is to
a. create a good human relations climate in the organization
b. define the organization’s purpose in society
c. define the operational structure of the organization
d. generate good public relations for the organization
Ans. b
3. The acronym SWOT stands for
a. Special Weapons for Operations Timeliness
b. Services, Worldwide Optimization, and Transport
c. Strengths Worldwide Overcome Threats
d. Strengths, Weaknesses, Opportunities, and Threats
Ans. d
4. Which of the following is not a characteristic of strategic management that makes it
different from other types of management?
a. It is interdisciplinary.
b. It has an external focus.
c. It has an internal focus.
d. It concerns the present direction of the organization.
Ans. d
5. Which of the following is an issue considered in developing corporate strategies?
a. What business(es) are we in?
b. What direction are we going?
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c. What resources do we have to implement our strategies?

d. What businesses are we in and what to do with those businesses?
Ans. c
6. Which of the following is NOT a major element of the strategic management process?
b. Implementing strategy
c. Evaluating strategy
c. Assigning administrative tasks
Ans. d
7. Competitive advantage can best be described as:
ADVERTISEMENTS:
b. what sets an organization apart.
d. intangible resources.
Ans. a
8. ________________ is the foundation of blue ocean strategy.
a. Innovation
ADVERTISEMENTS:
b. Value creation
c. Value innovation
d. value cost trade-off
Ans. c
9. The various organizational routines and processes that determine how efficiently
and effectively the organization transforms its inputs into outputs are called:
a. strengths.
ADVERTISEMENTS:
b. core competencies.
c. capabilities.
d. customer value.
Ans. b
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10. When defining strategic management the most important thing to remember is that
it is:
a. Not as easy as you think
ADVERTISEMENTS:
c. A living evolving process
d. More conceptual than practical
e. A way of determining responsibilities
Ans. c
11. An organisation’s strategy:
a. remains set in place longer than the mission and objectives
b. generally forms over a period of time as events unfold
c. tends to be formed at the same time the mission is developed and objectives are formulated
d. is usually conceived at a single time when managers sit down and work out a
comprehensive strategic plan for the next 3-5 years
Ans. b
12. The primary focus of strategic management is:
a. strategic analysis
b. the total organisation
c. strategy formulation
d. strategy implementation.
Ans. b
13. Which of the following is not an advantage of strategic management?
a. It provides organisations with a clearer sense of direction and purpose
b. It helps improve the political, economic, social and technological environment of the
organisation
c. It helps orientate management decisions to relevant environmental conditions
d. It helps organisations be proactive rather than reactive
Ans. b
14. Which of the following defines what business or businesses the firm is in or should
be in?
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Ans. b
15. Which of the following defines how each individual business unit will attempt to
achieve its mission?
Ans. a
16. Which of the following focuses on supporting the corporate and business
strategies?
a. Competitive strategy
c. Operational strategy
e. Mission strategy
Ans. c
17. Which one of the following is not a primary task of strategic managers?
a. Establishing strategic objectives
b. Developing the steps to follow in implementing operational level plans
c. Defining the business and developing a mission
d. Developing a strategy
e. Implementing and evaluating the chosen strategy
Ans. b
18. The task of strategy choice involves:
a. developing plans and activities which will improve the organisation’s performance and
competitive position
b. determining how the organisation can be more market and efficiency oriented
c. monitoring whether the organisation is achieving good financial performance
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d. keeping the organisation free of debt

Ans. a
19. Which one of the following is at the core of strategic management?
a. Choosing which organisational objectives to focus on
b. Being alert for opportunities to change work responsibilities
c. Adapting the organisation to a changing external environment
d. Choosing whether to make decisions autocratically or on the basis of participation
Ans. c
20. The corporate level is where top management directs:
a. all employees for orientation
b. its efforts to stabilize recruitment needs
c. overall strategy for the entire organization
d. overall sales projections
Ans. c
21. The three organizational levels are:
a. corporate level, business level, functional level
b. corporate level, business unit level, functional level
c. corporate strategy level, business unit level, functional level
d. corporate strategy level, business level, specialist level
Ans. a
22. Which of the following is an example of competing on quick response?
a. a firm produces its product with less raw material waste than its competitors
b. a firm offers more reliable products than its competitors
c. a firm’s products are introduced into the market faster than its competitors’
d. a firm’s research and development department generates many ideas for new products
Ans. c
23. Which one of the following is NOT included in the Porter’s Five Forces model:
a. Potential development of substitute products
b. Bargaining power of suppliers
c. Rivalry among stockholders
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d. Rivalry among competing firms

Ans. c
24. What is meant by the term ‘Stakeholder’?
a. A person who is not related with a business.
b. A person who is related with a business.
c. A person who owns a business.
d. A person who purchases the shares of a business.
Ans. b
25. Of the following, which one would NOT be considered one of the components of a
mission statement?
a. The target market for XYZ is oil and gas producers as well as producers of chemicals.
b. XYZ shall hire only those individuals who have with sufficient educational levels so as to be
of benefit to our customers
c. The customers of XYZ shall include global and local consumers of gas and oil products and
domestic users of nontoxic chemicals
d. The technologies utilized by XYZ shall focus upon development of alternative sources of gas
and oil so as to remain competitive within the industry
Ans. b
26. The strategic management process is
a. a set of activities that will assure a temporary advantage and average returns for the firm.
b. a decision-making activity concerned with a firm’s internal resources, capabilities, and
competencies, independent of the conditions in its external environment.
c. a process directed by top-management with input from other stakeholders that seeks to
achieve above-average returns for investors through effective use of the organization’s
resources.
d. the full set of commitments, decisions, and actions required for the firm to achieve above-
average returns and strategic competitiveness..
Ans. d
27. The goal of the organization’s__________ is to capture the hearts and minds of
employees, challenge them, and evoke their emotions and dreams.
a. vision
b. mission
c. culture
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d. strategy
Ans. a
28. A firm’s mission
a. is a statement of a firm’s business in which it intends to compete and the customers which
it intends to serve.
b. is an internally-focused affirmation of the organization’s financial, social, and ethical goals.
c. is mainly intended to emotionally inspire employees and other stakeholders.
d. is developed by a firm before the firm develops its vision.
Ans. a
29. The environmental segments that comprise the general environment typically will
NOT include
a. demographic factors.
b. sociocultural factors.
c. substitute products or services.
d. technological factors.
Ans. c
30. An analysis of the economic segment of the external environment would include all
of the following EXCEPT
a. interest rates.
b. international trade.
c. the strength of the U.S. dollar.
d. the move toward a contingent workforce.
Ans. d
31. Product differentiation refers to the:
a. ability of the buyers of a product to negotiate a lower price.
b. response of incumbent firms to new entrants.
c. belief by customers that a product is unique.
d. fact that as more of a product is produced the cheaper it becomes per unit.
Ans. c
32. Which of the following is NOT an entry barrier to an industry?
a. expected competitor retaliation
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b. economies of scale
c. customer product loyalty
d. bargaining power of suppliers
Ans. d
33. Switching costs refer to the:
a. cost to a producer to exchange equipment in a facility when new technologies emerge.
b. cost of changing the firm’s strategic group.
c. one-time costs suppliers incur when selling to a different customer.
d. one-time costs customers incur when buying from a different supplier.
Ans. d
34. New entrants to an industry are more likely when (i.e., entry barriers are low
when…)
a. it is difficult to gain access to distribution channels.
b. economies of scale in the industry are high.
c. product differentiation in the industry is low.
d. capital requirements in the industry are high.
Ans. c
35. Suppliers are powerful when:
a. satisfactory substitutes are available.
b. they sell a commodity product.
c. they offer a credible threat of forward integration.
d. they are in a highly fragmented industry.
Ans. c
36. The highest amount a firm can charge for its products is most directly affected by
a. expected retaliation from competitors.
b. the cost of substitute products.
c. variable costs of production.
d. customers’ high switching costs.
Ans. b
37. All of the following are forces that create high rivalry within an industry EXCEPT
a. numerous or equally balanced competitors.
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b. high fixed costs.

c. fast industry growth.
d. high storage costs.
Ans. c
38. According to the five factors model, an attractive industry would have all of the
following characteristics EXCEPT:
a. low barriers to entry.
b. suppliers with low bargaining power.
c. a moderate degree of rivalry among competitors.
d. few good product substitutes.
Ans. a
39. Internal analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. a
40. An external analysis enables a firm to determine what the firm
a. can do.
b. should do.
c. will do.
d. might do.
Ans. d
41. ________ is/are the source of a firm’s________, which is/are the source of the
firm’s ________.
a. Resources, capabilities, core competencies
b. Capabilities, resources, core competencies
c. Capabilities, resources, above average returns
d. Core competencies, resources, competitive advantage
Ans. a
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42. In the airline industry, frequent-flyer programs, ticket kiosks, and e-ticketing are
all examples of capabilities that are
a. rare.
b. causally ambiguous.
c. socially complex.
d. valuable.
Ans. d
43. Firms with few competitive resources are more likely
a. to not respond to competitive actions.
b. respond quickly to competitive actions.
c. delay responding to competitive actions.
d. respond to strategic actions, but not to tactical actions.
Ans. c
44. Competitors are more likely to respond to competitive actions that are taken by
a. differentiators.
b. larger companies.
c. first movers.
d. market leaders.
Ans. d
45. What can be defined as the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its
objectives?
a. Strategy formulation
b. Strategy evaluation
d. Strategic management
e. Strategic leading
Ans. d
46. Which of the following is not a cultural product?
a. Rites
b. Emotions
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c. Rituals
d. Sagas
e. Symbols
Ans. b
organization?
a. Strategists
d. Stakeholders
Ans. a
48. Which of the following is an element of a firm’s remote external environment?
a. Competition
b. Political agencies
c. Suppliers
d. Trade union
Ans. b
a. measurable.
b. continually changing.
c. reasonable.
d. challenging.
e. consistent.
Ans. b
a. laws
b. rules
c. policies
d. procedures
e. goals
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Ans. c
51. According to Greenley, strategic management offers all of these benefits except that
a. it provides an objective view of management problems.
b. it creates a framework for internal communication among personnel.
c. it encourages a favorable attitude toward change.
d. it maximizes the effects of adverse conditions and changes.
e. it gives a degree of discipline and formality to the management of a business.
Ans. d
52. The vision and mission statement can often be found
a. in the SEC report.
b. in annual reports.
c. on customer receipts.
d. on supplier invoices.
e. on community news bulletins
Ans. b
a. Communities
b. Banks
c. Suppliers
d. Employees
e. All of these
Ans. e
54. The process of performing an external audit needs to include:
a. only top level managers, as it’s a planning function.
b. as many managers and employees as possible.
c. primarily front-line supervisors
d. between 15 to 20 managers for it to be valid
e. stockholders and external government agencies
Ans. b
55. Which of the following is not a stage of strategy formulation techniques?
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a. Formulation Framework
b. Matching stage
c. External factor evaluation
d. Decision stage
Ans. b
56. ST Strategies is an important strategy to
a. Match weakness with opportunities of the firm
b. Overcome external threats
c. Obtain benefit from its resources
d. Overcome its weakness and reducing threats
Ans. b
57. The immediate external environment includes:
a. Divisions
b. S. B. U. s
c. Competitors
d. Management
Ans. c
58. The________ comprises economic and social conditions, political priorities and
technological developments, all of which must be anticipated, monitored, assessed and
incorporated into the executive’s decision making.
a. Internal environment
b. Task environment
c. Operating environment
d. Societal environment
Ans. d
59. Strategic management involves the_______, directing, _______ and controlling of a
company’s strategy-related decisions and actions.
a. Financing; marketing
b. Planning; financing
c. Planning; organizing
d. Marketing; planning
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Ans. c
60. A strategy is a company’s
a. Value statement
b. Pricing policy
c. Game Plan to outsmart competitor
d. Long-term objective
Ans. c
61. Strategy-formulation concepts and tools
a. Do not differ greatly for different size and type of organizations
b. Differ greatly for different size and type of organizations
c. Do not differ greatly for profit or nonprofit organizations but differ in small and large
organizations
d. None of the mentioned options
Ans. a
a. Are not critical to success
b. Serve as guidelines for action, directing and channeling efforts and activities of
organization members
c. Are not important for employee motivation and identification
d. Do not provide a basis for organizational design
Ans. b
a. Need not to be consistent
b. Should be easily achievable
c. Should be measurable
d. Should be confidential and not to be communicated throughout the organization
Ans. c
64. Which of the following resources is used by all organizations to achieve desired
objectives?
a. Financial resources,
b. Physical resources,
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c. Human resources
d. All of the mentioned options
Ans. d
65. Strategic management is
a. A pure science.
b. Based mainly on intuition.
c. Needed mainly when organizational performance falls.
d. Based on the use of quantitative and qualitative information.
Ans. d
66. Large-scale, future-oriented plans, for interacting with the competitive
environment to achieve company objectives refers to its
a. Strategy
b. Goals
c. Competitive analysis
d. Dynamic policies
Ans. a
67. Strategic issues require which level of management decisions?
a. Operative
b. Top
c. Front-line
d. Middle
Ans. b
c. Why do we exist?
Ans. d
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c. Analyzing available technologies

Ans. b
70. Strategic management process activate in the sequence of_______
a. Environmental scanning, Strategy formulation, Implementation, control and evaluation
b. Strategy formulation, Environmental scanning, Implementation, control and evaluation
c. Environmental scanning, Strategy Implementation, formulation, control and evaluation
d. Strategy formulation, Implementation, control, evaluation, Environmental scanning
Ans. a
71. KAPKAL Power’s interested to achieve a 10 percent return on equity (ROE) in their
core electric utility, 14 percent ROE on water resource operations, and 15 percent ROE
on support businesses. It is _____________
a. Mission
b. Strategy
c. Objective
d. Policy
Ans. c
72. “A possible and desirable future state of an organization” is called:
a. Mission
b. Vision
d. None of above
Ans. b
73. Strategic decisions are based on what managers_____________, rather than on what
they__________.
a. Know; forecast
b. React to; anticipate
c. Forecast; know
Ans. c
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74. “To improve economic strength of society and function as a good corporate citizen
on a local, state, and national basis in all countries in which we do business”. This is a
mission statement that contains:
a. Self-concept
b. Economic concern
c. Products or Services
d. Concern for Public Image
Ans. d
75. Strategic-management audit is known as:
c. Strategy control
Ans. a
76. Forecasting tools can be broadly categorized into two groups. Those are:
a. Qualitative, Operational
b. Quantitative, Operational
c. Qualitative, Quantitative
d. Regression and time series analysis
Ans. c
77.____________ identifies a firm’s major competitors and their particular strengths and
weaknesses in relation to a sample firm’s strategic position.
a. Competitive Profile Matrix
b. External Factor Evaluation matrix
c. Internal Factor Evaluation Matrix
d. Boston consulting group matrix
Ans. a
78. Organizing means an identifiable group of people contributing their efforts
towards the attainment of same goal. It is important at the time of:
c. Strategy Implementation
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Ans. c
79. In a turbulent and competitive free enterprise environment, a firm will succeed
only if it takes a(n) _____________ stance towards change.
a. Reactive
b. Proactive
c. Anti-regulatory or anti-government
d. Vision and not mission
Ans. b
80. Which statement best describes intuition?
a. It represents the marginal factor in decision-making.
b. It represents a minor factor in decision-making integrated with analysis.
c. It should be coupled with analysis in decision-making.
d. It is better than analysis in decision-making.
e. It is management by ignorance.
Ans. c
81. What are the means by which long-term objectives will be achieved?
a. Strategies.
b. Strengths.
c. Weaknesses.
d. Policies.
e. Opportunities.
Ans. a
c. Why do we exist?
e. Who are our competitors?
Ans. d
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83. When an industry relies heavily on government contracts, which forecasts can be
the most important part of an external audit.
a. economic
b. political
c. technological
d. competitive
e. Multinational
Ans. b
q. Analyzing available technologies
e. Analyzing social, cultural, demographic and geographic forces
Ans. b
organization?
a. Strategists
d. Stakeholders
Ans. a
a. Measurable.
b. Continually changing.
c. Reasonable.
d. Challenging.
e. Consistent.
Ans. b
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a. laws
b. rules
c. policies
d. procedures
e. goals
Ans. c
a. Communities
b. Banks
c. Suppliers
d. Employees
e. All of the given options
Ans. e
89. Typically how many strategic decision levels are in the corporate decision-making
hierarchy?
a. 3
b. 4
c. could be more than 5
d. 2
Ans. a
90. Which type of trend can be exemplified by the increasing numbers of two- income
households in a society?
a. Social
b. Economic
c. Cultural
d. Technological
Ans. b
91. External assessment is performed in which of the strategic management phase?
a. Strategy formulation stage
b. Strategy implementation stage
c. Strategy evaluation stage
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d. All of the given options

Ans. a
92. Political variables have a significant effect on
a. Strategy formulation and implementation
b. Strategy formulation and evaluation
c. Strategy implementation and evaluation
d. Strategy formulation, implementation and evaluation
Ans. a
93. Strategic decisions ostensibly commit the firm for
a. 1 -2 years
b. The short term
c. one years
d. A long time, typically five years
Ans. d
94. Social responsibility is a critical consideration for a company’s strategic decision
makers since
a. Stockholders demand it
b. The mission statement must express how the company intends to contribute to the
societies that sustain it
c. It increases a company’s profits
d. It helps make decisions
Ans. b
95. “The perfect search engine would understand exactly what you mean and give back
exactly what you want”, this statement is included in the mission statement of an
online firm and is showing which one of the following components?
a. Self-concept
b. Concern for public image
c. A declaration of attitude
d. Philosophy
Ans. b
96. Which of the following are signs of weakness in a company’s competitive position?
a. A return-on-equity is below 25% and earnings per share of less than Rs. 2.00
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b. A price set by the firm higher than its rivals

c. A declining market share, poor product quality and few sales in market
d. Lower revenues and profit margin and narrow product line than the market leader
Ans. c
97. It directs at developing new products before competitors do at improving product
quality or at improving manufacturing processes to reduce costs.
a. Marketing
b. Opportunity analysis
c. Research and development
d. Management
Ans. c
98. “Identifying and evaluating key social, political, economic, technological and
competitive trends and events”. Which of the followings best describes this statement?
a. Developing an effective mission statement
d. Formulating strategy
Ans. c
99. What is the central purpose of strategic evaluation?
a. Evaluate effectiveness of strategy to achieve organisational objectives.
b. Evaluate effectiveness of control system to measure achievements.
c. Evaluate effectiveness of strategies to be implemented efficiently.
d. Evaluate effectiveness of the strategy implementation process.
Ans. a
100. Strategy evaluation at the_____________ level involves using specific performance
measures-qualitative and quantitative-for each functional area.
a. organizational
b. operational
c. functional
d. production
Ans. c
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Strategic
Management
Multiple choice
questions
DR. SESHU BABU

Mr. CHUOP Theot Therith
2010
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Strategic Management
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k e r- s o ft w k e r- s o ft w a
PART A: MULTIPLE CHOICE QUESTIONS
CHAPTER ONE
The Nature of Strategic Management
1. Which of these is not a reason why some firms do no strategic planning?

a. Laziness
b. Competitive leadership
c. Honest difference of opinion
d. Poor reward structures
2 .Developing a vision and mission, identifying an organization's external opportunities and

threats, and determining internal strengths and weaknesses are all __________ activities.
a. strategy-formulation
b. strategy-implementation
c. long-range planning
d. short-range planning
3 . The means by which long-term objectives will be achieved are

a. mission statements
b. strategies.
c. vision statements.
d. long-term goals.
CHAPTER TWO
Business Mission
4. The _________ answers the question "What do we want to become?" whereas

_________answers the question "What is our business?"
a. vision statement; mission statement
b. short-term objectives; long-term objectives
c. objectives; strategies
d. mission; vision
5. What is the recommended length of an effective mission statement?

a. One page
b. Less than 200 words
c. One sentence of 10 to 20 words.
d. There is no recommendation. It can be as long as the management wants.
CHAPTER THREE
External Assessment
6. __________ represents the average score in both EFE and CPM.

a. 2.0
b. 3.0
c. 2.5
d. 4.0
7. All of these, except__________, are part of Porter's competitive forces in industry

analysis.
Prepared by: CHUOP Theot Therith 1

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a. potential entry of new competitors
b. bargaining power of suppliers
c. development of substitute products
d. bargaining power of union
8. __________ is based on the assumption that the future will be just like the past. [Hint]
a. Delphi forecasts
b. Econometric models
c. Linear regression
d. Scenario forecasts
CHAPTER FOUR
Internal Assessment
9. Shorthand words use to capture a vision or to reinforce old or new values in a firm's
culture are called
a. Metaphors
b. Sagas
c. Rituals
d. Symbols
10. In an IFE Matrix, the weight range is from __________ and the ratings range from
_________.
a. to 1.0; 1.0 to 4.0

b. to 1.0; 0.0 to 4.0
c. to 3.0; 1.0 to 2.0
d. to 4.0; 0.0 to 1.0
11. An effective information system collects, codes, stores, synthesizes, and _________
information in such a manner that it answers important operating and strategic questions.
a. Prints
b. Distributes
c. Presents
d. Filters
CHAPTER FIVE
Strategies in Action
12. __________ is adding new, unrelated products or services for present customers.
a. Concentric diversification
b. Horizontal diversification
c. Conglomerate diversification
d. Product development
13. Two reasons for mergers and acquisitions are

a. to increase managerial staff and to minimize economies of scale.
b. to reduce tax obligations and increase managerial staff.
c. to create seasonal trends in sales and to make better use of a new sales force.
d. to provide improved capacity utilization and to gain new technology.
14. Which strategy would be effective when the new products have a counter cyclical sales
pattern compared to an organization's present products?
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a. Forward integration
b. Retrenchment
c. Horizontal diversification
d. Market penetration
CHAPTER SIX
Strategy Analysis & Choice
15. A coordinate of _________ in the SPACE Matrix is a defensive profile.

a. +1, +1
b. -4, -2
c. +5, -1
d. -2, +3
16. The first option that should be considered for firms in Quadrant II of the Grand Strategy
Matrix is the __________ strategy.
a. integration
b. intensive
c. defensive
d. diversification
17. The pie slices within the circles of a _________ reveal the percent of corporate profits
contributed by each division.
a. QSPM
b. BCG Matrix
c. SPACE Matrix
d. Grand Strategy Matrix
CHAPTER SEVEN
Implementing Strategies: Management Issues
18. All of the following are stated advantages of a divisional structure except
a. it allows local control of local situations.
b. it leads to a competitive climate within a firm.
c. accountability is clear.
d. it promotes specialization of labor.
19. The average employee performance bonus is __________ percent of pay for individual
performance, _________ percent of pay for group productivity, and __________ percent of
pay for company-wide profitability.
a. 10.5; 5.5; 2.8
b. 6.8; 5.5; 6.4
c. 10.8; 8.5; 12.4
d. 15.4; 12.4; 10.4
20. __________ approach involves delivering parts and materials as needed rather than
being stockpiled
a. JIT
b. MBO
c. PERT
d. CAD-CAM

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PART B: ESSAY
Discussion on the applied concepts
in Strategic Management of Nokia Company
I. REVIEW OF NOKIA COMPANY

I.1 GENERATION OF NOKIA
From roots in paper, rubber, and cables, in just over 100 years Nokia becomes a
powerful industrial conglomerate.
The first Nokia century began with Fredrik Idestam's paper mill on the banks of the
Nokianvirta river. Between 1865 and 1967, the company would become a major industrial
force; but it took a merger with a cable company and a rubber firm to set the new Nokia
Corporation on the path to electronics.
The newly formed Nokia Corporation was ideally positioned for a pioneering role in the
early evolution of mobile communications. As European telecommunications markets were
deregulated and mobile networks became global, Nokia led the way with some iconic
products.
As mobile phone use booms, Nokia makes the sector its core business. By the turn of
the century, the company is the world leader. In 1992, Nokia decided to focus on its
telecommunications business. This was probably the most important strategic decision in its
history.
As adoption of the GSM standard grew, new CEO Jorma Ollila put Nokia at the head of
the mobile telephone industry’s global boom – and made it the world leader before the end of
the decade.
Nokia sells its billionth mobile phone as the third generation of mobile technology
emerges. Nokia’s story continues with 3G, mobile multiplayer gaming, multimedia devices
and a look to the future.
I.2. ORGANIZATIONAL STRUCTURE OF NOKIA

Nokia’s organizational structure is designed to position them for a world where the
mobile device, the Internet and the computer are fusing together.

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Mobile Solutions is responsible for developing and managing our portfolio of

smartphones and mobile computers. The team is also busy developing a world-class suite of
internet services under the Ovi brand, with a strong focus on maps and navigation, music,
messaging and media.
Mobile Phones is responsible for developing and managing our portfolio of affordable
mobile phones, as well as a range of services that people can access with them.
Markets manage our supply chains, sales channels, brand and marketing activities, and
is responsible for delivering our mobile solutions and mobile phones to the market.
Nokia Siemens Networks, jointly owned by Nokia and Siemens, provides wireless and
fixed network infrastructure, communications and networks service platforms, as well as
professional services to operators and service providers.
NAVTEQ is a leading provider of comprehensive digital map data and related location-
based content and services for automotive navigation systems, mobile navigation devices,
Internet-based mapping applications, and government and business solutions.
II. DISCUSSION ON THE APPLIED CONCEPTS

IN STRATEGIC MANAGEMENT OF NOKIA
The concept of strategic management is refers to (1) Strategy Formulation, (2) Strategy
Implementation and (3) Strategy Evaluation.
The limitation of discussion now is discussed only on strategic formulation: Nokia’s
vision of the future, mission, goals, and strategies.
II.1. VISION OF NOKIA

The Nokia’s vision statement is connecting people to what matters empowers them to
make the most of every moment. Nokia will therefore empower everyone to share and make
the most of their life by offering irresistible personal experiences. Nokia want to become the
leading provider of mobile solutions.
The full power of being connected: By 2015, all people will experience the full power of
being connected everywhere anytime.

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Enable people to be wherever they want, whenever they want: Highly personalized and
contextually relevant solutions become passports that take us wherever we want or need to be,
whenever we want or need to be there.
Life becomes more flexible and spontaneous: Freed from the physical constraints of
time and place, our lives become vastly more experiential, flexible and spontaneous.
Innovating, creating and sharing: Innovating, creating and sharing are social activities
where everyone plays. Co-creation is limited only by the willingness to participate.
Technology becomes invisible: Technology becomes invisible, technical literacy
becomes irrelevant, and intuition takes over.
Nokia never miss an opportunity to get the most out of life: Nokia never miss an
opportunity to get the most out of life thanks to ubiquitous connectivity and combinations of
mobile devices and services that learn and anticipate our personal wants and needs. Like
personal assistants sensing where we are, they point and lead us to what’s available and
relevant.
II.2. MISSION OF NOKIA

Nokia’s mission of connecting people is more than just an advertising buzz phrase. It
describes what we do. It says what benefits we bring to our operator and enterprise customers,
to consumers and to society. It says who we are and what we represent. It is our compass; we
use it to drive our business forward and to deliver value to our customers.
As people have different priorities, Nokia offers a wide range of opportunities and the
flexibility to make sure that they are accessible. The recognition of achievement through a
mix of individual, team and company-wide incentives is one aspect. However, equally
important is the support given to personnel in finding a balance between work and free time,
as well as the creation of opportunities for personal and professional growth.
Ultimately, the most important thing in the workplace is that people can feel motivated,
valued and comfortable. Through the Nokia Values: customer satisfaction, achievement,
respect and renewal, we aim to create such an atmosphere, where people can be themselves
and excel at what they do. Our values also help us establish a firm base from which we can
research, create and deliver the quality products and services our customers want, while
building a corporate image, with which our stakeholders are proud to be connected.
Today, Nokia is a world leader in mobile communications, contributing to the growth
and sustainability of the broader mobility industry. Nokia is dedicated to enhancing people’s
lives and productivity by providing easy-to-use products like mobile phones and solutions for

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imaging, games, media, mobile network operators and businesses. Today, Nokia comprises
four business groups: Mobile Phones, Multimedia, Enterprise Solutions, and Networks.
With approximately one in every third mobile phone in use made by Nokia, our
operations influence the lives of hundreds of millions of people; as customers, employees,
business partners and investors. As market leader with global operations, Nokia takes its
responsibility seriously and has many established practices and programs to help make sure
our overall impact is positive.
Mobile communications is already an established force for positive change, driving
economic development and improving social wellbeing. It gives people a voice, helps them
build personal and professional networks, and provides a base for more widespread
information sharing. We aim to increase the penetration of mobile phones in countries where
basic communications infrastructure is sparse or non-existent. Nokia is working closely with
operator customers and governments to offer affordable mobile entry products and solutions
to a broader cross-section of society, in a way that is financially viable.
Discussion on Nokia’s missions: Looking to the missions above, it indicates that Nokia
Company has applied the right concept in strategic management to develop its mission
statement corresponding to the nine components.
1. Customers: Nokia’s customers are people around the world, “…Nokia offers a wide
range of opportunities and the flexibility to make sure that they are accessible…”
2. Product and Services: “…Nokia comprises four business groups: Mobile Phones,
Multimedia, Enterprise Solutions, and Networks…”
3. Markets: “…is a global operation market…”
4. Technology: Nokia applies with high mobile and communication technology.
5. Concern for survival, growth, and profitability: “…contributing to the growth and
sustainability of the broader mobility industry…”
6. Philosophy: Nokia beliefs, “…Connecting people to what matters empowers them to
make the most of every moment…”
7. Self-concept: the major competitive advantage is, “…Seamless, delightful and
effortless user experiences. Vibrant partner ecosystem, People and places enriched
solutions, Direct and continuous consumer relationships, and Regain market position
in all markets…”
8. Concern for public image: “…established force for positive change, driving
economic development and improving social wellbeing…”
9. Concern for employee: “…the most important thing in the workplace is that people
can feel motivated, valued and comfortable…”
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II.3. GOALS OF NOKIA

To become the leading provider of mobile solutions, because in the mobile converged
internet space consumers expect seamlessly integrated solutions.
To deliver these solutions requires continuous relationships with consumers and vibrant
ecosystem.
II.4. STRATEGIES OF NOKIA

Strategy1: Competitive environment is changing – traditional competitors making an
effort to increase their volume share in the low end. As the mobile telecom, Internet and PC
industries converge, the industry ecosystem is expanding, and new entrants like Apple, RIM
& Google are creating value with mobile solutions.
Strategy2: Consumer needs are changing – voice and design driven devices business
continues to be important and volume growth will resume. Innovative mobile solutions are
delivering significant new value for many consumers.
Strategy3: The nature of consumers’ relationships with companies is changing – from a
monologue to a conversation … into continuous relationship. From a unified to a segmented
… into a dynamic personalized offering together with their ecosystem.
Strategy4: Irresistible solutions & vibrant ecosystem – starting from a consumer need
or want, radically improve the user experience, co-creating value with developers, operators,
partners by building and open ecosystem.
Strategy5: Transforming into a solutions driven company optimizing user experience.
Strategy6: Laying the foundation for an inclusive and sustainable ecosystem – a
sustainable ecosystem where Nokia services will be only one part of the offering 99% comes
from others.
Strategy7: Direct and continuous consumer relationships – Nokia devices strive to
initiate all consumers to the rich world of services, consumer understanding to maximize
Nokia’s value to the consumer, privacy & trust (permission-based), 300M active users by end
2011.
Strategy8: Best devices – three device areas with different ways to create and capture
value (computers, smart phones, phones).
Strategy9: Smart services – focus on four interconnected services under the Ovi brand,
differentiation through context enriched services – people and places.

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II.5. STRATEGIES EVOLUTION OF NOKIA
III. CONCLUSION
According to the discussion above, Nokia is a company that well understanding the
nature of strategy formulation, implementation and evaluation activities. Specially, Nokia has
accurately applied the concepts of strategic management in its strategy formulation. It has
clear vision statement, a good mission corresponding to the nine components, objectives that
stated clearly about what results to accomplish by when, and strongly strategies that plan to
achieve the mission and objectives.
Moreover, Nokia Company has program activities needed to accomplish its plan, cost of
the program, and the procedure – sequence of steps needed to do the job in strategy
implementation as well as the process to monitor performance and take corrective action.
IV. REFERENCES
1. Fred R. David, Strategic Management, 9/e, © 2003 by Prentice-Hall, Inc., A Pearson
Education Company, Upper Saddle River, New Jersey 07458
2. Dr. V.V.R. Seshu Babu, Strategic Management hand out, 2010, BBU, Phnom Penh
3. Nokia company web: http://www.nokia.com/about-nokia/company/vision-and-strategy
4. http://www.essayclub.com/term-papers/Analysis-Mission-Vision-Statement-
Nokia/3501.html
5. http://www.docstoc.com/docs/DownloadDoc.aspx?doc_id=1903541

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SAMPLE
EXAM
ENTREPRENEURSHIP
THE ENTREPRENEURSHIP EXAM IS USED FOR THE

FOLLOWING EVENTS:
ENTREPRENEURSHIP SERIES ENT
ENTREPRENEURSHIP TEAM DECISION MAKING ETDM
These test questions were developed by the MBA Research Center. Items have been randomly selected from the MBA Research Center’s
Test-Item Bank and represent a variety of instructional areas. Performance indicators for these test questions are at the prerequisite, career-
sustaining, and specialist levels. A descriptive test key, including question sources and answer rationale, has been provided.
Copyright © 2019 by MBA Research and Curriculum Center®, Columbus, Ohio. Each individual test item contained herein is the exclusive property
of MBA Research Center. Items are licensed only for use as configured within this exam, in its entirety. Use of individual items for any purpose
other than as specifically authorized in writing by MBA Research Center is prohibited.
Posted online March 2019 by DECA Inc.

