CS Foundation

CS Foundation Scales of Business Notes

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CS Foundation Scales of Business Notes

→ As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2005 ‘Enterprises’ is an industrial undertaking or a business concern that is engaged in the manufacture or production, processing or preservation of goods as specified in the first schedule of the IRDA Act 1951. Worldwide, micro small and medium enterprises (MSMEs) have been accepted as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the MSME sector is much higher than that of large enterprises.

On the basis of scales of business, the enterprises are classified as:
(a) Micro-enterprises
(b) Small Scale enterprises
(c) Public enterprise
(d) Large scale enterprises
(e) Micro Enterprise

→ Micro enterprises
This sector has been recognised as an engine of growth all over the world. The sector is characterised by low investment requirement, operational flexibility, location wise mobility and import substitution.

In accordance with the Act, these enterprises are classified in two categories:
(i) Manufacturing enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951. These are defined in terms of investment in plant and machinery.
For Enterprises engaged in the manufacture or production, processing or preservation of goods, an enterprise to be called a micro enterprise the investment in plant and machinery should not exceed Rs. 25 lakh.

(ii) Service enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment. Micro enterprise is defined as a unit in which investment in equipment does not exceed Rs 10 lakh when the Enterprise is engaged in providing or rendering of services equipment.
Micro enterprises do not have much access to commercial banking sector thus they mainly rely on micro finance or micro credit.

→ Small Scale enterprises
Small enterprise sector that plays an important role in sustaining the economic growth. It is the second largest employer of human resources after agriculture. Their significance in terms of fostering new entrepreneurship is well- recognized. This is because, most entrepreneurs start their business from a small unit which provides them an opportunity to harness their skills and talents, to experiment, to innovate and transform their ideas into goods and services and finally nurture it into a larger unit.

Small scale industries are the industries which are organized on a small scale and produce goods with the help of small machines, hired labour and power.

  • Small Scale Industry is defined as a unit in which investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore when the Enterprise is engaged in the manufacture or production, processing or preservation of goods.
  • Registration of small scale industries is voluntary
  • Small Scale Industry is defined as a unit in which investment in equipment is more than Rs.10 Lakh but does not exceed Rs. 2 Crore when the Enterprise is engaged in providing or rendering of services
  • Out of the total SSI 44% of the units belonged to service sector
  • Nearly 10.11% of the units are owned by women in SSI.
  • As per the definition given by RBI (given by Kohli committee), a unit may be identified as sick unit in terms of continuous decline in gross output.
  • The three yardsticks used for determining the sickness are delay in repayment of loan over a year, decline in networth by 50% and decline in output in last three years.
  • Most of the sick units were located in West Bengal, Karnataka, Kerala, Maharashtra and Andhra Pradesh.

Small scale industries can be classified as traditional small scale industry and modem small scale industry.

  • Traditional include khadi, village industries, handicrafts, etc.
  • Modem small scale industries produce sophisticated products like television, various engineering products. Over the years, the small scale sector in India has progressed from the production of simple consumer goods to the manufacture of many sophisticated and precision products like electronics control systems, micro wave components, electro medical equipments, etc. The process of economic liberalisation and market reforms has further exposed these enterprises to increasing levels of domestic and global competition. The total size of the SSI is estimated to be over 1 crore.

→ Role of small scale industries
There has been an immense role of small scale industry in India. Some of them are—
1. Production:
The small scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. It has been estimated that a million Rs. of investment in fixed assets in the small scale sector produces 4.62 million worth of goods or services with an approximate value addition of ten percentage points.

2. Employment generation:
Small scale industries employ labour intensive technology and hence generate more employment opportunities. A given amount of capital invested in a small scale industry provide more employment than the same amount of capital invested in a large scale industry. In a country like India confronted with the twin problems of unemployment and scarcity of capital, it is only the small scale industry which can solve these problems.

3. Optimum use of capital:
Small scale enterprises require relatively lesser amount of capital as compared with large scale enterprises. In the context of India economy where capital is scarce, small scale sector can act as a stabilizing force by providing high output capital ratio as well as high employment capital ratio

4. Self Employment:
Small scale sector provides numerous opportunities for self employment. He instead of seeking job for himself, provides employment to others.

5. Optimum use of capital:
Small scale enterprises require relatively lesser amount of capital as compared with large scale enterprises. Due to shorter gestation period small scale units provide early returns.

6. Use of local resources:
Small scale enterprises employ local resources like raw material, saving, entrepreneurial skill more effectively.

7. Equitable spread of income and wealth:
Small scale industries help in the development of socialistic pattern of society by ensuring equitable distribution of income and wealth. Large scale industries result in concentration of income and wealth in a few hands and that too at selected places whereas small scale industries ensure equitable spread of income and wealth amongst all and that too at all places

8. Export promotion and import substitution:
The process of economic liberalisation and market reforms has further exposed these enterprises to increasing levels of domestic and global competition. Small scale industries are thus producing goods that can catch up with this competition.
This sector is helping in export promotion by acting as ancillary units and import substitution. The small scale sector thus play a very important role in the economic development of our country.

→ Large Scale Enterprises
In India, industries with a fixed asset of more than one hundred million rupees are called large scale industries. These could be manufacturing units or others which use both indigenous and imported technologies. They cater to both the local and foreign markets. Examples of large scale industries include fertilizer, cement, natural gas, coal, metal extraction, metal processing, petroleum, natural gas.

→ Public Sector Enterprises
The government-owned corporations are termed as Public Sector Undertakings (PSUs) in India. In a PSU majority (51% or more) of the paid up share capital is held by central government or by any state government or partly by the central governments and partly by one or more state governments.

Post Independence, India was grappling with grave socio-economic problems, such as inequalities in income, regional imbalances in economic development and lack of trained manpower etc. Hence, to overcome these problems, Public Sectors were developed as an instrument for self-reliant economic growth. The country adopted the planned economic development policies, which envisaged the development of PSUs.
Some of the Public Sector Enterprises are BHEL: Bharat Heavy Electricals Limited, CIL: Coal India Limited, GAIL: Gas Authority of India Limited. Etc.

→ Characteristic features of PSU:

  1. Public enterprises are autonomous or semi-autonomous corporations and companies established, owned and controlled by the state and engaged in industrial and commercial undertakings.
  2. Primary objective of Public Sector Enterprises is to serve the public at large.
  3. In some areas Public Sector Enterprises have monopoly that is no other private company can work in that area of operation like railways, Post and telegraph, etc.

The Comptroller and Auditor General of India (CAG) audits government companies. In respect of government companies, CAG has the power to appoint the Auditor and to direct the manner in which the Auditor shall audit the company’s accounts.

Sometimes the government receive foreign assistance from industrially advanced countries for the development of industries. These advances received are spent through public enterprises.

→ Structure of PSEs in India:
The PSEs in India are basically categorised under four broad types based on their ownership structure. These include departmental undertakings, statutory corporations, government-owned companies and autonomous bodies set up as registered societies.

Departmental undertakings:
Departmental undertakings are primarily meant to provide essential services such as railways. They function under the control of the respective ministries of Government of India.

Statutory corporations:
Statutory corporations are public enterprises that came into existence by a Special Act of the Parliament. The Act defines the powers and functions, rules and regulations governing the employees and the relationship of the corporation with government departments.

Government-owned companies:
Government-owned or controlled companies refer to companies in which 51% or more of the paid up capital is held by the central or any state government (partly or wholly by both). It is registered under the Indian Companies Act and is fully governed by the provisions of this Act.

Autonomous bodies:
Autonomous bodies are set up whenever it is felt that certain functions need to be discharged outside the governmental set up with some amount of independence and flexibility without day-to-day interference from the governmental machinery.

