MGT602 - 3

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FINALTERM EXAMINATION
Spring 2009
MGT602- Entrepreneurship
Marks: 80
Question No: 1 ( Marks: 1 ) - Please choose one

In some countries, point of purchase displays are not allowed in retail stores. Such
differences are studied by international entrepreneurs under __________.
 Political Environment
 Cultural Environment
 Technological Environment
 Economic Environment

The intersection of knowledge and a recognized social need to start a product
development process is called:
 Iterative synthesis P:7

 Product-evolution process
 Ordinary innovation
 Situation analysis

A set of reasons for engaging in a particular behavior, especially human behavior is
known as _____________.
 Values
 Vision
 Entrepreneurship
 Motivation PAGE NO 25

_____________ System is necessary for expansion or elimination of intrapreneurial
units.
 Management
 Evaluation
 Reward
 Training

Which one of the following factors does not affect a person for being an entrepreneur?
 Work history
 Education
 Personal values
 Nationality

Which one of the following factors does not affect a person for being an entrepreneur?
 Family background
 Education
 Personal values
 Gender

Individuals who give psychological support to an entrepreneur are called:
 Roles models
 Moral support networks Page # 23
 Professional support networks
 Informal networks

The evaluation criteria for the new product should include all of the following, EXCEPT:
 Determination of market demand

 Determination of the suppliers
 Pricing and marketing policies of other competing firms
 Product should be profitable

Which one of the following is a method for obtaining new ideas and solutions by
focusing on problems?
 Problem inventory analysis P:40
Problem inventory analysis

Problem inventory analysis uses individuals in a manner that is analogous to focus

groups to generate new product ideas. However instead of generating new ideas
themselves, consumers are provided with a list of problems in a general product
category. They are then asked to identify and discuss products in this category that
have the particular problem. This method is often effective since it is easier to relate
known products to suggested problems and arrive at a new product idea then to
generate an entirely new idea by itself.
 Gordon method
 Checklist method
 Scientific method

Which one of the following reviews the trends and competitive strategies?
 Environmental analysis
 Product forecast
 Contingency plan
 Industry analysis

Which of the following is a idea generation method that focuses on parameters?
 Brainstorming
 Reverse brainstorming
 Creative problem solving P:40
 Synectics

Which of the following is a more structured method of problem solving, including
principles and rules for concept formation, making observations and experiments, and
finally validating the hypothesis?
 Scientific method P:41

 Heuristics
 Attribute listing
 Value analysis

Which of the following is the most important factor for the entrepreneur, while starting a
new venture, to make an assessment of business?
 Profit Doubted
Before preparing the plan, the entrepreneur must evaluate the profitability of the venture
through
the following:
1. Expected sales and expense figures for the first three years
2. Cash flow figures for the first three years
3. Current balance sheets and pro forma balance sheets for the next three years
Determination of expected sales and expenses is based on the market information
Gathered earlier.
 Risk
 Market
 Competitors

The goals of venture should have all of the following characteristics to be successful,
EXCEPT:
 Measurable
 Specific
 Properly monitored
 Independent of time P:60

Which of the following kind of need should be documented by the entrepreneur before
preparing the plan?
 Market
 Customer P:60
WHY SOME BUSINESS PLANS FAIL
A poorly prepared business plan can be blamed on:
• Goals set by the entrepreneurs that are unreasonable.
• Goals those are not measurable.
To be successful
• Goals should be specific.
• They should also be measurable and should be monitored over time.
The entrepreneur who has not made a total commitment to the business will not be able
to meet the venture’s demands of the venture. Investors will not be positive about a
venture that does not have full-time commitment. Investors will typically expect the
entrepreneur to make significant financial commitment to the business. Lack of
experience will result in failure unless the entrepreneur can gain knowledge or team up
with someone. The entrepreneur should also document customer needs before
preparing the plan.
 Investor s
 His own