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Test 1188 ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT EXAM 1
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1. Which of the following is a type of intangible business property that is protected by law:
A. Acreage
B. Inventory
C. Trademark
D. Equipment
2. Basic torts relating to businesses often involve disputes concerning

A. emotional stress.
B. assaults.
C. defamation.
D. contracts.
3. Which of the following is a characteristic of a business-format franchise:

A. The name of the business is chosen by the franchisee.
B. Products are bought directly from the supplier.
C. It is the least popular franchise arrangement.
D. Continuous assistance is provided by the franchisor.
4. Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are
considered advantages of a
A. sole proprietorship.
B. partnership.
C. trade union.
D. corporation.
5. Channels of distribution benefit consumers by

A. increasing profits for businesses.
B. lowering the prices of all consumer products.
C. raising the quality of all consumer products.
D. making a variety of products available to them.
6. For which of the following markets would producers use a short channel of distribution:
A. Local consumers
B. Generation X
C. Baby boomers
D. Senior citizens
7. If a business considers where the consumers are and who they are before selecting a channel of
distribution, the business is considering the __________ factor.
A. human
B. promotion
C. market
D. sales
8. What do business employees often need to do before they are able to write proposals?
A. Research the problem
B. Analyze personal biases
C. Contact the customer
D. Evaluate technical skills
9. Which of the following is an example of a manager developing a policy that impacts customer relations:
A. Increasing use of security devices
B. Extending business hours on weekends
C. Revising bookkeeping procedures
D. Scheduling employees' work hours
Copyright © 2019 by MBA Research and Curriculum Center®, Columbus, Ohio

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10. What should a successful brand promise be able to do?
A. Customize the product for each customer
B. Clarify the company's processes
C. Communicate an appealing benefit
D. Convey a high-quality image
11. Which of the following is one way that freedom in a private enterprise system is limited by laws:
A. Certain occupations must be licensed.
B. All workers must take ability tests.
C. Specific pay scales are regulated.
D. Employees must register with the state.
12. During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025.
The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over
represents the owner's
A. net profit.
B. gross profit.
C. sales income.
D. operating expenses.
13. Non-corporations are taxed as pass-through entities, meaning that

A. profits and losses are claimed on owners' personal tax returns.
B. they do not have to pay payroll taxes.
C. their income tax rates are lower than those of corporations.
D. they pay only state and local taxes.
14. Which of the following activities is an example of preparing before attempting to sell an idea:
A. Explaining solutions to audience needs
B. Determining the details of your idea
C. Overcoming objections from the audience
D. Affirming the audience's decision to "buy"
15. Managers are more likely to be able to persuade employees to follow new procedures if the managers
have
A. organizational skills.
B. credibility.
C. enthusiasm.
D. self-motivation.
16. Ali wants to negotiate with her boss to take on more job responsibilities. Before approaching her boss, Ali
needs to determine her boss's position and
A. abilities.
B. interests.
C. standards.
D. procedures.
17. After writing your personal vision, what must you do to achieve it?
A. Commit to your vision through hard work and dedication.
B. Put your vision in a safe space and look at it again in five years.
C. Get the highest-paying job that you can find out of high school.
D. Spend all of your free time working on self-improvement.
18. Ryan keeps a list of his goals to remind himself of what he's working toward. Which tip for smart goal
setting is Ryan following?
A. Putting goals in writing
B. Tying goals to a timetable
C. Making goals specific
D. Making goals difficult but possible
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19. The future that you desire to create is known as a
A. mission statement.
B. goal.
C. prediction.
D. vision.
20. The entrepreneurial discovery process that involves finding a way to meet an existing demand by
inventing new products from available resources is based on
A. science.
B. medicine.
C. psychology.
D. physics.
21. Dan is in the process of determining the types of computer software and telephone service that will best
suit his new business and get it up and running. Dan is considering his business's
A. financial constraints.
B. technical needs.
C. competitive advantage.
D. staffing requirements.
22. Which of the following statements is true about business startup requirements:
A. New business owners usually need to register for patent protection.
B. The financial needs to start a new business depend on the nature of the venture.
C. Purchasing a franchise is usually easy and inexpensive for startup business owners.
D. Equipment is the least expensive requirement for a startup business.
23. Why is it important for entrepreneurs to talk with industry experts when developing new business
concepts?
A. The industry experts usually improve your management skills.
B. The industry experts typically provide useful information.
C. The industry experts commonly enhance your confidence.
D. The industry experts frequently offer financial support.
24. If an entrepreneur obtains a commercial bank loan to finance a new venture, s/he is often required to
A. provide collateral.
B. close savings accounts.
C. relinquish contracts.
D. charge the prime-interest rate.
25. To determine their human resource needs, new business owners often find it helpful to
A. list all the tasks involved in operating the business.
B. ask a technical recruiter for advice.
C. hire consultants or freelancers.
D. allocate funds for additional payroll taxes.
26. The type of capital resources that a startup business needs to begin operating usually depends on the
A. vendors' lead time.
B. location.
C. owner's preferences.
D. industry.
27. Which of the following statements is true about new venture risk-taking:
A. When an entrepreneur seeks a high profit, the risk is usually higher.
B. When the entrepreneur seeks to limit risk, the reward tends to increase.
C. An entrepreneur's financial risk is not closely related to rewards.
D. The entrepreneur who does not care about profit is a high risk-taker.
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28. Small-business owners develop and use operating procedures so that everyday tasks are performed in
a(n) __________ way.
A. innovative
B. imprecise
C. diverse
D. standard
29. To develop repeat business and customer loyalty, a business owner might
A. update equipment.
B. increase prices.
C. ridicule the competition.
D. offer a new service.
30. By joining a community organization, such as the local chamber of commerce, an entrepreneur can
network with others to
A. evaluate personal skills and abilities.
B. obtain selling experience.
C. identify new venture opportunities.
D. improve goods and services.
31. Determine if the following statement is true or false: When developing an exit strategy for an
entrepreneurial venture, the most important consideration is finding a suitable buyer.
A. False, there are many factors to consider, such as company valuation and personal goals.
B. True, if the buyer is inexperienced, the business risks monetary losses and long-term failure.
C. False, the most important factor that an entrepreneur should consider is profitability.
D. True, the valuation of a business is dependent on the buyer's financial resources.
32. Which of the following is an example of an intangible asset:

A. Equipment
B. Inventory
C. Office building
D. Accounts receivable
33. Which of the following is a characteristic of a profit-and-loss statement:

A. Is the same as a balance sheet
B. Summarizes expenses and revenue from sales
C. Shows the owner's financial position
D. Lists assets and liabilities
34. In managerial accounting, the number of hours that a business runs its machinery during the production
process is classified as a(n)
A. production output.
B. cost driver.
C. unexpected expense.
D. inflexible transaction.
35. Businesses often obtain cash to produce and sell goods by borrowing against their
A. current liabilities.
B. accounts receivable.
C. operating expenses.
D. promissory notes.
36. When determining financing needs, what factor should businesses consider that will help decide whether
they can repay the debt?
A. Liquidity
B. Depreciation
C. Equity
D. Inventory
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37. Which of the following is a risk a business might face if it obtains a long-term loan from a financial
institution and pays off the loan before it is due:
A. Being charged a penalty
B. Losing interest on the account
C. Paying a processing fee
D. Receiving a variable rate
38. Why do lending institutions carefully evaluate how well a business meets certain criteria before making a
loan?
A. To improve relations
B. To provide service
C. To prevent theft
D. To reduce risk
39. Which of the following payback periods in a cost/benefit analysis would businesses prefer if all other
things were equal:
A. 2 years
B. 1 year
C. 3 years
D. 4 years
40. An example of an internal change that could affect a business's sales forecast is a change in the
A. length of a national recession.
B. number of competitors in the market.
C. size of the sales force.
D. levels of consumer spending.
41. Ethan is developing common-size financial statements so that he can compare financial performance
across several different companies. Ethan is conducting __________ analysis.
A. horizontal
B. vertical
C. ratio
D. trend
42. Jana noticed a problem while reviewing her company's monthly income statement. She verified that the
total revenue was $4,590 and the total expenses were $1,452. However, the income statement showed a
net income total of $1,383. Which of the following reflects the correct net income:
A. $3,381
B. $5,973
C. $3,138
D. $1,833
43. Why do interviewers usually focus on asking questions that are related to a job applicant's performance?
A. To understand complaints
B. To take remedial action
C. To determine qualifications
D. To plan future training
44. If employees are fired because their conduct is in serious violation of company policies, they are being
terminated for
A. incompetence.
B. performance.
C. resigning.
D. cause.
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45. Why is it often necessary to provide employees with additional training?
A. To increase socialization
B. To improve performance
C. To analyze diversity
D. To identify sensitivity
46. When a supervisor evaluates an employee's performance, the evaluation should be based on the
__________ standards.
A. organization's
B. supervisor's
C. competition's
D. employee's
47. Which of the following is one way that businesses use marketing information:
A. To predict change
B. To analyze data
C. To develop surveys
D. To conduct research
48. Which of the following is a characteristic of the data collection step in marketing research:
A. The least expensive step in marketing research
B. The least tedious step in marketing research
C. The step in which the most mistakes are made
D. The step that is most interesting to researchers
49. Which of the following is an example of a durable good:

A. House
B. Haircut
C. Gasoline
D. Hamburger
50. Motives, perception, attitude, lifestyle, personality, and abilities are __________ factors influencing
consumer behavior.
A. political
B. social
C. psychological
D. economic
51. Business goals are accomplished by means of marketing

A. salespeople.
B. budgets.
C. profit.
D. strategies.
52. Products that appeal to the majority of customers are often sold through __________ marketing efforts.
A. segmented
B. mass
C. demographic
D. psychographic
53. An important part of a market analysis involves collecting __________ information.

A. confidential
B. geographic
C. employee
D. property
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54. One reason why it is important to accurately forecast sales for a marketing plan is because the forecast is
the basis of other
A. business reports.
B. pricing strategies.
C. operational activities.
D. management techniques.
55. Which of the following is a strategy for linking performance measures to financial outcomes:
A. Analyzing click-through rates
B. Developing advertising budgets
C. Paying for direct-mail pieces
D. Maintaining sales receipts
56. What type of software do many businesses require be installed on computer systems as a security
feature?
A. Reality
B. Firewall
C. Spider
D. Media
57. The FPD Company keeps copies of its brochures, catalogs, and flyers on file for future reference. This is
an example of a company that is maintaining __________ records.
A. inventory
B. legal
C. promotional
D. asset
58. Which of the following is most likely to be a dynamic element of a business's external environment:
A. Decrease in personnel
B. Increase in competition
C. Renewed emphasis on training
D. New quality control measures
59. James needs to hire a bookkeeper for his growing business. To determine the new employee's salary,
James obtained pay data from five companies in his industry that are similar in size. The research
indicated the following: Company A pays $31,205; Company B pays $29,995; Company C pays $34,800;
Company D pays $42,500; and Company E pays $36,500. James decided to set his bookkeeper's salary
at $35,000. What measure of central tendency did James use to set his new employee's salary?
A. Mode
B. Mean
C. Range
D. Median
60. Hill Industries uses specific criteria to evaluate vendor performance, including on-time delivery rate,
return rate, and number of customer complaints. These metrics are also known as
A. consensus scales.
B. performance indicators.
C. economic indicators.
D. return on capital.
61. A business converts inputs into outputs through its __________ activities.
A. accounting
B. management
C. marketing
D. production
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62. What is often the role of management in the achievement of quality in a business?
A. To assign blame
B. To lead the effort
C. To judge the staff
D. To eliminate conflict
63. Which of the following is an example of a fixed operating expense:

A. Insurance
B. Sales commissions
C. Advertising
D. Travel expenses
64. What information does a business always need to have when it conducts a break-even analysis?
A. Fixed costs and depreciation rates
B. Variable costs and fixed costs
C. Production time and variable costs
D. Production time and depreciation rates
65. Which of the following should a business consider when negotiating a service or maintenance contract on
a piece of equipment:
A. Does the cost of the contract exceed the cost of possible repairs?
B. Is training and technical assistance available?
C. How much profit does the seller make on the contract?
D. Does the equipment require installation?
66. Which of the following is a situation in which a business could use the budget information to make
operating changes:
A. Total revenues exceed projected costs.
B. Estimated sales exceed actual sales.
C. Expected profits are increasing.
D. Accounts receivable are on target.
67. To effectively manage a supply chain, companies should

A. introduce frequent changes to the production process.
B. ignore underperforming suppliers and distributors.
C. monitor the performance of all supply chain partners.
D. launch new products through multiple suppliers.
68. An employee is comparing income statements from the past three years to evaluate changes and trends
in the business's revenue. What type of business analysis is the employee conducting?
A. Production
B. Financial
C. Information management
D. Sales
69. Before assigning a new project to her employees, Joanna establishes the steps that her staff needs to
take to complete the project. Joanna is utilizing
A. human resource planning.
B. business process thinking.
C. agile project management.
D. change management.
70. A manufacturing company is required by the local government to dispose of its waste in an
environmentally safe way. This is an example of how process design can be affected by __________
factors.
A. human
B. regulatory
C. technological
D. natural
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71. Which of the following situations describes a business process changing due to technological factors:
A. A manufacturing company purchases a new software program to run its machines.
B. A small general store offers more discounts to compete with a new shopping mall.
C. A waste treatment plant changes its disposal method to align with environmental law.
D. A family-owned restaurant opens a second location in an effort to expand its brand.
72. Which of the following is a true statement regarding the relationship between a business's supply chain
management and its performance:
A. Good supply chain management leads to unsustainable business practices.
B. Good supply chain management leads to decreased value for the customer.
C. Poor supply chain management can result in customer satisfaction.
D. Poor supply chain management can result in customer dissatisfaction.
73. Chad is buying a new car. Although the first car is a great deal and a more practical choice, he just loves
the look of the second car. As a result, he decides to purchase the second car. His decision is based on
which of the following internal factors:
A. Insight or intuition
B. Experience
C. Framing
D. Emotion
74. Time management helps to reduce stress because it

A. provides less time for rest and relaxation.
B. increases feelings of pressure and tension.
C. encourages procrastination in planning necessary activities.
D. allows adequate time for personal and professional activities.
75. Who typically reviews and approves the guidelines for running a corporation, which are also known as
corporate governance policies?
A. The investors
B. The shareholders
C. The management team
D. The board of directors
76. What is the relationship between shareholders and the board of directors?
A. The shareholders pay dividends to the board of directors.
B. The board of directors represents the shareholders.
C. The shareholders make decisions for the board of directors.
D. The board of directors holds the shareholders accountable.
77. An organization should include independent members on its board of directors because they
A. provide an objective perspective.
B. represent the interests of management.
C. understand the company's inner workings.
D. are less likely to act unethically.
78. When buyers and sellers have agreed on a value for a product, they have established the
A. price policy.
B. exchange price.
C. equilibrium price.
D. price line.
79. True or false: In determining the selling price of a good or service, most of the factors to be considered by
the seller are internal to the business.
A. True, most factors affecting price are internal to the business.
B. False, most factors affecting price are not controlled by the firm.
C. True, most factors affecting price are directly controlled by the business.
D. False, most factors affecting price are directly controlled by the business.
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80. A product idea is feasible if it
A. meets sales quotas.
B. creates a competitive advantage.
C. costs a lot to produce.
D. is a durable good.
81. Terry, a company buyer, has the job of choosing a particular assortment of products that will meet the
market's needs and the company's goals. Terry is responsible for the company's product
A. mix.
B. item.
C. line.
D. sales.
82. A business manager who wants to increase the number of items the business offers needs to decide
whether the new items will be compatible with the business's
A. level of service.
B. patronage motives.
C. current product mix.
D. advertising objectives.
83. What do many businesses identify and strive to improve in order to attract customers and be
competitive?
A. Commission plans
B. Service standards
C. Personal characteristics
D. Operating quotas
84. What type of promotional media is a business using when it sends out a postcard telling customers who
recently purchased products that the business is adding a new line of products?
A. Participative
B. Sales letter
C. Persuasive
D. Direct mail
85. Ariel, who designs and sells a line of purses and tote bags, recently sent free totes bag to local female
news anchors. Ariel's goal is to have others see the local celebrities carrying the tote bags to generate
interest in her product. What form of word-of-mouth marketing is Ariel using?
A. Product seeding
B. Celebrity testimonial
C. Cause marketing
D. Social media applications
86. An advantage to using direct marketing to communicate product information is that the business can
A. expect a majority of recipients to respond to the message.
B. effectively appeal to a mass audience.
C. customize the messages.
D. save money by personalizing offers.
87. Samples, premiums, and advertising specialties are examples of __________ used in sales promotion.
A. communications channels
B. publicity strategies
C. marketing activities
D. selling techniques
88. Why do some businesses sponsor local events?

A. To obtain publicity
B. To create news
C. To generate revenue
D. To sell products
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89. Which of the following are public relations activities:
A. Writing press releases, distributing company newsletters, and sponsoring events
B. Holding press conferences, identifying trends, and hiring new staff members
C. Sponsoring events, developing new products, and distributing company newsletters
D. Identifying trends, writing press releases, and hiring new staff members
90. The cost of employing product inspectors is a(n)

A. appraisal cost.
B. prevention cost.
C. internal failure cost.
D. external failure cost.
91. Because __________ measures of risk can be too general, it is also useful to perform __________
assessment of risk.
A. quantitative; qualitative
B. qualitative; quantitative
C. preventative; responsive
D. responsive; preventative
92. Which of the following is a potential risk of implementing enterprise risk management (ERM) software:
A. Standardization of reporting
B. More emphasis on risk
C. Loss of data during the transfer
D. Less efficient use of resources
93. Salespersons should have good communication skills, but the sales presentation should not include too
many __________ words.
A. expressive
B. picturesque
C. personal
D. technical
94. Which management function lays the groundwork for all of the other management functions?
A. Directing
B. Organizing
C. Staffing
D. Planning
95. One way that managers can promote ethical behavior on the part of everyone in the business is by
encouraging employees to
A. develop a code of ethics.
B. report unethical actions.
C. be thoughtful of others.
D. avoid social situations.
96. The ski shop manager set an objective to increase sales by 10% over the previous year even though the
forecast was for a mild and rainy winter. The manager's objective was
A. reasonable.
B. practical.
C. unrealistic.
D. scientific.
97. Which of the following pairs of businesses are examples of direct competitors:
A. Ryan’s Drugstore and Hally’s Homemade Cards
B. Hot n’ Spicy Wings and Southern Fried Chicken House
C. JTE Clothes Boutique and Carla’s Hardware
D. Modern Dry Cleaning and Trotterman Accounting Services
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98. Which of the following is the most critical component of a business plan:
A. Market analysis
B. Company description
C. Executive summary
D. Financial plan
99. Which of the following employees would most likely be described as “innovative” by his/her supervisor:
A. Jake, because he is always willing to adapt to changes during a project
B. Madison, because she prefers to stick to traditional ideas and processes
C. Elizabeth, because she gets frustrated when she needs to learn new skills
D. Anthony, because he is usually quiet during brainstorming sessions
100. One of the goals of change management is