Initially, the public sector was confined to core and strategic industries. The second phase witnessed nationalization of industries, takeover of sick units from the private sector and entry of the public sector into new fields like manufacturing consumer goods, consultancy, contracting and transportation, etc.

The Industrial Policy Resolution 1948 outlined the importance of the economy and its continuous growth in production and equitable distribution. In this process, the policy envisaged active engagement of the State in development of industries.

→ Multinational Corporations
A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries.

Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management

According to Franklin Root (1994), an MNC is a parent company that engages in foreign production through its affiliates located in several countries, exercises direct control over the policies of its affiliates, implements business strategies in production, marketing, finance and staffing that transcend national boundaries.

The two characteristic features of MNC are its large size and their worldwide activities are centrally controlled by parent company. Some of the examples of MNC are Toyata, Coco Cola, Me Donalds etc.

Some of the reasons why companies wish to become multinationals are

  • To secure cheaper premises and labour – cost of land and labour will be cheaper in developing countries.
  • To increase market share- companies may find they are at saturation point in the domestic market and need a new outlet. They may start by exporting to other countries but eventually they will want to being production overseas. Coca Cola started this way following US soldiers around the world after WWW.
  • To avoid tax or trade barriers- different nations have different levels of corporation tax and may have different barriers to entry.
  • Government grants – Sometimes the policy of some country are more favourable for business like some special tax concessions etc.

Advantages of MNC’s to Host Countries

  • The companies bring much needed money into the country.
  • The companies help the development of the country by bringing in technology and knowledge that the host country does not possess.
  • Multinationals create jobs which boosts the local economy and more workers to tax.
  • Multinationals are in position to benefit from economies of scale. This means the cost per unit can be lowered through specialisation – with a large workforce work can be divided up and people can do their limited job expertly.
  • The new companies often help to improve transport links around the area.
  • The new multi-national companies act as growth poles for other similar companies. They could encourage more companies to locate in that country once they see the benefits that it brings.
  • The host country’s business also gets management expertise from MNC’s.
  • The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC’s.
  • The host country can reduce imports and increase exports due to goods produced by MNC’s in the host country. This helps to improve balance of payment.
  • Their size and scale of operation enables them to benefit from economies of scale enabling lower average costs and prices for consumers. This is particularly important in industries with very high fixed costs, such as car manufacture and airlines.

Advantages of MNC’s to home country

  • MNC’s create opportunities for marketing the products produced in the home country throughout the world.
  • It helps in the inflow of foreign exchange.
  • They create employment opportunities to the people of home country both at home and abroad.
  • MNC’s help to maintain favourable balance of payment of the home country in the long run.
  • They ensure optimum utilization of resources present in home country.

Disadvantages of MNC’s:

  • Multinationals’ profits are not usually kept in the host country.
  • Multinationals will want to produce in ways that are as efficient and as cheap as possible and this may not always be the best for environment.
  • A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty.
  • Their market dominance makes it difficult for local small firms to thrive.
  • In developing economies, big multinationals can use their economies of scale to push local firms out of business.
  • Multinationals have been accused of cutting comers on health and safety in countries where regulation and laws are not as rigorous. For example the Bhopal gas disaster in 1984 killed hundreds of people in India.
  • In order to make profit, MNC’s may use natural resources of the home country indiscriminately and cause depletion of the resources.
  • Companies are often interested in profit at the expense of the consumer.
  • Multinational companies often have monopoly power which enables them to make excess profit.
  • Social responsibility may be overlooked by MNC’s.
  • They may exert political muscle.
  • The multinational may threaten to pull out of a country if they don’t get favourable policies from Government.

CS Foundation Forms of Business Organisation Notes

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CS Foundation Forms of Business Organisation Notes

→ A business organization is an individual or group of people that collaborate to achieve certain commercial goals. Some business organizations are formed to earn income for owners. Other business organizations, called non-profits, are formed for public purposes.

The common characteristic feature of business organisation are:

  • Distinct ownership: Business organisation may be owned by one or more individuals. Ownership is directly linked to control, thus more close is ownership and management more control will be. As in the case of sole proprietorship, ownership and management is very close thus control on organisation is more.
  • Separate identity: Every business organisation has its own separate identity. It has its own assets and liabilities.
  • Lawful purpose: Every organisation should have lawful purpose. The objective of the organisation should not be contrary to law.
  • Dealing in goods and services: Every business organisation is engaged in some business or providing some services in order to earn profit.
  • Continuity and stability of business organisation: Stability is essential for any business concern. Uninterrupted existence enables the entrepreneur to formulate long-term plans for the development of the business concern.
  • Risk involvement: Every organisation is involved in one or other type of risk. It is an integral part of business.

The choice of the most suitable form of business organisation is a crucial decision because it affects the rights and liability of the owners. Therefore, the choice should be made with great thought and deliberations.

Factors which should be checked while deciding the form of organisation most suitable for business are:

  • Ease of formation: It should be easy to form an organisation. Formation of an organisation should not involve too many legal formalities which may take time.
  • Adequacy of capital: The form of organization should facilitate the raising of the required amount of capital at a reasonable cost.
  • Nature of business: Business which provide direct services like restaurants, professional services are generally organised as proprietary concerns while some more organised drawing large amount of capital are generally Public limited or private limited companies.
  • Liability: Liability of a organisation can be limited or unlimited. A choice is to be made between them from the point of risk, liability should be limited.
  • Control: Degree of control an owner is looking for is another factor to determine what kind of organisation is best suited. A person who desires direct control of business, prefers proprietorship, because a company involves separation of ownership and management.
  • Tax liability: Tax liability for each form of organisation is different so when deciding about the form of organisation taxation is an important issue.
  • Flexibility: an organisation form should be such so as to be able to absorb the market changes.
  • Stability and continuity: if the business is ad-hoc or temporary then proprietorship or partnership are the ideal type of organisation. But for business organisation stability and continuity is best suited cause uninterrupted long-term plans are must for the development of the business concern.

→ Choosing a Form of Business Organisation
A business enterprise can be owned and organized in several forms. Each form of organization has its own merits and demerits. The ultimate choice of the form of business depends upon the balancing of the advantages and disadvantages of the various forms of business. The choice of the form of business is governed by several interrelated and interdependent factors such as the nature of business, Scale of operations, the degree of control, Amount of capita! required, the volume of risks and liabilities as well as the willingness of the owners to bear it.

Different forms of organisation are:

  1. Sole proprietorship
  2. Partnership
  3. Hindu Undivided Family Business
  4. Co-operatives, Societies and Trusts
  5. Limited Liability Partnership
  6. Company
  7. Statutory Bodies and Corporations

1. Sole proprietorship
A sole proprietorship is the oldest and the most common form of business. It is a one-man organisation where a single individual owns, manages and controls the business. For tax and legal liability purpose, the owner and the business are one and the same. The proprietorship is not taxed as separate entity. Note that the earnings of the business are taxed at the individual level, whether or not they are actually in cash. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.

Its main features are:

  • Ease of formation is its most important feature because it is not required to go through elaborate legal formalities.
  • No agreement is to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.
  • The firm has no legal existence separate from its owner.
  • The capital required by the organisation is supplied wholly by the owner himself and he depends largely on his own savings and profits of his business.
  • Owner alone enjoys the benefits or profits of the business and he alone bears the losses.
  • The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
  • Owner has a complete control over all the aspects of his business and it is he who takes all the decisions though he may engage the services of a few others to carry out the day-to-day activities.
  • The formation and operation of a sole proprietorship form of business organisation requires almost no legal formalities.
  • The legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.