The marketing plan section of the business plan should focus on strategies for how
many
years of the venture?
 2
 3 P:61
Reference:
 Where have we been? -The history of the marketplace, marketing strengths and
weaknesses, and market opportunities.
 Where do we want to go (short term)? - Marketing objectives and goals in the
next twelve months.
 How do we get there? -Specific marketing strategy that will be implemented.
The marketing plan should be a guide for implementing marketing decision-making

and not a superficial document.
 4
 5

Secondary data can be obtained from all of the following sources, EXCEPT:
 Internet
 Magazine
 Bureau of statistics
 Focus group P: 63
Data obtained by a focus group is not secondary data. Because it is not

based on past data we collect it from a group.

Which of the following is the simplest approach of gathering primary data?
 Interviews
 Observations P:63
 Surveys
 Focus Group

In which of the following entity capital rising entirely depends on the entrepreneur?
 Corporation
 Sole Proprietorship P:70
 Partnership
 All of the above

Which of the following represents the environment in which entrepreneurship can t
grow?
 Boom
 Vacuum
Its correct answer is "vacuum" because rest three are not environment
rather these are different stages of business. As the main feature of
entrepreneurship is "independence”. So in vacuum environment an
entrepreneur cannot grow.
 Maturity
 Introductory Phase

Which of the following shows the standard acceptable term of a Limited Liability
Company?
 Three
 Ten
 Twenty
THIRTY Page no 73
6. The standard acceptable term of an LLC is 30 years.
In entrepreneurship the starting capital is also called:
 Equity Capital
 equity capital
 Definition
Capital raised from owners.

 Seed Capital
 Financial Capital
 Short term Capital

Which one of the following an entrepreneur must develop while preparing a pro forma of
sales budget?
 Cash flow statement

 Balance sheet
 Income statement P: 75 ,77
 Statement of retained earnings

For how many years should a financial plan needs to provide the projected financial
data?
 One
 Three P: 58
 Five
 Ten

In the preparation of the pro forma income statement, the entrepreneur must have to
develop first:
 A production budget
 A sales budget
 An operating budget
 A capital budget P:75
In the preparation of the pro forma income statement, the entrepreneur must first
develop a sales budget, an estimate of the expected volume of sales by month.
1. From sales forecasts, the entrepreneur will determine the cost of these sales.
2. Estimated ending inventory will also be included.

Which of the following statement provides projections of all operating expenses for each
month of the first year?
 The pro forma balance sheet

 The pro forma income statement P:78
The pro forma income statements also provide projections of all operating
expenses for each month of the first year.
 The pro forma cash flow statement

 The actual balance sheet

In which of the following sources the large positive cash flow may need to be invested?
 Long term
 Short term P:78
2. Large positive cash flows may need to be invested in short term sources.
 Average term
 None of the above options

Which of the following is NOT the determinant of entrepreneur's ownership?
 Cash
 Debt
 None of the given options
 Equity

Which of the following cannot be used as basis of loan?
 Worth of the business

 Perishable item
 Fixed asset
 All of the given options

In inventory loans, finished goods inventory can be financed up to what percent of
inventory value?
 50% P:83
 70%
 80%
 100%

What is the practical maximum limit to the amount of loan guaranteed by Small
Business Administration for starting of new venture?
 $ ten thousand
 $ hundred thousand
 $ one million P:86
 There is no limit

The overall coordinating party in an agreement is:
 Limited partner
 Major partner
 Minor partner
 General partner

Which of the following is the oldest development financing institution?
 Small Business Finance Corporation

 Khushhali Bank
 Regional Development Finance Corporation
 Industrial Development Bank of Pakistan P:94

Which of the following is a type of leverage ratio?
 Debt ratio
 Net profit margin
 Return on investment
 Current ratio

A source of cash resulting from an entrepreneur selling the business is called:
 Positive cash flow

 Negative cash flow
 Terminal value
 Earnings valuation

Which of the following can be used for collateral?
 Shares
 Tangible property
 All of the given options P:83,56,81
 Real State