A. to obtain buy-in from stakeholders.
B. to limit the effects of a change.
C. to keep the people involved to a minimum.
D. to reduce the time it takes to make a change.
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Test 1188 ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT EXAM—KEY 13
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1. C
Trademark. A trademark is a symbol, design, or word used by a business to identify a good or service
and is registered with the government to prevent its use by others. A trademark is an example of
intangible business property. Federal law protects a business's intangible property from being used by
competitors. A business's inventory, acreage, and equipment are types of tangible property.
SOURCE: BL:001
SOURCE: World Intellectual Property Organization. (n.d.). What is intellectual property? Retrieved
September 17, 2018, from
http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf
2. D
Contracts. Business torts are wrongful actions against a business that cause it harm in some way.
Disputes concerning contracts are often the basis for businesses suing individuals or other businesses.
Many businesses have contractual arrangements with employees or vendors. If these contracts are
broken, the business might be harmed and seek compensation through the legal system. Basic torts
relating to businesses do not involve disputes concerning assaults, defamation, or emotional stress.
SOURCE: BL:069
SOURCE: Legal Match. (2018, May 2). Business torts. Retrieved September 17, 2018, from
https://www.legalmatch.com/law-library/article/business-torts.html
3. D
Continuous assistance is provided by the franchisor. A business-format franchise is a more complex and
more popular type of franchise arrangement than the product trade-name franchise. It involves a close,
continuous working relationship between the franchisor and the franchisee. Examples of the business-
format franchise are McDonald's, Holiday Inn, and Jiffy Lube. Products and other materials usually must
be purchased from the franchisor's list of approved vendors. The franchisee must operate under the
trade name of the franchisor.
SOURCE: BL:003
SOURCE: LAP-BL-001—Own It Your Way (Types of Business Ownership)
4. D
Corporation. Corporations are advantageous due to the separate legal body that is created by a state
charter. The charter limits individual liability, allows for permanency of existence, ease in transferring
ownership, and a greater number of resources for financial growth. Both the sole proprietorship and
partnership have unlimited liability, definitive life spans, difficulty in raising capital, and are not separate
legal entities. A trade union is a group that represents people in similar occupational skill areas.
SOURCE: BL:006
SOURCE: LAP-BL-006—Taking Care of Business (Selecting Forms of Business Ownership)
5. D
Making a variety of products available to them. Channels of distribution benefit consumers by making a
variety of products available to them. Without these channels, consumers could only buy products
directly from producers, which would be impractical. Channels may lower some but not all consumer
product prices. They may raise the quality of some but not all consumer products. Increased profits for
businesses is not a benefit for consumers.
SOURCE: CM:001
SOURCE: LAP-CM-002—Chart Your Channels (Channel Management)
6. A
Local consumers. A short channel can be used when the potential customers are few and/or located
close together. The baby boomer, senior citizen, and Generation X markets have many potential
customers who are widely dispersed.
SOURCE: CM:003
SOURCE: LAP-CM-003—Channel It (Channels of Distribution)
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7. C
Market. Market factors deal with where the consumers are, who they are, the information they require,
and the size of their orders. Understanding the market is an important aspect of selecting the best
channel of distribution. For example, it is important for businesses to know that most consumers prefer to
buy products from retailers. Promotion, human, and sales are not factors that businesses consider when
selecting a channel of distribution.
SOURCE: CM:010
SOURCE: Waksman, K. (2018, June 11). How to choose the right distribution channel for your
business. Retrieved September 17, 2018, from https://www.thebalancesmb.com/choose-
best-distribution-channel-for-your-business-3502272
8. A
Research the problem. Proposals are intended to answer questions or provide recommendations to solve
problems. Business employees often need to research a particular situation or problem before they are
able to write proposals. After employees do research and gather information, they write proposals that
explain the problem and the solutions. The proposal is intended to persuade the business to follow the
recommendations. Employees usually do not need to analyze personal biases, contact the customer, or
evaluate technical skills before they are able to write proposals.
SOURCE: CO:062
SOURCE: Bidsketch. (2018, June 15). How to write a business proposal. Retrieved September 17,
2018, from https://www.bidsketch.com/blog/articles/how-to-write-a-business-proposal/
9. B
Extending business hours on weekends. Management is responsible for developing policies, and many
of these policies have an impact on customer relations. An example of a policy that usually improves
customer relations is providing extended business hours on weekends. Many customers work during the
week and only have free time in the evenings and on weekends. Businesses that offer extended hours
on weekends are making it easy for customers to buy when it is convenient for them. Scheduling
employees' work hours, using security devices, and revising bookkeeping procedures are routine
business activities that managers perform on a regular basis.
SOURCE: CR:008
SOURCE: Reynolds, P. (2016, May 6). Role of senior management in delivering customer service.
Retrieved September 17, 2018, from https://www.etechgs.com/blog/role-senior-
management-delivering-customer-service/
10. C
Communicate an appealing benefit. A brand promise is a business's agreement (spoken or unspoken)
with customers that it will consistently meet their expectations and deliver on its brand characteristics and
values. Before the business can deliver on its brand promise, it must have a product that offers an
appealing benefit—one that persuades the target market to buy. For example, FedEx provides delivery
services. The company's brand promise focuses on reliability. Therefore, FedEx promises to get its
customers' packages to their destinations in a reliable manner—safely, quickly, and courteously—every
time, which is an appealing benefit for most customers. A procedure is the step-by-step process that a
person follows when performing a specific task. Customization involves making the product unique for
each customer. Customization, a high-quality image, and the process by which the business delivers its
products may be elements of a company's brand promise.
SOURCE: CR:001
SOURCE: Frederiksen, L. (2018, August 13). Elements of a successful brand 4: Brand promise.
Retrieved September 17, 2018, from https://hingemarketing.com/blog/story/elements-of-a-
successful-brand-4-brand-promise1
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11. A
Certain occupations must be licensed. Even though there are many economic freedoms in a private
enterprise system, there are certain limits. Economic freedom is limited by laws that have been created to
protect everyone. Workers in certain occupations must be licensed to safeguard public health and safety.
Pay scales are not regulated but vary greatly depending on the occupation, area of the country, and
current economic conditions. The law does not require all workers to take tests, although some
businesses require applicants to take and pass ability tests before they are hired. Employees are not
required to register with the state.
SOURCE: EC:009
SOURCE: LAP-EC-015—People Power (The Private Enterprise System)
12. A
Net profit. Net profit is the amount of money left over after operating expenses are subtracted from gross
profit. Sales income is the total received from the sale of goods or services. Gross profit is the money left
over after cost of merchandise is subtracted from sales income. Operating expenses are the daily costs
of running a business.
SOURCE: EC:010
SOURCE: LAP-EC-002—Risk Rewarded (Factors Affecting Profit)
13. A
Profits and losses are claimed on owners' personal tax returns. Non-corporations are taxed as pass-
through entities, meaning that profits and losses are claimed on owners' personal tax returns. Non-
corporations are still subject to federal taxes as well as state and local taxes. Business income-tax rates
are based on how much profit a business makes, not whether it is a corporation or not. Non-corporations
pay payroll taxes on employees, just as corporations do.
SOURCE: EC:072
SOURCE: LAP-EC-027—Pay Your Share (Business Taxes)
14. B
Determining the details of your idea. Before you can "sell" your idea to others, you need to solidify the
details and specifications of your proposal so that you can fully explain your idea to your audience.
Explaining solutions to audience needs, overcoming objections, and affirming the audience's decision to
"buy into" your idea are all steps in the selling process that come after doing advance preparation.
SOURCE: EI:108
SOURCE: LAP-EI-108—Do They Buy It? ("Selling" Ideas to Others)
15. B
Credibility. Credibility is believability. If employees believe what managers are saying, they are more
likely to be persuaded to do what the managers want them to do. Managers develop credibility by always
being truthful with employees. As a result, employees often like and trust managers who are credible
and, therefore, are willing to follow their instructions. Having organizational skills, enthusiasm, or self-
motivation does not necessarily mean that managers will be able to persuade employees.
SOURCE: EI:012
SOURCE: LAP-EI-121—Win Them Over (Persuading Others)
16. B
Interests. The key to successful negotiation is to focus on interests. Interests are the things that you and
the other party want or need. You must consider the other party's interests as well as your own. Ability is
a skill someone uses to perform a task through knowledge, training, and practice. When negotiating, one
party may not necessarily know the other party's skills. Standards are specifications or statements that
are used as a basis for comparing or judging goods or services. Procedure refers to the step-by-step
process someone follows when performing a specific task.
SOURCE: EI:062
SOURCE: LAP-EI-062—Make It a Win-Win (Negotiation in Business)
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17. A
Commit to your vision through hard work and dedication. Your personal vision will not become a reality
unless you work hard to achieve your goals. Putting your vision in a safe place and looking at it again in
five years will not help you achieve your vision. Instead, you should place your vision in a place where
you will see it often. Getting the highest-paying job you can find out of high school may help you save
money, but it will not necessarily help you achieve your vision. You should be strategic when deciding
what career path to pursue, making sure that it aligns with your vision. You do not need to spend all of
your free time on self-improvement—you can still have hobbies and spend time doing things that you
enjoy while pursuing your personal vision.
SOURCE: EI:063
SOURCE: LAP-EI-064—Picture This! (Determining Personal Vision)
18. A
Putting goals in writing. By keeping a list, Ryan has put his goals in writing. This makes them seem more
solid and real, giving Ryan greater motivation to work toward them. Ryan is not necessarily tying his
goals to a timetable, making his goals specific, or making his goals difficult but possible.
SOURCE: EI:027
SOURCE: LAP-EI-027—High Hopes (Developing an Achievement Orientation)
19. D
Vision. Vision is the future you desire to create. A goal is an objective or want that you plan to fulfill. A
prediction is a forecast made about the future. A mission statement is a brief summary of what a
business owner wants a business to be doing.
SOURCE: EI:060
SOURCE: LAP-EI-060—Vision Quest (Enlisting Others in Vision)
20. A
Science. Entrepreneurial discovery is the process of detecting and matching product and market
opportunities with one another in a manner that satisfies the market and the business. Sometimes there
is a market with a demand for something that is not available, and the business invents a product to
satisfy the demand. For example, a scientist uses existing physical elements to develop a new vaccine to
prevent a certain disease for which there is no treatment. Because the vaccine is new, the scientist
(inventor) is observing and applying knowledge in a specific way, or using a scientific process. Medicine,
psychology, and physics are scientific disciplines, or areas of scientific study.
SOURCE: EN:002
SOURCE: Smart Specialisation Platform. (2015, December 15). Entrepreneurial discovery process.
Retrieved September 17, 2018, from http://s3platform.jrc.ec.europa.eu/entrepreneurial-
discovery-edp
21. B
Technical needs. Entrepreneurs and startup business owners must consider many factors before they
open their ventures. They must consider their financial and staffing needs, as well as their technical
needs. Their technical needs might include telephone, fax, Internet, computers, software programs, and
automated equipment needs. Each business's needs vary, so the technical needs of each business
varies, too. The competitive advantage is the edge achieved by businesses that offer something better
than their competitors.
SOURCE: EN:007
SOURCE: Horvath, B. (2017, July 13). Tech considerations for new business: What you need to know.
Retrieved September 17, 2018, from https://businesstown.com/tech-considerations-new-
business-need-know/
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22. B
The financial needs to start a new business depend on the nature of the venture. The requirements (e.g.,
time, money) that a person needs to start a business differ and usually depend on the nature of the
business. For example, a person who starts a home-based consulting business does not require as much
money for the startup as a restaurant franchisee does. The franchisee needs to lease space or build a
facility, purchase kitchen equipment, obtain supplies, hire employees, and pay franchise fees, which can
be very expensive. A patent is legal protection that provides an owner the sole rights to an invention or
process for a specific time period. Business owners do not always invent goods or processes, so not all
of them need to obtain patent protection.
SOURCE: EN:009
SOURCE: Beesley, C. (2017, December 29). How to estimate the cost of starting a business from
scratch. Retrieved September 17, 2018, from https://www.sba.gov/blogs/how-estimate-cost-
starting-business-scratch
23. B
The industry experts typically provide useful information. Industry experts have in-depth knowledge about
a specific field. Experts often know about the trends, processes, new products, and new technology that
affect the industry. These experts often provide entrepreneurs with useful information as they develop the
ideas for their new ventures. Talking with industry experts doesn't always improve your management
skills or enhance your confidence. Industry experts might know where you can obtain financial support,
but they do not always offer it themselves.
SOURCE: EN:012
SOURCE: Katz, J., & Green, R. (2011). Entrepreneurial small business (3rd ed.) [pp. 90, 92-96]. New
York, NY: McGraw-Hill/Irwin.
24. A
Provide collateral. There are many ways for entrepreneurs to obtain financing for new business ventures.
One way is to obtain a loan from a commercial bank. The loan process generally involves completing a
loan application and submitting a business plan to the financial institution. In most situations, a bank will
require the loan applicant to put up collateral in order to obtain the loan. Collateral is anything of value
(e.g., car, home) belonging to the borrower that is pledged to the lender to guarantee that the loan will be
repaid. For example, if a business fails, and the borrower cannot afford to pay back the bank loan, the
bank can take the borrower's belongings (collateral) as payment for the outstanding loan. Banks do not
require loan applicants to close their savings accounts, relinquish contracts, or charge interest.
SOURCE: EN:015
SOURCE: Hall, A. (2012, October 20). 5 ways of funding a business: How to get your piece of the pie.
Retrieved September 17, 2018, from https://www.forbes.com/sites/alanhall/2012/10/20/5-
means-of-funding-a-small-business-how-to-get-your-piece-of-the-pie/#621492421cf2
25. A
List all the tasks involved in operating the business. Often, it helps business owners to write down every
task that the business must perform in order to operate. After listing all tasks, the owners can categorize
tasks by function (e.g., sales, bookkeeping) and determine in which areas they need the help or expertise
of others. In most situations, asking a technical recruiter for advice, hiring consultants or freelancers, and
allocating fund for payroll taxes do not help business owners determine their human resource needs.
SOURCE: EN:017
SOURCE: CliffsNotes. (2016). Determining human resource needs. Retrieved September 18, 2018,
from https://www.cliffsnotes.com/study-guides/principles-of-management/staffing-and-
human-resource-management/determining-human-resource-needs
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26. D
Industry. Capital resources are assets, or things of value, that a firm uses on an ongoing basis to meet its
objectives. The capital resources that a business needs to get up and running depends on the type of
products that the business sells. For example, a snow-ski resort needs ski-lift equipment, while a
landscape business needs mowing equipment, mulch, and shrubs to efficiently operate. Location,
owner's preferences, and suppliers' lead time are not always primary considerations when selecting
capital resources.
SOURCE: EN:019
SOURCE: Nickolas, S. (2018, February 2). What inputs are considered to be factors of production?
Retrieved September 12, 2018, from
https://www.investopedia.com/ask/answers/032715/what-inputs-are-considered-be-factors-
production.asp
27. A
When an entrepreneur seeks a high profit, the risk is usually higher. Risk is the chance of failure or loss.
There are many types of risks that business owners face including social, career, psychic, and financial
risks. The amount of risk a business owner takes varies, but financial risk is the risk that is the easiest to
measure. The more money that a person invests in a business (equity or debt finance options), the more
financial risk the person is taking because s/he has more money to lose. Risk-taking is often related to
potential rewards. Entrepreneurs care about their profits to varying degrees.
SOURCE: EN:024
SOURCE: Investopedia. (2018, July 25). Risk-return tradeoff. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/r/riskreturntradeoff.asp
28. D
Standard. Operating procedures are the step-by-step processes that employees follow when performing
specific work-related tasks. By developing and implementing operating procedures, the small-business
owner reduces the amount of time that s/he spends answering questions and making decisions about
routine, day-to-day activities. This reduction occurs because the employees have guidelines or a
standard way to complete tasks. Conducting activities in a standard way often increases employee
productivity and efficiency. Everyday tasks do not always need to be performed in imprecise, diverse, or
innovative ways.
SOURCE: EN:026
SOURCE: Rush, M. (2016, October 26). Standard operating procedures for a business. Retrieved
September 17, 2018, from https://smallbusiness.chron.com/standard-operating-procedures-
business-3228.html
29. D
Offer a new service. Because a business cannot survive if it does not earn a profit, and profits are
generated from product sales, business owners often look for ways to improve or develop goods and
services to keep the customers coming back. Increasing prices and ridiculing the competition are not
activities that would increase repeat business and customer loyalty. Updating equipment does not
necessarily facilitate repeat business and customer loyalty.
SOURCE: EN:028
SOURCE: Rampton, D. (2017, September 25). Introducing new products and services as a business
owner. Retrieved September 17, 2018, from https://due.com/blog/introduce-new-products-
and-services-as-a-business-owner/
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30. C
Identify new venture opportunities. An opportunity is a circumstance that presents itself as a favorable
means to meet an objective. Entrepreneurs look for opportunities to start businesses and if the
opportunities are feasible, they act upon them. There are many ways to look for business opportunities
such as watching trends, attending trade shows, and talking with friends, customers, and business
associates. Entrepreneurs might join community organizations or trade associations to network with
others with the goal of identifying new venture opportunities. Entrepreneurs do not join community
organizations to obtain selling experiences, evaluate personal skills and abilities, or improve goods and
services.
SOURCE: EN:031
SOURCE: Long, J. (2017, March 23). 6 benefits of joining a professional community. Retrieved
September 17, 2018, from https://www.entrepreneur.com/article/290983
31. A
False, there are many factors to consider, such as company valuation and personal goals. Entrepreneurs
often leave their ventures after they achieve their objectives for their businesses. Entrepreneurs consider
many factors, such as how much the business is worth, and personal considerations, such as retiring or
starting another venture. There are several ways for an entrepreneur to exit a business, which include
selling the business, taking his/her share of the profits and letting partners or others run the business,
and closing the business. Thus, exiting a business is often complex and has many factors and options to
consider, other than finding a suitable buyer.
SOURCE: EN:037
SOURCE: Clark, B., & Commers, J. (2018). Entrepreneurship (2nd ed.) [pp. 498-511]. Tinley Park, IL:
The Goodheart-Willcox Company.
32. D
Accounts receivable. Accounts receivable are money that is owed to a business. They are an asset to the
business, but they do not have a physical presence. Inventory, buildings, and equipment are all tangible
assets—they have a physical presence.
SOURCE: FI:093
SOURCE: LAP-FI-010—The Right Balance (The Nature of Balance Sheets)
33. B
Summarizes expenses and revenue from sales. A profit-and-loss statement is a business's financial
picture that lists all revenue and expenses for a certain time period. A profit-and-loss statement is not the
same as a balance sheet. Characteristics of a balance sheet include listing assets and liabilities and
showing the owner's financial position.
SOURCE: FI:094
SOURCE: LAP-FI-004—Watch Your Bottom Line (Income Statements)
34. B
Cost driver. A factor that causes a change in the cost of an activity is called a cost driver. Changes such
as the amount of labor used, the number of machines used, the power used to run the machinery, and
the number of hours that the machinery is operated are cost drivers. Increases in these activities
increase the costs of making outputs (products), while decreases in these activities decrease the costs of
making the outputs. Cost drivers are not unexpected expenses or inflexible transactions.
SOURCE: FI:657
SOURCE: Investopedia. (2018, July 19). Activity cost driver. Retrieved September 17, 2018, from
http://www.investopedia.com/terms/a/activity-cost-driver.asp
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35. B
Accounts receivable. Accounts receivable are all the monies owed to a business by its customers.
Businesses in need of cash to continue producing and selling goods often use their accounts receivable
as collateral when borrowing from financial institutions. In effect, the businesses are turning over the
proceeds from their receivables to the lenders in exchange for immediate cash to continue operating. A
promissory note is a legal form signed by a borrower promising to repay a loan. Liabilities are debts that
the business owes. Operating expenses are all of the expenditures necessary to keep the business
running.
SOURCE: FI:023
SOURCE: Investopedia. (2018, May 29). Accounts receivable financing. Retrieved September 17,
2018, from https://www.investopedia.com/terms/a/accountsreceivablefinancing.asp
36. A
Liquidity. Liquidity refers to a business's current assets, such as income or savings, that can be used to
pay expenses. Assets that are in the form of cash or tangibles that can be sold easily to generate cash
add to a company's liquidity. When determining financing needs, businesses usually consider their
liquidity to decide if they have sufficient funds available to repay the debt. For example, if a business was
barely covering expenses and had no liquid assets, it probably would decide not to borrow money
because it would be difficult to make payments on the loan. Depreciation is a reduction in value of goods
occurring over a period of time. Equity is the value of the business after all expenses and debts have
been subtracted. Inventory is all the stock a business has on hand.
SOURCE: FI:043
SOURCE: Mueller, J. (2018, May 8). Understanding financial liquidity. Retrieved September 17, 2018,
from https://www.investopedia.com/articles/basics/07/liquidity.asp
37. A
Being charged a penalty. When businesses obtain long-term loans, they agree to pay a certain amount of
interest to the lending institution over a period of years. If a business pays off the loan before it is due, the
financial institution does not get the interest it expected to receive. In such cases, the financial institution
may charge the business a penalty for prepaying the loan. This penalty may be sizeable depending on
the amount of the loan. A financial institution, rather than a business, loses interest on the account. A
business might negotiate a variable rate for a long-term loan and pay a processing fee to originate the
loan.
SOURCE: FI:041
SOURCE: Business Filings. (2012, May 24). The real cost of borrowing money. Retrieved September
17, 2018, from https://www.bizfilings.com/toolkit/research-topics/finance/business-
finance/the-real-cost-of-borrowing-money
38. D
To reduce risk. There is a risk involved in making loans because a business may default and be unable
to repay the bank. To reduce the risk, lending institutions use certain criteria to evaluate if the business is
creditworthy. For example, a bank would run a credit check to find out if the business pays its bills on
time. Also, a bank would review the business's financial records to determine if it earned sufficient
income to pay expenses and also repay the loan. By carefully evaluating how well a business meets
certain criteria, a bank is able to reduce the risk involved in making a loan. Lending institutions do not
evaluate businesses to provide service, prevent theft, or improve relations.
SOURCE: FI:034
SOURCE: Business Filings. (2012, May 24). What banks look for when reviewing a loan application.
Retrieved September 17, 2018, from https://www.bizfilings.com/toolkit/research-
topics/finance/business-finance/what-banks-look-for-when-reviewing-a-loan-application
39. B
1 year. Businesses prefer a short payback period. This is the point at which a decision begins to pay for
itself. In other words, the payback period is the time it takes for the benefits of a change to repay its
costs. Another term for payback period is break-even point.
SOURCE: FI:357
SOURCE: LAP-FI-011—Running the Numbers (Cost-Benefit Analysis)
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40. C
Size of the sales force. An internal change is one that occurs within the business and is under the
business's control. Increasing or decreasing the number of people on the sales force is an internal
change that will affect the sales forecast. For example, decreasing the size of the sales force may cause
sales to fall because the remaining staff may not be able to handle as many sales. Changes in the
number of competitors in the market, the length of a national recession, and the levels of consumer
spending are external changes.
SOURCE: FI:096
SOURCE: Freelancer. (2015, April 14). Sales forecasting: Factors to consider. Retrieved September 17,
2018, from https://www.freelancer.com/community/articles/sales-forecasting-factors-to-
consider
41. B
Vertical. Three common types of financial statement analysis are vertical analysis, horizontal analysis,
and ratio analysis. When conducting vertical analysis, an individual calculates each individual item on a
financial statement as a percentage of the total. After doing so, the analyst can develop common-size
financial statements that allow him/her to compare performance across several years for a single
company or across several different companies. Horizontal analysis, which is sometimes known as trend
analysis, involves analyzing dollar amounts on financial statements for a single company across several
years. Horizontal analysis does not involve the development of common-size financial statements. Ratio
analysis involves the calculation of ratios based on a company's financial data. It allows analysts to
compare numbers within a financial statement and determine the relationships among numbers on
different financial statements. It can also be used to compare the performance of multiple companies.
SOURCE: FI:334
SOURCE: Investopedia. (2018, June 13). Vertical analysis. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/v/vertical_analysis.asp
42. C
$3,138. A business's income statement, or profit-and-loss statement, is a financial summary that shows
how much money the business has made or has lost over a specific period of time. A typical income
statement includes revenue, operating expenses, and net income (profit). To determine the net income,
subtract the total expenses from the total revenue ($4,590 - $1,442 = $3,138). It is important to verify the
income statement's accuracy because businesses use the information to make important decisions about
the business. If the information is incorrect (e.g., transposed numbers) and errors are not corrected, the
business may make unwise decisions on the basis of faulty information.
SOURCE: FI:335
SOURCE: Investopedia. (2018, August 9). Net income. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/n/netincome.asp
43. C
To determine qualifications. The purpose of an interview is to determine if the applicant meets the
qualifications to perform the job. Therefore, the interview questions should relate directly to the job in
terms of the applicant's education, skills, training, and work history. Businesses often take remedial
action with current employees who are not performing well on the job. Applicants usually do not complain
during job interviews. Interviewers usually do not plan future training while asking questions during a job
interview.
SOURCE: HR:355
SOURCE: Business Filings. (2012, May 24). The dos and don'ts of conducting a job interview.
Retrieved September 17, 2018, from https://www.bizfilings.com/toolkit/research-topics/office-
hr/the-dos-and-donts-of-conducting-a-job-interview
44. D
Cause. Termination for cause occurs when an employee's conduct seriously violates company policies or
jeopardizes the company or other employees. A termination for performance is used when an employee
consistently exhibits poor performance compared to established performance criteria, or is incompetent.
A resignation is a voluntary act by an employee.
SOURCE: HR:358
SOURCE: Heathfield, S.M. (2018, August 25). Termination for cause. Retrieved September 17, 2018,
from https://www.thebalancecareers.com/termination-for-cause-1918274
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45. B
To improve performance. Businesses often provide additional training based on changing needs in the
workplace. As technology and job responsibilities change, it is necessary to train employees to perform
new tasks or tasks that have been revised. By providing training, businesses are helping employees
learn new skills and improve their performance. Socialization is part of the orientation process.
Businesses do not provide additional training to analyze diversity or identify sensitivity.
SOURCE: HR:392
SOURCE: Frost, S. (2018, June 30). The importance of training & development in the workplace.
Retrieved September 17, 2018, from https://smallbusiness.chron.com/importance-training-
development-workplace-10321.html
46. A
Organization's. Each organization, or business, develops standards for evaluating an employee's
performance. When supervisors evaluate employees, they should rate them according to established
standards. An employee is more likely to resent a negative evaluation if it is based on the supervisor's
standards. Evaluations are not based on the standards set by employees or competitors.
SOURCE: HR:368
SOURCE: Noe, R.A., Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2010). Human resource
management: Gaining a competitive advantage (7th ed.) [p. 358]. New York, NY: McGraw-
Hill/Irwin.
47. A
To predict change. Businesses need a wide variety of information in order to make decisions about how
the business will market its goods or services. Businesses gather marketing information about their
customers, the competition, the economy, and sales trends in order to predict what may occur in the
future. The use of marketing information allows businesses to prepare for change and adapt in order to
remain successful. Businesses often develop surveys and conduct research to obtain the marketing data
they need to analyze in order to predict change.
SOURCE: IM:012
SOURCE: Churchill, G.A., Brown, T.J., & Suter, T.A. (2010). Basic marketing research (7th ed.) [pp. 3-
7]. Mason, OH: South-Western Cengage Learning.
48. C
The step in which the most mistakes are made. The reason that the most mistakes are made in this step
is that data collection can be a tedious chore. When researchers become bored, they may record data
inaccurately. It is also the most expensive and least interesting step.
SOURCE: IM:010
SOURCE: LAP-IM-010—Seek and Find (Marketing Research)
49. A
House. A durable good is an item that is intended to last a relatively long time. Most houses would be
considered durable goods. Haircuts, gasoline, and hamburger are eventually used up and are, therefore,
classified as nondurable goods.
SOURCE: MK:001
SOURCE: LAP-MK-004—Have It Your Way! (Nature of Marketing)
50. C
Psychological. Consumer behavior encompasses individuals' actions that determine what they buy and
sell. Psychological, social, and personal factors all influence consumer behavior. Psychological factors
include an individual's motives, perception, attitude, lifestyle, personality, abilities, and knowledge.
Consumer behavior is also impacted by social factors such as opinion leaders, a person's family,
reference groups, social class, and culture. Personal factors impacting consumer behavior are specific to
a particular person and include demographic characteristics such as gender, age, ethnicity, etc. While
political and economic factors may influence consumer behavior in some instances, motives, perception,
attitude, lifestyle, personality, and abilities are not political or economic factors.
SOURCE: MK:014
SOURCE: LAP-MK-006—Cause and Effect (Buying Behavior)
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51. D
Strategies. Marketing strategies are game plans for getting the job done. Budgets and salespeople are
factors in a strategy, and profit is a goal of most strategies.
SOURCE: MP:001
SOURCE: LAP-MP-002—Pick the Mix (Nature of Marketing Strategies)
52. B
Mass. Mass marketing is designing products and directing marketing activities in order to appeal to the
whole market. One marketing plan can thus be used to appeal to many types of customers. Demographic
characteristics, such as age, income, or occupation, and psychographic characteristics, such as lifestyles
and personalities, are used to define or differentiate between segments of a market.
SOURCE: MP:003
SOURCE: LAP-MP-003—Have We Met? (Market Identification)
53. B
Geographic. When analyzing the market, it is important for businesses to collect several types of
geographic information. First, a business considers the geographic location of customers and potential
customers. Businesses need to know where their customers are. Also, a business considers the
geographic location of the business. Businesses need to know if they are located in an area that has
market potential or if there are too many competitors in that area. A market analysis does not involve
collecting confidential, employee, or property information.
SOURCE: MP:009
SOURCE: Frenz, R. (2017, September 26). Components of marketing analysis. Retrieved September
20, 2018, from https://bizfluent.com/info-7921910-components-market-analysis.html
54. C
Operational activities. The sales forecast, the prediction of future sales over a specific period of time, is
the basis for many other operational activities. The forecast affects decisions about production,
distribution, purchasing, promotion, etc. Therefore, the sales forecast needs to be as accurate as
possible so the business correctly plans the other operational activities. For example, if the forecast is too
high, a business might produce substantially more product than it will be able to sell. A sales forecast is
not the basis of pricing strategies, business reports, or management techniques.
SOURCE: MP:014
SOURCE: Metcalf, T. (2018, April 5). Top 10 reasons why sales forecasting is important. Retrieved
September 17, 2018, from http://yourbusiness.azcentral.com/top-10-reasons-sales-
forecasting-important-24818.html
55. A
Analyzing click-through rates. Businesses develop performance measures to evaluate the effectiveness
of marketing activities. Businesses also need to compare the performance measures to financial
outcomes to determine if the activity was worth the cost. The click-through rate for online advertising is a
performance measure. By analyzing the click-through rate, businesses can link performance to financial
outcomes. For example, if 200,000 people viewed a site and 8,000 of them clicked on a banner ad, the
click-through rate is 4%. If the goal was to achieve a click-through rate of 2%, the activity outperformed
expectations that might lead to an increase in sales, which is the financial outcome the business desires.
Developing advertising budgets and paying for direct-mail pieces are promotional activities. Maintaining
sales receipts is a bookkeeping activity.
SOURCE: MP:020
SOURCE: WordStream. (n.d.). Click-through rate (CTR): Understanding click-through rate for PPC.
Retrieved September 17, 2018, from https://www.wordstream.com/click-through-rate
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56. B
Firewall. Firewall software is intended to prevent unauthorized access to a computer network. Many
businesses require firewall software to be installed on their computer systems because their systems are
networked, and hackers could destroy or steal valuable data. Firewall software is a security feature that
helps protect a business's computer network. Businesses do not install reality, spider, or media software
as a security feature.
SOURCE: NF:012
SOURCE: Cisco. (2015, July 30). What is a firewall? Retrieved September 17, 2018, from
https://www.cisco.com/c/en/us/products/security/firewalls/what-is-a-firewall.html
57. C
Promotional. Promotional records are documents containing information about the various types of
communication that businesses use to inform, persuade, or remind customers of their products, images,
or ideas. Businesses often keep copies of their promotional materials in case they need to refer to them
in the future for some reason (e.g., to answer customer inquiries). Contracts, permits, and leases are
examples of records that businesses keep for regulatory and legal purposes. Inventory records contain
information about the types and quantities of materials or products the business has available or on
order. Asset records contain information about the things that a business owns, such as the equipment
and furniture it uses to operate.
SOURCE: NF:001
SOURCE: LAP-NF-001—Record It (Business Records)
58. B
Increase in competition. A business's external environment is always changing and dynamic. Elements of
the external environment that are likely to impact business decision-making are competition,
demographics, society and culture, the economy, the government, and technology. Personnel, training,
and quality control measures all represent internal elements of the business's environment.
SOURCE: NF:015
SOURCE: LAP-NF-015—Get the 4-1-1 (Conducting an Environmental Scan)
59. B
Mean. The mean is a measure of central tendency. Mean is a mathematical average, which involves
adding together the raw data and dividing the sum by the number of individual data. In the example,
James added together all of the salaries of the companies that he researched ($31,205 + $29,995 +
$34,800 +$42,500 + $36,500 = $175,000). Then, Jack divided the sum by the number of individual
salaries in the set of data ($175,000 / 5 = $35,000). The mode of a set of numbers is the value that
appears most often in the set. The range is the difference between the largest and the smallest number
in the data set. The median is the exact middle of a data set. In the example, $34,800 is the median of
the data set.
SOURCE: NF:093
SOURCE: Russell, D. (2018, March 11). How to calculate the mean, median, and mode. Retrieved
September 17, 2018, from https://www.thoughtco.com/the-mean-median-and-mode-2312604
60. B
Performance indicators. A performance indicator is a measure of the success of a certain activity or
entity. Businesses often set performance indicators for their own success, as well as the success and
effectiveness of their suppliers. Performance indicators commonly used to evaluate vendor performance
and effectiveness include on-time delivery rate, return rate, and number of customer complaints. If a
vendor does not meet or exceed a particular indicator, the business is apt to discuss the measure with
the vendor and develop a plan of corrective action. A consensus scale is a measure of each group
member's feelings toward a proposed decision or solution. Economic indicators are statistical measures
used to assess the health and direction of the economy. Return on capital is a measure of how well a
business generates cash flow in relation to the capital it has already invested into itself.
SOURCE: OP:162
SOURCE: Brown, C.M. (2010, December 30). 7 tips for rating and evaluating your suppliers and
vendors. Retrieved September 18, 2018, from http://www.inc.com/guides/2010/12/7-tips-to-
rate-and-evaluate-your-suppliers-and-vendors.html
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61. D
Production. Production is the process or activity of producing goods and services. For example, a
company uses raw materials, equipment, employees, and a building to produce radios for purchase by
other businesses for use or for resale. Management is the process of coordinating resources in order to
accomplish an organization's goals. Accounting is the process of keeping financial records. Marketing is
the process of planning and executing the conception, pricing, promotion, and distribution of ideas,
goods, and services to create exchanges that satisfy individual and organizational objectives.
SOURCE: OP:017
SOURCE: LAP-OP-017—Can You Make It? (Nature of Production)
62. B
To lead the effort. Management sets the tone for quality in a business and leads the effort. If managers
do their best to achieve quality and set an example for employees, the employees usually follow.
Managers lead by setting clear goals, by making sure employees understand the goals, by giving
employees the information and tools they need, and by being supportive. They also lead by behaving the
way they expect employees to behave. The role of management in the achievement of quality in a
business is not to assign blame or judge the staff. Management should direct and guide. It is not possible
to eliminate conflict, although management often can control conflict.
SOURCE: OP:020
SOURCE: Brown, B. (2017, September 26). The role of managers in Total Quality Management.
Retrieved September 17, 2018, from https://bizfluent.com/info-7743372-role-managers-total-
quality-management.html
63. A
Insurance. Insurance is a fixed operating cost—it does not increase or decrease with changes in
production. Sales commissions, advertising, and travel expenses are all variable—they fluctuate with
changes in production.
SOURCE: OP:024
SOURCE: LAP-OP-009—Watch Your (Over) Head (Overhead/Operating Costs)
64. B
Variable costs and fixed costs. A break-even analysis is a financial assessment that a business uses to
identify the level of sales it needs to reach the break-even point at various prices. To conduct a break-
even analysis, the business must know the fixed costs and variable costs it will encounter to get the good
or service to the end user. Production time might be included as a cost in certain types of businesses
(e.g., tax preparation, manufacturing). Depreciation rate is the level at which the value of something (e.g.,
equipment) reduces over time.
SOURCE: OP:192
SOURCE: Tatum, M., & Harris, B. (2018, August 23). What is a break-even analysis? Retrieved
September 17, 2018, from http://www.wisegeek.com/what-is-a-break-even-analysis.htm
65. A
Does the cost of the contract exceed the cost of possible repairs? The business should estimate the
costs of the most expensive, possible repairs and calculate if these expenses would be more or less than
the cost of the service or maintenance contract. If the cost of the repair would be less than the cost of the
contract, it may be wise to forgo the contract. The business would consider the need for installation and
the availability of training and technical assistance when purchasing equipment. A business does not
consider how much profit the seller will make on the contract.
SOURCE: OP:027
SOURCE: Thakur, S. (2011, April 28). Negotiate software maintenance contracts: Tips & strategies.
Retrieved September 17, 2018, from https://www.brighthubpm.com/monitoring-
projects/115813-negotiate-software-maintenance-contracts-tips-and-strategies/
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66. B
Estimated sales exceed actual sales. Budgets are only useful if a business compares the budget
estimates with actual operating conditions. Businesses use the budget information to make decisions
about how the business will operate and to make changes when necessary. A business knows that it
must make operating changes if it compares the level of sales estimated in the budget with actual sales
figures and finds that actual sales are not keeping up with the estimates. This information indicates that
the business might not make the expected profit or even have a loss if changes are not made. A
business probably would not make operating changes if the budget information indicates that total
revenues exceed projected costs, expected profits are increasing, and accounts receivable are on target.
SOURCE: OP:030
SOURCE: Johnston, K. (2016, October 26). How does a budget help management make good
decisions? Retrieved September 17, 2018, from https://smallbusiness.chron.com/budget-
management-make-good-decisions-57917.html
67. C
Monitor the performance of all supply chain partners. To ensure the efficient production and distribution
of products, companies should monitor the performance of all supply chain partners on a consistent
basis. Companies should not ignore underperforming vendors—they should work with them to resolve
the problem(s) or else replace them. Companies must be careful when introducing new innovations or
changes to the production process. Introducing change too quickly can overwhelm the supply chain,
resulting in failure to meet production quotas. Companies should stick with a single supplier when
launching a new product in order to avoid overcomplicating the process.
SOURCE: OP:303
SOURCE: Schiff, J. (2016, February 17). 13 ways to improve your supply chain management. Retrieved
September 17, 2018, from http://www.enterpriseappstoday.com/supply-chain-
management/slideshows/13-ways-to-improve-your-supply-chain-management.html
68. B
Financial. Business analysis is the process of investigating and evaluating a business issue, problem,
process, or approach. Analysis helps a business determine if it is achieving its goals or if it needs to take
corrective action, so it can achieve its goals. Financial analysis involves evaluating the business's
financial health. Because the business needs to make a reasonable profit so it can thrive in marketplace,
it is important to continuously analyze the business's financial status. The operations business function
involves the day-to-day activities that the business performs—activities that are required for continued
business functioning such as producing goods and services. Information management is the process of
coordinating the resources pertaining to business knowledge, facts, or data. Sales is a marketing activity
that involves responding to consumer needs and wants through planned, personalized communications
intended to influence purchase decisions and ensure satisfaction.
SOURCE: OP:327
SOURCE: Investopedia. (2018, July 9). Financial analysis. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/f/financial-analysis.asp
69. B
Business process thinking. Business process thinking is a method of thinking that emphasizes the
importance of processes in business. Managers who use business process thinking would most likely
establish the necessary steps to complete a project before assigning the project to staff. Human resource
planning, agile project management, and change management are also important business practices, but
they are not described in this example.
SOURCE: OP:474
SOURCE: Pitagorsky, G. (2016, August 3). The importance of process thinking. Retrieved September
17, 2018, from https://www.projecttimes.com/george-pitagorsky/the-importance-of-process-
thinking.html
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70. B
Regulatory. Because the manufacturing company is required by local government to dispose of its waste
safely, the company must design its waste disposal process to abide by the regulations. This is an
example of regulatory factors affecting business process design. Human factors affecting process design
include stress, employee morale, and fatigue. Technological factors that can affect process design
include the cost of any equipment or hardware that is necessary for the process. The term “natural
factors” is not usually used to describe factors affecting process design.
SOURCE: OP:475
SOURCE: Taylor, H. (2017, September 26). Factors that affect process design. Retrieved September
17, 2018, from https://bizfluent.com/list-7444011-factors-affect-process-design.html
71. A
A manufacturing company purchases a new software program to run its machines. Technology can
cause a business to change its processes, such as when a new technology becomes available or an old
technology becomes obsolete. A small general store offering discounts to compete with a new shopping
mall is an example of how competition can cause business processes to change. A waste treatment plant
changing its disposal method to align with environmental law is an example of how regulations and
governmental factors can cause business processes to change. A family-owned restaurant opening a
second location in an effort to expand its brand is an example of how the desire for growth can cause
business processes to change.
SOURCE: OP:476
SOURCE: Gleeson, P. (2018, June 30). Factors that may cause change in an organization. Retrieved
September 17, 2018, from https://smallbusiness.chron.com/factors-may-cause-change-
organization-203.html
72. D
Poor supply chain management can result in customer dissatisfaction. Poor supply chain management
would likely lead to many problems for all members of a supply chain, such as order fulfillment delays
and product quality issues. These issues would most likely result in customer dissatisfaction, not
customer satisfaction. Good supply chain management would lead to increased value for customers,
since product issues would be less likely. Good supply chain management is likely to result in sustainable
business practices, not unsustainable business practices.
SOURCE: OP:477
SOURCE: Ingram, D. (2016, October 26). How does supply chain management affect manufacturing
companies? Retrieved September 17, 2018, from http://smallbusiness.chron.com/supply-
chain-management-affect-manufacturing-companies-75841.html
73. D
Emotion. Chad feels strongly about the second car, so his decision-making is influenced by his emotion.
Chad isn't influenced by experience because he hasn't encountered this particular option before. Framing
is an external factor that refers to the way an option is presented. Chad isn't being influenced by insight
or intuition because he doesn't have a gut feeling that the second car is better. In fact, he knows that the
first car is a much better buy, but he decides to go with the second car anyway.
SOURCE: PD:017
SOURCE: LAP-PD-017—Weigh Your Options (Decision-Making)
74. D
Allows adequate time for personal and professional activities. The use of time-management techniques
forces us to take care of important activities immediately, which relieves pressure and tension. It allows
more time for rest and relaxation. This will ultimately reduce stress.
SOURCE: PD:019
SOURCE: LAP-PD-001—About Time (Time Management)
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75. D
The board of directors. A corporation's board of directors is responsible for approving and reviewing the
corporate governance policies of the business. These corporate governance policies specify the
guidelines and rules by which a corporation is directed and run. Although shareholders, the management
team, and the investors are affected by these rules, it is the job of the board to approve and review them.
SOURCE: PD:213
SOURCE: Brefi Group Limited. (2018). Roles and responsibilities of directors and boards. Retrieved
http://www.brefigroup.co.uk/directors/directors_roles_and_responsibilities.html
76. B
The board of directors represents the shareholders. A company's board of directors represents the
interests of the shareholders through the board's management of the company. The shareholders often
have a role in electing the board members. The shareholders do not pay dividends to the board of
directors. The shareholders also do not make decisions for the board members; rather, board members
make decisions on behalf of the shareholders. The board of directors does not hold the shareholders
accountable; rather, the shareholders hold the board of directors accountable.
SOURCE: PD:214
SOURCE: Investopedia. (2018, April 22). Corporate governance. Retrieved September 17, 2018, from
http://www.investopedia.com/terms/c/corporategovernance.asp
77. A
Provide an objective perspective. An organization's board of directors should include both inside and
independent members. Inside members are high-level executives, shareholders, or stakeholders in the
organization. Independent members are not involved with the organization. They provide an objective
view, keep the board transparent, and help balance out the power of the board. They do not represent
the interests of management. They also do not necessarily understand the company's inner workings, at
least not as well as inside members. Independent members are not necessarily any less likely to act
unethically than inside members.
SOURCE: PD:302
SOURCE: Knowledge @ Wharton. (2015, June 16). How independent directors bridge the information
gap. Retrieved September 17, 2018, from http://knowledge.wharton.upenn.edu/article/how-
independent-directors-bridge-the-information-gap/
78. B
Exchange price. The exchange price is the amount of money that the buyer is willing to pay and the seller
is willing to accept for a good or service. When a good or service is sold, the buyers and sellers have
agreed on a value for the product, which is the exchange rate. For example, if a business offers a product
for $50 and customers agree to pay that amount, the exchange rate is $50. Price policy is a guideline
regulating the range of prices for goods and services that businesses offer to customers. Equilibrium
price is the point at which the quantity of a good that buyers want to buy is equal to the quantity that
sellers are willing to sell at a certain price. Price lining is the practice of selling goods/services at a limited
number of predetermined price points, or levels.
SOURCE: PI:001
SOURCE: LAP-PI-002—The Price Is Right (Nature of Pricing)
79. B
False, most factors affecting price are not controlled by the firm. Most of the factors to be considered in
setting prices are external to the business. These factors are not controlled by the firm and include such
factors as supply and demand, economic conditions, competition, and channel members.
SOURCE: PI:002
SOURCE: LAP-PI-003—Make Cents (Factors Affecting Selling Price)
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80. B
Creates a competitive advantage. Product research and development is an expensive process for a
business. Before a business invests time, personnel, and money to take an idea and turn it into a
product, it must determine if the product is feasible, or reasonable, to make and market successfully. The
idea is feasible if it translates into a product that creates a competitive advantage for the business. A
competitive advantage is the edge achieved by a business that offers something better than its
competitors. A business bases its sales quotas on existing information rather than product ideas. Costs
are a consideration when determining product idea feasibility; however, high production costs often make
product ideas impractical. Because services are often feasible product ideas, the ideas do not need to be
durable goods.
SOURCE: PM:129
SOURCE: NPD Solutions. (2016). Assessing the feasibility of a new product. Retrieved September 17,
2018, from http://www.npd-solutions.com/feasibility.html
81. A
Mix. A product mix is the particular assortment of products that a business offers in order to meet its
market's needs and its company's goals. Terry's job is to choose items for that mix. While Terry is not
directly responsible for sales, he is responsible for buying products the company can sell. A product item
is each individual good, service, or idea that a business offers for sale. A product line is a group of related
product items.
SOURCE: PM:003
SOURCE: LAP-PM-003—Mix & Match (The Nature of the Product Mix)
82. C
Current product mix. The product mix is the particular assortment of products that a business offers in
order to meet its market's needs and its company goals. Most businesses have an image that appeals to
their target market and add items to the product mix that are consistent with the types of products they
currently handle. Patronage motives are emotional or rational buying motives that cause people to
choose one business over another. Level of service is the number of services that a company offers its
customers and the speed at which those services are performed. Advertising objectives are the specific
purposes or goals of individual advertisements or advertising campaigns.
SOURCE: PM:006
SOURCE: Claessens, M. (2015, June 1). Product mix decisions - Width, length, depth and consistency.
Retrieved September 17, 2018, from https://marketing-insider.eu/product-mix-decisions/
83. B
Service standards. Service standards are specifications for the quality of service that a business intends
to provide. Many businesses identify standards for service and continually work to improve them in order
to attract customers and be competitive. By having high service standards, businesses are often able to
set themselves apart from competitors. Businesses do not identify and strive to improve commission
plans, personal characteristics, and operating quotas in order to attract customers and be competitive.
However, favorable commission plans might attract quality employees.
SOURCE: PM:273
SOURCE: Ray, L. (2017, November 21). Performance standards for customer service. Retrieved
September 17, 2018, from https://yourbusiness.azcentral.com/performance-standards-
customer-service-1299.html
84. D
Direct mail. Direct mail is a promotional medium that comes to consumers' homes and businesses.
Businesses that use direct mail often send it to current customers who are likely to buy more products.
Persuasive direct mail encourages immediate action such as mail orders or inquiries. A sales letter is a
type of printed direct mail, as is a postcard. Participative is not a type of direct mail.
SOURCE: PR:007
SOURCE: LAP-PR-003—Ad-Quipping Your Business (Types of Advertising Media)
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85. A
Product seeding. Product seeding involves "planting" or placing the product in the hands of specific
influencers. The goal is to have the influencers be seen using or wearing the product, which will in turn
generate interest in and desire for the product. A testimonial is a statement by an identified user of a
product proclaiming the benefits received from the use of the product. Cause marketing occurs when a
business supports a cause that affects society such as protecting the environment or raising awareness
of a disease. Social media involve the use of websites and applications for social networking.
SOURCE: PR:247
SOURCE: Bart, Y. (2017, November 14). Product seeding: Word-of-mouth effects for and beyond the
focal product. Retrieved September 17, 2018, from https://www.gfk-
verein.org/en/publications/gfk-marketing-intelligence-review/all-issues/connected-
consumer/product-seeding-word-mouth-effects-and-beyond-focal-product
86. C
Customize the messages. Direct marketing is a form of promotion that directly communicates with
members of the target market. Two channels that businesses commonly use to communicate directly
with customers are email and traditional postal mail. Both of these direct-marketing methods provide the
business with the ability to customize the message or offer to appeal to the message recipient. For
example, an online business might have a customer's personal product preferences stored in its
database. When a customer's favorite products go on sale, the business can send email messages to the
customer to let him/her know about the promotion. This form of direct marketing is a way to connect and
build long-term relationships with customers. Customized messages do not appeal to a mass audience.
A business cannot assume that the majority of message recipients will respond to a direct-marketing
message. In some, but not all situations, a business may save money by using one form of direct
marketing over other forms of promotion.
SOURCE: PR:089
SOURCE: Leonard, K. (2018, June 27). The advantages & disadvantages of direct marketing &
telemarketing. Retrieved September 17, 2018, from
https://smallbusiness.chron.com/advantages-disadvantages-direct-marketing-telemarketing-
54933.html
87. A
Communications channels. A communications channel is a path or means used to provide information to
others. In sales promotion, businesses use several means to provide information to customers or
potential customers. These include giving away samples so customers can have firsthand experience
with the product; giving away premiums which are free gifts that remind customers of the business; and
giving away advertising specialties, such as key chains that include the name and phone number of the
business. The reason for using these communications channels is to encourage customers to buy.
Samples, premium, and advertising specialties are not examples of publicity strategies, marketing
activities, or selling techniques used in sales promotion.
SOURCE: PR:249
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C. (2012). Marketing essentials (pp. 405-411).
Columbus, OH: Glencoe/McGraw-Hill.
88. A
To obtain publicity. By sponsoring an event, businesses are using the event as a communications
channel to provide information to others. The goal of sponsoring an event is to obtain publicity which is
any nonpersonal presentation of ideas, goods, or services that is not paid for by the company or
individual that benefits from or is harmed by it. In many cases, the media report the event and include
information about the sponsors. As a result, the businesses obtain publicity. Businesses that sponsor
local events are not creating news. Businesses do not sponsor local events to generate revenue or to sell
products. However, by obtaining publicity, they might attract more customers which will result in selling
more products and generating more revenue.
SOURCE: PR:250
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C. (2012). Marketing essentials (p. 399). Columbus,
OH: Glencoe/McGraw-Hill.
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89. A
Writing press releases, distributing company newsletters, and sponsoring events. Public relations are a
function of business that is designed to establish good relations between the business and the public.
The business can foster goodwill with its various publics—its customers, its investors, its employees, the
community—using a variety of tools and activities. Some public relations tools and activities include
writing press releases, distributing company newsletters, sponsoring events, and holding press
conferences. Identifying trends is a marketing-research activity. Hiring new staff members is a human
resources activity. Product development is a product/service management activity.
SOURCE: PR:252
SOURCE: Clow, K.E., & Baack, D. (2010). Integrated advertising, promotion, and marketing
communications (4th ed.) [p. 356]. Upper Saddle River, NJ: Prentice Hall.
90. A
Appraisal cost. The cost of employing product inspectors is an appraisal cost. Appraisal costs are the
costs associated with catching defective products as quickly as possible (quality control). Internal failure
costs are the costs associated with defective products before they make it to the customer. External
failure costs are the costs associated with defective products that have reached the customer. Prevention
costs are the costs associated with making sure defective products don't get made in the first place
(quality assurance).
SOURCE: QM:001
SOURCE: LAP-QM-001—Keep It Quality (Nature of Quality Management)
91. B
Qualitative; quantitative. Qualitative analysis of risks measures the probability of a risk occurring.
Quantitative risk analysis is more precise and assigns numbers to risk based on data reported.
Qualitative risk analysis is more general, whereas quantitative risk assessment helps go more in depth
and offer a more valid way to make decisions. Risk assessments are generally not categorized as
preventative or responsive.
SOURCE: RM:059
SOURCE: Dcosta, A., & Finn, W. (2011, June 15). An overview of project risk assessments with
samples. Retrieved September 17, 2018, from http://www.brighthubpm.com/risk-
management/110139-an-overview-of-project-risk-assessments-with-samples/
92. C
Loss of data during the transfer. When a company switches to an ERM software system, there is the
potential for data to be lost during the transfer/conversion process. However, the increased emphasis on
risk and standardization of reporting are benefits of implementing ERM software rather than potential
risks. ERM software generally increases efficiency of resource use rather than decreasing it.
SOURCE: RM:062
SOURCE: Merit Solutions. (2015, August 24). Risks associated with ERP implementation. Retrieved
September 17, 2018, from http://www.meritsolutions.com/business-insights/risks-associated-
with-erp-implementations/
93. D
Technical. In some cases, using a certain number of technical terms is necessary to the sale of the
product. However, their use should be limited as they may be unfamiliar to customers. A sales
vocabulary should be clear, but expressive, creating pictures through carefully chosen words. Personal
words make the customer feel as though s/he is a part of the presentation.
SOURCE: SE:017
SOURCE: LAP-SE-117—Sell Away (The Nature and Scope of Selling)
94. D
Planning. The planning function is the management function that lays the groundwork for all of the other
management functions. Organizing, staffing, directing, and controlling decisions are based on the plans
the business has established.
SOURCE: SM:001
SOURCE: LAP-SM-003—Manage This! (Concept of Management)
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95. B
Report unethical actions. Managers can promote ethical behavior in the business by encouraging
employees to report unethical actions. If employees know that unethical behavior will not be tolerated and
that such behavior will be punished, they are more likely to behave in an ethical way. By reporting
unethical behavior, employees are helping managers enforce ethics in the business. The managers,
rather than the employees, are responsible for developing a code of ethics for the business. Managers do
not promote ethical behavior in the business by encouraging employees to be thoughtful of others or to
avoid social situations.
SOURCE: SM:002
SOURCE: Lambarki, T. (n.d.). How managers can encourage ethical behavior. Retrieved September
17, 2018, from https://courses.lumenlearning.com/suny-principlesmanagement/chapter/how-
managers-can-encourage-ethical-behavior/
96. C
Unrealistic. Setting goals and objectives help a company move forward, but the goals must be realistic.
Companies that set unrealistic goals are less likely to achieve those goals. If they plan for the unrealistic
goals, acquire additional inventory, and hire more staff, they may encounter failure. Practical, reasonable,
and scientific are characteristics of realistic goals and objectives.
SOURCE: SM:008
SOURCE: The Happy Manager. (2007-2018). What are SMART objectives - and how do you set them?
Retrieved September 17, 2018, from https://the-happy-manager.com/tips/smart-objectives/
97. B
Hot n’ Spicy Wings and Southern Fried Chicken House. Direct competition is competition which occurs
among businesses that offer similar goods or services. Hot n’ Spicy Wings and Southern Fried Chicken
House are direct competitors for consumers' food purchases. All of the other alternatives are businesses
that are in indirect competition with each other because they offer dissimilar goods or services.
SOURCE: SM:011
SOURCE: Oman, J. (2018, January 16). Understanding your competition. Retrieved September 17,
2018, from https://smallbusinessbc.ca/article/understanding-your-competition/
98. C
Executive summary. The executive summary is the most critical component of a business plan. It is the
heart of your business plan and the first thing that readers will see. Most readers will use the executive
summary to determine whether or not it's worth reading any further. While the company description,
market analysis, and financial plan are all important, the executive summary is the most critical
component of the plan.
SOURCE: SM:013
SOURCE: LAP-SM-013—Plan for Success (Creating a Business Plan)
99. A
Jake, because he is always willing to adapt to changes during a project. To innovate new ideas and
processes, employees must be willing to adapt to unforeseen circumstances. This flexibility is essential to
successfully innovate. Sticking to traditional ideas and processes, getting frustrated with learning new
skills, and staying quiet during brainstorming sessions are all indications that these employees are not
likely to be called innovative by their supervisors.
SOURCE: SM:094
SOURCE: Bagley, R. (2014, January 15). The 10 traits of great innovators. Retrieved September 17,
2018, from http://www.forbes.com/sites/rebeccabagley/2014/01/15/the-10-traits-of-great-
innovators/#5429e812ed50
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100. A
To obtain buy-in from stakeholders. Changes are more successful when stakeholders are supportive of
them. Change management helps obtain this buy-in from stakeholders by keeping them informed and
involved. Limiting the effects of a change, keeping the people involved to a minimum, and reducing the
time it takes to make a change are not necessarily goals of change management.
SOURCE: SM:095
SOURCE: Mind Tools Content Team. (1996-2018). Change management. Retrieved September 17,
2018, from https://www.mindtools.com/pages/article/newPPM_87.htm
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SAMPLE
EXAM
ENTREPRENEURSHIP
THE ENTREPRENEURSHIP EXAM IS USED FOR THE