Advantages of Proprietorship:

  • A sole proprietorship is the simplest and least expensive business structure to establish.
  • Costs are minimal, with legal costs limited to obtaining the necessary license or permits if required.
  • Just like formation it is also very easy to wind up the business.
  • It is your sole discretion to form or wind up the business at any time.
  • The profits earned belong to the sole proprietor alone and he bears the risk of losses as well. Thus, there is a direct link between effort and reward. If he works hard, then there is a possibility of getting more profit and of course, he will be the sole beneficiary of this profit. Nobody will share this reward with him. This provides strong motivation for the sole proprietor to work hard.
  • The income generated through operations can be directed into the proprietor’s pocket or reinvested as he or she sees fit.
  • Profits flow directly to the proprietor’s personal tax return; they are not subject to a second level of taxation, fri others words, profits from the business will not be taxed at the business level.
  • In a sole proprietorship business the sole proprietor alone is responsible for all decisions. Since no one else is involved in decision-making it becomes quick and prompt action can be taken on the basis of this decision.
  • In the case of sole proprietorship business, the proprietor can keep business secrets with himself and all his plans to himself, since management and control are in his hands. There is no need to disclose any information to others.
  • The sole proprietor is always in a position to maintain good personal contact with the customers and employees. Good personal contacts helps in maintaining close and friendly relations with the employees and thus, business runs smoothly.
  • Sole proprietorship form of business organisation leads to creation of employment opportunities for people. Not only is the owner self-employed, sometimes he also creates job opportunities for others.
  • Your business is not taxed separately, so it’s easy to fulfil the tax reporting requirements for a sole proprietorship.

Disadvantages of a Proprietorship

  • In sole proprietorship business, it is the owner who arranges the required capital of the business. It is often difficult for a single individual to raise a huge amount of capital.
  • In the eyes of law, owner and business are considered one and the same. So, proprietorship does not enjoy continuity of life.
  • Because there is no separation between proprietor and his business, he can be held personally liable for debts and obligations of the business. This risk extends to the liability caused by any employee of the proprietor.
  • A sole proprietor may not be an expert in every aspect of management.
  • In sole proprietorship form of business organisation there is a limit beyond which it becomes difficult to expand its activities.

Hence, this form of organisation is suitable for the businesses which involve moderate risk, small financial resources, capital requirement is small and risk involvement is not heavy like automobile repair shops, small bakery shops, tailoring, etc. It accounts for the largest number of business concerns in India.

2. Partnership:
Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the “partners” and collectively as a “firm”.

Its main features are:

  • A partnership is easy to form as no cumbersome legal formalities are involved.
  • Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits.
  • The Registrar of Firms is responsible for registering partnership firms.
  • The minimum number of partners must be two, while the maximum number can be 100.
  • The firm has no separate legal existence of its own i.e., the firm and the partners are one and the same in the eyes of law.
  • Ownership of property usually carries with it the right of management. Every partner, therefore, has a right to share in the management of the business firm.
  • If firm assets are not sufficient for the payment of firm liabilities than all the partners personal assets can be taken for the payment of liability.
  • In the absence of any agreement to the contrary, all partners have a right to participate in the activities of the business.
  • Partnership comes to an end with the death, retirement of any partner. However, if remaining partners want to continue then they can continue by signing a new agreement.
  • A partner binds all partner with its activities. In this way every partner plays a double role of principal and agent.
  • There are restrictions on the transfer of interest i. e. none of the partners can transfer his interest in the firm to any person (except to the existing partners) without the unanimous consent of all other partners.

Advantages of Partnership Firm

  • A partnership firm can be formed easily with an agreement between two or more persons to carry lawful business
  • Registration is not compulsory
  • Closure of firm is easy
  • Different partners may have expertisation in different areas of functions. As a result, decisions are likely to be more balanced
  • Since two or more partners join hands to start a partnership business, it may be possible to pool together more resources as compared to a sole proprietorship. The partners can contribute more capital, more effort and more time for the business.
  • Risk is shared by all partners.
  • A partnership firm is a flexible organization. At any time, the partners can decide to change the size or nature of the business or area of it’s operation. There is no need to follow any legal procedure. Only the consent of all the partners is required.
  • A partnership firm is not legally bound to publish its accounts thus it can maintain confidentiality and secrecy. Disadvantages of Partnership Firm
  • All the partners are jointly liable for the debt of the firm. They can share the liability among themselves or any one can be asked to pay all the debts even from his personal properties depending on the arrangement made between the partners.
  • Capital investment by partners is limited as there is restriction on number of partners.
  • Firm cannot expand beyond a certain size.
  • As the decisions are shared between all the partners, thus there is possibility of conflicts among the partners in case of difference in opinion in some issues.
  • The partnership firm has no legal existence separate from it’s partners. It comes to an end with death, insolvency, incapacity or the retirement of a partner. Further, any unsatisfied or discontent partner can also give notice at any time for the dissolution of the partnership.
  • If you are a partner in any firm, you cannot transfer your share or part of the company to outsiders, without the consent of other partners. This creates inconvenience for the partner who wants to leave the firm or sell part of his share to others.
  • The confidence of the public in partnership firm is low because it is not legally required to publish its accounts.
  • Partnership is an appropriate form of ownership for medium sized business involving limited capital. This may include small scale industries, wholesale and retail trade; small service concerns like transport agencies, real estate brokers, etc.

3. Hindu Undivided Family Business
Hindu Undivided Family Business is a distinct type of organisation which is unique to India. Even within India its existence is restricted to only certain parts of the country. In this form of business ownership, all members of a Hindu undivided family do business jointly under the control of the head of the family who is known as the ‘Karta’. The members of the family are known as ‘Co-partners’. Thus, the Hindu Undivided Family Business is a business owned by co-partners of a Hindu undivided estate.

Its main features are:

  • It comes into existence by the operation of Hindu law and not out of contract.
  • The rights and liabilities of co-partners are determined by the general rules of the Hindu law.
  • The membership of this form of business is the result of status arising from the birth in the family and its legality is not affected by the minority.
  • The Karta can function in Dual capacity and can claim remuneration and other benefits from the HUF.
  • Registration is unnecessary, but the rights of its members to sue third parties for claims of debt remains unaffected.
  • It is managed by the Karta. He has the authority to obtain loans against the family property or in other ways. Other members have no right of management. Moreover members cannot take loans binding on the joint-family property.
  • There can be a HUF comprising only of FEMALE members.
  • The firm enjoys continuity of operations as its existence is not subject to the death or insolvency of a co-partner or even of the Karta himself. Thus, it has a perpetual life like the public limited company.
  • HUF cannot enter in to contracts, or form partnership firm, or represent except through Karta, however Karta may allow others to represent HUF.
  • The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Advantages of Hindu Undivided Family Business

  • It is easy to form Hindu Undivided Family Business as it does not involve lot of legal formalities.
  • HUF can accept gifts from relations who may not be the member of the family.
  • Every co-partner will get share in the profit generated from business irrespective of money put by him.
  • Liability of the Karta is unlimited which compelles him to do business in efficient manner.
  • As HUF does not get dissolved with the death of Karta it has continuity of operations.

Disadvantages of Hindu Undivided Family Business

  • It is confined to Joint Hindu families thus the benefits of HUF cannot be availed by everyone.
  • If there is any dispute between the co-partners then the business may be closed and then the profits are shared between the co-partners.
  • Resources available to HUF are limited so it cannot carry on big business.
  • As Karta is responsible for all the acts of HUF thus the business of HUF depends on the knowledge and experience of Karta, thus a managerial skill lacking can be there.
  • Karta has unlimited liability.

4. Co-operatives, Societies and Trusts:
Co-operative organisation is a society which has as its objectives the promotion of the interests of its members in accordance with the principles of cooperation. The term co-operative is derived from the Latin word ‘co’ means ‘with’ and ‘operari’ means ‘to work’. It is a voluntary association of ten or more members residing or working in the same locality, who join together on the basis of equality for the fulfilment of their economic or business interest. The basic feature which differentiates the co-operatives from other forms of business ownership is that its primary motive is service to the members rather than making profits. It functions under the Co-operative Societies Act,1912 and other State Co-operative Societies Acts.