The __________ venture capital firm invests in technology created by the school
 Corporate
 University-sponsored (doubted)
 SBA
 State-sponsored

In most cases, the venture capitalist:
 Seeks control of the company P:55

 Never expects a seat on the board of directors

 Expects the management team to run the daily operations
 Prefers not to interfere in planning and expertise areas

Determining first-mover advantage depends on all of the following, EXCEPT:
 The ability of the company to maintain a legal monopoly in the market

 The stability of the environment surrounding the entry
 The ability of the entrepreneur to erect barriers to entry and imitation in
order to extend the firm's lead time
 The ability of the entrepreneur to educate customers

Which of the following would be an advantage of starting a new business over
acquisition?
 Established customer base

 Customer response to location
 Existing employees
 All of the given options P:104

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Question No: 1 ( Marks: 1 ) - Please choose one

Question No: 2 ( Marks: 1 ) - Please choose one

 Iterative synthesis P:7

Question No: 3 ( Marks: 1 ) - Please choose one

Question No: 4 ( Marks: 1 ) - Please choose one

Question No: 5 ( Marks: 1 ) - Please choose one

Question No: 6 ( Marks: 1 ) - Please choose one

Question No: 7 ( Marks: 1 ) - Please choose one

Question No: 8 ( Marks: 1 ) - Please choose one

 Determination of market demand

Question No: 9 ( Marks: 1 ) - Please choose one

 Problem inventory analysis P:40

Problem inventory analysis

Problem inventory analysis uses individuals in a manner that is analogous to focus

Question No: 10 ( Marks: 1 ) - Please choose one

Question No: 11 ( Marks: 1 ) - Please choose one

Question No: 12 ( Marks: 1 ) - Please choose one

 Scientific method P:41

Question No: 13 ( Marks: 1 ) - Please choose one

2. Cash flow figures for the first three years

Question No: 14 ( Marks: 1 ) - Please choose one

Question No: 15 ( Marks: 1 ) - Please choose one

WHY SOME BUSINESS PLANS FAIL

A poorly prepared business plan can be blamed on:

• Goals set by the entrepreneurs that are unreasonable.

• Goals those are not measurable.

• Goals should be specific.

• They should also be measurable and should be monitored over time.

Question No: 16 ( Marks: 1 ) - Please choose one

The marketing plan should be a guide for implementing marketing decision-making

Question No: 17 ( Marks: 1 ) - Please choose one

Data obtained by a focus group is not secondary data. Because it is not

Question No: 18 ( Marks: 1 ) - Please choose one

Question No: 19 ( Marks: 1 ) - Please choose one

Question No: 20 ( Marks: 1 ) - Please choose one

Question No: 21 ( Marks: 1 ) - Please choose one

Question No: 23 ( Marks: 1 ) - Please choose one

 Cash flow statement

Question No: 24 ( Marks: 1 ) - Please choose one

Question No: 25 ( Marks: 1 ) - Please choose one

2. Estimated ending inventory will also be included.

Question No: 26 ( Marks: 1 ) - Please choose one

 The pro forma balance sheet

 The pro forma cash flow statement

Question No: 27 ( Marks: 1 ) - Please choose one

Question No: 28 ( Marks: 1 ) - Please choose one

Question No: 29 ( Marks: 1 ) - Please choose one

 Worth of the business

Question No: 30 ( Marks: 1 ) - Please choose one

Question No: 31 ( Marks: 1 ) - Please choose one

Question No: 32 ( Marks: 1 ) - Please choose one

Question No: 33 ( Marks: 1 ) - Please choose one

 Small Business Finance Corporation

Question No: 34 ( Marks: 1 ) - Please choose one

Question No: 35 ( Marks: 1 ) - Please choose one

 Positive cash flow

Question No: 36 ( Marks: 1 ) - Please choose one

Question No: 37 ( Marks: 1 ) - Please choose one

Question No: 38 ( Marks: 1 ) - Please choose one

 Seeks control of the company P:55