FOLLOWING EVENTS:
ENTREPRENEURSHIP SERIES ENT
ENTREPRENEURSHIP TEAM DECISION MAKING ETDM
These test questions were developed by the MBA Research Center. Items have been randomly selected from the MBA Research Center’s
Test-Item Bank and represent a variety of instructional areas. Performance indicators for these test questions are at the prerequisite, career-
sustaining, and specialist levels. A descriptive test key, including question sources and answer rationale, has been provided.
Copyright © 2019 by MBA Research and Curriculum Center®, Columbus, Ohio. Each individual test item contained herein is the exclusive property
of MBA Research Center. Items are licensed only for use as configured within this exam, in its entirety. Use of individual items for any purpose
other than as specifically authorized in writing by MBA Research Center is prohibited.
Posted online March 2019 by DECA Inc.

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1. Which of the following is a type of intangible business property that is protected by law:
A. Acreage
B. Inventory
C. Trademark
D. Equipment
2. Basic torts relating to businesses often involve disputes concerning

A. emotional stress.
B. assaults.
C. defamation.
D. contracts.
3. Which of the following is a characteristic of a business-format franchise:

A. The name of the business is chosen by the franchisee.
B. Products are bought directly from the supplier.
C. It is the least popular franchise arrangement.
D. Continuous assistance is provided by the franchisor.
4. Limited liability, indefinite length of life, ease of expansion, legal entity, and transfer of ownership are
considered advantages of a
A. sole proprietorship.
B. partnership.
C. trade union.
D. corporation.
5. Channels of distribution benefit consumers by

A. increasing profits for businesses.
B. lowering the prices of all consumer products.
C. raising the quality of all consumer products.
D. making a variety of products available to them.
6. For which of the following markets would producers use a short channel of distribution:
A. Local consumers
B. Generation X
C. Baby boomers
D. Senior citizens
7. If a business considers where the consumers are and who they are before selecting a channel of
distribution, the business is considering the __________ factor.
A. human
B. promotion
C. market
D. sales
8. What do business employees often need to do before they are able to write proposals?
A. Research the problem
B. Analyze personal biases
C. Contact the customer
D. Evaluate technical skills
9. Which of the following is an example of a manager developing a policy that impacts customer relations:
A. Increasing use of security devices
B. Extending business hours on weekends
C. Revising bookkeeping procedures
D. Scheduling employees' work hours
Copyright © 2019 by MBA Research and Curriculum Center®, Columbus, Ohio

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10. What should a successful brand promise be able to do?
A. Customize the product for each customer
B. Clarify the company's processes
C. Communicate an appealing benefit
D. Convey a high-quality image
11. Which of the following is one way that freedom in a private enterprise system is limited by laws:
A. Certain occupations must be licensed.
B. All workers must take ability tests.
C. Specific pay scales are regulated.
D. Employees must register with the state.
12. During the month of July, sales at Handy's Shoe Mart totaled $2,500. The cost of the shoes was $1,025.
The owner paid $866 for supplies, insurance, rent, and utilities during the month. The $609 left over
represents the owner's
A. net profit.
B. gross profit.
C. sales income.
D. operating expenses.
13. Non-corporations are taxed as pass-through entities, meaning that

A. profits and losses are claimed on owners' personal tax returns.
B. they do not have to pay payroll taxes.
C. their income tax rates are lower than those of corporations.
D. they pay only state and local taxes.
14. Which of the following activities is an example of preparing before attempting to sell an idea:
A. Explaining solutions to audience needs
B. Determining the details of your idea
C. Overcoming objections from the audience
D. Affirming the audience's decision to "buy"
15. Managers are more likely to be able to persuade employees to follow new procedures if the managers
have
A. organizational skills.
B. credibility.
C. enthusiasm.
D. self-motivation.
16. Ali wants to negotiate with her boss to take on more job responsibilities. Before approaching her boss, Ali
needs to determine her boss's position and
A. abilities.
B. interests.
C. standards.
D. procedures.
17. After writing your personal vision, what must you do to achieve it?
A. Commit to your vision through hard work and dedication.
B. Put your vision in a safe space and look at it again in five years.
C. Get the highest-paying job that you can find out of high school.
D. Spend all of your free time working on self-improvement.
18. Ryan keeps a list of his goals to remind himself of what he's working toward. Which tip for smart goal
setting is Ryan following?
A. Putting goals in writing
B. Tying goals to a timetable
C. Making goals specific
D. Making goals difficult but possible
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19. The future that you desire to create is known as a
A. mission statement.
B. goal.
C. prediction.
D. vision.
20. The entrepreneurial discovery process that involves finding a way to meet an existing demand by
inventing new products from available resources is based on
A. science.
B. medicine.
C. psychology.
D. physics.
21. Dan is in the process of determining the types of computer software and telephone service that will best
suit his new business and get it up and running. Dan is considering his business's
A. financial constraints.
B. technical needs.
C. competitive advantage.
D. staffing requirements.
22. Which of the following statements is true about business startup requirements:
A. New business owners usually need to register for patent protection.
B. The financial needs to start a new business depend on the nature of the venture.
C. Purchasing a franchise is usually easy and inexpensive for startup business owners.
D. Equipment is the least expensive requirement for a startup business.
23. Why is it important for entrepreneurs to talk with industry experts when developing new business
concepts?
A. The industry experts usually improve your management skills.
B. The industry experts typically provide useful information.
C. The industry experts commonly enhance your confidence.
D. The industry experts frequently offer financial support.
24. If an entrepreneur obtains a commercial bank loan to finance a new venture, s/he is often required to
A. provide collateral.
B. close savings accounts.
C. relinquish contracts.
D. charge the prime-interest rate.
25. To determine their human resource needs, new business owners often find it helpful to
A. list all the tasks involved in operating the business.
B. ask a technical recruiter for advice.
C. hire consultants or freelancers.
D. allocate funds for additional payroll taxes.
26. The type of capital resources that a startup business needs to begin operating usually depends on the
A. vendors' lead time.
B. location.
C. owner's preferences.
D. industry.
27. Which of the following statements is true about new venture risk-taking:
A. When an entrepreneur seeks a high profit, the risk is usually higher.
B. When the entrepreneur seeks to limit risk, the reward tends to increase.
C. An entrepreneur's financial risk is not closely related to rewards.
D. The entrepreneur who does not care about profit is a high risk-taker.
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28. Small-business owners develop and use operating procedures so that everyday tasks are performed in
a(n) __________ way.
A. innovative
B. imprecise
C. diverse
D. standard
29. To develop repeat business and customer loyalty, a business owner might
A. update equipment.
B. increase prices.
C. ridicule the competition.
D. offer a new service.
30. By joining a community organization, such as the local chamber of commerce, an entrepreneur can
network with others to
A. evaluate personal skills and abilities.
B. obtain selling experience.
C. identify new venture opportunities.
D. improve goods and services.
31. Determine if the following statement is true or false: When developing an exit strategy for an
entrepreneurial venture, the most important consideration is finding a suitable buyer.
A. False, there are many factors to consider, such as company valuation and personal goals.
B. True, if the buyer is inexperienced, the business risks monetary losses and long-term failure.
C. False, the most important factor that an entrepreneur should consider is profitability.
D. True, the valuation of a business is dependent on the buyer's financial resources.
32. Which of the following is an example of an intangible asset:

A. Equipment
B. Inventory
C. Office building
D. Accounts receivable
33. Which of the following is a characteristic of a profit-and-loss statement:

A. Is the same as a balance sheet
B. Summarizes expenses and revenue from sales
C. Shows the owner's financial position
D. Lists assets and liabilities
34. In managerial accounting, the number of hours that a business runs its machinery during the production
process is classified as a(n)
A. production output.
B. cost driver.
C. unexpected expense.
D. inflexible transaction.
35. Businesses often obtain cash to produce and sell goods by borrowing against their
A. current liabilities.
B. accounts receivable.
C. operating expenses.
D. promissory notes.
36. When determining financing needs, what factor should businesses consider that will help decide whether
they can repay the debt?
A. Liquidity
B. Depreciation
C. Equity
D. Inventory
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37. Which of the following is a risk a business might face if it obtains a long-term loan from a financial
institution and pays off the loan before it is due:
A. Being charged a penalty
B. Losing interest on the account
C. Paying a processing fee
D. Receiving a variable rate
38. Why do lending institutions carefully evaluate how well a business meets certain criteria before making a
loan?
A. To improve relations
B. To provide service
C. To prevent theft
D. To reduce risk
39. Which of the following payback periods in a cost/benefit analysis would businesses prefer if all other
things were equal:
A. 2 years
B. 1 year
C. 3 years
D. 4 years
40. An example of an internal change that could affect a business's sales forecast is a change in the
A. length of a national recession.
B. number of competitors in the market.
C. size of the sales force.
D. levels of consumer spending.
41. Ethan is developing common-size financial statements so that he can compare financial performance
across several different companies. Ethan is conducting __________ analysis.
A. horizontal
B. vertical
C. ratio
D. trend
42. Jana noticed a problem while reviewing her company's monthly income statement. She verified that the
total revenue was $4,590 and the total expenses were $1,452. However, the income statement showed a
net income total of $1,383. Which of the following reflects the correct net income:
A. $3,381
B. $5,973
C. $3,138
D. $1,833
43. Why do interviewers usually focus on asking questions that are related to a job applicant's performance?
A. To understand complaints
B. To take remedial action
C. To determine qualifications
D. To plan future training
44. If employees are fired because their conduct is in serious violation of company policies, they are being
terminated for
A. incompetence.
B. performance.
C. resigning.
D. cause.
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45. Why is it often necessary to provide employees with additional training?
A. To increase socialization
B. To improve performance
C. To analyze diversity
D. To identify sensitivity
46. When a supervisor evaluates an employee's performance, the evaluation should be based on the
__________ standards.
A. organization's
B. supervisor's
C. competition's
D. employee's
47. Which of the following is one way that businesses use marketing information:
A. To predict change
B. To analyze data
C. To develop surveys
D. To conduct research
48. Which of the following is a characteristic of the data collection step in marketing research:
A. The least expensive step in marketing research
B. The least tedious step in marketing research
C. The step in which the most mistakes are made
D. The step that is most interesting to researchers
49. Which of the following is an example of a durable good:

A. House
B. Haircut
C. Gasoline
D. Hamburger
50. Motives, perception, attitude, lifestyle, personality, and abilities are __________ factors influencing
consumer behavior.
A. political
B. social
C. psychological
D. economic
51. Business goals are accomplished by means of marketing

A. salespeople.
B. budgets.
C. profit.
D. strategies.
52. Products that appeal to the majority of customers are often sold through __________ marketing efforts.
A. segmented
B. mass
C. demographic
D. psychographic
53. An important part of a market analysis involves collecting __________ information.

A. confidential
B. geographic
C. employee
D. property
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54. One reason why it is important to accurately forecast sales for a marketing plan is because the forecast is
the basis of other
A. business reports.
B. pricing strategies.
C. operational activities.
D. management techniques.
55. Which of the following is a strategy for linking performance measures to financial outcomes:
A. Analyzing click-through rates
B. Developing advertising budgets
C. Paying for direct-mail pieces
D. Maintaining sales receipts
56. What type of software do many businesses require be installed on computer systems as a security
feature?
A. Reality
B. Firewall
C. Spider
D. Media
57. The FPD Company keeps copies of its brochures, catalogs, and flyers on file for future reference. This is
an example of a company that is maintaining __________ records.
A. inventory
B. legal
C. promotional
D. asset
58. Which of the following is most likely to be a dynamic element of a business's external environment:
A. Decrease in personnel
B. Increase in competition
C. Renewed emphasis on training
D. New quality control measures
59. James needs to hire a bookkeeper for his growing business. To determine the new employee's salary,
James obtained pay data from five companies in his industry that are similar in size. The research
indicated the following: Company A pays $31,205; Company B pays $29,995; Company C pays $34,800;
Company D pays $42,500; and Company E pays $36,500. James decided to set his bookkeeper's salary
at $35,000. What measure of central tendency did James use to set his new employee's salary?
A. Mode
B. Mean
C. Range
D. Median
60. Hill Industries uses specific criteria to evaluate vendor performance, including on-time delivery rate,
return rate, and number of customer complaints. These metrics are also known as
A. consensus scales.
B. performance indicators.
C. economic indicators.
D. return on capital.
61. A business converts inputs into outputs through its __________ activities.
A. accounting
B. management
C. marketing
D. production
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62. What is often the role of management in the achievement of quality in a business?
A. To assign blame
B. To lead the effort
C. To judge the staff
D. To eliminate conflict
63. Which of the following is an example of a fixed operating expense:

A. Insurance
B. Sales commissions
C. Advertising
D. Travel expenses
64. What information does a business always need to have when it conducts a break-even analysis?
A. Fixed costs and depreciation rates
B. Variable costs and fixed costs
C. Production time and variable costs
D. Production time and depreciation rates
65. Which of the following should a business consider when negotiating a service or maintenance contract on
a piece of equipment:
A. Does the cost of the contract exceed the cost of possible repairs?
B. Is training and technical assistance available?
C. How much profit does the seller make on the contract?
D. Does the equipment require installation?
66. Which of the following is a situation in which a business could use the budget information to make
operating changes:
A. Total revenues exceed projected costs.
B. Estimated sales exceed actual sales.
C. Expected profits are increasing.
D. Accounts receivable are on target.
67. To effectively manage a supply chain, companies should

A. introduce frequent changes to the production process.
B. ignore underperforming suppliers and distributors.
C. monitor the performance of all supply chain partners.
D. launch new products through multiple suppliers.
68. An employee is comparing income statements from the past three years to evaluate changes and trends
in the business's revenue. What type of business analysis is the employee conducting?
A. Production
B. Financial
C. Information management
D. Sales
69. Before assigning a new project to her employees, Joanna establishes the steps that her staff needs to
take to complete the project. Joanna is utilizing
A. human resource planning.
B. business process thinking.
C. agile project management.
D. change management.
70. A manufacturing company is required by the local government to dispose of its waste in an
environmentally safe way. This is an example of how process design can be affected by __________
factors.
A. human
B. regulatory
C. technological
D. natural
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71. Which of the following situations describes a business process changing due to technological factors:
A. A manufacturing company purchases a new software program to run its machines.
B. A small general store offers more discounts to compete with a new shopping mall.
C. A waste treatment plant changes its disposal method to align with environmental law.
D. A family-owned restaurant opens a second location in an effort to expand its brand.
72. Which of the following is a true statement regarding the relationship between a business's supply chain
management and its performance:
A. Good supply chain management leads to unsustainable business practices.
B. Good supply chain management leads to decreased value for the customer.
C. Poor supply chain management can result in customer satisfaction.
D. Poor supply chain management can result in customer dissatisfaction.
73. Chad is buying a new car. Although the first car is a great deal and a more practical choice, he just loves
the look of the second car. As a result, he decides to purchase the second car. His decision is based on
which of the following internal factors:
A. Insight or intuition
B. Experience
C. Framing
D. Emotion
74. Time management helps to reduce stress because it

A. provides less time for rest and relaxation.
B. increases feelings of pressure and tension.
C. encourages procrastination in planning necessary activities.
D. allows adequate time for personal and professional activities.
75. Who typically reviews and approves the guidelines for running a corporation, which are also known as
corporate governance policies?
A. The investors
B. The shareholders
C. The management team
D. The board of directors
76. What is the relationship between shareholders and the board of directors?
A. The shareholders pay dividends to the board of directors.
B. The board of directors represents the shareholders.
C. The shareholders make decisions for the board of directors.
D. The board of directors holds the shareholders accountable.
77. An organization should include independent members on its board of directors because they
A. provide an objective perspective.
B. represent the interests of management.
C. understand the company's inner workings.
D. are less likely to act unethically.
78. When buyers and sellers have agreed on a value for a product, they have established the
A. price policy.
B. exchange price.
C. equilibrium price.
D. price line.
79. True or false: In determining the selling price of a good or service, most of the factors to be considered by
the seller are internal to the business.
A. True, most factors affecting price are internal to the business.
B. False, most factors affecting price are not controlled by the firm.
C. True, most factors affecting price are directly controlled by the business.
D. False, most factors affecting price are directly controlled by the business.
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80. A product idea is feasible if it
A. meets sales quotas.
B. creates a competitive advantage.
C. costs a lot to produce.
D. is a durable good.
81. Terry, a company buyer, has the job of choosing a particular assortment of products that will meet the
market's needs and the company's goals. Terry is responsible for the company's product
A. mix.
B. item.
C. line.
D. sales.
82. A business manager who wants to increase the number of items the business offers needs to decide
whether the new items will be compatible with the business's
A. level of service.
B. patronage motives.
C. current product mix.
D. advertising objectives.
83. What do many businesses identify and strive to improve in order to attract customers and be
competitive?
A. Commission plans
B. Service standards
C. Personal characteristics
D. Operating quotas
84. What type of promotional media is a business using when it sends out a postcard telling customers who
recently purchased products that the business is adding a new line of products?
A. Participative
B. Sales letter
C. Persuasive
D. Direct mail
85. Ariel, who designs and sells a line of purses and tote bags, recently sent free totes bag to local female
news anchors. Ariel's goal is to have others see the local celebrities carrying the tote bags to generate
interest in her product. What form of word-of-mouth marketing is Ariel using?
A. Product seeding
B. Celebrity testimonial
C. Cause marketing
D. Social media applications
86. An advantage to using direct marketing to communicate product information is that the business can
A. expect a majority of recipients to respond to the message.
B. effectively appeal to a mass audience.
C. customize the messages.
D. save money by personalizing offers.
87. Samples, premiums, and advertising specialties are examples of __________ used in sales promotion.
A. communications channels
B. publicity strategies
C. marketing activities
D. selling techniques
88. Why do some businesses sponsor local events?

A. To obtain publicity
B. To create news
C. To generate revenue
D. To sell products
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89. Which of the following are public relations activities:
A. Writing press releases, distributing company newsletters, and sponsoring events
B. Holding press conferences, identifying trends, and hiring new staff members
C. Sponsoring events, developing new products, and distributing company newsletters
D. Identifying trends, writing press releases, and hiring new staff members
90. The cost of employing product inspectors is a(n)

A. appraisal cost.
B. prevention cost.
C. internal failure cost.
D. external failure cost.
91. Because __________ measures of risk can be too general, it is also useful to perform __________
assessment of risk.
A. quantitative; qualitative
B. qualitative; quantitative
C. preventative; responsive
D. responsive; preventative
92. Which of the following is a potential risk of implementing enterprise risk management (ERM) software:
A. Standardization of reporting
B. More emphasis on risk
C. Loss of data during the transfer
D. Less efficient use of resources
93. Salespersons should have good communication skills, but the sales presentation should not include too
many __________ words.
A. expressive
B. picturesque
C. personal
D. technical
94. Which management function lays the groundwork for all of the other management functions?
A. Directing
B. Organizing
C. Staffing
D. Planning
95. One way that managers can promote ethical behavior on the part of everyone in the business is by
encouraging employees to
A. develop a code of ethics.
B. report unethical actions.
C. be thoughtful of others.
D. avoid social situations.
96. The ski shop manager set an objective to increase sales by 10% over the previous year even though the
forecast was for a mild and rainy winter. The manager's objective was
A. reasonable.
B. practical.
C. unrealistic.
D. scientific.
97. Which of the following pairs of businesses are examples of direct competitors:
A. Ryan’s Drugstore and Hally’s Homemade Cards
B. Hot n’ Spicy Wings and Southern Fried Chicken House
C. JTE Clothes Boutique and Carla’s Hardware
D. Modern Dry Cleaning and Trotterman Accounting Services
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98. Which of the following is the most critical component of a business plan:
A. Market analysis
B. Company description
C. Executive summary
D. Financial plan
99. Which of the following employees would most likely be described as “innovative” by his/her supervisor:
A. Jake, because he is always willing to adapt to changes during a project
B. Madison, because she prefers to stick to traditional ideas and processes
C. Elizabeth, because she gets frustrated when she needs to learn new skills
D. Anthony, because he is usually quiet during brainstorming sessions
100. One of the goals of change management is