There are different types of co-operatives like consumer co-operatives, producer’s co-operatives, marketing co-operatives, housing co-operatives, credit co-operatives, farming co-operatives, etc. The aim of all such co-operatives is to promote the welfare of their members.

The characteristic features of Co-operative organisation are:

  • It is a voluntary organisation as a member is free to leave the society and withdraw his capital at any time, after giving a notice.
  • Individuals having common interest can join a co-operative enterprise as members of their own accord.
  • The minimum number of members is 10, but there is no limit to the maximum number of members. However, the members must be residing or working in the same locality.
  • While leaving, a member can withdraw his capital from the society but he cannot transfer his share to another person.
  • Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.
  • After registration a co-operative enterprise becomes a body corporate independent of its members /. e. a separate legal entity.
  • Equality is the essence of co-operative enterprises; each member is entitled to a single vote regardless of his contribution to the capital of the society.
  • The basic principle of co-operatives “one man one vote” ensures that nobody can dictate terms to other members just because of his greater command over excessive wealth.
  • Administration of co-operative society is entrusted to a Board of Directors elected on the principle of equality of vote.
  • It is subject to the provisions of the Co-operative Societies Act, 1912 or State Co-operative Societies Acts. It has to submit annual reports and accounts to the Registrar of Societies.
  • The primary motive of co-operative societies is to provide service to their members. The aim is not to earn profits as is the case in all other forms of enterprises.
  • The liability of every member is limited to the extent of his capital contribution.
  • The shares of co-operative society cannot be transferred but can be returned to the society in case a member wants to withdraw his membership.
  • Being a separate legal entity a co-operative enjoys continuity of existence which is not affected by death, insolvency, retirement, etc. of the members.
  • The organization of co-operative society is a democratic body. Every member has got equal right over the function and management of that society.
  • It runs on the principle of cash unlike other forms of organisation. It is not a position to afford the liability of credit sales which is a common phenomenon with all other form of business. It is because a cash sale, is a rule, it has always helped in avoiding the risk of bad debts and in conserving the limited resources of co-operatives.

Advantages of Co-operative Societies

  • As there are large number of members thus greater amount of capital is available.
  • The formation of a co-operative society is very simple as compared to the formation of any other form of business organisations. Any ten adults can join together and form a co-operative society.
  • In most cases, the liabilities of the members of the society is limited to the extent of capital contributed by them.
  • Unless and otherwise specifically debarred, the membership of co-operative society is open to everybody.
  • The primary motive of co-operative societies is to provide service to their members
  • In Co-operative society members arc provided with better good and services at reasonable prices.
  • The co-operative society is managed by the elected members from and among themselves
  • The Central and State Government provides a number of incentives for the promotion of co-operatives.
  • A co-operatives society after registration is recognized as a separate legal entity on the eyes of law. It acquires an identity quite distinct and independent of its members.
  • The basis of co-operation is united and joint action. Co-operatives thrive on the principle of mutual help. Disadvantages of Co-operative Societies
  • Co-operative societies financial strength depend on the capital contributed by its members and loan raising capacity from state co-operative banks.
  • The membership fee is limited for which they are unable to raise large amount of resources as their members belong to the lower and middle class. Thus, co-operative are not suitable for the large scale business which require huge capital.
  • A co-operative society is managed by the members only. They do not possess any managerial and special skills.
  • The co-operative societies sell their products to outsiders only in cash. Hence, marketing is a shortcoming for the co-operatives.
  • Government put their nominee in the Board of management of co-operative society. They influence the decision of the Board which may or may not be favourable for the interest of the society.
  • It constitutes of members from various types of personnel from different social, economical and academic background which may cause a lack of harmony between them.
  • The co-operative society docs not maintain any secrecy in business because the affairs of the society is openly discussed in the meetings.
  • Excessive state regulation, interference with the flexibility of its operation affects adversely the efficiency of the management of the society.

5. Limited Liability Partnership
Limited Liability Partnership entities, the world wide recognized form of business organization has now been introduced in India by way of Limited Liability Partnership Act, 2008. A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.

It is a new corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. In other words, it is an alternative corporate business vehicle that provides the benefits of limited liability of a company, but allows its members the flexibility of organising their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm.
Internationally, LLPs arc the preferred vehicle of business, particularly for service industry or for activities involving professionals.

The characteristic features of LLP are:

  • The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons,
    associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
  • It offers limited liability protection for its partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.
  • The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act, 2008. The Act provides flexibility to devise the agreement as per their choice.
  • Renowned and accepted form of business worldwide
  • An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status does.
  • Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
  • The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
  • The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
  • The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act, 2008.
  • The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.
  • Low cost of Formation and compliances.
  • Body corporate can be a partner of an LLP.

Advantages of Limited Liability Partnership:

  • First and foremost benefit of trading/doing business via LLP is the limited liability conferred upon the partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.
  • Changes in partners does not make an end to LLP.
  • Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general and for the enterprises in services sector, in particular.
  • No restriction regarding the number of partners.
  • No requirement of minimum capital.
  • Body corporate can be a partner of an LLP.
  • It is easy to dissolve or wind up an LLP.

Disadvantages of Limited Liability Partnership:

  • It cannot raise funds from public.
  • A major disadvantage of operating an LLP is that a partner can enter into a contractual agreement without the authorization of another partner.
  • There is no distinct separation between management and owners.

6. Company:
A company is a legal entity that is separate from its owners, the shareholders. No shareholder of a corporation is personally liable for the debts, obligations or acts of the corporation. A company is registered association which is an artificial legal person, having an independent legal, entity with a perpetual succession, a common seal for its signatures, a common capital comprised of transferable shares and carrying limited liability.

Its main features are:

  • It has an independent legal existence. The Indian Companies Act, 2013 contains the provisions regarding the legal formalities for setting up of a private limited company. Registrars of Companies (ROC) appointed under the Companies Act covering the various States and Union Territories are vested with the primary duty of registering companies floated in the respective states and the Union Territories.
  • A corporation is identified by the terms “Limited”, “Ltd.”, “Incorporated”, “Inc.”, “Corporation”. Whatever the term, it must appear with the corporate name on all documents, stationery and so on, as it appears on the incorporation document.
  • A joint stock company is a voluntary association of certain persons formed to carry out a particular purpose in common.
  • For forming a public company at least seven persons and for a private company at least two persons are persons are required.
  • A company is an artificial person. It has to act through a board of directors elected by shareholders.
  • The liability of its members is limited.
  • It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it.
  • Its formation, working and its winding up, in fact, all its activities are strictly governed by laws, rules and regulations.
  • Being an artificial entity, a company cannot act and sign itself. Therefore, it acts through human beings. All the acts of the company are authorised by its common seal.

Advantages of Company Form of Organization

  • A company is a creation of the law and only the law can bring an end to its existence. Its life does not depend on the life of its members.
  • As a company has a separate legal entity, its members cannot be held liable for the debts of the company. The liability of every member is limited to the nominal value of the shares bought by him or to the amount of guarantee given by him.
  • With this form of organisation larger amount of capital can be raised.
  • The capital of a company is divided into parts. Each part is called a share. These shares are generally transferable.
  • A company is an artificial person created by law. It exists only in contemplation of law. It is competent to enter into contracts and to own property in its own name.
  • Organizing a business in corporate form increases the credibility of the company. In addition, businesses organized in corporate form appear more professional in comparison to other forms of business. Thus this form of organisation can avail more financial loans from financial institutions.
  • Organizing a business as a corporation provides owners with personal asset protection.
  • Businesses that organize as a corporation find it easier to transfer ownership.
  • Ownership interest in a corporation may be sold or assigned by transferring the company’s stock certificate to another shareholder.
  • The management of companies is done by the directors elected by the shareholders. Due to this, shareholders elect only such directors who are experts and posses special knowledge and skill in their respective field so that management of the business may be done with maximum efficiency and ability.
  • The company form of organization is an effective medium for mobilizing the scattered savings of the community and investing them in different commercial and industrial enterprises.