A. to obtain buy-in from stakeholders.
B. to limit the effects of a change.
C. to keep the people involved to a minimum.
D. to reduce the time it takes to make a change.
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1. C
Trademark. A trademark is a symbol, design, or word used by a business to identify a good or service
and is registered with the government to prevent its use by others. A trademark is an example of
intangible business property. Federal law protects a business's intangible property from being used by
competitors. A business's inventory, acreage, and equipment are types of tangible property.
SOURCE: BL:001
SOURCE: World Intellectual Property Organization. (n.d.). What is intellectual property? Retrieved
http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf
2. D
Contracts. Business torts are wrongful actions against a business that cause it harm in some way.
Disputes concerning contracts are often the basis for businesses suing individuals or other businesses.
Many businesses have contractual arrangements with employees or vendors. If these contracts are
broken, the business might be harmed and seek compensation through the legal system. Basic torts
relating to businesses do not involve disputes concerning assaults, defamation, or emotional stress.
SOURCE: BL:069
SOURCE: Legal Match. (2018, May 2). Business torts. Retrieved September 17, 2018, from
https://www.legalmatch.com/law-library/article/business-torts.html
3. D
Continuous assistance is provided by the franchisor. A business-format franchise is a more complex and
more popular type of franchise arrangement than the product trade-name franchise. It involves a close,
continuous working relationship between the franchisor and the franchisee. Examples of the business-
format franchise are McDonald's, Holiday Inn, and Jiffy Lube. Products and other materials usually must
be purchased from the franchisor's list of approved vendors. The franchisee must operate under the
trade name of the franchisor.
SOURCE: BL:003
SOURCE: LAP-BL-001—Own It Your Way (Types of Business Ownership)
4. D
Corporation. Corporations are advantageous due to the separate legal body that is created by a state
charter. The charter limits individual liability, allows for permanency of existence, ease in transferring
ownership, and a greater number of resources for financial growth. Both the sole proprietorship and
partnership have unlimited liability, definitive life spans, difficulty in raising capital, and are not separate
legal entities. A trade union is a group that represents people in similar occupational skill areas.
SOURCE: BL:006
SOURCE: LAP-BL-006—Taking Care of Business (Selecting Forms of Business Ownership)
5. D
Making a variety of products available to them. Channels of distribution benefit consumers by making a
variety of products available to them. Without these channels, consumers could only buy products
directly from producers, which would be impractical. Channels may lower some but not all consumer
product prices. They may raise the quality of some but not all consumer products. Increased profits for
businesses is not a benefit for consumers.
SOURCE: CM:001
SOURCE: LAP-CM-002—Chart Your Channels (Channel Management)
6. A
Local consumers. A short channel can be used when the potential customers are few and/or located
close together. The baby boomer, senior citizen, and Generation X markets have many potential
customers who are widely dispersed.
SOURCE: CM:003
SOURCE: LAP-CM-003—Channel It (Channels of Distribution)
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7. C
Market. Market factors deal with where the consumers are, who they are, the information they require,
and the size of their orders. Understanding the market is an important aspect of selecting the best
channel of distribution. For example, it is important for businesses to know that most consumers prefer to
buy products from retailers. Promotion, human, and sales are not factors that businesses consider when
selecting a channel of distribution.
SOURCE: CM:010
SOURCE: Waksman, K. (2018, June 11). How to choose the right distribution channel for your
business. Retrieved September 17, 2018, from https://www.thebalancesmb.com/choose-
best-distribution-channel-for-your-business-3502272
8. A
Research the problem. Proposals are intended to answer questions or provide recommendations to solve
problems. Business employees often need to research a particular situation or problem before they are
able to write proposals. After employees do research and gather information, they write proposals that
explain the problem and the solutions. The proposal is intended to persuade the business to follow the
recommendations. Employees usually do not need to analyze personal biases, contact the customer, or
evaluate technical skills before they are able to write proposals.
SOURCE: CO:062
SOURCE: Bidsketch. (2018, June 15). How to write a business proposal. Retrieved September 17,
2018, from https://www.bidsketch.com/blog/articles/how-to-write-a-business-proposal/
9. B
Extending business hours on weekends. Management is responsible for developing policies, and many
of these policies have an impact on customer relations. An example of a policy that usually improves
customer relations is providing extended business hours on weekends. Many customers work during the
week and only have free time in the evenings and on weekends. Businesses that offer extended hours
on weekends are making it easy for customers to buy when it is convenient for them. Scheduling
employees' work hours, using security devices, and revising bookkeeping procedures are routine
business activities that managers perform on a regular basis.
SOURCE: CR:008
SOURCE: Reynolds, P. (2016, May 6). Role of senior management in delivering customer service.
Retrieved September 17, 2018, from https://www.etechgs.com/blog/role-senior-
management-delivering-customer-service/
10. C
Communicate an appealing benefit. A brand promise is a business's agreement (spoken or unspoken)
with customers that it will consistently meet their expectations and deliver on its brand characteristics and
values. Before the business can deliver on its brand promise, it must have a product that offers an
appealing benefit—one that persuades the target market to buy. For example, FedEx provides delivery
services. The company's brand promise focuses on reliability. Therefore, FedEx promises to get its
customers' packages to their destinations in a reliable manner—safely, quickly, and courteously—every
time, which is an appealing benefit for most customers. A procedure is the step-by-step process that a
person follows when performing a specific task. Customization involves making the product unique for
each customer. Customization, a high-quality image, and the process by which the business delivers its
products may be elements of a company's brand promise.
SOURCE: CR:001
SOURCE: Frederiksen, L. (2018, August 13). Elements of a successful brand 4: Brand promise.
Retrieved September 17, 2018, from https://hingemarketing.com/blog/story/elements-of-a-
successful-brand-4-brand-promise1
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11. A
Certain occupations must be licensed. Even though there are many economic freedoms in a private
enterprise system, there are certain limits. Economic freedom is limited by laws that have been created to
protect everyone. Workers in certain occupations must be licensed to safeguard public health and safety.
Pay scales are not regulated but vary greatly depending on the occupation, area of the country, and
current economic conditions. The law does not require all workers to take tests, although some
businesses require applicants to take and pass ability tests before they are hired. Employees are not
required to register with the state.
SOURCE: EC:009
SOURCE: LAP-EC-015—People Power (The Private Enterprise System)
12. A
Net profit. Net profit is the amount of money left over after operating expenses are subtracted from gross
profit. Sales income is the total received from the sale of goods or services. Gross profit is the money left
over after cost of merchandise is subtracted from sales income. Operating expenses are the daily costs
of running a business.
SOURCE: EC:010
SOURCE: LAP-EC-002—Risk Rewarded (Factors Affecting Profit)
13. A
Profits and losses are claimed on owners' personal tax returns. Non-corporations are taxed as pass-
through entities, meaning that profits and losses are claimed on owners' personal tax returns. Non-
corporations are still subject to federal taxes as well as state and local taxes. Business income-tax rates
are based on how much profit a business makes, not whether it is a corporation or not. Non-corporations
pay payroll taxes on employees, just as corporations do.
SOURCE: EC:072
SOURCE: LAP-EC-027—Pay Your Share (Business Taxes)
14. B
Determining the details of your idea. Before you can "sell" your idea to others, you need to solidify the
details and specifications of your proposal so that you can fully explain your idea to your audience.
Explaining solutions to audience needs, overcoming objections, and affirming the audience's decision to
"buy into" your idea are all steps in the selling process that come after doing advance preparation.
SOURCE: EI:108
SOURCE: LAP-EI-108—Do They Buy It? ("Selling" Ideas to Others)
15. B
Credibility. Credibility is believability. If employees believe what managers are saying, they are more
likely to be persuaded to do what the managers want them to do. Managers develop credibility by always
being truthful with employees. As a result, employees often like and trust managers who are credible
and, therefore, are willing to follow their instructions. Having organizational skills, enthusiasm, or self-
motivation does not necessarily mean that managers will be able to persuade employees.
SOURCE: EI:012
SOURCE: LAP-EI-121—Win Them Over (Persuading Others)
16. B
Interests. The key to successful negotiation is to focus on interests. Interests are the things that you and
the other party want or need. You must consider the other party's interests as well as your own. Ability is
a skill someone uses to perform a task through knowledge, training, and practice. When negotiating, one
party may not necessarily know the other party's skills. Standards are specifications or statements that
are used as a basis for comparing or judging goods or services. Procedure refers to the step-by-step
process someone follows when performing a specific task.
SOURCE: EI:062
SOURCE: LAP-EI-062—Make It a Win-Win (Negotiation in Business)
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17. A
Commit to your vision through hard work and dedication. Your personal vision will not become a reality
unless you work hard to achieve your goals. Putting your vision in a safe place and looking at it again in
five years will not help you achieve your vision. Instead, you should place your vision in a place where
you will see it often. Getting the highest-paying job you can find out of high school may help you save
money, but it will not necessarily help you achieve your vision. You should be strategic when deciding
what career path to pursue, making sure that it aligns with your vision. You do not need to spend all of
your free time on self-improvement—you can still have hobbies and spend time doing things that you
enjoy while pursuing your personal vision.
SOURCE: EI:063
SOURCE: LAP-EI-064—Picture This! (Determining Personal Vision)
18. A
Putting goals in writing. By keeping a list, Ryan has put his goals in writing. This makes them seem more
solid and real, giving Ryan greater motivation to work toward them. Ryan is not necessarily tying his
goals to a timetable, making his goals specific, or making his goals difficult but possible.
SOURCE: EI:027
SOURCE: LAP-EI-027—High Hopes (Developing an Achievement Orientation)
19. D
Vision. Vision is the future you desire to create. A goal is an objective or want that you plan to fulfill. A
prediction is a forecast made about the future. A mission statement is a brief summary of what a
business owner wants a business to be doing.
SOURCE: EI:060
SOURCE: LAP-EI-060—Vision Quest (Enlisting Others in Vision)
20. A
Science. Entrepreneurial discovery is the process of detecting and matching product and market
opportunities with one another in a manner that satisfies the market and the business. Sometimes there
is a market with a demand for something that is not available, and the business invents a product to
satisfy the demand. For example, a scientist uses existing physical elements to develop a new vaccine to
prevent a certain disease for which there is no treatment. Because the vaccine is new, the scientist
(inventor) is observing and applying knowledge in a specific way, or using a scientific process. Medicine,
psychology, and physics are scientific disciplines, or areas of scientific study.
SOURCE: EN:002
SOURCE: Smart Specialisation Platform. (2015, December 15). Entrepreneurial discovery process.
Retrieved September 17, 2018, from http://s3platform.jrc.ec.europa.eu/entrepreneurial-
discovery-edp
21. B
Technical needs. Entrepreneurs and startup business owners must consider many factors before they
open their ventures. They must consider their financial and staffing needs, as well as their technical
needs. Their technical needs might include telephone, fax, Internet, computers, software programs, and
automated equipment needs. Each business's needs vary, so the technical needs of each business
varies, too. The competitive advantage is the edge achieved by businesses that offer something better
than their competitors.
SOURCE: EN:007
SOURCE: Horvath, B. (2017, July 13). Tech considerations for new business: What you need to know.
Retrieved September 17, 2018, from https://businesstown.com/tech-considerations-new-
business-need-know/
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22. B
The financial needs to start a new business depend on the nature of the venture. The requirements (e.g.,
time, money) that a person needs to start a business differ and usually depend on the nature of the
business. For example, a person who starts a home-based consulting business does not require as much
money for the startup as a restaurant franchisee does. The franchisee needs to lease space or build a
facility, purchase kitchen equipment, obtain supplies, hire employees, and pay franchise fees, which can
be very expensive. A patent is legal protection that provides an owner the sole rights to an invention or
process for a specific time period. Business owners do not always invent goods or processes, so not all
of them need to obtain patent protection.
SOURCE: EN:009
SOURCE: Beesley, C. (2017, December 29). How to estimate the cost of starting a business from
scratch. Retrieved September 17, 2018, from https://www.sba.gov/blogs/how-estimate-cost-
starting-business-scratch
23. B
The industry experts typically provide useful information. Industry experts have in-depth knowledge about
a specific field. Experts often know about the trends, processes, new products, and new technology that
affect the industry. These experts often provide entrepreneurs with useful information as they develop the
ideas for their new ventures. Talking with industry experts doesn't always improve your management
skills or enhance your confidence. Industry experts might know where you can obtain financial support,
but they do not always offer it themselves.
SOURCE: EN:012
SOURCE: Katz, J., & Green, R. (2011). Entrepreneurial small business (3rd ed.) [pp. 90, 92-96]. New
York, NY: McGraw-Hill/Irwin.
24. A
Provide collateral. There are many ways for entrepreneurs to obtain financing for new business ventures.
One way is to obtain a loan from a commercial bank. The loan process generally involves completing a
loan application and submitting a business plan to the financial institution. In most situations, a bank will
require the loan applicant to put up collateral in order to obtain the loan. Collateral is anything of value
(e.g., car, home) belonging to the borrower that is pledged to the lender to guarantee that the loan will be
repaid. For example, if a business fails, and the borrower cannot afford to pay back the bank loan, the
bank can take the borrower's belongings (collateral) as payment for the outstanding loan. Banks do not
require loan applicants to close their savings accounts, relinquish contracts, or charge interest.
SOURCE: EN:015
SOURCE: Hall, A. (2012, October 20). 5 ways of funding a business: How to get your piece of the pie.
Retrieved September 17, 2018, from https://www.forbes.com/sites/alanhall/2012/10/20/5-
means-of-funding-a-small-business-how-to-get-your-piece-of-the-pie/#621492421cf2
25. A
List all the tasks involved in operating the business. Often, it helps business owners to write down every
task that the business must perform in order to operate. After listing all tasks, the owners can categorize
tasks by function (e.g., sales, bookkeeping) and determine in which areas they need the help or expertise
of others. In most situations, asking a technical recruiter for advice, hiring consultants or freelancers, and
allocating fund for payroll taxes do not help business owners determine their human resource needs.
SOURCE: EN:017
SOURCE: CliffsNotes. (2016). Determining human resource needs. Retrieved September 18, 2018,
from https://www.cliffsnotes.com/study-guides/principles-of-management/staffing-and-
human-resource-management/determining-human-resource-needs
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26. D
Industry. Capital resources are assets, or things of value, that a firm uses on an ongoing basis to meet its
objectives. The capital resources that a business needs to get up and running depends on the type of
products that the business sells. For example, a snow-ski resort needs ski-lift equipment, while a
landscape business needs mowing equipment, mulch, and shrubs to efficiently operate. Location,
owner's preferences, and suppliers' lead time are not always primary considerations when selecting
capital resources.
SOURCE: EN:019
SOURCE: Nickolas, S. (2018, February 2). What inputs are considered to be factors of production?
Retrieved September 12, 2018, from
https://www.investopedia.com/ask/answers/032715/what-inputs-are-considered-be-factors-
production.asp
27. A
When an entrepreneur seeks a high profit, the risk is usually higher. Risk is the chance of failure or loss.
There are many types of risks that business owners face including social, career, psychic, and financial
risks. The amount of risk a business owner takes varies, but financial risk is the risk that is the easiest to
measure. The more money that a person invests in a business (equity or debt finance options), the more
financial risk the person is taking because s/he has more money to lose. Risk-taking is often related to
potential rewards. Entrepreneurs care about their profits to varying degrees.
SOURCE: EN:024
SOURCE: Investopedia. (2018, July 25). Risk-return tradeoff. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/r/riskreturntradeoff.asp
28. D
Standard. Operating procedures are the step-by-step processes that employees follow when performing
specific work-related tasks. By developing and implementing operating procedures, the small-business
owner reduces the amount of time that s/he spends answering questions and making decisions about
routine, day-to-day activities. This reduction occurs because the employees have guidelines or a
standard way to complete tasks. Conducting activities in a standard way often increases employee
productivity and efficiency. Everyday tasks do not always need to be performed in imprecise, diverse, or
innovative ways.
SOURCE: EN:026
SOURCE: Rush, M. (2016, October 26). Standard operating procedures for a business. Retrieved
September 17, 2018, from https://smallbusiness.chron.com/standard-operating-procedures-
business-3228.html
29. D
Offer a new service. Because a business cannot survive if it does not earn a profit, and profits are
generated from product sales, business owners often look for ways to improve or develop goods and
services to keep the customers coming back. Increasing prices and ridiculing the competition are not
activities that would increase repeat business and customer loyalty. Updating equipment does not
necessarily facilitate repeat business and customer loyalty.
SOURCE: EN:028
SOURCE: Rampton, D. (2017, September 25). Introducing new products and services as a business
owner. Retrieved September 17, 2018, from https://due.com/blog/introduce-new-products-
and-services-as-a-business-owner/
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30. C
Identify new venture opportunities. An opportunity is a circumstance that presents itself as a favorable
means to meet an objective. Entrepreneurs look for opportunities to start businesses and if the
opportunities are feasible, they act upon them. There are many ways to look for business opportunities
such as watching trends, attending trade shows, and talking with friends, customers, and business
associates. Entrepreneurs might join community organizations or trade associations to network with
others with the goal of identifying new venture opportunities. Entrepreneurs do not join community
organizations to obtain selling experiences, evaluate personal skills and abilities, or improve goods and
services.
SOURCE: EN:031
SOURCE: Long, J. (2017, March 23). 6 benefits of joining a professional community. Retrieved
September 17, 2018, from https://www.entrepreneur.com/article/290983
31. A
False, there are many factors to consider, such as company valuation and personal goals. Entrepreneurs
often leave their ventures after they achieve their objectives for their businesses. Entrepreneurs consider
many factors, such as how much the business is worth, and personal considerations, such as retiring or
starting another venture. There are several ways for an entrepreneur to exit a business, which include
selling the business, taking his/her share of the profits and letting partners or others run the business,
and closing the business. Thus, exiting a business is often complex and has many factors and options to
consider, other than finding a suitable buyer.
SOURCE: EN:037
SOURCE: Clark, B., & Commers, J. (2018). Entrepreneurship (2nd ed.) [pp. 498-511]. Tinley Park, IL:
The Goodheart-Willcox Company.
32. D
Accounts receivable. Accounts receivable are money that is owed to a business. They are an asset to the
business, but they do not have a physical presence. Inventory, buildings, and equipment are all tangible
assets—they have a physical presence.
SOURCE: FI:093
SOURCE: LAP-FI-010—The Right Balance (The Nature of Balance Sheets)
33. B
Summarizes expenses and revenue from sales. A profit-and-loss statement is a business's financial
picture that lists all revenue and expenses for a certain time period. A profit-and-loss statement is not the
same as a balance sheet. Characteristics of a balance sheet include listing assets and liabilities and
showing the owner's financial position.
SOURCE: FI:094
SOURCE: LAP-FI-004—Watch Your Bottom Line (Income Statements)
34. B
Cost driver. A factor that causes a change in the cost of an activity is called a cost driver. Changes such
as the amount of labor used, the number of machines used, the power used to run the machinery, and
the number of hours that the machinery is operated are cost drivers. Increases in these activities
increase the costs of making outputs (products), while decreases in these activities decrease the costs of
making the outputs. Cost drivers are not unexpected expenses or inflexible transactions.
SOURCE: FI:657
SOURCE: Investopedia. (2018, July 19). Activity cost driver. Retrieved September 17, 2018, from
http://www.investopedia.com/terms/a/activity-cost-driver.asp
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35. B
Accounts receivable. Accounts receivable are all the monies owed to a business by its customers.
Businesses in need of cash to continue producing and selling goods often use their accounts receivable
as collateral when borrowing from financial institutions. In effect, the businesses are turning over the
proceeds from their receivables to the lenders in exchange for immediate cash to continue operating. A
promissory note is a legal form signed by a borrower promising to repay a loan. Liabilities are debts that
the business owes. Operating expenses are all of the expenditures necessary to keep the business
running.
SOURCE: FI:023
SOURCE: Investopedia. (2018, May 29). Accounts receivable financing. Retrieved September 17,
2018, from https://www.investopedia.com/terms/a/accountsreceivablefinancing.asp
36. A
Liquidity. Liquidity refers to a business's current assets, such as income or savings, that can be used to
pay expenses. Assets that are in the form of cash or tangibles that can be sold easily to generate cash
add to a company's liquidity. When determining financing needs, businesses usually consider their
liquidity to decide if they have sufficient funds available to repay the debt. For example, if a business was
barely covering expenses and had no liquid assets, it probably would decide not to borrow money
because it would be difficult to make payments on the loan. Depreciation is a reduction in value of goods
occurring over a period of time. Equity is the value of the business after all expenses and debts have
been subtracted. Inventory is all the stock a business has on hand.
SOURCE: FI:043
SOURCE: Mueller, J. (2018, May 8). Understanding financial liquidity. Retrieved September 17, 2018,
from https://www.investopedia.com/articles/basics/07/liquidity.asp
37. A
Being charged a penalty. When businesses obtain long-term loans, they agree to pay a certain amount of
interest to the lending institution over a period of years. If a business pays off the loan before it is due, the
financial institution does not get the interest it expected to receive. In such cases, the financial institution
may charge the business a penalty for prepaying the loan. This penalty may be sizeable depending on
the amount of the loan. A financial institution, rather than a business, loses interest on the account. A
business might negotiate a variable rate for a long-term loan and pay a processing fee to originate the
loan.
SOURCE: FI:041
SOURCE: Business Filings. (2012, May 24). The real cost of borrowing money. Retrieved September
17, 2018, from https://www.bizfilings.com/toolkit/research-topics/finance/business-
finance/the-real-cost-of-borrowing-money
38. D
To reduce risk. There is a risk involved in making loans because a business may default and be unable
to repay the bank. To reduce the risk, lending institutions use certain criteria to evaluate if the business is
creditworthy. For example, a bank would run a credit check to find out if the business pays its bills on
time. Also, a bank would review the business's financial records to determine if it earned sufficient
income to pay expenses and also repay the loan. By carefully evaluating how well a business meets
certain criteria, a bank is able to reduce the risk involved in making a loan. Lending institutions do not
evaluate businesses to provide service, prevent theft, or improve relations.
SOURCE: FI:034
SOURCE: Business Filings. (2012, May 24). What banks look for when reviewing a loan application.
Retrieved September 17, 2018, from https://www.bizfilings.com/toolkit/research-
topics/finance/business-finance/what-banks-look-for-when-reviewing-a-loan-application
39. B
1 year. Businesses prefer a short payback period. This is the point at which a decision begins to pay for
itself. In other words, the payback period is the time it takes for the benefits of a change to repay its
costs. Another term for payback period is break-even point.
SOURCE: FI:357
SOURCE: LAP-FI-011—Running the Numbers (Cost-Benefit Analysis)
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40. C
Size of the sales force. An internal change is one that occurs within the business and is under the
business's control. Increasing or decreasing the number of people on the sales force is an internal
change that will affect the sales forecast. For example, decreasing the size of the sales force may cause
sales to fall because the remaining staff may not be able to handle as many sales. Changes in the
number of competitors in the market, the length of a national recession, and the levels of consumer
spending are external changes.
SOURCE: FI:096
SOURCE: Freelancer. (2015, April 14). Sales forecasting: Factors to consider. Retrieved September 17,
2018, from https://www.freelancer.com/community/articles/sales-forecasting-factors-to-
consider
41. B
Vertical. Three common types of financial statement analysis are vertical analysis, horizontal analysis,
and ratio analysis. When conducting vertical analysis, an individual calculates each individual item on a
financial statement as a percentage of the total. After doing so, the analyst can develop common-size
financial statements that allow him/her to compare performance across several years for a single
company or across several different companies. Horizontal analysis, which is sometimes known as trend
analysis, involves analyzing dollar amounts on financial statements for a single company across several
years. Horizontal analysis does not involve the development of common-size financial statements. Ratio
analysis involves the calculation of ratios based on a company's financial data. It allows analysts to
compare numbers within a financial statement and determine the relationships among numbers on
different financial statements. It can also be used to compare the performance of multiple companies.
SOURCE: FI:334
SOURCE: Investopedia. (2018, June 13). Vertical analysis. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/v/vertical_analysis.asp
42. C
$3,138. A business's income statement, or profit-and-loss statement, is a financial summary that shows
how much money the business has made or has lost over a specific period of time. A typical income
statement includes revenue, operating expenses, and net income (profit). To determine the net income,
subtract the total expenses from the total revenue ($4,590 - $1,442 = $3,138). It is important to verify the
income statement's accuracy because businesses use the information to make important decisions about
the business. If the information is incorrect (e.g., transposed numbers) and errors are not corrected, the
business may make unwise decisions on the basis of faulty information.
SOURCE: FI:335
SOURCE: Investopedia. (2018, August 9). Net income. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/n/netincome.asp
43. C
To determine qualifications. The purpose of an interview is to determine if the applicant meets the
qualifications to perform the job. Therefore, the interview questions should relate directly to the job in
terms of the applicant's education, skills, training, and work history. Businesses often take remedial
action with current employees who are not performing well on the job. Applicants usually do not complain
during job interviews. Interviewers usually do not plan future training while asking questions during a job
interview.
SOURCE: HR:355
SOURCE: Business Filings. (2012, May 24). The dos and don'ts of conducting a job interview.
Retrieved September 17, 2018, from https://www.bizfilings.com/toolkit/research-topics/office-
hr/the-dos-and-donts-of-conducting-a-job-interview
44. D
Cause. Termination for cause occurs when an employee's conduct seriously violates company policies or
jeopardizes the company or other employees. A termination for performance is used when an employee
consistently exhibits poor performance compared to established performance criteria, or is incompetent.
A resignation is a voluntary act by an employee.
SOURCE: HR:358
SOURCE: Heathfield, S.M. (2018, August 25). Termination for cause. Retrieved September 17, 2018,
from https://www.thebalancecareers.com/termination-for-cause-1918274
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45. B
To improve performance. Businesses often provide additional training based on changing needs in the
workplace. As technology and job responsibilities change, it is necessary to train employees to perform
new tasks or tasks that have been revised. By providing training, businesses are helping employees
learn new skills and improve their performance. Socialization is part of the orientation process.
Businesses do not provide additional training to analyze diversity or identify sensitivity.
SOURCE: HR:392
SOURCE: Frost, S. (2018, June 30). The importance of training & development in the workplace.
Retrieved September 17, 2018, from https://smallbusiness.chron.com/importance-training-
development-workplace-10321.html
46. A
Organization's. Each organization, or business, develops standards for evaluating an employee's
performance. When supervisors evaluate employees, they should rate them according to established
standards. An employee is more likely to resent a negative evaluation if it is based on the supervisor's
standards. Evaluations are not based on the standards set by employees or competitors.
SOURCE: HR:368
SOURCE: Noe, R.A., Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2010). Human resource
management: Gaining a competitive advantage (7th ed.) [p. 358]. New York, NY: McGraw-
Hill/Irwin.
47. A
To predict change. Businesses need a wide variety of information in order to make decisions about how
the business will market its goods or services. Businesses gather marketing information about their
customers, the competition, the economy, and sales trends in order to predict what may occur in the
future. The use of marketing information allows businesses to prepare for change and adapt in order to
remain successful. Businesses often develop surveys and conduct research to obtain the marketing data
they need to analyze in order to predict change.
SOURCE: IM:012
SOURCE: Churchill, G.A., Brown, T.J., & Suter, T.A. (2010). Basic marketing research (7th ed.) [pp. 3-
7]. Mason, OH: South-Western Cengage Learning.
48. C
The step in which the most mistakes are made. The reason that the most mistakes are made in this step
is that data collection can be a tedious chore. When researchers become bored, they may record data
inaccurately. It is also the most expensive and least interesting step.
SOURCE: IM:010
SOURCE: LAP-IM-010—Seek and Find (Marketing Research)
49. A
House. A durable good is an item that is intended to last a relatively long time. Most houses would be
considered durable goods. Haircuts, gasoline, and hamburger are eventually used up and are, therefore,
classified as nondurable goods.
SOURCE: MK:001
SOURCE: LAP-MK-004—Have It Your Way! (Nature of Marketing)
50. C
Psychological. Consumer behavior encompasses individuals' actions that determine what they buy and
sell. Psychological, social, and personal factors all influence consumer behavior. Psychological factors
include an individual's motives, perception, attitude, lifestyle, personality, abilities, and knowledge.
Consumer behavior is also impacted by social factors such as opinion leaders, a person's family,
reference groups, social class, and culture. Personal factors impacting consumer behavior are specific to
a particular person and include demographic characteristics such as gender, age, ethnicity, etc. While
political and economic factors may influence consumer behavior in some instances, motives, perception,
attitude, lifestyle, personality, and abilities are not political or economic factors.
SOURCE: MK:014
SOURCE: LAP-MK-006—Cause and Effect (Buying Behavior)
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51. D
Strategies. Marketing strategies are game plans for getting the job done. Budgets and salespeople are
factors in a strategy, and profit is a goal of most strategies.
SOURCE: MP:001
SOURCE: LAP-MP-002—Pick the Mix (Nature of Marketing Strategies)
52. B
Mass. Mass marketing is designing products and directing marketing activities in order to appeal to the
whole market. One marketing plan can thus be used to appeal to many types of customers. Demographic
characteristics, such as age, income, or occupation, and psychographic characteristics, such as lifestyles
and personalities, are used to define or differentiate between segments of a market.
SOURCE: MP:003
SOURCE: LAP-MP-003—Have We Met? (Market Identification)
53. B
Geographic. When analyzing the market, it is important for businesses to collect several types of
geographic information. First, a business considers the geographic location of customers and potential
customers. Businesses need to know where their customers are. Also, a business considers the
geographic location of the business. Businesses need to know if they are located in an area that has
market potential or if there are too many competitors in that area. A market analysis does not involve
collecting confidential, employee, or property information.
SOURCE: MP:009
SOURCE: Frenz, R. (2017, September 26). Components of marketing analysis. Retrieved September
20, 2018, from https://bizfluent.com/info-7921910-components-market-analysis.html
54. C
Operational activities. The sales forecast, the prediction of future sales over a specific period of time, is
the basis for many other operational activities. The forecast affects decisions about production,
distribution, purchasing, promotion, etc. Therefore, the sales forecast needs to be as accurate as
possible so the business correctly plans the other operational activities. For example, if the forecast is too
high, a business might produce substantially more product than it will be able to sell. A sales forecast is
not the basis of pricing strategies, business reports, or management techniques.
SOURCE: MP:014
SOURCE: Metcalf, T. (2018, April 5). Top 10 reasons why sales forecasting is important. Retrieved
September 17, 2018, from http://yourbusiness.azcentral.com/top-10-reasons-sales-
forecasting-important-24818.html
55. A
Analyzing click-through rates. Businesses develop performance measures to evaluate the effectiveness
of marketing activities. Businesses also need to compare the performance measures to financial
outcomes to determine if the activity was worth the cost. The click-through rate for online advertising is a
performance measure. By analyzing the click-through rate, businesses can link performance to financial
outcomes. For example, if 200,000 people viewed a site and 8,000 of them clicked on a banner ad, the
click-through rate is 4%. If the goal was to achieve a click-through rate of 2%, the activity outperformed
expectations that might lead to an increase in sales, which is the financial outcome the business desires.
Developing advertising budgets and paying for direct-mail pieces are promotional activities. Maintaining
sales receipts is a bookkeeping activity.
SOURCE: MP:020
SOURCE: WordStream. (n.d.). Click-through rate (CTR): Understanding click-through rate for PPC.
Retrieved September 17, 2018, from https://www.wordstream.com/click-through-rate
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56. B
Firewall. Firewall software is intended to prevent unauthorized access to a computer network. Many
businesses require firewall software to be installed on their computer systems because their systems are
networked, and hackers could destroy or steal valuable data. Firewall software is a security feature that
helps protect a business's computer network. Businesses do not install reality, spider, or media software
as a security feature.
SOURCE: NF:012
SOURCE: Cisco. (2015, July 30). What is a firewall? Retrieved September 17, 2018, from
https://www.cisco.com/c/en/us/products/security/firewalls/what-is-a-firewall.html
57. C
Promotional. Promotional records are documents containing information about the various types of
communication that businesses use to inform, persuade, or remind customers of their products, images,
or ideas. Businesses often keep copies of their promotional materials in case they need to refer to them
in the future for some reason (e.g., to answer customer inquiries). Contracts, permits, and leases are
examples of records that businesses keep for regulatory and legal purposes. Inventory records contain
information about the types and quantities of materials or products the business has available or on
order. Asset records contain information about the things that a business owns, such as the equipment
and furniture it uses to operate.
SOURCE: NF:001
SOURCE: LAP-NF-001—Record It (Business Records)
58. B
Increase in competition. A business's external environment is always changing and dynamic. Elements of
the external environment that are likely to impact business decision-making are competition,
demographics, society and culture, the economy, the government, and technology. Personnel, training,
and quality control measures all represent internal elements of the business's environment.
SOURCE: NF:015
SOURCE: LAP-NF-015—Get the 4-1-1 (Conducting an Environmental Scan)
59. B
Mean. The mean is a measure of central tendency. Mean is a mathematical average, which involves
adding together the raw data and dividing the sum by the number of individual data. In the example,
James added together all of the salaries of the companies that he researched ($31,205 + $29,995 +
$34,800 +$42,500 + $36,500 = $175,000). Then, Jack divided the sum by the number of individual
salaries in the set of data ($175,000 / 5 = $35,000). The mode of a set of numbers is the value that
appears most often in the set. The range is the difference between the largest and the smallest number
in the data set. The median is the exact middle of a data set. In the example, $34,800 is the median of
the data set.
SOURCE: NF:093
SOURCE: Russell, D. (2018, March 11). How to calculate the mean, median, and mode. Retrieved
September 17, 2018, from https://www.thoughtco.com/the-mean-median-and-mode-2312604
60. B
Performance indicators. A performance indicator is a measure of the success of a certain activity or
entity. Businesses often set performance indicators for their own success, as well as the success and
effectiveness of their suppliers. Performance indicators commonly used to evaluate vendor performance
and effectiveness include on-time delivery rate, return rate, and number of customer complaints. If a
vendor does not meet or exceed a particular indicator, the business is apt to discuss the measure with
the vendor and develop a plan of corrective action. A consensus scale is a measure of each group
member's feelings toward a proposed decision or solution. Economic indicators are statistical measures
used to assess the health and direction of the economy. Return on capital is a measure of how well a
business generates cash flow in relation to the capital it has already invested into itself.
SOURCE: OP:162
SOURCE: Brown, C.M. (2010, December 30). 7 tips for rating and evaluating your suppliers and
vendors. Retrieved September 18, 2018, from http://www.inc.com/guides/2010/12/7-tips-to-
rate-and-evaluate-your-suppliers-and-vendors.html
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61. D
Production. Production is the process or activity of producing goods and services. For example, a
company uses raw materials, equipment, employees, and a building to produce radios for purchase by
other businesses for use or for resale. Management is the process of coordinating resources in order to
accomplish an organization's goals. Accounting is the process of keeping financial records. Marketing is
the process of planning and executing the conception, pricing, promotion, and distribution of ideas,
goods, and services to create exchanges that satisfy individual and organizational objectives.
SOURCE: OP:017
SOURCE: LAP-OP-017—Can You Make It? (Nature of Production)
62. B
To lead the effort. Management sets the tone for quality in a business and leads the effort. If managers
do their best to achieve quality and set an example for employees, the employees usually follow.
Managers lead by setting clear goals, by making sure employees understand the goals, by giving
employees the information and tools they need, and by being supportive. They also lead by behaving the
way they expect employees to behave. The role of management in the achievement of quality in a
business is not to assign blame or judge the staff. Management should direct and guide. It is not possible
to eliminate conflict, although management often can control conflict.
SOURCE: OP:020
SOURCE: Brown, B. (2017, September 26). The role of managers in Total Quality Management.
Retrieved September 17, 2018, from https://bizfluent.com/info-7743372-role-managers-total-
quality-management.html
63. A
Insurance. Insurance is a fixed operating cost—it does not increase or decrease with changes in
production. Sales commissions, advertising, and travel expenses are all variable—they fluctuate with
changes in production.
SOURCE: OP:024
SOURCE: LAP-OP-009—Watch Your (Over) Head (Overhead/Operating Costs)
64. B
Variable costs and fixed costs. A break-even analysis is a financial assessment that a business uses to
identify the level of sales it needs to reach the break-even point at various prices. To conduct a break-
even analysis, the business must know the fixed costs and variable costs it will encounter to get the good
or service to the end user. Production time might be included as a cost in certain types of businesses
(e.g., tax preparation, manufacturing). Depreciation rate is the level at which the value of something (e.g.,
equipment) reduces over time.
SOURCE: OP:192
SOURCE: Tatum, M., & Harris, B. (2018, August 23). What is a break-even analysis? Retrieved
September 17, 2018, from http://www.wisegeek.com/what-is-a-break-even-analysis.htm
65. A
Does the cost of the contract exceed the cost of possible repairs? The business should estimate the
costs of the most expensive, possible repairs and calculate if these expenses would be more or less than
the cost of the service or maintenance contract. If the cost of the repair would be less than the cost of the
contract, it may be wise to forgo the contract. The business would consider the need for installation and
the availability of training and technical assistance when purchasing equipment. A business does not
consider how much profit the seller will make on the contract.
SOURCE: OP:027
SOURCE: Thakur, S. (2011, April 28). Negotiate software maintenance contracts: Tips & strategies.
Retrieved September 17, 2018, from https://www.brighthubpm.com/monitoring-
projects/115813-negotiate-software-maintenance-contracts-tips-and-strategies/
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66. B
Estimated sales exceed actual sales. Budgets are only useful if a business compares the budget
estimates with actual operating conditions. Businesses use the budget information to make decisions
about how the business will operate and to make changes when necessary. A business knows that it
must make operating changes if it compares the level of sales estimated in the budget with actual sales
figures and finds that actual sales are not keeping up with the estimates. This information indicates that
the business might not make the expected profit or even have a loss if changes are not made. A
business probably would not make operating changes if the budget information indicates that total
revenues exceed projected costs, expected profits are increasing, and accounts receivable are on target.
SOURCE: OP:030
SOURCE: Johnston, K. (2016, October 26). How does a budget help management make good
decisions? Retrieved September 17, 2018, from https://smallbusiness.chron.com/budget-
management-make-good-decisions-57917.html
67. C
Monitor the performance of all supply chain partners. To ensure the efficient production and distribution
of products, companies should monitor the performance of all supply chain partners on a consistent
basis. Companies should not ignore underperforming vendors—they should work with them to resolve
the problem(s) or else replace them. Companies must be careful when introducing new innovations or
changes to the production process. Introducing change too quickly can overwhelm the supply chain,
resulting in failure to meet production quotas. Companies should stick with a single supplier when
launching a new product in order to avoid overcomplicating the process.
SOURCE: OP:303
SOURCE: Schiff, J. (2016, February 17). 13 ways to improve your supply chain management. Retrieved
September 17, 2018, from http://www.enterpriseappstoday.com/supply-chain-
management/slideshows/13-ways-to-improve-your-supply-chain-management.html
68. B
Financial. Business analysis is the process of investigating and evaluating a business issue, problem,
process, or approach. Analysis helps a business determine if it is achieving its goals or if it needs to take
corrective action, so it can achieve its goals. Financial analysis involves evaluating the business's
financial health. Because the business needs to make a reasonable profit so it can thrive in marketplace,
it is important to continuously analyze the business's financial status. The operations business function
involves the day-to-day activities that the business performs—activities that are required for continued
business functioning such as producing goods and services. Information management is the process of
coordinating the resources pertaining to business knowledge, facts, or data. Sales is a marketing activity
that involves responding to consumer needs and wants through planned, personalized communications
intended to influence purchase decisions and ensure satisfaction.
SOURCE: OP:327
SOURCE: Investopedia. (2018, July 9). Financial analysis. Retrieved September 17, 2018, from
https://www.investopedia.com/terms/f/financial-analysis.asp
69. B
Business process thinking. Business process thinking is a method of thinking that emphasizes the
importance of processes in business. Managers who use business process thinking would most likely
establish the necessary steps to complete a project before assigning the project to staff. Human resource
planning, agile project management, and change management are also important business practices, but
they are not described in this example.
SOURCE: OP:474
SOURCE: Pitagorsky, G. (2016, August 3). The importance of process thinking. Retrieved September
17, 2018, from https://www.projecttimes.com/george-pitagorsky/the-importance-of-process-
thinking.html
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70. B
Regulatory. Because the manufacturing company is required by local government to dispose of its waste
safely, the company must design its waste disposal process to abide by the regulations. This is an
example of regulatory factors affecting business process design. Human factors affecting process design
include stress, employee morale, and fatigue. Technological factors that can affect process design
include the cost of any equipment or hardware that is necessary for the process. The term “natural
factors” is not usually used to describe factors affecting process design.
SOURCE: OP:475
SOURCE: Taylor, H. (2017, September 26). Factors that affect process design. Retrieved September
17, 2018, from https://bizfluent.com/list-7444011-factors-affect-process-design.html
71. A
A manufacturing company purchases a new software program to run its machines. Technology can
cause a business to change its processes, such as when a new technology becomes available or an old
technology becomes obsolete. A small general store offering discounts to compete with a new shopping
mall is an example of how competition can cause business processes to change. A waste treatment plant
changing its disposal method to align with environmental law is an example of how regulations and
governmental factors can cause business processes to change. A family-owned restaurant opening a
second location in an effort to expand its brand is an example of how the desire for growth can cause
business processes to change.
SOURCE: OP:476
SOURCE: Gleeson, P. (2018, June 30). Factors that may cause change in an organization. Retrieved
September 17, 2018, from https://smallbusiness.chron.com/factors-may-cause-change-
organization-203.html
72. D
Poor supply chain management can result in customer dissatisfaction. Poor supply chain management
would likely lead to many problems for all members of a supply chain, such as order fulfillment delays
and product quality issues. These issues would most likely result in customer dissatisfaction, not
customer satisfaction. Good supply chain management would lead to increased value for customers,
since product issues would be less likely. Good supply chain management is likely to result in sustainable
business practices, not unsustainable business practices.
SOURCE: OP:477
SOURCE: Ingram, D. (2016, October 26). How does supply chain management affect manufacturing
companies? Retrieved September 17, 2018, from http://smallbusiness.chron.com/supply-
chain-management-affect-manufacturing-companies-75841.html
73. D
Emotion. Chad feels strongly about the second car, so his decision-making is influenced by his emotion.
Chad isn't influenced by experience because he hasn't encountered this particular option before. Framing
is an external factor that refers to the way an option is presented. Chad isn't being influenced by insight
or intuition because he doesn't have a gut feeling that the second car is better. In fact, he knows that the
first car is a much better buy, but he decides to go with the second car anyway.
SOURCE: PD:017
SOURCE: LAP-PD-017—Weigh Your Options (Decision-Making)
74. D
Allows adequate time for personal and professional activities. The use of time-management techniques
forces us to take care of important activities immediately, which relieves pressure and tension. It allows
more time for rest and relaxation. This will ultimately reduce stress.
SOURCE: PD:019
SOURCE: LAP-PD-001—About Time (Time Management)
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75. D
The board of directors. A corporation's board of directors is responsible for approving and reviewing the
corporate governance policies of the business. These corporate governance policies specify the
guidelines and rules by which a corporation is directed and run. Although shareholders, the management
team, and the investors are affected by these rules, it is the job of the board to approve and review them.
SOURCE: PD:213
SOURCE: Brefi Group Limited. (2018). Roles and responsibilities of directors and boards. Retrieved
http://www.brefigroup.co.uk/directors/directors_roles_and_responsibilities.html
76. B
The board of directors represents the shareholders. A company's board of directors represents the
interests of the shareholders through the board's management of the company. The shareholders often
have a role in electing the board members. The shareholders do not pay dividends to the board of
directors. The shareholders also do not make decisions for the board members; rather, board members
make decisions on behalf of the shareholders. The board of directors does not hold the shareholders
accountable; rather, the shareholders hold the board of directors accountable.
SOURCE: PD:214
SOURCE: Investopedia. (2018, April 22). Corporate governance. Retrieved September 17, 2018, from
http://www.investopedia.com/terms/c/corporategovernance.asp
77. A
Provide an objective perspective. An organization's board of directors should include both inside and
independent members. Inside members are high-level executives, shareholders, or stakeholders in the
organization. Independent members are not involved with the organization. They provide an objective
view, keep the board transparent, and help balance out the power of the board. They do not represent
the interests of management. They also do not necessarily understand the company's inner workings, at
least not as well as inside members. Independent members are not necessarily any less likely to act
unethically than inside members.
SOURCE: PD:302
SOURCE: Knowledge @ Wharton. (2015, June 16). How independent directors bridge the information
gap. Retrieved September 17, 2018, from http://knowledge.wharton.upenn.edu/article/how-
independent-directors-bridge-the-information-gap/
78. B
Exchange price. The exchange price is the amount of money that the buyer is willing to pay and the seller
is willing to accept for a good or service. When a good or service is sold, the buyers and sellers have
agreed on a value for the product, which is the exchange rate. For example, if a business offers a product
for $50 and customers agree to pay that amount, the exchange rate is $50. Price policy is a guideline
regulating the range of prices for goods and services that businesses offer to customers. Equilibrium
price is the point at which the quantity of a good that buyers want to buy is equal to the quantity that
sellers are willing to sell at a certain price. Price lining is the practice of selling goods/services at a limited
number of predetermined price points, or levels.
SOURCE: PI:001
SOURCE: LAP-PI-002—The Price Is Right (Nature of Pricing)
79. B
False, most factors affecting price are not controlled by the firm. Most of the factors to be considered in
setting prices are external to the business. These factors are not controlled by the firm and include such
factors as supply and demand, economic conditions, competition, and channel members.
SOURCE: PI:002
SOURCE: LAP-PI-003—Make Cents (Factors Affecting Selling Price)
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80. B
Creates a competitive advantage. Product research and development is an expensive process for a
business. Before a business invests time, personnel, and money to take an idea and turn it into a
product, it must determine if the product is feasible, or reasonable, to make and market successfully. The
idea is feasible if it translates into a product that creates a competitive advantage for the business. A
competitive advantage is the edge achieved by a business that offers something better than its
competitors. A business bases its sales quotas on existing information rather than product ideas. Costs
are a consideration when determining product idea feasibility; however, high production costs often make
product ideas impractical. Because services are often feasible product ideas, the ideas do not need to be
durable goods.
SOURCE: PM:129
SOURCE: NPD Solutions. (2016). Assessing the feasibility of a new product. Retrieved September 17,
2018, from http://www.npd-solutions.com/feasibility.html
81. A
Mix. A product mix is the particular assortment of products that a business offers in order to meet its
market's needs and its company's goals. Terry's job is to choose items for that mix. While Terry is not
directly responsible for sales, he is responsible for buying products the company can sell. A product item
is each individual good, service, or idea that a business offers for sale. A product line is a group of related
product items.
SOURCE: PM:003
SOURCE: LAP-PM-003—Mix & Match (The Nature of the Product Mix)
82. C
Current product mix. The product mix is the particular assortment of products that a business offers in
order to meet its market's needs and its company goals. Most businesses have an image that appeals to
their target market and add items to the product mix that are consistent with the types of products they
currently handle. Patronage motives are emotional or rational buying motives that cause people to
choose one business over another. Level of service is the number of services that a company offers its
customers and the speed at which those services are performed. Advertising objectives are the specific
purposes or goals of individual advertisements or advertising campaigns.
SOURCE: PM:006
SOURCE: Claessens, M. (2015, June 1). Product mix decisions - Width, length, depth and consistency.
Retrieved September 17, 2018, from https://marketing-insider.eu/product-mix-decisions/
83. B
Service standards. Service standards are specifications for the quality of service that a business intends
to provide. Many businesses identify standards for service and continually work to improve them in order
to attract customers and be competitive. By having high service standards, businesses are often able to
set themselves apart from competitors. Businesses do not identify and strive to improve commission
plans, personal characteristics, and operating quotas in order to attract customers and be competitive.
However, favorable commission plans might attract quality employees.
SOURCE: PM:273
SOURCE: Ray, L. (2017, November 21). Performance standards for customer service. Retrieved
September 17, 2018, from https://yourbusiness.azcentral.com/performance-standards-
customer-service-1299.html
84. D
Direct mail. Direct mail is a promotional medium that comes to consumers' homes and businesses.
Businesses that use direct mail often send it to current customers who are likely to buy more products.
Persuasive direct mail encourages immediate action such as mail orders or inquiries. A sales letter is a
type of printed direct mail, as is a postcard. Participative is not a type of direct mail.
SOURCE: PR:007
SOURCE: LAP-PR-003—Ad-Quipping Your Business (Types of Advertising Media)
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85. A
Product seeding. Product seeding involves "planting" or placing the product in the hands of specific
influencers. The goal is to have the influencers be seen using or wearing the product, which will in turn
generate interest in and desire for the product. A testimonial is a statement by an identified user of a
product proclaiming the benefits received from the use of the product. Cause marketing occurs when a
business supports a cause that affects society such as protecting the environment or raising awareness
of a disease. Social media involve the use of websites and applications for social networking.
SOURCE: PR:247
SOURCE: Bart, Y. (2017, November 14). Product seeding: Word-of-mouth effects for and beyond the
focal product. Retrieved September 17, 2018, from https://www.gfk-
verein.org/en/publications/gfk-marketing-intelligence-review/all-issues/connected-
consumer/product-seeding-word-mouth-effects-and-beyond-focal-product
86. C
Customize the messages. Direct marketing is a form of promotion that directly communicates with
members of the target market. Two channels that businesses commonly use to communicate directly
with customers are email and traditional postal mail. Both of these direct-marketing methods provide the
business with the ability to customize the message or offer to appeal to the message recipient. For
example, an online business might have a customer's personal product preferences stored in its
database. When a customer's favorite products go on sale, the business can send email messages to the
customer to let him/her know about the promotion. This form of direct marketing is a way to connect and
build long-term relationships with customers. Customized messages do not appeal to a mass audience.
A business cannot assume that the majority of message recipients will respond to a direct-marketing
message. In some, but not all situations, a business may save money by using one form of direct
marketing over other forms of promotion.
SOURCE: PR:089
SOURCE: Leonard, K. (2018, June 27). The advantages & disadvantages of direct marketing &
telemarketing. Retrieved September 17, 2018, from
https://smallbusiness.chron.com/advantages-disadvantages-direct-marketing-telemarketing-
54933.html
87. A
Communications channels. A communications channel is a path or means used to provide information to
others. In sales promotion, businesses use several means to provide information to customers or
potential customers. These include giving away samples so customers can have firsthand experience
with the product; giving away premiums which are free gifts that remind customers of the business; and
giving away advertising specialties, such as key chains that include the name and phone number of the
business. The reason for using these communications channels is to encourage customers to buy.
Samples, premium, and advertising specialties are not examples of publicity strategies, marketing
activities, or selling techniques used in sales promotion.
SOURCE: PR:249
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C. (2012). Marketing essentials (pp. 405-411).
Columbus, OH: Glencoe/McGraw-Hill.
88. A
To obtain publicity. By sponsoring an event, businesses are using the event as a communications
channel to provide information to others. The goal of sponsoring an event is to obtain publicity which is
any nonpersonal presentation of ideas, goods, or services that is not paid for by the company or
individual that benefits from or is harmed by it. In many cases, the media report the event and include
information about the sponsors. As a result, the businesses obtain publicity. Businesses that sponsor
local events are not creating news. Businesses do not sponsor local events to generate revenue or to sell
products. However, by obtaining publicity, they might attract more customers which will result in selling
more products and generating more revenue.
SOURCE: PR:250
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C. (2012). Marketing essentials (p. 399). Columbus,
OH: Glencoe/McGraw-Hill.
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89. A
Writing press releases, distributing company newsletters, and sponsoring events. Public relations are a
function of business that is designed to establish good relations between the business and the public.
The business can foster goodwill with its various publics—its customers, its investors, its employees, the
community—using a variety of tools and activities. Some public relations tools and activities include
writing press releases, distributing company newsletters, sponsoring events, and holding press
conferences. Identifying trends is a marketing-research activity. Hiring new staff members is a human
resources activity. Product development is a product/service management activity.
SOURCE: PR:252
SOURCE: Clow, K.E., & Baack, D. (2010). Integrated advertising, promotion, and marketing
communications (4th ed.) [p. 356]. Upper Saddle River, NJ: Prentice Hall.
90. A
Appraisal cost. The cost of employing product inspectors is an appraisal cost. Appraisal costs are the
costs associated with catching defective products as quickly as possible (quality control). Internal failure
costs are the costs associated with defective products before they make it to the customer. External
failure costs are the costs associated with defective products that have reached the customer. Prevention
costs are the costs associated with making sure defective products don't get made in the first place
(quality assurance).
SOURCE: QM:001
SOURCE: LAP-QM-001—Keep It Quality (Nature of Quality Management)
91. B
Qualitative; quantitative. Qualitative analysis of risks measures the probability of a risk occurring.
Quantitative risk analysis is more precise and assigns numbers to risk based on data reported.
Qualitative risk analysis is more general, whereas quantitative risk assessment helps go more in depth
and offer a more valid way to make decisions. Risk assessments are generally not categorized as
preventative or responsive.
SOURCE: RM:059
SOURCE: Dcosta, A., & Finn, W. (2011, June 15). An overview of project risk assessments with
samples. Retrieved September 17, 2018, from http://www.brighthubpm.com/risk-
management/110139-an-overview-of-project-risk-assessments-with-samples/
92. C
Loss of data during the transfer. When a company switches to an ERM software system, there is the
potential for data to be lost during the transfer/conversion process. However, the increased emphasis on
risk and standardization of reporting are benefits of implementing ERM software rather than potential
risks. ERM software generally increases efficiency of resource use rather than decreasing it.
SOURCE: RM:062
SOURCE: Merit Solutions. (2015, August 24). Risks associated with ERP implementation. Retrieved
September 17, 2018, from http://www.meritsolutions.com/business-insights/risks-associated-
with-erp-implementations/
93. D
Technical. In some cases, using a certain number of technical terms is necessary to the sale of the
product. However, their use should be limited as they may be unfamiliar to customers. A sales
vocabulary should be clear, but expressive, creating pictures through carefully chosen words. Personal
words make the customer feel as though s/he is a part of the presentation.
SOURCE: SE:017
SOURCE: LAP-SE-117—Sell Away (The Nature and Scope of Selling)
94. D
Planning. The planning function is the management function that lays the groundwork for all of the other
management functions. Organizing, staffing, directing, and controlling decisions are based on the plans
the business has established.
SOURCE: SM:001
SOURCE: LAP-SM-003—Manage This! (Concept of Management)
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95. B
Report unethical actions. Managers can promote ethical behavior in the business by encouraging
employees to report unethical actions. If employees know that unethical behavior will not be tolerated and
that such behavior will be punished, they are more likely to behave in an ethical way. By reporting
unethical behavior, employees are helping managers enforce ethics in the business. The managers,
rather than the employees, are responsible for developing a code of ethics for the business. Managers do
not promote ethical behavior in the business by encouraging employees to be thoughtful of others or to
avoid social situations.
SOURCE: SM:002
SOURCE: Lambarki, T. (n.d.). How managers can encourage ethical behavior. Retrieved September
17, 2018, from https://courses.lumenlearning.com/suny-principlesmanagement/chapter/how-
managers-can-encourage-ethical-behavior/
96. C
Unrealistic. Setting goals and objectives help a company move forward, but the goals must be realistic.
Companies that set unrealistic goals are less likely to achieve those goals. If they plan for the unrealistic
goals, acquire additional inventory, and hire more staff, they may encounter failure. Practical, reasonable,
and scientific are characteristics of realistic goals and objectives.
SOURCE: SM:008
SOURCE: The Happy Manager. (2007-2018). What are SMART objectives - and how do you set them?
Retrieved September 17, 2018, from https://the-happy-manager.com/tips/smart-objectives/
97. B
Hot n’ Spicy Wings and Southern Fried Chicken House. Direct competition is competition which occurs
among businesses that offer similar goods or services. Hot n’ Spicy Wings and Southern Fried Chicken
House are direct competitors for consumers' food purchases. All of the other alternatives are businesses
that are in indirect competition with each other because they offer dissimilar goods or services.
SOURCE: SM:011
SOURCE: Oman, J. (2018, January 16). Understanding your competition. Retrieved September 17,
2018, from https://smallbusinessbc.ca/article/understanding-your-competition/
98. C
Executive summary. The executive summary is the most critical component of a business plan. It is the
heart of your business plan and the first thing that readers will see. Most readers will use the executive
summary to determine whether or not it's worth reading any further. While the company description,
market analysis, and financial plan are all important, the executive summary is the most critical
component of the plan.
SOURCE: SM:013
SOURCE: LAP-SM-013—Plan for Success (Creating a Business Plan)
99. A
Jake, because he is always willing to adapt to changes during a project. To innovate new ideas and
processes, employees must be willing to adapt to unforeseen circumstances. This flexibility is essential to
successfully innovate. Sticking to traditional ideas and processes, getting frustrated with learning new
skills, and staying quiet during brainstorming sessions are all indications that these employees are not
likely to be called innovative by their supervisors.
SOURCE: SM:094
SOURCE: Bagley, R. (2014, January 15). The 10 traits of great innovators. Retrieved September 17,
2018, from http://www.forbes.com/sites/rebeccabagley/2014/01/15/the-10-traits-of-great-
innovators/#5429e812ed50
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100. A
To obtain buy-in from stakeholders. Changes are more successful when stakeholders are supportive of
them. Change management helps obtain this buy-in from stakeholders by keeping them informed and
involved. Limiting the effects of a change, keeping the people involved to a minimum, and reducing the
time it takes to make a change are not necessarily goals of change management.
SOURCE: SM:095
SOURCE: Mind Tools Content Team. (1996-2018). Change management. Retrieved September 17,
2018, from https://www.mindtools.com/pages/article/newPPM_87.htm
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Entrepreneurship MCQS Guide
Section 1
1. Which one of the following actions by an entrepreneur is most likely to contribute to creative destruction?
A) Development of a new product
B) Take-over of a competitor
C) Issuing shares
D) Reducing prices
2. An advantage of the small firm in the innovation process?

A) Ability to carry out R&D
B) Ability to raise finance
C) Ability of the entrepreneur to carry out multiple tasks
D) Ability of the entrepreneur to act on new ideas or product development
3.External links may provide incentives to:

A) Raise finance
B) Introduce new working practices
C) Introduce improvements to products
D) Attend business exhibitions
4. Firms located on science parks compared to those located off science parks are:
A) More innovative
B) Less innovative
C) No more or less innovative
D) More growth orientated
5. Innovative small firms are more likely in:

A) Knowledge-based sectors
B) Biotechnology
C) Automobile manufacture
D) Aerospace manufacture
6. Schumpeter considered that innovative entrepreneurs would:

A) Thrive
B) Disappear
C) Be absorbed within large innovative firms
D) Be absorbed within non-innovative firms
7. Innovative entrepreneurs face special issues in raising:

A) Development capital
B) Structured capital
C) Human capital
D) Seed capital
8. Innovative entrepreneurs may have to pay high insurance premiums due to the:
A) The need to protect patents
B) Greater employee liability
C) Greater customer liability
D) Greater trading risks
9. Networking by innovative entrepreneurs may be most encouraged by?

A) Science parks
B) Business incubators
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C) Chambers of Commerce
D) Business associations
10. The most likely problem encountered by innovative entrepreneurs in raising finance is:
A) Limited security since R&D is an intangible asset
B) The costs of the patenting system
C) The exhaustion of personal equity in R&D
D) Inability of potential external funders to understand technology

1. (A) 2. (D) 3. (C) 4. (C) 5. (A) 6. (C) 7. (D) 8 (A) 9 (B) 10 (C)
1. Which of the following is NOT recognized as a misconception about entrepreneurship?

A) Successful entrepreneurship needs only a great idea.
B) Entrepreneurship is easy.
C) Entrepreneurship is found only is small businesses.
D) Entrepreneurial ventures and small businesses are different.
2. All of the following are characteristics of small businesses EXCEPT:

A) Small businesses are independently owned, operated, and financed.
B) Small businesses have fewer than 100 employees.
C) Small businesses emphasize new or innovative practices.
D) Small businesses have little impact on industry.
3. Which of the following is NOT on of the three areas in which the importance of entrepreneurship can be shown?
A) Innovation
B) Number of new start-ups
C) Job creation and employment
D) bureaucracy
4. The creation of new firms is important because these new firms contribute to economic development through
benefits that include all of the following EXCEPT:
A) Product-process innovation
B) Increased tax revenues
C) Unemployment
D) Social betterment
5. All of the following represent countries in which the highest level of entrepreneurial activity was found EXCEPT:
A) Australia
B) Korea
C) Norway
D) Japan
6. Positive external trends or changes that provide unique and distinct possibilities for innovating and creating value
are called _____________.
A) Strengths
B) Opportunities
C) Weaknesses
D) Threats
7. An individual who has no prior business ownership experience as a business founder, inheritor of a business, or a
purchaser of a business is called a(n) ____________ entrepreneur.
A) Habitual
B) Novice
C) Serial
D) Portfolio
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8. An individual who has prior business ownership experience is called a(n) ____________ entrepreneur.
A) Novice
B) habitual
C) Serial
D) Portfolio
9. All of the following are popular demographic factors about entrepreneurs that have been studied EXCEPT:
A) Self-confidence
B) Gender
C) Education
D) Family birth order
10. The three main responsibilities involved with managing an entrepreneurial venture once its up and running
include all of the following EXCEPT:
A) Managing processes
B) Managing people
C) Managing bureaucracy
D) Managing growth

1. (D) 2. (C) 3. (D) 4. (C) 5. (D) 6. (B) 7. (B) 8 (B) 9 (A) 10 (C)
.
.
Section 2
1. An individual who initiates, creates and manages a new business can be called
_____________.
A. A leader
B. A manager
C. A professional
D. An entrepreneur
ANSWER: D
2. Someone who improves an existing business can be called _________.

A. An intrapreneur.
B. A professional.
C. A co-worker.
D. A changeling.
ANSWER: A

C. Risk taking
D. All the above.
ANSWER: D
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4. Which industrial sector tends to naturally promote small-scale businesses and

Entrepreneurship, and
generally has lower barriers to market entry?
A. Service.
B. Manufacturing.
C. Distribution.
D. Agriculture.
ANSWER: A

schools.
B. Youth venture.
C. Young Business.
ANSWER: A

D. All the above.
ANSWER: D
7. Intellectual Property laws can protect _________.

A. Trademarks.
B. Copyright.
C. Patents.
D. All the above.
ANSWER: D
its
A. A cooperative.
B. A franchise.
ANSWER: B

C. Poor management.
D. All the above.
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ANSWER: D
D. Marketing
ANSWER: B
11. Good sources of information for an entrepreneur about competitors can be Obtained
from_________.
A. Websites.
D. All the above.
ANSWER: D

D. All the above.
ANSWER: D

ANSWER: C

ANSWER: D
ANSWER: C

A. money.
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B. personal values.
C. pull influences.
D. All the above.
ANSWER: D
B. Profitability.
ANSWER: D

ANSWER: D

ANSWER: D

with other
routes to market entry?
ANSWER: D
21. Someone legally appointed to resolve the financial difficulties of an insolvent firm is
called____________.
B. a predator.
C. an auditor.
ANSWER: A

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C. monopolies.
D. multiplication.
ANSWER: A
23. To provide financial assistance to entrepreneurs the government has set up a number
of___________.
ANSWER: D
specific
objective within a specific period of time
A. Idea generation.
C. Project.
D. Strategy.
ANSWER: C
ANSWER: A

ANSWER: C
time with
limited resources
C. Budget Analysis.
ANSWER: A
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28. ______________ is a form of financing especially for funding high technology, high risk and
perceived
high reward projects
A. Fixed capital.
B. Current capital.
C. Seed capital.
D. Venture capital.
ANSWER: D
29. In _________, machines and equipments are arranged in the order or sequence in which they
are to be
used for manufacturing the product
A. Factory Layout.
B. Product Layout.
C. Process Layout.
D. Combined Layout.
ANSWER: B
industry to
help it compete with other units
A. Incentive.
B. Subsidy.
C. Bounty.
D. Concession.
ANSWER: C
31. The granting of cash subsidy on the capital investment is called __________.
ANSWER: D
32. ____________ is primarily concerned with the identification of the project demand potential
and the
selection of the optimal technology.
C. Input analysis.
ANSWER: A
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ANSWER: A
the
ANSWER: D
technical know
how to produce the product.
ANSWER: C
A. Trade marks.
B. Patents.
C. Tangible assets.
D. Copyright.
ANSWER: C
sell its
A. A cooperative.
B. A franchise.
ANSWER: B

B. To provide capital for business development in exchange for a stake in the Business
ownership.
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ANSWER: B

ANSWER: B
_________
stage.
A. Concept.
C. Test marketing.
ANSWER: C
entrepreneur?
ANSWER: C
A. an intrapreneur.
ANSWER: C
44. Industries producing complete articles for direct consumption & also processing industries is
called
as_______________.
ANSWER: A
of the
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project resources.
C. Input analysis.
ANSWER: B
the
ANSWER: D
problem is
called as ___________.
ANSWER: B

ANSWER: B

A. Commerce.
ANSWER: B

B. is a director.
ANSWER: A
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A. avoided.
B. reduced.
C. ignored.
D. erased.
ANSWER: B

A. Partnership.
ANSWER: B

ANSWER: B

A. A manager-owner.
ANSWER: B

ANSWER: C

schools.
B. Youth venture.
C. Young Business.
ANSWER: A
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ANSWER: A
D. All the above.
ANSWER: D

D. all the above.
ANSWER: D
was due to
its color. What could be the best source of this information?
A. Supplier.
B. Retailer.
C. Competition.
ANSWER: B

ANSWER: D
63. Every entrepreneur should draw an ------------ for his project to ensure the timely completion
of all
activities involved in setting up an enterprise.
A. cost structure
C. market structure
ANSWER: B
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64. Entrepreneurial development is the key to achieve all-round ---------------- through

acceleration of
industrial and entrepreneurial activities.
ANSWER: A
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Sample Test for Management Accounting
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
1. Which phrase best describes the current role of the managerial accountant?
b. Managerial accountants facilitate the decision-making process within an organization.
c. Managerial accountants make the key decisions within an organization.
d. Managerial accountants are primarily information collectors.
e. Managerial Accountants are solely staff advisors in an organization.
2. An example of qualitative data is:

a. product cost
b. customer satisfaction
c. net income
d. inventory cost
e. net worth.
3. Product and service costing information is prepared for

a. manufacturing companies with inventory.
b. merchandising companies.
c. service providers.
d. each of the other four answers..
e. manufacturing companies without inventory.
4. Manufacturing costs typically consist of

a. direct materials, direct labor, and manufacturing overhead.
b. production and shipping costs.
c. production and marketing costs.
d. direct materials, direct labor, and administrative costs.
e. direct materials, direct labor, marketing and administrative costs.
5. In comparison to the traditional manufacturing environment, overhead costs in a JIT

environment all the following are true except:
a. are more easily tracked to products.
b. are frequently direct in nature.
c. include rent, insurance and utilities.
d. most of the costs are likely to be indirect in nature.
e. labor need not be tracked to the product.
6. As production increases within the relevant range,

a. variable costs will vary on a per unit basis.
b. variable costs will vary in total.
c. fixed costs will vary in total.
d. fixed and variable cost stay the same in total.
e. none of the other four answers is true.
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7. You are given the cost and volume information below:
Volume Cost
1 unit $ 15
10 units 150
100 units 1500
What type of a cost is given?

a. fixed cost
b. variable cost
c. step cost
d. mixed cost
e. rent cost.
8. Which of the following statements regarding graphs of fixed and variable costs is true?
a. Variable costs can be represented by a straight line where costs are the same for each
data point.
b. Fixed costs can be represented by a straight line starting at the origin and continuing
through each data point.
c. Fixed costs are zero when production is equal to zero.
d. Variable costs are zero when production is equal to zero.
e. Fixed and Variable costs are curvilinear form above zero on the “Y” axis.
9. All of the following statements regarding budgeting is true except

a. Budgeting helps managers determine the resources needed to meet their goals and
objectives.
b. Budgeting is a key ingredient in good decision-making.
c. Budgeting is a bookkeeping task
d. The focus of budgeting is planning.
e. Budgeting is an executive responsibility.
10. Broihan Corporation has the following purchases budget for the last half of 2002:
July $100,000 October $ 90,000

August 80,000 November 100,000
September 110,000 December 94,000
Historically, the company pays one half at the time of purchase and the remainder in the month
following purchase.
What are the expected cash disbursements in August?

a. $ 80,000.
b. $ 90,000.
c. $ 95,000.
d. $100,000
e. $105,000
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11. The Inground Sprinkler Supply sells sprinkler systems suited for large or small yards. The
company has decided to adopt an activity-based costing system. Last year the company incurred
$1,000,000 in overhead costs related to the following activities:
Activity Allocation Base Overhead Cost

Purchasing number of purchase orders $ 350,000
Material handling number of shipments received 200,000
Quality inspection number of inspections 450,000
The activities for large and small yard systems were as follows:
Large Small
purchase orders 15,000 20,000
shipments received 7,500 12,500
inspections 11,500 11,000
If a customer requested a bid on a specially designed sprinkler that would probably require four
inspections, how much quality inspection overhead would you include in the bid?
a. $ 0
b. $40
c. $80
d. $120.
e. $160.
12. Bubblemania has three product lines - A, B, and C.
A B C Total
Sales $10,000 9,000 12,000 31,000
Variable costs 4,500 7,000 6,000 17,500
Contribution Margin 5,500 2,000 6,000 13,500
Fixed costs 3,500 6,000 3,000 12,500
Net income 2,000 (4,000) 3,000 1,000
Product line B appears unprofitable, and management is considering discontinuing the line. How
would the discontinuation of Product line B affect net income?
a. increase by $4,000
b. decrease by $4,000
c. increase by $2,000
d. decrease by $2,000
e. increase by $6,000
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13. Coed Novelties manufactures key chains for college bookstores. During 2003, the company
had the following costs:
Direct materials used $ 31,000

Direct labor 18,000
Factory rent 12,000
Equipment deprecation – factory 2,000
Equipment depreciation – office 750
Marketing expense 2,500
Administrative expenses 40,000
35,000 units produced were in 2003. What is the product cost per unit?
a. approximately $1.24
b. $1.80
c. approximately $3.04
d. $1.40
e. approximately $1.82
14. The time value of money focuses on

a. accounting net income.
b. earnings per share.
c. cash flow.
d. current earnings
e. accrual net income.
15. The Unique Bookshelf Company is considering the purchase of a custom delivery van
costing approximately $50,000. Using a discount rate of 20%, the present value of future cost
savings is estimated at $51,200. To yield the 20% return, the actual cost of the van should not
exceed the $50,000 estimate by more than:
a. $50,000
b. $51,200
c. $25,000
d. $ 1,200
e. 20%
16. The Cape Cod Cotton Candy Company had the following information available regarding
last year's operations:
Sales (100,000 units) $200,000

Variable costs 100,000
Contribution margin 100,000
Fixed costs 50,000
Net Income 50,000
If sales were to increase by 200 units, what would be the effect on net income?
a. $400 increase
b. $200 increase
c. $150 increase
d. $100 increase
e. $200 loss
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Sample Test for Management Accounting

Answer Section
MULTIPLE CHOICE
1. ANS: B
2. ANS: B
3. ANS: D
4. ANS: A
5. ANS: D
6. ANS: B
7. ANS: B
8. ANS: D
9. ANS: C
10. ANS: B
11. ANS: C
12. ANS: D
13. ANS: B
14. ANS: C
15. ANS: D
16. ANS: B
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Which of the following is the application of ethics to special problems and opportunities
experienced by those in business?
A. Situational ethics
B. Consequentialism
C. Business ethics
D. Sarbanes-Oxley principles
E. Business utilitarianism
C. Business ethics
Which of the following is the study and practice of decisions about what is good, or
right?
A. Morals
B. Ethics
C. Consequences
D. Law
E. Business
B. Ethics
A local Chamber of Commerce plans a seminar on "the social responsibility of business

in our community." What does that term reference?
A. The responsibility of business to make profit for shareholders.
B. The responsibility of business to have annual meetings.
C. The expectations that the community imposes on firms doing business inside its
borders.
D. The expectations of employees regarding wage rates.
E. The expectations of management in regard to adequate utility resources.

C. The expectations that the community imposes on firms doing business inside its
borders.
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Which of the following is the minimal standard essential for the development of business
ethics?
A. Meeting the requirements of deontology.
B. Meeting the requirement of the public disclosure test.
C. Meeting the requirement of utilitarianism.
D. Satisfying the company's board of directors.
E. The legality of a decision.

E. The legality of a decision.
A. Business ethics refers to standards of business conduct but does not result in a set
of correct decisions.
B. Business ethics results in a set of correct decisions and does not simply refer to
standards of business conduct.
C. Business ethics produces a list of correct business decisions that all ethical
businesses will make so long as the theory of deontology is followed.
D. Business ethics produces a list of correct business decisions that all ethical
businesses will make so long as the theory of rule utilitarianism is followed.
E. Business ethics produces a list of correct business decisions that all ethical
businesses will make so long as the theory of virtue ethics is followed.
A. Business ethics refers to standards of business conduct but does not result in a set
of correct decisions.
Which of the following was the result in U.S. v. Alfred Caronia, the case in the text in
which the defending pharmaceutical representative was charged with illegally promoting
off-label use of a drug?
A. That the defendant had not indeed promoted off-label use of the drug at issue, and
the case was dismissed.
B. That although the defendant promoted off-label use of the drug at issue, the off-label
use was later approved as a valid and appropriate use, and the case was dismissed.
C. That the defendant's speech failed to meet the criteria for classification as
commercial speech and that, therefore, the defendant had no constitutional argument in
opposition to the charges against him.
D. That although the defendant's speech met the criteria for classification as commercial
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speech, no constitutional protection has been historically extended to that type of

speech; and the defendant, therefore, had no constitutional argument in opposition to
the charges against him.
E. That although the defendant's speech met the criteria for classification as commercial
speech entitled to constitutional protection under some conditions, the government met
the requirements for regulation of the particular speech at issue involving off-label
usage.
E. That although the defendant's speech met the criteria for classification as commercial
speech entitled to constitutional protection under some conditions, the government met
the requirements for regulation of the particular speech at issue involving off-label
usage.
Which of the following is true regarding revelations involving Enron and WorldCom?
A. That their upholding of high ethical standards in regard to accounting practices

supports the conclusion that the business world should be allowed to regulate itself.
B. That WorldCom, a privately held company, had high ethical standards but that Enron,
a publicly traded company, engaged in illegal accounting practices supporting the
conclusion that privately held companies should be allowed to regulate themselves
whereas publicly held companies need significant government regulation.
C. That WorldCom, a privately held company, engaged in illegal accounting practices

but that Enron, a publicly traded company, had high ethical standards supporting the
conclusion that privately held companies need significant government regulation
whereas publicly held companies should be allowed to regulate themselves.
D. That although illegal accounting practices occurred, it is so difficult to find and

regulate such practices that any regulation should be left to the free market.
E. That accounting issues with these companies illustrate that the business world
cannot be allowed to regulate itself ethically and that government oversight is needed.
E. That accounting issues with these companies illustrate that the business world
cannot be allowed to regulate itself ethically and that government oversight is needed.
Which of the following is asserted by the principle of rights?
A. That whether a business decision is ethical depends on how the decision affects the
rights of all involved.
B. That whether a business decision is ethical depends on how the decision affects the
rights of stockholders without consideration of other stakeholders.
C. That whether a business decision is ethical depends on how the decision affects the
rights of employees without consideration of other stakeholders.
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D. That whether a business decision is ethical depends on how the decision affects the
overall economy.
E. That whether a business decision is ethical depends on how the decision affects the
rights of organized labor without consideration of other stakeholders.
A. That whether a business decision is ethical depends on how the decision affects the
rights of all involved.
What is the system of "guanxi" used in China?
A. It refers to a system of relationship building woven together by social ties.
B. It refers to a system of strict ethical rules.
C. It refers to a prohibition against criticism of government rules and regulations.
D. It refers to a system by which business people attempt to avoid strict Chinese

regulations.
E. It refers to a system of smuggling.