Disadvantages of Company Form of Organization:

  • The formation of a joint stock company is much more complicated than sole proprietorship or partnership.
    There are many legal formalities,
  • The joint stock company is subject to doubt taxation. It pays tax on its earnings to the government. The tax is also paid by the shareholders on receipt of dividend from the company.
  • Scope for directors for personal profit because shareholders are scattered and are not known to each other thus all the business is in the hands of directors who can misuse it.
  • Working of companies ate regulated by the provisions of the Companies Act. Thus a lot many formalities are to be fulfilled
  • There is no secrecy of business cause profit and loss account, balance sheet etc. are to be published.
  • One of the primary disadvantages of a corporation is the costs for running a corporate form of business. It costs money to incorporate with the state where the business operates.
  • Corporations need to maintain more records than other business entities. Corporations must file annual reports. and tax returns and maintain business bank accounts and records that are separate from personal accounts.

Shareholder meeting records, board of director meeting records etc.

  • The shares of some company are listed on stock exchange which can experience speculation.
  • Undemocratic control with the exploitation of scattered shareholders.
  • If the objective of promoters is dishonesty then there is Scope for promotional frauds. They may give a very good picture about the company hiding true facts to investors which may affect the investor and its money.
  • Generally policy decisions are taken at the Board meetings of the company.
  • Further the company has to fulfill certain procedural formalities. These procedures are time consuming and therefore, may delay action on the decisions.
  • A company is a large-scale business organisation having huge resources. This gives a lot of economic and other power to the persons who manage the company. Any misuse of such power creates unhealthy conditions in the society.
  • A joint stock company form of business organisation is found to be suitable where the volume of business is large and huge financial resources are needed. Since members of a joint stock company have limited liability it is possible to raise capital from the public without much difficulty. This form of organisation is also suitable for businesses which involve heavy risks.

→ Other Company types Domestic Corporation
A company that conducts its affairs in its home country. A domestic corporation is often taxed differently than a foreign corporation and may be required to pay duties or fees on the importatiofi of its products.

Foreign Corporation:
It means any company incorporated outside India which has an established place of business in India. A company has an established place of business in India if it has a specified place at which it carries on business such as an office, store house or other premises functioning in India.

Private Corporation:
A privately held company or close corporation is a business company owned by small number of shareholders or company members which does not offer or trade its company shares to the general public on the stock market exchanges.

Public Corporation:
A public company means a company which is not a private company. Any seven or more persons can join hands to form a public company.

→ Statutory Bodies and Corporations:
A statutory corporation or public body is a corporation created by statute. The Act or statute defines its objectives, powers and functions. A public corporation seeks to combine the flexibility of private company and the accountability of public enterprises. Life Insurance Corporation of India, Reserve Bank of India, Employees State Insurance Corporation, Industrial Development bank of India are examples of public Corporation.

Its main features are:

  • It is a body corporate established through a special Act of Parliament or State Legislature. The Act defines its powers and privileges and its relationships with government departments and ministries.
  • The public corporation is wholly owned by the Central and/or State Govemment(s)
  • It has a separate legal entity
  • Initial capital is provided by Government.
  • The corporations not subject to the budgetary, accounting and audit regulations applicable to government departments.
  • The management of companies is done by the directors elected by the Government.
  • The primary motive of the corporation is public service rather than private profits.

Advantages of a Statutory Corporation

  • There is no parliamentary interference, so it enjoys internal autonomy.
  • The formal corporate structure facilitates professional managers which help in good decision-making.
  • A public corporation is often granted special privileges. The special law by which by which it is created can be tailor made to meet the specific needs of the particular situation.
  • One of the advantages of a statutory corporation is that, being a separate legal entity, it keeps going indefinitely, regardless of who owns or directs it. This can be an advantage where ownership or control is going to change.

Disadvantages of a Statutory Corporation

  • It is very difficult to form statutory corporations because it requires lengthy documentation, complicated formalities and passing of statue.
  • Statutory Corporations is suitable only for giant size business but is not suitable for small size business.
  • The policies once approved, the statue once passed cannot be changed easily. It can be done by the parliament only and this is very time-consuming.
  • Mostly Statutory Corporations are subject to political interference and this affects the efficiency of the corporation and practically their internal autonomy is lost.

CS Foundation Business Environment Notes

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CS Foundation Business Environment Notes

→ Business may be defined as the organised effort by individuals to produce goods and services, to sell these goods and services in a market place and to reap some reward for this effort. Business term can be understood as an enterprise doing work with a motive to earn profit. Besides this business can also be termed as a change, a change to adapt itself to survive in the market. A business environment is always changing because of change in government policies, change in technology, etc. which force the business to adapt itself to these changes.

Business environment encompasses all those factors that affect a company’s operations and includes customers, competitors, stakeholders, suppliers, industry trends, regulations, other government activities, social and economic factors and technological developments. Besides earning profit, business has some other benefits also like:

  1. It provides employment.
  2. It is responsible for the supply of goods and services.
  3. It contributes to the economic growth of the country.
  4. It is an important institution in the society.

→ Characteristics of business environment:
1. Environment is Complex:
Business environment principally consists of a number of factors, events conditions.
These are influenced to different departmental source in the organisation. All these factors have to be considered as environment analysis is complex and rigid and totally very difficult.

2. Environment is Multi-faceted:
Business environment is changing frequently. Strategic observer can shape and observe different character of this changing environment. Strategic observer may find some changes as an opportunity and some as a threat.

3. Environment has a far reaching impact:
Environment impact is essential ingredients for strategist to study changes and take appropriate decisions at appropriate time. If strategically neglect to take appropriate decisions at the right time which create impact to organisation then it may affect the organisation in a negative way.

4. Environment is Dynamic
Business and company environment is constantly changing in different nature. Micro and macro-environment factors are influenced to business. It impact to change on the business conditions. Dynamic environment is flexible and dynamic nature in company. A company drafts its short-term and long-term objective taking care of the dynamic nature of business environment.

→ Importance of business environment:
As a business environment is uncertain and dynamic, an enterprise has to keep itself fit to survive in this environment. An enterprise has to constantly keep an eye on this changing environment. Various threats to the enterprise in the business environment are:-

  1. To keep a look on the potential threats to the business. It has to constantly monitor the rivals and formulate strategies to cope up with the competition.
  2. To a business should look for the first mover advantage thus if any enterprise is the first to do any business than it gets an advantage in the market as there is no competition.
  3. As the business environment is dynamic, an enterprise should develop a course of action to meet this changing environment.
  4. An enterprise has to continuously monitor the environment so that with the change the performance can be improved.

→ Vision and Mission Statement
Every enterprise has to have a vision and mission for its progress. By vision, we mean an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision. Vision is actually the future goal of the enterprise and for achieving that goal some measurements are to be followed by company. These measurements are the mission of the enterprise. Elements of Mission and Vision Statements are often combined to provide a statement of the company’s purpose, goals and values. However, sometimes the two terms are used interchangeably.

There are many other reasons to develop vision and mission statements as well. For example, having clear and compelling vision statements can:

  • Draw people to common work
  • Give hope for a better future
  • Inspire community members to realize their dreams through positive, effective action
  • Provide a basis for developing the other aspects of your action planning process: your mission, objectives, strategies and action plans

laving a clear mission, the statement can:-

  • Convert the broad dreams of your vision into more specific, action-oriented terms
  • Explain your goals to interested parties in a clear and concise manner
  • Enhance your organization’s image as being competent and professional

→ Types of Business Environment
Mainly, there are two types of business environment:
A. Internal
B. External

A. Internal Environment
An organization’s internal environment is composed of the elements within the organization, including current employees, management and especially corporate culture, which defines employee behaviour. Internal environment consists of factors that are in the control of the business. It includes 6 Ms i.e:

  1. Man
  2. Money
  3. Machinery
  4. Marketing
  5. Management structure
  6. Miscellaneous factors

1. Man (Human Resources):
This factor is the most important and basic factor in an enterprise. The quality of the people working in an enterprise affect the organisation’s ability to achieve its goal. A dedicated, skilled, initiative, high morale staff is an asset to the enterprise.

2. Money:
This is required by an enterprise for starting the business and for its day-to-day operation. This money comes either in the form of share capital, loans from banks and Financial Institutions and the unorganised capital market.

3. Machinery:
Company invests money in fixed assets like machines, etc. so as to get a positive return over cost in future. Machine are the basic tools to produce goods or services. Selection of an appropriate and efficient machine not fijily increases efficiency but also saves time and increases revenue.

4. Marketing:
Marketing involves all the factors that affect the decision-making component of the management which includes quality of marketing men, distribution network. Management has to take decisions for how the company’s products or services are to be marketed so as to get maximum benefit and for achieving the target some of the internal factors like men, distribution policy, etc. are some of the internal factors to be checked upon.

5. Management structure:
Business is greatly influenced by the management of the business. Board of directors take the decisions for a business organisation, thus the way management thinks and take decisions greatly influence the business as a whole. Management develops different strategies for the working of an organisation. Management guides and inspire internal operations to ensure a competitive position in the market place.

6. Miscellaneous factors:
Besides the above mentioned factors there are other internal factors that affect the business. These are

→ Research and Development:
Research and Development mainly tells the company’s ability to survive or prosper in the changing business environment. Although they are mostly outsourced from external environment but it has direct impact on the decision-making of the organisation. Technology gives the new way of doing work. It includes new designs, inventions etc. Adaptability and innovation are crucial to gaining market share and staying profitable in fluctuating economic climates.

→ Value system of the organization:
By value system, we mean what is the policy of the organization regarding the right and wrong. It is the business ethics that the organization follows which defines the organization’s policy about right and wrong. Internal factors like organizational structure and the corporate culture decides the motivation of the employee with the company.

→ Company image:
A good company image help company to raise finance, making joint venture, making purchases, etc.

→ Competitive advantage:
Analyzing the competition is an internal business part of the company. Management of the company has to continuously and closely monitor its competitors as it directly affects the business.

→ Analyzing involves:

  • Identifying who is the competitor
  • Strengths and weaknesses of the competitors
  • Internal environment of the competitor
  • Strategies to meet out the competition

B. External Environment
An organization is continuously being affected by the external forces that surround it. All these forces that are outside the business enterprise but have an effect on the organization are constitute external environment. External environment of an organization includes a variety of factors, whose existence, influence its behaviour and performance. The action of these factors may be direct (for example, the actions of competitors) or indirect (for example, changes in business climate) and external environmental analysis is done in two different contexts:

  1. Micro-Environment
  2. Macro-Environment

(1) Micro-Environment:
The micro-environment, as the name suggests, is the immediate environment that impacts a business. These factors are more linked with the company. The micro-environment can generally be considered the local environment where the business operates and the business owner is likely to be somewhat aware of the impacts that they are faced with. Although these factors lie outside the company but they do not affect all the companies of a particular industry in a similar fashion. It may affect one company more than the other in the same industry. As they have direct impact on the organization it is also known as Operating environment or Task environment.

Some of the Micro-environment are:
(a) Employees
(b) Customers
(c) Shareholders
(d) Suppliers
(e) Media .
(f) Competitors

(a) Employees: Employees are those people that are employed to work for an organisation. Employees are an important because they drive value through customer satisfaction. They are the backbone of the organization. If the employees are not motivated and are not dedicated to work then it is a setback for an organization. These are the people who execute the plans drafted by management thus they play an important role in the success of organization.

(b) Customers: Customers are vital to our business because without paying customers, we have no business. The desire and need of a customer are primary to an organization. Every organization has to work according to customer orientation. All the business-strategies are to be made as per customers satisfaction.

(c) Shareholders: Shareholders are those members of the micro-environment that have a direct influence on your
business although they are not generally paying customers. Shareholder is an individual who invests his money in the organization. They own shares in the organisation which gives them the right to vote. Thus in a way working of the company is controlled by shareholders. A company has to have a close and strong relation with shareholders as they are not just the people who controls the working of a company but also the investors of the company.

(d) Suppliers: Suppliers are those companies that supply your business with goods and services to which you add value through transformation. Thus if the services or goods supplied by supplier are of inferior quality then it greatly affects the business. Today suppliers are a vital part of the supply chain, which sees valued-added at all stages from conception to consumption.

(e) Media: A positive image of an organisation is good for the success of an organization. Organizations need to have a positive media image. For this purpose, image organizations do employ public relation officers that continuously monitor the media and develop close contacts with them. These public relation officers develop strategies for media support.

(f) Competitors: Competitors are the people who compete for your customers. A business has to have a unique selling point. To overcome competition it has to project itself something different which makes it special. On some occasions you might collaborate with a competitor these are examples of alliances and joint ventures.

(2) Macro-environment
The macro-environment includes those things that may impact 1 businesses but which are outside of their control. It is the larger, external environment within which businesses operate from an industry or economic standpoint. It is also known as General or Remote environment.
Macro-environment study the overall issues of firms and broader dimensions.

It is mainly concerned with major issues.
‘STEEP’ explains the five areas of interest for macro-environment, these are:

  • S – Socio Cultural and Demographics
  • T – Technological
  • E – Economic conditions
  • E – Ecology and Physical Environment
  • P – Political and Legal

It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro-environmental factors that the company has to take into consideration.
(a) Socio Cultural and Demographic factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company’s products and how that company operates. For example, an ageing population may imply a smaller and less-willing workforce (thus increasing the cost of labour). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers).

(b) Technological factors such as R and D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality and lead to innovation.

(c) Economic factors: The economic environment constitutes to economic conditions, economic policies and the
economic system that is important to external factors of business. The economic factors affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and global economic factors. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm’s cost of capital and, therefore, to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy.

(d) Environmental factors include weather, climate and climate change, which may especially affect industries such as tourism, farming and insurance. Furthermore, growing awareness to climate change is affecting how companies operate and the products they offer – it is both creating new markets and diminishing or destroying existing ones.

(e) Political factors show how changes in government policy might affect the business. Political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided.

→ Global Development and Business Environment
Indian economy has been changing due to changing policies of Government as well as due to global integration. At the time of independence we had agrarian economy. Most of the economy was dependent on agriculture. Later on, policies were changed and emphasis was laid on industries. In 1991 licensing requirement for most of the industries were removed and private participation was welcomed. To channel foreign investment a board named ‘Foreign Investment Promotion Board’ was established. Thus, we can see Indian economy has been changing with time.

Its development can be divided into three heads for understanding

  1. Liberalisation
  2. Privatisation
  3. Globalisation

(1) Liberalisation:
Liberalisation can be termed as removal of controls. It is actually elimination of unnecessary controls and restrictions on the business organization. Characteristic features of Liberalisation are:

  • Abolishing industrial licensing
  • Reduction of tax rates
  • Freedom in fixing of price of goods and services
  • Simplifying the procedure of export and import
  • Simple policies to enhance the investment from foreign companies
  • Development of stiff competition
  • Low inflation rate

(2) Privatisation:
The transfer of ownership, property or business from the Government to the private sector is termed privatisation. The government ceases to be the owner of the entity. Privatisation is considered to bring more efficiency and objectivity to the company. Characteristic features of Privatisation are:

  • Partial or complete removal of control of state on any industry
  • Opening up of an industrial sector for private entities which earlier was completely reserved for public sector
  • To improve the performance of PSU’s
  • To remove administrative burden on state
  • To encourage private sector investment from both domestic as well as foreign sources
  • Sale of equity for divestiture or privatization of ownership
  • Denationalization or reprivatisation of a sector –
  • Privatization of management
  • Franchising certain services
  • Formal liquidation (closure of an enterprise and selling its assets)
  • Informal liquidation (retaining the legal status even though suspending some of its operations)
  • In order to raise resources selling shares of some public enterprises
  • Improvement in performance by MOU system which involves greater autonomy to management along with accountability.