A. It refers to a system of relationship building woven together by social ties.
What do the letters "WPH" mean in reference to the "WPH Framework for Business
Ethics" discussed in the text?
A. Who, Purpose, and How
B. When, Plan, and How
C. Why, Procedure, and Hope
D. Where, Plan, and Hope
E. Where, Procedure, and How

A. Who, Purpose, and How
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Which of the following is true under the WPH process of ethical decision making?
A. The interest of management is ranked higher than that of employees when decisions
are made.
B. The interest of owners is ranked higher than that of both employees and
management when decisions are made.
C. When decisions are made, the interest of the community as a whole is considered
last.
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D. The interest of management is ranked higher than that of employees when decisions
are made, but the interest of owners is ranked higher than the interest of any group.
E. There is not a framework under WPH for ranking one stakeholder above another.
E. There is not a framework under WPH for ranking one stakeholder above another.
A. Shareholders but not employees
B. Employees but not shareholders
C. Customers but not employees or shareholders
D. Management but not employees
E. Shareholders, employees, customers, and management

E. Shareholders, employees, customers, and management
Positive abstractions that capture our sense of what is good or desirable are called
______.
A. Ethical ideas
B. Values
C. Conscience demands
D. Desirable principles
E. Action goals
B. Values
Which of the following are values in the WPH process of ethical decision making?
A. Freedom only
B. Security only
C. Efficiency only
D. Freedom and security, but not efficiency
E. Freedom, security, and efficiency

E. Freedom, security, and efficiency
The idea that we should interact with other people in a manner consistent with the
manner in which we would like them to interact with us is called the ______.
A. Equalization Rule
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B. Ethical Realization Rule
C. Silver Rule
D. Golden Rule
E. Ten Commandments Rule

D. Golden Rule
What is the name of the law signed by President Bush in the wake of several corporate
accounting scandals?
A. The Sarbanes-Oxley Act
B. The Public Accounting Act
C. The Certified Public Accounting Act
D. The Whaley-Mallicoat Act
E. The Corporate Scandal Act

A. The Sarbanes-Oxley Act
Which of the following is true regarding activities of the Public Company Accounting
Oversight Board?
A. The Board ensures that auditors and public accounting firms compile accurate and
truthful financial reports for the companies they audit, but it has no responsibility in
regard to whistle-blowing protection.
B. The Board requires that companies devise a system that allows employees to report
suspicions of unethical behavior, but it does not address financial reports prepared by
auditors and public accounting firms.
C. The Board requires that the universalization test be used as the primary ethical
guideline and also mandates protection for whistle-blowers who report suspicious
activity involving financial reports.
D. The Board ensure that auditors and public accounting firms compile accurate and
truthful financial reports for the companies they audit and also requires that companies
devise a system that allows employees to report suspicions of unethical behavior.
E. The Public Company Accounting Oversight Board was abolished during the Obama
administration and no longer exists.
D. The Board ensure that auditors and public accounting firms compile accurate and
truthful financial reports for the companies they audit and also requires that companies
devise a system that allows employees to report suspicions of unethical behavior.
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According to the text, which of the following may be a part of the "how" in the WPH
process of decision making?
A. Public disclosure, universalization, security, and the Golden Rule
B. Values, public disclosure, and security
C. Profit maximization, security, and public disclosure
D. Whistle-blowing, the Golden Rule, values, and public disclosure
E. Public disclosure, universalization, and the Golden Rule

E. Public disclosure, universalization, and the Golden Rule
The "public disclosure" test for ethical behavior is sometimes referred to as the ______
test.
A. Television
B. Powell
C. Self-conscious
D. Golden
E. Primary
A. Television
The ______ for ethical behavior seeks consideration of what the world would be like if a
decision is copied by everyone else.
A. Golden rule
B. Universalization test
C. Public disclosure
D. Relevant disclosure
E. World rule
B. Universalization test
Which of the following is true regarding steps taken by news corporations to protect
confidential records?
A. News corporations are putting numerous security barriers and encryptions around
their records so that nobody can gain access to them.
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B. News corporations are attempting to protect information written by their own

employees, but efforts are not made to protect confidential sources because
constitutional protection does not extend to confidential sources.
C. News corporations are not bothering with security barriers to the extent as in
previous decades because government regulation requires that information be turned
over, and there is no point in taking drastic measures to protect such information.
D. New regulations make significant privacy barriers illegal in regard to news

corporations, so many barriers have been or are being removed.
E. Because of the respect given to confidential records by the U.S. government and its
enforcement agencies, news corporations see little need to enhance protection of
confidential records.
A. News corporations are putting numerous security barriers and encryptions around
their records so that nobody can gain access to them.
The ethical theory that requires that we evaluate the morality of an action by imagining
ourselves in the position of the person facing the ethical dilemma is called ______.
B. Ethical relativism
C. Absolutism
D. Consequentialism
E. Relativity ethics
How is absolutism different from ethical relativism and situational ethics?
A. It applies utilitarianism.
B. It holds that a cost-benefit analysis should be applied.
C. It holds that whether an action is moral does not depend on the perspective of the
person facing the ethical dilemma.
D. It applies virtue ethics and concentrates on the accepted values of the person at
issue as well as those of the community involved.
E. It applies corporate ethics principles.

C. It holds that whether an action is moral does not depend on the perspective of the
person facing the ethical dilemma.
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Which of the following is true regarding the relationship between ethical relativism and
situational ethics?
A. Like ethical relativism, situational ethics requires that we evaluate the morality of an
action by imagining ourselves in the position of the person facing the ethical dilemma;
but unlike ethical relativism, situational ethics allows us to judge other people's actions.
B. Like ethical relativism, situational ethics requires that we evaluate the morality of an
action by imagining ourselves in the position of the person facing the ethical dilemma
and also like ethical relativism, situational ethics allows us to judge the actions of others.
C. While the two theories are similar, ethical relativism upholds the existence of
objective moral standards whereas situational ethics refuses to recognize the existence
of objective moral standards.
D. Ethical relativism and situational ethics are the same theory.
E. There is no relationship between ethical relativism and situational ethics because the
theories are fundamentally opposed to each other.
A. Like ethical relativism, situational ethics requires that we evaluate the morality of an
action by imagining ourselves in the position of the person facing the ethical dilemma;
but unlike ethical relativism, situational ethics allows us to judge other people's actions.
Which of the following requires that we see murder as a moral action as long as the
murderer believes that the action is best for himself or herself?
A. Absolutism
B. Deontology
C. Categorical imperative
D. Uncertainty of thought
E. Ethical relativism
Which of the following is also referred to as ethical fundamentalism?
A. Ethical relativism
B. Absolutism
C. Social responsibility
D. Ethical absolutism
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E. Absolute theory
B. Absolutism
What is the basis of consequentialism?
A. Deontology
B. Categorical imperatives
C. Inquiry into the consequences
D. Disregard of consequences
E. Act utilitarianism
C. Inquiry into the consequences
Kantian ethics is involved with which of the following ethical theories?
A. Deontology
B. Act utilitarianism
C. Rule utilitarianism
D. Absolutism
E. Situational ethics
A. Deontology
An ethical theory that urges managers to take those actions that provide the greatest
pleasure after having subtracted the pain or harm associated with the action in question
is called ______.
A. Deontology
B. Utilitarianism
C. Kantian ethics
D. Absolutism
B. Utilitarianism
Business manager who deceives everyone because the manager believes that
deception maximizes pleasure over pain in a given situation is acting consistently with
which ethical theory?
A. Act deontology
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C. Act utilitarianism
D. Ethical fundamentalism
E. Rule utilitarianism
A business manager may consider it wrong to terminate a person whose spouse has
terminal cancer because a firm has an absolute obligation to support its employees
when they are vulnerable, period. The business manager is acting consistently with
which ethical theory?
A. Deontology
D. Ethical fundamentalism
A. Deontology
A person who believes that they should not cheat on a drug test because if everyone
did so, the drug test would be meaningless is applying a[n] ______.
A. Ethics of care
B. Virtual analysis
C. Cost-benefit analysis
D. Fundamentalist approach
E. Categorical imperative
Which of the following helps explain why the principle of deontology may be difficult to
apply?
A. People disagree about what duties we owe to one another and which duties are more
important.
B. People disagree about whether consequences are positive or negative.

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C. People disagree about the ethics of care.
D. People disagree about what duties we owe to one another and also whether
consequences are positive or negative.
E. People disagree about what duties we owe to one another, whether consequences
are positive or negative, and about the ethics of care.
A. People disagree about what duties we owe to one another and which duties are more
important.
The ethical system in which the development of virtues, or positive character traits such
as courage, justice, and truthfulness, is the basis for morality is called ______.
A. Absolutism decision
B. Virtual analysis
C. Virtue ethics
D. Fundamentalist approach
C. Virtue ethics
Which of the following consists of acting on the basis of the recognition that certain
actions are right or wrong, regardless of their consequences?
A. Act utilitarianism
B. Rule utilitarianism
C. Situational ethics
D. Virtue ethics
E. Deontology
E. Deontology
What is a difficulty with the application of virtue ethics?
A. The applicable categorical imperatives.
B. The lack of agreement about the meaning of "the good life."
C. The applicable principle of rights.
D. The ethics of care analysis.

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E. The lack of agreement regarding which rules on balance produce the greatest
amount of pleasure for the greatest number of people.
B. The lack of agreement about the meaning of "the good life."
The ______ adherents believe that when one individual, the caregiver, meets the needs
of one other person, the cared-for party, the caregiver is helping to meet the needs of all
the individuals who fall within the cared-for party's web of care.
A. Deontology
B. Utilitarianism
C. Absolutism
D. Virtue ethics
E. Ethics of care
E. Ethics of care
The ______ holds that the right course of action is the option most consistent with the
building and maintaining of human relationships.
A. Ethics of care
B. Principle of virtue ethics
C. Deontology
D. Act utilitarianism
A. Ethics of care
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THE CHARTERED INSURANCE INSTITUTE
E67
Examination element of M67

Fundamentals of risk management
Based on the 2017/2018 syllabus

examined from 1 May 2017 until 30 April 2018
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E67 – Examination element of M67 Fundamentals of risk

management
Based on the 2017/2018 syllabus examined from 1 May 2017 until 30 April 2018
Contents
Introduction to Examination Guide 3
E67 Syllabus 7
Specimen Examination 12
Specimen Examination Answers and Learning Outcomes Covered 21
Published in April 2017 by:

The Chartered Insurance Institute
42-48 High Road, South Woodford, London E18 2JP
Telephone: 020 8989 8464
Fax: 020 8530 3052
Email: customer.serv@cii.co.uk
Copyright ©2017 The Chartered Insurance Institute. All rights reserved.
E67 Examination Guide 2017/2018 2

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E67 – Examination element of M67 Fundamentals of risk

management
Based on the 2017/2018 syllabus examined from 1 May 2017 until 30 April 2018
Introduction
This examination guide has been produced by the Examinations Department at the Chartered Insurance
Institute (CII) to assist students in their preparation for the E67 examination. It contains a specimen
examination with answer key.
Ideally, students should have completed the majority of their E67 studies before attempting the
specimen examination. Students should allow themselves one hour to complete the examination.
They should then review their performance to identify areas of weakness on which to concentrate the
remainder of their study time. The examination must be successfully passed within 18 months of
enrolment on M67.
Although the specimen examination in this guide is typical of an E67 examination, it should be noted
that it is not possible to test every single aspect of the syllabus in any one particular examination. To
prepare properly for the examination, candidates should make full use of the tuition options available
and read as widely as possible to ensure that the whole syllabus has been covered. They should also
endeavour to keep as up-to-date as possible with developments in the industry by reading the
periodicals listed in the M67 reading list, which is located on the syllabus in this examination guide and
on the CII website at www.cii.co.uk.
Background Information
CII examination questions undergo a rigorous writing and editing process before reaching an
examination. The questions are written to strict guidelines by practitioners with relevant technical
knowledge and experience. Questions are very carefully worded to ensure that all the information
required to answer the question is provided in a clear and concise manner. They are then edited by an
independent panel of experienced practitioners who have been specifically trained to ensure that
questions are technically correct, clear and unambiguous. As a final check, each examination is
scrutinised by the Senior Examiner and a CII assessment expert.
Occasionally a question will require amendment after the examination guide is first published. In such
an event, the revised question will be published on the CII website:
1) Visit www.cii.co.uk/qualifications
2) Select the appropriate qualification
3) Select your unit on the right hand side of the page
Candidates should also refer here for the latest information on changes to law and practice and when
they will be examined.

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Syllabus
The M67 syllabus is published on the CII website at www.cii.co.uk. Candidates should note that the
examination is based on the syllabus, rather than on any particular tuition material. Of course, the CII
tuition material will provide the vast majority of the information required to perform well in the
examination, but the CII recommends that students consult other reference materials to supplement
their studies.
Skill Specification
The examination syllabus categorises M67 learning outcomes into attainment levels. Each learning
outcome specifies the level of skill required of candidates and thus the level at which candidates may
be tested.
The syllabus requires that candidates have the ability to understand the subject matter. Each learning
outcome begins with the following cognitive skill:
Understanding - Candidates must be able to link pieces of information together in cause and effect
relationships. Typically questions may ask ‘Why’. Questions set on an understand learning outcome
can test either knowledge or understanding or both.

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Examination Information
The method of assessment for the E67 examination is 50 multiple choice questions (MCQs). One hour
is allowed for this examination.
The M67 syllabus provided in this examination guide will be examined from 1 May 2017 until 30 April
2018.
Candidates will be examined on the basis of English law and practice unless otherwise stated.
The general rule is that legislative and industry changes will not be examined earlier than 3 months
after they come into effect.
E67 examinations test the Financial Conduct Authority and Prudential Regulation Authority rules and
regulations.
When preparing for the examination, candidates should ensure that they are aware of what typically
constitutes each type of product listed in the syllabus and ascertain whether the products with which
they come into contact during the normal course of their work deviate from the norm, since questions
in the examination test generic product knowledge.
A multiple choice question consists of a problem followed by four options, labelled A, B, C and D, from
which the candidate is asked to choose the correct response. Each question will contain only one
correct or best response to the problem posed.
One mark is awarded for each correct response identified by the candidate. No mark is awarded if the
candidate either chooses an incorrect response, chooses more than one response or fails to choose any
response. No marks are deducted for candidates choosing an incorrect response.
If you bring a calculator into the examination room, it must be a silent battery or solar-powered
non-programmable calculator. The use of electronic equipment capable of being programmed to hold
alphabetic or numerical data and/or formulae is prohibited. You may use a financial or scientific
calculator, provided it meets these requirements.
Candidates are permitted to make rough notes. Candidates are not permitted, in any circumstances, to
remove any papers relating to the examination from the examination room.

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Examination Technique: Multiple Choice Questions

The best approach to multiple choice examinations is to work methodically through the questions.
The questions are worded very carefully to ensure that all the information required is presented in a
concise and clear manner. It cannot be emphasised too strongly that understanding the precise
meaning of the question is vital. If candidates miss a crucial point when reading the question it could
result in choosing the wrong option. Candidates should read carefully through the question and all the
options before attempting to answer.
Candidates should pay particular attention to any words in the question which are emphasised in bold
type, for example, maximum, minimum, main, most, normally and usually. Negative wording is
further emphasised by the use of capital letters, for example NOT, CANNOT.
Candidates should not spend too much time on any one question. If they cannot make up their mind,
they should leave the question and come back to it later.
When all of the questions have been answered, it is prudent to use any remaining time to go through
each question again, carefully, to double-check that nothing has been missed. Altering just one
incorrect response to a correct response could make the difference between passing and failing.
After the Examination

Rigorous checks are made to ensure the correctness of the results issued. A pre-defined quota of
passes to be awarded does not exist. If all candidates achieve a score of at least the pass mark, then all
candidates will be awarded a pass grade. Individual feedback on the candidate’s examination
performance is automatically provided and will indicate the result achieved and, for each syllabus
learning outcome, the percentage of questions in the examination that were answered correctly.

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Fundamentals of risk management

Purpose
To explore the principles of risk management and the role of insurance within these principles.
Assumed knowledge
It is assumed that the candidate already has knowledge of the fundamental principles of insurance as
covered in IF1 Insurance, legal and regulatory or equivalent examinations.
Summary of learning outcomes Number of questions

in the examination*
1. Understand the meaning of risk. 9
2. Understand the role and purpose of risk management. 8
3. Understand the core elements of the risk management process. 12
4. Understand the different categories of risk. 5
5. Understand current trends in risk management. 6
6. Understand the position of insurance within risk management. 5
7. Understand the key risk management lessons learnt from major loss events. 5
*The test specification (relevant to the M67 multiple choice question exam only) has an in-built element of flexibility. It is
designed to be used as a guide for study and is not a statement of actual number of questions that will appear in every exam.
However, the number of questions testing each learning outcome will generally be within the range plus or minus 2 of the
number indicated.
Important notes
M67
• Method of assessment:
Mixed assessment consisting of two components, both of which must be passed. One component is
a coursework assignment and one is a multiple choice examination. The details are:
1. an online coursework assignment using RevisionMate consisting of 10 questions which
sequentially follow the learning outcomes. This must be successfully completed within 6 months
of enrolment; and
2. a multiple-choice question (MCQ) exam at one of the CII’s online centres (paper based MCQs are
available in April and October for those sitting outside the UK). The MCQ exam consists of 50
MCQs. 1 hour is allowed for this examination. This exam must be successfully passed within 18
months of enrolment.
• This syllabus will be examined from 1 May 2017 until 30 April 2018.
• Candidates will be examined on the basis of English law and practice unless otherwise stated.
• Candidates should refer to the CII website for the latest information on changes to law and practice
and when they will be examined:
1. Visit www.cii.co.uk/updates
2. Select the appropriate qualification
3. Select your unit on the right hand side of the page
2017 M67/P67
Copyright © 2017 The Chartered Insurance Institute. All rights reserved.
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P67
• Method of assessment: Part I 14 compulsory questions (140 marks). Part II 2 questions selected from
3 (60 marks). Total of 200 marks. Three hours are allowed for this exam.
• The syllabus is examined on the basis of English law and practice unless otherwise stated.
• The general rule is that the exams are based on the English legislative position six months before
the date of the exams.
• Candidates should refer to the CII website for the latest information on changes to law and practice
and when they will be examined:
1. Visit www.cii.co.uk/qualifications
2. Select the appropriate qualification
3. Select your unit on the right hand side of the page
2017 2 of 5
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1. Understand the meaning of risk 6. Understand the position of insurance
1.1 Explain the difference between risk and within risk management
uncertainty. 6.1 Explain the role of insurance as a risk transfer
1.2 Explain the basics of probability theory. mechanism.
1.3 Discuss risk perception. 6.2 Explain the role of an insurance intermediary in
1.4 Explain the difference between pure and supporting risk management.
speculative risk. 6.3 Discuss alternatives to insurance (captives,
alternative risk transfer, self-insurance).
2. Understand the role and purpose of
risk management 7. Understand the key risk management
2.1 Explain the evolution of the discipline of risk lessons learnt from major loss events
management. 7.1 Explain why risk management systems can fail.
2.2 Outline the benefits of risk management. 7.2 Explain the consequences of the failure of risk
2.3 Explain key roles and responsibilities for risk management systems.
management (Board, Managers, Risk Function 7.3 Discuss examples of relevant loss events.
etc).
2.4 Explain the relationship between risk
management, compliance, and the audit function.
3. Understand the core elements of the

risk management process
3.1 Outline the risk management process.
3.2 Explain the purpose and contents of a risk
register.
3.3 Explain the various risk management standards
that exist.
3.4 Explain the various risk management tools and
techniques (identification, assessment,
monitoring, control and financing).
3.5 Explain the regulatory and corporate governance
context surrounding the risk management
process.
4. Understand the different categories of

risk
4.1 Define and categorise risk (e.g. various financial,
operational, insurance risks, strategic and
reputation).
4.2 Discuss difficult to categorise risks.
4.3 Examine the link between cause, events and
effects.
5. Understand current trends in risk

management.
5.1 Discuss the emergence of enterprise risk
management (ERM).
5.2 Discuss the emergence of governance, risk and
compliance (GRC).
5.3 Explain the role of the Chief Risk Officer and Risk
Committee.
5.4 Explain the concepts of risk aggregation and
correlation.
2017 3 of 5
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k e r- s o ft w a Quantitative operational risk models. Catalina Bolance et k e r- s o ft w a
Reading list al. London: Chapman & Hall, 2012.*
The following list provides details of various Supply chain risk: understanding emerging threats to
publications which may assist you with your studies. global supply chains. John Manners-Bell. London: Kogan
Page, 2014.*
Note: The examination will test the syllabus alone.
Rethinking risk measurement and reports. 2v. Klaus
The reading list is provided for guidance only and is Bocker (ed). London: Incisive, 2010.
not in itself the subject of the examination.
Risk: an introduction. Bernardus Ale. Routledge, 2010. *
The publications will help you keep up-to-date with
developments and will provide a wider coverage of Risk analysis. 2nd ed. Terje Aven. Hoboken: Wiley, 2015.*
syllabus topics. Risk analysis in finance and insurance. 2nd ed.
CII/PFS members can borrow most of the additional Alexander Melnikov. Chapman and Hall/CRC, 2010. *
study materials below from Knowledge Services. Risk culture and effective risk governance. Patricia
CII study texts can be consulted from within the Jackson, ed. London: Risk Books, 2014.
library.
Risk management for insurers: risk control, economic
New materials are added frequently - for information capital, and Solvency II. Rene Doff. 3rd ed. London: Risk
about new releases and lending service, please go to Books, 2015.
www.cii.co.uk/knowledge or email
knowledge@cii.co.uk. Strategic risk management. Patrick McConnell. London:
Risk Books, 2016.
CII study texts Systemic risk assessment and oversight. J A Chan-Lau.

London: Risk Books, 2013.
Fundamentals of risk management. London: CII. Study
text M67/P67. The handbook of integrated risk management in global
supply chains. Panos Kouvelis. Wiley, 2012.
Insurance, legal and regulatory. London: CII. Study text
IF1. The risk management handbook. David Hillson. London:
Kogan Page, 2016.*
Books (and ebooks)
Approaches to enterprise risk management. London: Ebooks
Bloomsbury, 2010.* The following ebooks are available through Discovery via
www.cii.co.uk/discovery (CII/PFS members only):
A risk management approach to business continuity:
aligning business continuity with corporate governance. A short guide to operational risk. David Tattam. Gower,
Julia Graham, David Kaye. Brookfield, Connecticut: 2011.
Rothstein Associates, 2006.
A short guide to fraud risk. By Martin Samociuk and Nigel
A short guide to contract risk. Helena Haapio, George J. Iyer. Edited by Helenne Doody. Aldershot: Gower
Siegel. Farnham: Gower, 2013. Publishing, 2010.
A short guide to reputation risk. Garry Honey. Farnham: Enterprise risk management: a common framework for
Gower, 2009.* the entire organisation. Philip E.J. Green. Oxford:
Butterworth-Heinemann, 2016.
A short guide to procurement risk. Richard Russill.
Farnham: Gower, 2010.* Enterprise risk management: from incentives to controls.
James Lam. 2nd ed. Hoboken: Wiley, 2013.
Corporate risk management: an organisational
perspective. Tony Merna, Faisal F Al-Thani. 2nd ed. Fundamentals of enterprise risk management: how top
Chichester, West Sussex: John Wiley, 2008.* companies assess risk, manage exposure and seize
opportunity. John J. Hampton. New York: American
Exploiting future uncertainty: creating value from risk.
Management Association, 2015.
David Hillson. Farnham, Gower, 2010.
Fundamentals of risk management: understanding,
Innovative thinking in risk, crisis and disaster
evaluating and implementing effective risk management.
management. Simon Bennet. Farnham: Gower, 2012.
Paul Hopkin, Kogan Page, 2014.
Handbook of insurance. Georges Dionne. New York:
Risk analysis in finance and insurance. 2nd ed. A V
Springer, 2013.*
Melnikov. Boca Raton, Florida: CRC Press, 2011.
Handbook of the economics of risk and uncertainty. Mark
Risk and the law. Diethelm Klippel, Gordon R. Woodman.
Machina, W. Kip Viscusi. North Hollans, 2014.*
London: Routledge, 2009.
Introduction to insurance mathematics: technical and
Risk management and financial institutions. John Hull.
financial features of risk transfers. Annamaria Olivieri,
Wiley, 2015.
Ermanno Pitacco. Berlin: Springer, 2011.
Risk management: concepts and guidance. Carl L.
Managing risk in projects. David Hillson. Farnham,
Pritchard. 5th ed. Boca Raton: CRC Press, 2015.
Gower, 2009.
Principles of risk management and insurance. 12th ed.
George E. Rejda, Michael J. McNamara. Pearson
Education, 2014.
2017 4 of 5
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Factfiles and other online resources M67
CII factfiles are concise, easy to digest but technically
dense resources designed to enrich the knowledge of Exemplars
members. Covering general insurance, life and pensions Exemplar papers are available for all mixed assessment
and financial services sectors, the factfile collection units. Exemplars are available for both the coursework
includes key industry topics as well as less familiar or component and the multiple-choice component.
specialist areas with information drawn together in a way
not readily available elsewhere. Available online via These are available on the CII website under the unit
www.cii.co.uk/ciifactfiles (CII/PFS members only). number before purchasing the unit. They are available
under the following link www.cii.co.uk/qualifications/
• Alternative risk transfer (ART). Alan Punter. diploma-in-insurance-qualification.
• Insurance-linked securities (ILS). Alan Punter.
These exemplar papers are also available on the
• Risk control. Ian Searle. RevisionMate website www.revisionmate.com after you
• Risk identification. Ian Searle. have purchased the unit.
• Risk transfer. Ian Searle.
• Recent developments to Solvency II. Brad Baker. P97
AIRMIC. www.airmic.com.
Examination guides
Institute of Risk Management www.theirm.org. Guides are produced for each sitting of written answer
Risk.net: and online resource providing news, analysis examinations. These include the exam questions,
and trends in risk management. Available via examiners’ comments on candidates’ performance and
www.cii.co.uk/risknet (members only). key points for inclusion in answers.
Further articles and technical bulletins are available at You are strongly advised to study guides from the last
www.cii.co.uk/knowledge (CII/PFS members only). two sittings. Please visit www.cii.co.uk to buy online or
contact CII Customer Service for further information on
+44 (0)20 8989 8464.
Journals and magazines
The Journal. London: CII. Six issues a year. Also available Alternatively, if you have a current study text enrolment,
online via www.cii.co.uk/knowledge (CII/PFS members the latest exam guides are available via
only). www.revisionmate.com.
Post magazine. London: Incisive Financial Publishing. Older guides are available via
Monthly. Also available online at www.postonline.co.uk. www.cii.co.uk/pastexamguides (CII/PFS members only).
Strategic risk. London: Newsquest Specialist Media. Eight
issues a year. Exam technique/study skills
Further periodical publications are available at There are many modestly priced guides available in
www.cii.co.uk/journalsmagazines bookshops. You should choose one which suits your
(CII/PFS members only). requirements.
The Insurance Institute of London (IIL) holds a lecture on
Reference materials revision techniques for CII written exams approximately
Concise encyclopedia of insurance terms. Laurence S. three times a year. The slides from their most recent
Silver, et al. New York: Routledge, 2010.* lectures can be found at
www.cii.co.uk/iilwrittenrevision (CII/PFS members only).
Dictionary of insurance. C Bennett. 2nd ed. London:
Pearson Education, 2004.
* Also available as an ebook through Discovery via
www.cii.co.uk/discovery (CII/PFS members only).
2017 5 of 5
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1. Within an organisation, when attempting to manage and control risk, the organisation should be
aware that
A. consideration of risk perception is not required.
B. consideration should be given to internal controls only.
C. uncertainty must be taken into account.
D. uncertainty need not be considered.
2. The Chief Risk Officer within a large manufacturing organisation has been asked by the Board of
Directors to provide an example of a pure risk. A suitable example would be
A. a fire occurring in a new manufacturing process line.
B. entering into a contract to purchase a new factory.
C. making a strategic decision that affects the long-term future of the organisation.
D. the purchase of a currency derivative.
3. An insurer is reviewing its book of commercial insurance policies and is using probability theory to
analyse claims data, which is based on the following information.
Postcode area Number of risks insured Number of claims reported

EH 3,200 154
LS 500 57
M 4,200 139
N 1,600 109
From this information the insurer will deduce that the likelihood of future claims arising is greatest
in which postcode area?
A. EH.
B. LS.
C. M.
D. N.
4. When applying probability theory to a specific period of time, a measurement of 0.85 indicates that
the event
A. is very likely to occur.
B. may occur, but is impossible to predict.
C. will never occur.
D. will occur, but very rarely.
5. Which type of risks are characterised by a perceived lack of control and catastrophic potential?
A. Delay risks.
B. Dread risks.
C. Man-made risks.
D. Unknown risks.

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6. An organisation following the Renn and Rohrmann structured framework should be aware that an
individual’s risk perception is influenced by common sense, which is also referred to as
A. collective reasoning strategies.
B. emotional factors.
C. knowledge of risks.
D. personal identity and views.
7. How can the perception of risk by senior management typically have a fundamental effect on the
future direction of a manufacturing organisation?
A. It will determine which risk management tools are used in identifying risks.
B. It will have a direct effect on the marketability of its products and services.
C. It will influence the composition of its risk management committee.
D. It will shape the organisation’s risk appetite and attitude towards risk acceptance.
8. How does a pure risk differ from a speculative risk?

A. A pure risk always has an environmental cause whereas a speculative risk always involves human
error.
B. A pure risk can be measured in probability terms whereas a speculative risk cannot.
C. A pure risk is not subject to regulatory control but a speculative risk always is.
D. A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain.
9. As part of an organisation’s risk management process, when considering risk and uncertainty, the
risk team must be aware that
A. risk assessment is the sole method of reducing uncertainty.
B. risk can apply to both opportunities and threats to the organisation.
C. uncertainty should always be considered completely separately from risk.
D. uncertainty should only be considered when reviewing long-term objectives.
10. How did the large fluctuations in prices of many raw materials and commodities in the 1970’s
influence the evolution of risk management?
A. An increase in the use of captive insurers.
B. Derivatives being used as a risk management tool.
C. Financial institutions increasing their market and credit risk management services.
D. The development of business continuity planning.
11. A key influence on the evolution of risk management theory in the 19th Century was based on
A. calculating the standard deviation of a distribution around a mean.
B. economists analysing the relationship between unemployment and interest rates.
C. mathematicians collecting measurements to provide statistical data.
D. placing a greater emphasis on the human element of decision making.

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12. When considering risk management within a manufacturing organisation, what is a key benefit of
conducting a detailed structured analysis of the entire organisation?
A. It would allow the organisation to develop silo-based risk management techniques.
B. It would identify all counterparty risks that affect financial stability.
C. It would identify alternative production methods and remove all risks.
D. It would uncover weaknesses and provide valuable information that can be used to improve
processes.
13. Why is it important that an organisation attempts to measure the benefits of risk management in
financial terms?
A. It will improve the delivery of services to customers.
B. It will ensure faster recovery from emergency incidents.
C. It will quantify the level of internal and external resources that are required.
D. It will record all electronic interventions to provide an audit trail.
14. Within a large global organisation, who has the primary responsibility of identifying individual risk
owners and making sure appropriate risk control activities are carried out?
A. Board of Directors.
B. Chief Risk Officer.
C. Risk Committee.
D. Risk Manager.
15. In relation to a large organisation’s risk management process, what does the internal audit function
typically have responsibility for?
A. Helping to evaluate existing risk controls in specified areas of the business only.
B. Preparing designated parts of an up-to-date risk register.
C. Providing detailed assurance that risk management processes are effective.
D. Setting detailed targets and objectives within the Board remit.
16. Within a large global organisation, the compliance function is normally

A. autonomous and reports directly to the board.
B. a part of the audit function only.
C. a part of both the risk management and audit functions.
D. a part of the risk management function only.
17. An organisation operates with separate and independent risk management, compliance and audit
functions. The organisation’s board of directors should be aware that
A. all costs will be reduced and more risks will be eliminated.
B. holistic risk management processes will be more effective across the organisation.
C. this is likely to create a more robust approach to managing risk.
D. work will often be duplicated and costs will usually be increased.

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18. A large organisation is assessing a risk using a typical risk management process and has just
established and identified the risks to which it is exposed. What is likely to be the next stage in the
process?
A. Analysing risks.
B. Eliminating risks.
C. Evaluating risks.
D. Treating risks.
19. One of the primary reasons that an organisation should monitor and regularly review its risk
management process is to
A. consider whether lessons could be learned for future management of risks.
B. ensure that all significant risks are eliminated immediately.
C. evidence that all risks are measured in financial terms only.
D. evidence that an internationally-recognised framework is followed at all times.
20. A risk register has been produced for a large engineering company. What is a key difficulty of such
a register?
A. It is impossible to update it on a regular basis.
B. It is likely to list only a very small number of risks.
C. It may fail to take account of correlations between risks.
D. Stakeholders must be consulted upon all risk management decisions.
21. What is a key consideration when designing an organisational risk register?

A. All staff can update and accept new risks.
B. All staff receive training on updating the register.
C. It is always installed on a web-based system.
D. The organisation’s risk profile is captured.
22. The ISO 31000 standard separates risk management areas into
A. frameworks, processes and audit.
B. principles, frameworks and compliance.
C. principles, frameworks and processes.
D. principles, processes and compliance.
23. Which risk management standard places a specific emphasis on internal risk controls?
A. AIRMIC.
B. COSO.
C. FERMA.
D. ISO 31000.

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24. One key reason for a risk manager to review an organisational chart is to
A. determine the extent of present and visible risks.
B. determine the process of the delivery of services.
C. establish a decision-making route.
D. establish the potential impact of a possible risk incident.
25. A risk manager in an organisation is evaluating a risk and multiplies the probability of the risk
occurring with the potential impact. The result of the calculation is the production of a risk
A. appetite.
B. control.
C. factor.
D. matrix.
26. In a manufacturing organisation, what is a fault tree typically designed to show?

A. It evaluates the potential cost of a disruption.
B. It identifies key personnel at each stage in the process.
C. It identifies the likelihood of an interruption arising.
D. It outlines possible solutions to potential interruptions.
27. A logistics manager for a supermarket chain identifies that there is a continual delay in the
deliveries to stores. What is the most appropriate technique to identify the cause of the problem?
A. Decision tree.
B. Flow chart.
C. Hazard and operability study.
D. Physical inspection.
28. What key advantage does a Governance Risk and Compliance framework offer when compared to
retaining separate and independent risk control functions?
A. It can promote individual risk initiatives at working levels.
B. It is easily introduced and quickly implemented.
C. It places less reliance on risk decisions at board level.
D. It provides a consolidated risk management function.
29. To comply with the UK Corporate Governance Code, to which body must all UK-listed companies
provide information concerning solvency, liquidity, risk management and viability on an annual
basis?
A. The Financial Conduct Authority.
B. The Financial Policy Committee.
C. The Financial Reporting Council.
D. The Prudential Regulation Authority.

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30. Where an insurance organisation has failed to keep up with new legislation governing its day-to-day
activities, it primarily increases its exposure to
A. compliance and regulatory risk.
B. insurance and regulatory risk.
C. liquidity and business risk.
D. market and strategic risk.
31. A large organisation is assessing the financial strength of one of its customers. Which types of risk
are being assessed?
A. Credit and liquidity.
B. Liquidity and legal.
C. Market and strategic.
D. Operational and credit.
32. Within an organisation, business risk can typically be categorised as the

A. alleged or actual breach of contract between an organisation and counterparty.
B. probability of a loss being inherent in an organisation’s operations and environment.
C. risk of an organisation not being able to meet its financial obligations.
D. uncertainty relating to the occurrence of an insured event.
33. Why can it be difficult for an organisation to categorise risks?