(3) Globalization:
The tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets. Globalization has had the effect of markedly increasing not only international trade, but also cultural exchange.

Reasons for Globalization:

  • Domestic markets are not enough and other markets are required for the progress of industry
  • World is shrinking because of the development of the transportation, communication, technological changes, etc.
  • An organization named WTO (World Trade Organization) was established for the development of cross-border trade
  • For the development of business a new technology is needed which could be taken from overseas
  • To cut down the manufacturing cost, industries may set up manufacturing units overseas where manufacturing cost is favourable
  • To set up a business in a place which is politically more stable
  • Adverse business environment in home country pushes the companies to look for global market
  • Most companies move their headquarters to overseas to avoid their respective home countries’ high taxes and other costs associated in business operation in those countries.

CS Foundation Introduction to Law MCQ Questions

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CS Foundation Introduction to Law MCQ Questions

Question 1.

Who of the following was NOT a jurist of natural law?

a. Ulpine
b. Circero
c. Henry Maine
d. Justinian
Answer:
c. Henry Maine

Question 2.

The following is NOT a meaning of law, as described by Savigny’s theory,

a. Law is universal in nature.
b. Law is found and not made.
c. Law is the art of what is equitable and good.
d. Law is found and not made.
Answer:
c. Law is the art of what is equitable and good.

Question 3.

Law is an “essentially and exclusively a social fact” whose definition of law is this?

a. Doguit
b. Jeremy Benthan
c. Savigny
d. Keisen
Answer:
a. Doguit

Question 4.

Rule of conduct so established as to justify a prediction with reasonable certainty which will be enforced by Courts. This type of definition of law comes under the class.

a. Sociological definition of law
b. Realist definition of law
c. Historical definition of law
d. None of the above.
Answer:
b. Realist definition of law

Question 5.

What is the doctrine of stare decisis?

a. The doctrine of sovereignty
b. The beginning of case
c. The statutory law
d. The doctrine of precedent
Answer:
d. The doctrine of precedent

Question 6.

Personal law means

a. Hindu law.
b. Hindu and Islamic law
c. Hindu and Mohammedan law
d. All of the above.
Answer:
c. Hindu and Mohammedan law

Question 7.

Positive morality is NOT a part of

a. Customs law
b. Presidents
c. Legislation
d. Personal law
Answer:
a. Customs law

Question 8.

The doctrine of binding precedent does NOT apply to Supreme Court. Is this true?

a. No, the Supreme Court should normally follow its own prior decisions but may deport from them when it appears right to do so
b. No, the Supreme Court is bound by its own previous decisions.
c. Yes, the Supreme Court is highest court and as such not bound by doctrine.
d. No, Supreme Court is bound only by its own previous
Answer:
a. No, the Supreme Court should normally follow its own prior decisions but may deport from them when it appears right to do so

Question 9.

A custom will be valid at law only if

1. Custom shows certainty
2. Custom must not be opposed to morality
3. Custom must not be general
4. Custom must show consistency Select the correct option

a. 1,2,3 fulfils
b. 1, 3, 4 fulfils
c. 1,2,4 .
d. 4,1,3
Answer:
c. 1,2,4 .

Question 10.

The doctrine of precedent applies to

a. Only courts
b. Only tribunals
c. Both courts and tribunals
d. None of the above.
Answer:
a. Only courts

Question 11.

Ratio decidendi means?

a. A judicial decision
b. Part of the judgment which possesses authority
c. An observation made by any judge.
d. Only observation made by the court which goes beyond the requirement of the case
Answer:
b. Part of the judgment which possesses authority

Question 12.

When a court finds some material difference between the facts of the case currently under consideration and the facts of an earlier case which established a precedent the court can:

a. Overrule the earlier case
b. Reverse the earlier decision
c. Disapprove the earlier case
d. Distinguish the earlier case
Answer:
c. Disapprove the earlier case

Question 13.

Statute law is law made by:

a. Statutory bodies
b. Courts
c. Parliament
d. Statutory officials
Answer:
c. Parliament

Question 14.

Where statute law and common law conflict:

a. Statute law prevails
b. Common law prevails
c. The matter will be referred to equity for a decision
d. The matter will be referred to High Court for a decision
Answer:
c. The matter will be referred to equity for a decision

Question 15.

Doctrine of justice, equity and good conscience is NOT applied in case where,—

a. Custom has been described in four Vedas.
b. Custom has been described in Koran
c. Law or custom is found in codes of Manu
d. All of the above.
Answer:
d. All of the above.

Question 16.

Which of the following statement is correct?

a. Statements made obiter dicta form the basis of precedent established in a case.
b. Statement made obiter dicta are of persuasive authority.
c. Statements made obiter dicta are binding or all courts.
d. Statements made obiter dicta have no influence on courts.
Answer:
b. Statement made obiter dicta are of persuasive authority.

Question 17.

Intra vires means

a. Within the powers
b. Between living persons
c. Amongst other things
d. None of the above.
Answer:
a. Within the powers

Question 18.

The true way of citing a case whose details are Ram versus Motilal decided in 1865 and can be found in volume 208 of Supreme Court cases starting at page 216 will be

a. Ram v Motilal, 208 SCC 216 (1865)
b. Ram V. Motilal, 208 SCC 216 (1865)
c. RamV. Motilal 208 SCC 216, (1865)
d. Ram VS Motilal. 208 SCC 216 1865
Answer:
b. Ram V. Motilal, 208 SCC 216 (1865)

Question 19.

What is the ratio decidendi of a case?

a. The evidence of a case
b. The legal reasoning of a case
c. The facts of a case
d. The first paragraph in a case
Answer:
d. The first paragraph in a case

Question 20.

In case of unincorporated association legal action is taken against.

a. Association
b. Members of association
c. Both a and b
d. None of the above.
b. Members of association

Question 21.

When a court applies prior judicial rulings to cases which is similar to the prior case than it is called

a. Personal law
b. Precedent
c. Common law
d. None of the above
Answer:
b. Precedent

Question 22.

When a court establishes a binding precedent, the reason for its decision is referred as:

a. Stare decisis
b. Caveat emptor
c. Res judicata
d. Ratio decidendi
Answer:
b. Caveat emptor

Question 23.

These are ’the observations made by the court which are having persuasive value but have no binding power which can be used for future references is called

a. Stare decisis
b. Ratio decidendi
c. Obiter dicta
d. Caveat emptor
Answer:
c. Obiter dicta

Question 24.

Which of these is not true regarding the doctrine of stare decisis?

a. A lower court is bound by a decision of a superior court in the same jurisdiction when the superior court has decided the same issue.
b. A decision in one province is binding in other provinces.
c. Lower courts have considerable leeway to distinguish the earlier case on the basis of its facts.
d. All of the above are true.
Answer:
b. A decision in one province is binding in other provinces.

Question 1.

Which of the following is source of Indian mercantile law?

a. English Mercantile law
b. Judicial decisions.
c. Customs and trade usages
d. All of the above
Answer:
d. All of the above

Hint:
The main sources of modern Indian Law, as administered by Indian courts, may be divided into broad categories:
(i) Primary sources and,
(ii) secondary sources.
The primary sources of Indian law are:
(a) customs,
(b) judicial precedents
(c) statutes
(d) personal law.
The secondary sources of Indian law are:
(a) English Law
(b) Justice, equity and good conscience.