A. Audit and compliance functions must always categorise risks differently.
B. Risk categories are always applied differently across an organisation.
C. There is no universally accepted definition of individual risks.
D. Universal risk categorisations must always be used.
34. Understanding the potential causes of risk events will primarily help an organisation to
A. comply with corporate governance standards.
B. eliminate all risks.
C. improve internal audit procedures.
D. reduce the frequency of loss.
35. Where a large organisation uses enterprise risk management to create a framework to consider all
risks affecting the organisation, this is typically known as
A. a consolidated approach.
B. connected methodology.
C. a holistic approach.
D. seamless methodology.

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36. Which type of risk framework is expected to improve efficiency by aligning strategy, processes,
technology and people?
A. Controls, risk and supervision.
B. Corporate, governance and control.
C. Governance, risk and compliance.
D. Supervision, audit and compliance.
37. When implementing an enterprise risk management (ERM) framework, a large organisation should
be aware that ERM
A. only allows for risks to be measured in financial terms.
B. relies largely upon the analysis and evaluation of risks against criteria that are set by the Board.
C. will always improve the competitive position of the organisation.
D. will always require assessment of risk management processes from both internal and external
auditors.
38. What is typically the day-to-day responsibility of a Chief Risk Officer within a large organisation?
A. Ensuring that all key risks are adequately managed and reported.
B. Preparing and maintaining individual insurance arrangements.
C. Producing policies on compliance matters.
D. Providing assurance that individual risk management processes are effective.
39. A train has crashed and is badly damaged. There have been numerous claims from injured
passengers as well as a loss of revenue for the train operator. This is an example of
A. risk aggregation.
B. risk categorisation.
C. risk probability.
D. risk severity.
40. A key requirement for successfully implementing a governance risk and compliance framework
within an organisation is for
A. consistent terminology to be introduced across the organisation’s risk management and
assurance functions.
B. risk management and compliance functions to create individual risk management frameworks at
all levels.
C. risk management costs to be reduced when all risk events occur.
D. senior managers to increase their risk tolerance.
41. An organisation will typically find that their insurance arrangements will exclude cover for
A. consequential losses following natural disasters.
B. credit risks.
C. product liability claims.
D. the value of their computerised database.

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42. Insurance policies issued by a commercial insurer operating solely in the UK are directly governed
under which Act?
A. Consumer Insurance (Disclosure and Representations) Act 2012.
B. Financial Services Act 2012.
C. Insurance Act 2015.
D. Sarbanes-Oxley Act 2002.
43. A broker is undertaking a business interruption review on behalf of a client. This would
most commonly include an evaluation of the
A. effectiveness of a business continuity plan.
B. effectiveness of risk reserving.
C. level of risk tolerance.
D. level of self insurance.
44. What is a primary benefit of a commercial customer self-insuring a risk?

A. Claims costs will reduce.
B. Controllability of risk will increase.
C. Its short-term cash-flow position is likely to improve.
D. Staff training requirements will decrease.
45. A large manufacturing organisation has renewed an insurance policy and has accepted a significant
increase in the policy deductible. What is this most likely to indicate?
A. Decreased risk avoidance.
B. Decreased risk tolerance.
C. Increased risk elimination.
D. Increased risk retention.
46. For what primary reason could enterprise risk management (ERM) systems fail?
A. ERM decisions are always ignored across a business when a top-down approach is used.
B. Financial constraints could compromise the implementation of ERM systems.
C. Management can never override ERM decisions.
D. The use of ERM systems do not give the required assistance to risk managers.
47. What could a financial organisation make primary use of, to assess whether its risk management
systems are likely to fail?
A. Key control indicators.
B. Key risk indicators.
C. Silo-based risk management.
D. Physical inspections.

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48. A large organisation has entered into a surety arrangement using a counterparty to guarantee
certain credit risks. The main risk to the organisation of the counterparty failing is that the
organisation would
A. be liable for all future losses incurred on these credit agreements.
B. be responsible for all of the counterparty’s losses.
C. be unable to self insure these risks.
D. have losses limited to the premium paid only.
49. An engineering company is assessing the key risks faced within the manufacturing process.
Although cover is in place for most of the potential losses that may arise, the company should be
aware that
A. automated warnings will always eliminate human error.
B. the consequences of human error can never be insured against.
C. human error cannot be eliminated.
D. the use of physical barriers will always eliminate human error.
50. As a direct result of recent disasters in the oil drilling and exploration sector, for companies in this
sector there has been an increase in
A. business continuity planning and the use of lower policy deductibles.
B. coinsurance and silo-based risk management.
C. governance, risk and control and self-insurance.
D. new regulations and safety controls.

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Specimen Examination Answers and Learning Outcomes Covered

Learning Learning Learning
Question Answer Question Answer Question Answer
Outcome Outcome Outcome
Learning Outcome 1 Learning Outcome 4 Learning Outcome 7
1 C 1.1 30 A 4.1 46 B 7.1
2 A 1.4 31 A 4.1 47 A 7.1
3 B 1.2 32 B 4.1 48 A 7.2
4 A 1.2 33 C 4.2 49 C 7.2
5 B 1.3 34 D 4.3 50 D 7.3
6 A 1.3 5 questions 5 questions
7 D 1.3
8 D 1.4 Learning Outcome 5
9 B 1.1 35 C 5.1
9 questions 36 C 5.2
37 B 5.1
Learning Outcome 2 38 A 5.3
10 B 2.1 39 A 5.4
11 C 2.1 40 A 5.2
12 D 2.2 6 questions
13 C 2.2
14 B 2.3 Learning Outcome 6
15 C 2.3 41 D 6.1
16 C 2.4 42 C 6.1
17 D 2.4 43 A 6.2
8 questions 44 C 6.3
45 D 6.3
Learning Outcome 3 5 questions
18 A 3.1
19 A 3.1
20 C 3.2
21 D 3.2
22 C 3.3
23 B 3.3
24 C 3.4
25 C 3.4
26 C 3.4
27 B 3.4
28 D 3.5
29 C 3.5
12 questions

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TECEP® Test Description for MAR-201-TE
INTRODUCTION TO MARKETING
This exam assesses students’ knowledge and application of key marketing concepts for today's business
practices. It evaluates students’ knowledge of the essential techniques managers need to compete
successfully, whether in large companies or small businesses, profit-oriented firms or not-for-profit
organizations. Topics include customer-oriented marketing strategies, buyers and markets, target market
selection, and the marketing variables of products (and services), price, promotion, and distribution. (3
credits)
● Test format:
o 74 multiple choice questions (1 point each)
o 8 short answer questions (2 points each)
o 2 essay questions (5 points each)
● Passing score: 65% (65/100 points). Your grade will be reported as CR (Credit) or NC (No
Credit).
● Explain contemporary customer-oriented marketing strategies
● Identify key aspects of affective consumer and business-to-business marketing
● Outline ways to research, establish, and develop target markets
● Discuss the essential decisions markets make regarding products and services
● Explain the processes used in marketing channels and supply-chain management
● Describe various means for promoting products and services
● Identify common pricing concepts and strategies
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Using Strategy and Research in Marketing (25%)
Topic Resource
Universal functions
● Chapter 1: What Is Marketing?
● Chapter 2: Strategic Planning
Strategic/tactical planning
Boundless Marketing
● Chapter 2: Marketing Strategies and Planning
○ The Strategic Planning Process
Market research and intelligence
● Chapter 10: Gathering & Using Information
Boundless Marketing
Market environment and planning ● Chapter 3: The Marketing Environment
○ The Marketing Environment
Boundless Marketing
Pricing ● Chapter 8: Pricing
○ Defining Price
Understanding Consumers: From the Decision Process to Target Market Identification (20%)
Topic Resource
Consumer behavior
Customer satisfaction and loyalty ● Chapter 14: Customer Satisfaction, Loyalty, &
Empowerment
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Decision process ● Module 7: Consumer Behavior
○ Buying-Process Stages
Social influence
○ Section 3.1: Factors that Influence
Consumers' Buying Behavior
Segmentation, targeting, and position ● Chapter 5: Market Segmenting, Targeting, &
Positioning
○ Section 13.4: Ethics in Sales and Sales
Ethics Management
Boundless Marketing
● Ethics in Marketing
Defining Business Marketing (15%)
Topic Resource
Boundless Marketing
● Chapter 5: Business-to-Business Marketing
○ Business Markets
Business-to-business marketing
○ Business Customers
○ Industrial Classification
○ The Business Buying Decision Process
Business buying behavior
● Chapter 4: Business Buying Behavior
Boundless Marketing
● Chapter 7: Global Marketing
○ Introduction to Global Marketing
○ The Global Marketing Environment
Global marketing
○ Important International Bodies and
Agreements
○ Types of International Business
○ Global Marketing Mix
Boundless Marketing
Non-profit marketing ● Chapter 17: Introduction to Nonprofit Marketing
○ Nonprofit Marketing
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Identifying Products, Services and Channels Utilized in Marketing (15%)
Topic Resource
Boundless Marketing
○ New Product Development
Development of product and services
● Module 10: Product Marketing
○ New Product Development Process
Boundless Marketing
○ Managing Existing Products
Management of product and services
● Chapter 7: Developing and Managing Offerings
○ Section 7.2: Managing New Products
● Chapter 8: Using Marketing Channels to Create
Value for Customers
Boundless Marketing
Marketing channels ● Chapter 11: Marketing Channels
○ Marketing Channels in the Supply Chain
○ Channel Intermediaries
○ Channel Structures
○ Channel Strategy Decisions
○ Marketing Channel Relationships
● Module 12: Place: Distribution Channels
○ Why It Matters: Place: Distribution
Channels
○ Using Channels of Distribution
○ Managing Distribution Channels
Supply chains and logistics
○ Retailers As Channels of Distribution
○ Integrated Supply Chain Management and
the Distribution Strategy
○ Putting It Together: Place: Distribution
Channels
○ Discussion: Distribution Strategy
Communications (25%)
Topic Resource
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● Module 13: Promotion: Integrated Marketing
Direct marketing
Communication (IMC)
○ Direct Marketing
Integrated marketing ● Chapter 11: Integrated Marketing Communications
and the Changing Media Landscape
Personal selling and promotion
RESOURCE LICENSING GUIDE
This is a comprehensive list of the materials used in this test description, as well as other useful study
materials. We encourage you to explore these resources to make sure that you are familiar with multiple
perspectives on the topics above. All of these resources are openly licensed, which means that they are
free to be revised, remixed, reused, redistributed, and retained, so long as their unique terms are
followed. You can learn more about open licensing here.
Title License
Principles of Marketing [Saylor course]. Washington, D.C.: Saylor Academy. See License
Principles of Marketing [Lumen course]. Portland, OR: Lumen Learning. CC BY-NC-SA 3.0
Boundless Marking [Boundless course]. Portland, OR: Lumen Learning. CC BY-SA 4.0
Tanner, J., & Raymond, M. A. (2012). Marketing Principles (v. 2.0). 2012 Book CC BY-NC-SA 3.0
Archive.
International Review of Management and Marketing. ISSN: 2146-4405 CC BY 4.0
SAMPLE QUESTIONS
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1. Which element of the marketing mix includes the distribution of products?
a. Product
b. Price
c. Place
d. Promotion
2. To be ethically effective, marketing plans must be

3. A(n) __________is a document that communicates a marketing strategy for an offering.
a. research paper
b. market plan
c. mission statement
d. annual report
4. In a SWOT analysis, SWOT stands for
a. strategies, weaknesses, obligations, threats

c. strengths, work requirements, opportunities, time
d. strategies, worth, obligations, time
5. Raw data transforms to information when
a. it is calculated
b. a manager is aware that it exists
c. it becomes useful
d. a manager looks at it
6. Which of the following is true about participating in professional networking websites?

b. They are less helpful for mid- and late career professionals.
c. They are more frequently used by experienced workers.
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7. _________________ are especially useful to marketers.

b. Location, locomotion, liberation
c. Profitability, reliability, predictability
d. Proactivity, reactivity, alacrity
8. What term is used to describe when a customer purchases a product with no planning or
forethought?
a. Extended problem solving

b. Impulse buying
c. High-involvement purchasing
d. Evaluation implementation
9. What type of segmentation is the primary starting point for most marketers?
a. Psychographic
b. Use-pattern
c. Demographic
d. Cultural
10. In the business-to-business buying process, what is the next step after the need is described and
quantified?
a. Searching for potential suppliers

c. Establishing an order routine
d. Recognizing a need
11. Which of the following is a skill that could advance career goals in global marketing?
a. Ability to speak two or more languages

b. Experience in a single geographical area
c. Computer literacy
d. Having a foreign driver’s license
12. When a product is sold in as many outlets as possible a(n) ___________ distribution strategy is
being used.
a. selective
b. intensive
c. extreme
d. exclusive
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13. What is a useful way to empower customers?
a. Ask customers to participate in product design.

b. Conduct customer feasibility studies.
c. Refer customers to competitors for quality comparisons.
d. Give customers free products.
14. Which of the following is a key function of “positioning” in marketing campaigns?
a. To provide a reason why the customer should buy the product.

d. To distract the customer from considering a competitor’s product.
15. A(n) ____________ explains how an offering will be launched.
a. offering transaction
b. business document
c. customer base
d. communication plan
16. _________ is defined as the variety of marketing communications an organization utilizes.
a. Promotional mix
b. Personal selling
c. Advertising
d. Publicity
17. Which of the following are social media?
a. Corporate investor pages

c. Downloadable company brochures
18. What is the generally accepted view about using sex and humor themes in cross-cultural
marketing campaigns?
a. Humor and sex themes are acceptable.

b. Humor and sex themes are encouraged.
c. Humor and sex themes can be used if they are very mild.
d. Humor and sex themes are not appropriate.
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19. The channel through which communication takes place is known as the
a. information
b. medium
c. communication
d. transference
Short answer questions: Answer in two to four complete sentences. (2 points each)
20. Determine an advantage for using a product life cycle mode.
21. Provide an advantage for using segmentation, targeting, and positioning in developing marketing
strategies.
22. Provide one benefit and one drawback of using a viral market channel.
Essay questions: Answer in six to eight complete sentences. (5 points each)
23. Describe major differences between strategic and tactical planning.
24. Define micromarketing and discuss its importance in integrated marketing communications
programs.
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1. (c) 8. (b) 15. (d)

2. (a) 9. (c) 16. (a)
3. (b) 10. (a) 17. (d)
4. (b) 11. (a) 18. (d)
5. (c) 12. (b) 19. (b)
6. (a) 13. (a)
7. (a) 14. (a)
20. Using a product life cycle to manage the activities of a product or service allows a company to
map out a long-term strategy for more effective planning. Companies can plan for the evolution of
price, product features, promotion and placement in a way that is seamless and continuous for
both the customer, as well as the firm’s operations.
Scoring Rubric
● Fully explains the benefits for using a product life cycle model
Meets
Expectations
(2 pts)
● Partially explains the benefits for using a product life cycle

model
Partially Meets
Expectations
and grammar
(1 pt)
● Does not explain the benefits for using a product life cycle
model
Needs
Improvement
(0 pts)
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21. Targeting, marketing and positioning provide opportunities to reach a specific market and identify
the characteristics of the market. Additionally, positioning can cater to a particular market rather
than an entire universe. For instance, products such as Tesla, Porsche and Maserati are
positioned to a different market than Ford, Chevy and Buick. This allows a market to develop and
deliver personalized messages to different audiences rather than focusing on one message to
everybody.
Scoring Rubric
● Fully identifies and explains an advantage for using one of the

Meets
marketing and positioning
Expectations
(2 pts)
● Partially identifies and explains an advantage for using one of

the following in developing marketing strategies: targeting,
Partially Meets marketing and positioning
Expectations
(1 pt) and grammar
● Does not identify or explain an advantage for using one of the

Needs marketing and positioning
Improvement
(0 pts) spelling and grammar
22. Viral marketing is an advertisement tied to e-mail or another online communication designed to
have one person pass on the content to another. Major benefits of such marketing are speed of
transmission and the ability of consumers to share with like-minded friends; drawbacks include
changes in the marketing message as it is passed from one person to another and the loss of
control for the instigating firm as the messaging has the potential to change significantly from its
original intent.
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Scoring Rubric
● Fully provides a benefit and drawback of viral marketing

Meets
Expectations
(2 pts)
● Partially provides a benefit and drawback of viral marketing

Partially Meets
Expectations ● Uses complete sentences with some minor errors in spelling
and grammar
(1 pt)
● Does not provide a benefit and drawback of viral marketing

Needs
Improvement ● Uses incomplete sentences with some significant errors in
(0 pts)
Essay questions
23. All companies plan both strategically as well as tactically. There are four major differences
between strategy and tactics in organizational planning: context, scale, rationale and time frame.
In terms of context, strategic planning is largely concerned with overall plan design, while tactics
addresses implementation of a plan in practical terms. In the area of scale, strategic planning
typically is concerned with a large framework that would affect the organization as whole, while
tactics are smaller in scale and more specific in their focus, usually at the department or division
level. Strategy explains why an action will take place and its necessity; tactics explain how the
end result will be achieved step-by-step. This difference is fundamental to their rationale. Finally,
strategy takes place over a long time frame and often it continues for years. Yet, tactics are put
into place much more quickly, and are monitored more frequently, often on a daily basis.
Scoring Rubric
Identifies the two planning approaches: strategic planning, tactical planning
Appropriately identifies key planning elements: context, scale, rationale, time

frame
Appropriately discusses the differences between the two planning approaches
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24. Micromarketing, often called niche marketing, is a marketing strategy that concentrates on a
specific customer characteristic in order to achieve a high degree of targeting focus. This
characteristic can be demographic or psychographic.
Integrated marketing communications seeks to coordinate marketing efforts across a number of

media. This coordination is built on customer commonalities as determined via research methods.
In terms of demographics, these commonalities could be geographic location, income bracket,
age or education; psychographic categories can be based on lifestyles, such as those
categorized in the VALS research methodology. Micromarketing segments are customer building
blocks built on such specific commonalities and as such are key components of integrated
marketing communications campaigns. The more precise marketing communications can be, i.e.,
driven by micromarketing, the more effective.
Scoring Rubric
Correctly defines micromarketing and targeting focus, use of

demographics/psychographics
Correctly describes IMC and gives specific examples utilizing precision targeting
Explains the importance of micromarketing to IMC: targeting, ability to aggregate

consumers
Online Tests /

State Finished
Overdue 1 min 4 secs
Marks 7/20
Grade 35 out of 100
Question 1
Complete
Mark 0 out of 1
a. It allows regulators to have an absolute verification concerning the financial health of the business.
b. It allows external users absolute assurance of financial health.
d. It helps ensure that the company is in compliance with US laws.
Question 2
Complete
Mark 1 out of 1
What term is used to describe when a customer purchases a product with no planning or forethought?
a. High-involvement purchasing
b. Extended problem solving

c. Evaluation implementation
d. Impulse buying
Question 3
Complete
Mark 1 out of 1
Risk is only to do with industry and accidents at work.
a. False
b. True
Question 4
Complete
Mark 1 out of 1
Which of the following is a key function of “positioning” in marketing campaigns?
a. To distract the customer from considering a competitor’s product.

d. To provide a reason why the customer should buy the product.
Question 5
Complete
Mark 0 out of 1
a. Tax return information that is useful to external users


Question 6
Complete
Mark 1 out of 1
a. Current status
b. Company summary
c. Market analysis
d. Operations plan
Question 7
Complete
Mark 1 out of 1
b. Managerial Accountants are solely staff advisors in an organization.

d. Managerial accountants prepare the financial statements for an organization.

Question 8
Complete
Mark 1 out of 1

c. Provides information centred on products departments and activities
Question 9
Complete
Mark 1 out of 1
a. It would uncover weaknesses and provide valuable information that can be used to improve processes.
b. It would identify alternative production methods and remove all risks.
c. It would identify all counterparty risks that affect financial stability.

d. It would allow the organisation to develop silo-based risk management techniques.
Question 10
Complete
Mark 0 out of 1
a. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of virtue
ethics is followed.
b. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of
deontology is followed.
c. Business ethics refers to standards of business conduct but does not result in a set of correct decisions.
d. Business ethics results in a set of correct decisions and does not simply refer to standards of business conduct.
e. Business ethics produces a list of correct business decisions that all ethical businesses will make so long as the theory of rule
utilitarianism is followed.
Question 11
Complete
Mark 0 out of 1
How does a pure risk differ from a speculative risk?
a. A pure risk can be measured in probability terms whereas a speculative risk cannot.
b. A pure risk only leads to the possibility of a loss, whereas a speculative risk may lead to a gain.
c. A pure risk always has an environmental cause whereas a speculative risk always involves human error.
d. A pure risk is not subject to regulatory control but a speculative risk always is.
Question 12
Complete
Mark 0 out of 1
a. Internal users
c. External users
d. All users
Question 13
Not answered
Marked out of 1
In general when people discover unethical behaviour in their own company they usually
a. report it to authorities in the company.

b. gossip and complain about the transgressor.
c. mind their own business.

d. report it to the authorities outside the company.
e. try to right the ethical wrong.
Question 14
Not answered
Marked out of 1
a. Shareholders, employees, customers, and management

b. Management but not employees
c. Shareholders but not employees

d. Customers but not employees or shareholders
e. Employees but not shareholders
Question 15
Not answered
Marked out of 1
Which of the following is true about how ethical conceptions shape business law and business relationships in different countries?
a. Different ethical understandings prevail in different countries, so ethical conceptions shape business law and business relationships
uniquely in each country.
b. Different ethical understandings exist in different countries, but fairness is the highest ethical standard so countries must create
uniform laws.
c. Business law and business relationships should be the same in all countries because ethics provides one correct ANSWER to all
questions.
d. Business law should be the same in all countries because protecting the rights of shareholders is always the ethically proper course
of action.
e. Ethics does not shape business law or business relationships because law and ethics are separate and not interrelated.
Question 16
Not answered
Marked out of 1
a. consider whether lessons could be learned for future management of risks.

d. ensure that all significant risks are eliminated immediately.
Question 17
Not answered
Marked out of 1
The Chief Risk Officer within a large manufacturing organisation has been asked by the Board of Directors to provide an example of a pure
risk. A suitable example would be
a. a fire occurring in a new manufacturing process line.

b. the purchase of a currency derivative.
c. entering into a contract to purchase a new factory.

d. making a strategic decision that affects the long-term future of the organisation.
Question 18
Not answered
Marked out of 1
What type of segmentation is the primary starting point for most marketers?
a. Demographic
b. Use-pattern
c. Cultural
d. Psychographic
Question 19
Not answered
Marked out of 1
_________________ are especially useful to marketers.
b. Profitability, reliability, predictability
c. Proactivity, reactivity, alacrity

d. Location, locomotion, liberation
Question 20
Not answered
Marked out of 1
It is most likely, during a takeover attempt, for a firm’s managers to face an ethical issue because
a. the takeover might not be in the shareholders’ best interests.
b. their duties to the firm’s owners may conflict with their competitors’ best interests.
c. their duties to the firm’s owners may conflict with the best interests of society.
d. their duties to the firm’s owners may conflict with their personal interests.
e. their duties to the firm’s owners may be illegal.
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EGT3742 Entrepreneurship
(Semester 2 2021) [OW] [F]
Started on Wednesday, 29 September

2021, 7:30 PM
State Finished
Completed on Wednesday, 29 September
2021, 7:55 PM
Time taken 25 mins
Marks 21/30
Grade 70 out of 100
Question 1
Complete
Mark 1 out of 1
Flag question
Businesses seem most concerned with ethical

issues that could
a. show weakness.
b. offend their union employees.
c. affect employees.
e. damage the firm.
The correct answer is: damage the firm.
Question 2
Complete
Mark 1 out of 1
Flag question
How does a pure risk differ from a speculative

risk?
a. A pure risk always has an environmental

cause whereas a speculative risk always
involves human error.
b. A pure risk is not subject to regulatory
control but a speculative risk always is.
c. A pure risk can be measured in probability
terms whereas a speculative risk cannot.
d. A pure risk only leads to the possibility of
a loss, whereas a speculative risk may
lead to a gain.
The correct answer is: A pure risk only leads to the

possibility of a loss, whereas a speculative risk
may lead to a gain.
Question 3
Complete
Mark 1 out of 1
Flag question
Which of the following presents a problem when

considering the theory of ethics known as
absolutism?
b. The allegation that an excessive number

of followers actually follow
consequentialism.
c. The questionable nature of the rules in
most absolutist repositories seems overly
flexible when applied to different
situations.
d. The unquestionable nature of the rules in
most absolutist repositories seems overly
inflexible when applied to different
situations.
e. The fact that most individuals associated
with this theory have been proven to have
acted to the detriment of their followers in
one way or another.
The correct answer is: The unquestionable nature

of the rules in most absolutist repositories seems
overly inflexible when applied to different
situations.
Question 4
Complete
Mark 1 out of 1
Flag question
a. When it can be transferred by purchasing

insurance
b. When the risk event has a low probability
of occurrence and low impact
c. A risk event can never be avoided
d. When the risk event is unacceptable --

generally one with a very high probability
of occurrence and high impact
The correct answer is: When the risk event is

unacceptable -- generally one with a very high
probability of occurrence and high impact
Question 5
Complete
Mark 1 out of 1
Flag question
A person who is punished (or not rewarded. for

unethical behaviour
a. will be a model employee.
b. will continue to behave unethically.
c. will quit the firm.
d. is less likely to repeat the behaviour.
e. will be angry.
The correct answer is: is less likely to repeat the

behaviour.
Question 6
Complete
Mark 1 out of 1
Flag question
Which of the following is true regarding business

ethics?
a. Business ethics produces a list of correct

business decisions that all ethical
businesses will make so long as the theory
of rule utilitarianism is followed.
b. Business ethics produces a list of correct
of virtue ethics is followed.
c. Business ethics results in a set of correct
decisions and does not simply refer to
standards of business conduct.
d. Business ethics produces a list of correct
of deontology is followed.
e. Business ethics refers to standards of
business conduct but does not result in a
set of correct decisions.
The correct answer is: Business ethics refers to

standards of business conduct but does not result
in a set of correct decisions.
Question 7
Complete
Mark 1 out of 1
Flag question
Which phrase best describes the current role of

the managerial accountant?
a. Managerial accountants prepare the

financial statements for an organization.
b. Managerial accountants facilitate the
decision-making process within an
organization.
c. Managerial accountants make the key
decisions within an organization.
d. Managerial accountants are primarily
information collectors.
e. Managerial Accountants are solely staff
advisors in an organization.
The correct answer is: Managerial accountants

facilitate the decision-making process within an
organization.
Question 8
Complete
Mark 0 out of 1
Flag question
How do law and business ethics relate to each

other?
a. The law establishes ethical rules and

boundaries, because laws take multiple
stakeholders into consideration.
b. Law and business ethics serve as an
interactive system, informing and
assessing each other.
c. Ethics entirely determines what the laws
will be, as ethics is focused on finding one
right ANSWER to every question.
d. Ethics is unrelated to the law because
ethics ANSWERs only moral questions.
e. The law establishes what is ethical, as
anything which is legal is automatically
ethical.
The correct answer is: Law and business ethics

serve as an interactive system, informing and
assessing each other.
Question 9
Complete
Mark 1 out of 1
Flag question
A __________is a document that

communicates a marketing strategy for an
offering.
a. annual report
b. market plan
c. research paper
d. mission statement
The correct answer is: market plan
Question 10
Complete
Mark 1 out of 1
Flag question
a. strategies, weaknesses, obligations,

threats
b. strategies, worth, obligations, time
c. strengths, weaknesses, opportunities,

threats
d. strengths, work requirements,
opportunities, time
The correct answer is: strengths, weaknesses,

opportunities, threats
Question 11
Complete
Mark 0 out of 1
Flag question
A written statement of policies and principles that

guides the behaviour of all employees is called
a. None of the mentioned
b. Ethical dilemma
c. Code of ethics
d. Word of ethics
The correct answer is: Code of ethics
Question 12
Complete
Mark 0 out of 1
Flag question
The only social responsibility that businesses have

is to focus on how business decisions affect
company operations.
a. False
b. True
The correct answer is: False
Question 13
Complete
Mark 0 out of 1
Flag question
A person uncomfortable with his employer’s hiring

only black women is experiencing
a. a conflict of interest.
b. a moral attribute.
c. an ethical issue.
d. intraorganizational conflict.
e. a feeling of guilt.
The correct answer is: a feeling of guilt.
Question 14
Complete
Mark 1 out of 1
Flag question
Managerial accounting provides information for

which target group?
a. External users
c. All users
d. Internal users
The correct answer is: Internal users
Question 15
Complete
Mark 0 out of 1
Flag question
Risk management can be defined as the art and

science of _________ risk factors throughout the
life cycle of a project.
a. identifying, reviewing, and avoiding
b. researching, reviewing, and acting on
c. reviewing, monitoring, and managing
d. identifying, analyzing, and responding to
e. analyzing, changing, and suppressing
The correct answer is: researching, reviewing, and

acting on
Question 16
Complete
Mark 1 out of 1
Flag question
a. varied according to management

responsibility level
b. flexible enough to contain differences of
opinion
c. substantially different from compliance
requirements
d. honest and truthful
The correct answer is: honest and truthful
Question 17
Complete
Mark 1 out of 1
Flag question
An ethical issue is a problem, situation, or

opportunity
a. requiring an individual or organization to

choose among several actions that must
be evaluated as right or wrong, ethical or
unethical.
b. requiring society to choose among several
actions that must be evaluated as right or
wrong.
c. requiring an individual or organization to
choose between harming consumers or
the environment and earning more profits.
d. that harms consumers.
The correct answer is: requiring an individual or

organization to choose among several actions that
must be evaluated as right or wrong, ethical or
unethical.
Question 18
Complete
Mark 1 out of 1
Flag question
When considering risk management within a

manufacturing organisation, what is a key benefit
of conducting a detailed structured analysis of the
entire organisation?
a. It would uncover weaknesses and provide

valuable information that can be used to
improve processes.
b. It would identify all counterparty risks that
affect financial stability.
c. It would identify alternative production
methods and remove all risks.
d. It would allow the organisation to develop
silo-based risk management techniques.
The correct answer is: It would uncover

weaknesses and provide valuable information that
can be used to improve processes.
Question 19
Complete
Mark 1 out of 1
Flag question
A ________ franchise is an arrangement in which

the franchisor grants to the franchisee the right to
buy its products and use its trade name.
a. product extension
b. business format
c. production plus
d. product and trademark
The correct answer is: product and trademark
Question 20
Complete
Mark 0 out of 1
Flag question
Which type of risk framework is expected to

improve efficiency by aligning strategy, processes,
technology and people?
b. Supervision, audit and compliance.
d. Controls, risk and supervision.
The correct answer is: Controls, risk and

supervision.
Question 21
Complete
Mark 1 out of 1
Flag question
Suppose a project has many hazards that could

easily injure one or more persons and there is no
method of avoiding the potential for damages. The
project manager should consider __________ as a
means of deflecting the risk.
c. not acknowledging the potential for injury
d. establishing a management reserve
e. establishing a contingency fund
The correct answer is: buying insurance for

personal bodily injury
Question 22
Complete
Mark 1 out of 1
Flag question
Individuals’ personal ethics play a major role in the

evaluation of business decisions only when their
preferences or values
a. influence their performance in the

workplace.
b. are ethical.
c. result in negative publicity for their

employer.
d. are unethical.
e. differ from those of their employer.
The correct answer is: influence their performance

in the workplace.
Question 23
Complete
Mark 1 out of 1
Flag question
Which of the following are social media?
a. Downloadable company brochures
c. Corporate investor pages
The correct answer is: Public networking websites
Question 24
Complete
Mark 0 out of 1
Flag question
What is the primary opportunity that exists for

startups in emerging industries?
a. Capturing a first-mover advantage
b. Winning customers by placing an

emphasis on service and process
innovation
c. Pursuing a niche strategy that focuses on
a narrow segment of the industry
d. Consolidating the industry and establish
industry leadership as a result of doing so
The correct answer is: Capturing a first-mover

advantage
Question 25
Complete
Mark 1 out of 1
Flag question
Which of the following are the main components of

an industry/target market feasibility analysis?
a. Industry status and target market status
b. Industry sufficiency and target market

demand
c. Industry attractiveness and target market
attractiveness
d. Industry attractiveness and
product/service demand
The correct answer is: Industry sufficiency and

target market demand
Question 26
Complete
Mark 1 out of 1
Flag question
Which of the following is a skill that could advance

career goals in global marketing?
:

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EGT3742 Entrepreneurship

(Semester 2 2021) [OW] [F]

Started on Wednesday, 8 September 2021,

Social relations develop to create a team identity

The correct answer is: norming

This is the most difficult challenge faced by

a. Too much low salary

b. None of the answers are correct

c. Love life challenges

The correct answer is: Possible replacement by AI

Internal analysis enables a firm to determine what

The correct answer is: can do.

What are the components of group Cohesion

a. Assign objectives to group members,

c. Completing objectives, productivity,

The correct answer is: Productivity, Mutual Aid,

A group of managers is considering pricing

d. Mission and Vision

The correct answer is: Business level

________ means limitation of organized action.

The correct answer is: Directing

Competitive advantage can best be described as:

c. a strength of the organization.

d. what sets an organization apart.

The correct answer is: increased efficiency.

________ is/are the source of a firm’s________,

a. Core competencies, resources,

The correct answer is: Resources, capabilities,

a. Needed mainly when organizational

c. Based on the use of quantitative and

The correct answer is: Based on the use of

“A possible and desirable future state of an

a. None of the mentioned

The correct answer is: Vision

The following principle of Personnel management

a. Principle of Dignity of labour

b. Principle of team spirit

c. Principle of fair reward

d. Principle of joint management

The correct answer is: Principle of joint

Strategic management process activate in the

a. Strategy formulation, Implementation,

The correct answer is: Environmental scanning,

Which of the following focuses on supporting the

The correct answer is: Operational strategy

Get to know each other and learn how to function

The correct answer is: forming

Engineering students are planning a fundraiser to

The correct answer is: Storming

Successful development of norms allows teams to

The correct answer is: performing

Strategic decisions are based on what

a. React to; anticipate

d. Compromise with; analyze

The correct answer is: Forecast; know

________ method of training is connected to real

The correct answer is: Case study

In manpower planning, short term plans are

The correct answer is: One year

is/are the source of a firm’s,