Question 2.

Which kind of precedent from the following creates and applies a new rule of law?

a. Declaratory
b. Persuasive
c. Absolutely authoritative
d. Original
Answer:
d. Original

Hint:
An original precedent is one which creates and applies a new rule of law. Precedent means some set pattern guiding the future conduct. The precedent on an issue is the collective body of judicially announced principles that a court should consider when interpreting the law. The doctrine of precedent declares that cases must be decided the same way when their materials facts are the same. Obviously it does not require that all the facts should be the same.

Question 3.

means “adhere to the decision and do not unsettle things which are established”

a. Stare decisis
b. Ratio decidendi C. Obiter dicta
d. None of the above.
Answer:
a. Stare decisis

Hint:
The doctrine of judicial precedent is based on stare decisis. That is the standing by of previous decisions. Once a point of law has been decided in a particular case, that law must be applied in all future cases containing the same material facts.

Question 4.

Which of the following is not a source of Indian law?

a. English mercantile law
b. Judicial decisions
c. Civil law
d. Customs and trade usage
Answer:
c. Civil law

Hint:
The primary sources of Indian law are:
(a) customs,
(b) judicial precedents
(c) statutes
(d) personal law

Question 5.

Which of the following is not a branch of merchant law?

a. Criminal law
b. Civil law
c. Administrative law
d. English law
Answer:
d. English law

Question 6.

Law is ” essentially and exclusively a social fact” is given under

a. Historical
b. Sociological
c. Realist
d. Positivistic
Answer:
b. Sociological

Hint:
Sociological jurisprudence is a term coined by the American jurist Roscoe Pound to describe his approach to the understanding of the law. This philosophical approach to law stresses the actual social effects of legal institutions, doctrines and practices. It examines the actual effects of the law within society and the influence of social phenomena on the substantive and procedural aspects of law.

Question 7.

“Justice is the main guiding element of law” is defined under which school?

a. Natural
b. Sociological
c. Positivistic
d. Historical
Answer:
a. Natural

Question 8.

Decision of one High Court have only a value in a court within the jurisdiction of another High Court.

a. Voluntary
b. Mandatory
c. Persuasive
d. All of the above
Answer:
c. Persuasive

Hint:
Decision of one High Court is not binding on other High Court and have persuasive value only. Decision of High Court is binding on all subordinate courts and tribunals.

Question 9.

The decisions given by Supreme Court are recorded in

a. AIR
b. SCC
c. AIR and SCC
d. ITR
Answer:
c. AIR and SCC

Hint:

  • AIR — All India Reports
  • SCC — Supreme Court Cases

Question 10.

Meaning of intra vires

a. Within the power
b. Amongst the other
c. Beyond the power
d. None of these
Answer:
a. Within the power

Hint:
The legal Maxim, “intra vires” means within the powers

Question 11.

Which law is related to the commercial activities of the people of the society?

a. Constitutional law
b. Administrative law
c. Civil law
d. Mercantile law
Answer:
d. Mercantile law

Hint:
Mercantile Law is known as commercial law or business law”. It is a branch of law which governs and regulates trade and commerce.

Question 12.

Past decision of the courts for future cases is known as:

a. Customs
b. Previous work
c. Precedents
d. Historical record.
Answer:
c. Precedents

Hint:
Precedent means some set pattern guiding the future conduct. The precedent on an issue is the collective body of judicially announced principles that a court should consider when interpreting the law. The doctrine of precedent declares that cases must be decided the same way when their materials facts are the same. Obviously, it does not require that all the facts should be the same

Question 13.

‘Fait accompli1 means:

a. Accomplished Act
b. Accomplished person
c. Vision to be accomplished
d. Person accompanying in crime
Answer:
a. Accomplished Act

Hint:
“fait accompli’ is a Latin word which means an accomplished act

Question 14.

In case of Hindu and Muslim family business, which laws prevail to divide their family properties?

a. Government law
b. Their Own laws
c. Legal laws
d. None of these.
Answer:
b. Their Own laws

Hint:
Hindus and Mohammedans are governed by their personal law. In case of Hindus personal Law is found in SHRUTI which includes four Vedas. In case of Muslims the laws that govern their personal laws are found in Holy Kuran.

Question 15.

In case name, the first name usually identifies:

a. The person who is defending the case
b. The person against whom the action is brought
c. The person who is bringing the court action
d. The person who is accused
Answer:
c. The person who is bringing the court action

Hint:
Example Roy v. Amit 204 In this example Roy v. Amit—Case Name. Usually the first name identifies who is bringing the court action and the second name is the person against whom action is being brought.
204 — Volume Number
AIR — Name of reporter
209 — Beginning page
1980 — Year of decision
Roy — Person who is bringing the court action
Amit — Person against whom action is being brought

Question 16.

Custom as a source has a very inferior place in the

a. Hindu law
b. Judicial decision
c. Criminal law
d. Mohammedan law
Answer:
d. Mohammedan law

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Business Functions MCQ Questions

by

CS Foundation Emerging Trends in Business MCQ Questions

Question 1.

In India which of the following is a source of law?

(a) Acts of Parliament
(b) The politicians
(c) Self-regulating codes of practice
(d) Table A of the Companies Act
Answer:
(a) Acts of Parliament

Question 2.

Out of the following which is NOT an example of a political risk?

(a) Government regulations
(b) Cost of production
(c) War
(d) Civil unrest
Answer:
(b) Cost of production

Question 3.

Main factor for spending on R and D are

(a) For survival in the market
(b) For change in environment
(c) For change in government policies
(d) Change in company’s image.
Answer:
(a) For survival in the market

Question 4.

Strategic planning is ……….

(a) To develop relation between the organization and its environment.
(b) Creating new opportunities by stretching and exploiting capabilities in new ways.
c. The skills of the senior management
(d) Utilizing ail the resources of an organization to their full capacity.
Answer:
(d) Utilizing ail the resources of an organization to their full capacity.

Question 5.

The value chain main attempt purpose is not to make identify those activities that add value to:

(a) The key skills that will be required by organization.
(b) The senior managers strategies and efforts in the organization
(c) The organization’s shareholders.
(d) The customer or final user.
Answer:
(d) The customer or final user.

Question 6.

What type of strategic capabilities is the source of sustainable competitive advantage for a based view of strategy?

(a) Strategy based on unique resources and casual ambiguity.
(b) Dynamic capabilities with complex features.
(c) Operational excellence. .
(d) Strategic capabilities, which are valuable to buyers, rare, robust and non-substitutable.
Answer:
(d) Strategic capabilities, which are valuable to buyers, rare, robust and non-substitutable.

Question 7.

Which of the following is true about business strategies?

(a) Well defined missions make strategy development much easier.
(b) An organisation should stick with its strategy for life of the business.
(c) All firms with an industry will adopt the some strategy.
(d) Organisational……..strategies depend on operations strategies.
Answer:
(c) All firms with an industry will adopt the some strategy.

Question 8.

Location is a good criteria regarding a marked strategy as

(a) It takes care of politics
(b) It takes care of suppliers
(c) It takes care of government policies
(d) Both b and c
Answer:
(a) It takes care of politics

Question 9.

Corporate strategy is

(a) The implementation of plans to achieve long-term aims
(b) Vertical marketing strategy.
(c) More specific and practical than marketing strategy.
(d) Both a and b
Answer:
(a) The implementation of plans to achieve long-term aims

Question 10.

To optimise the productivity of retail space and inventory is the proper strategy is

(a) Efficient store assortments
(b) Revision of organisation processes by information systems
(c) Efficient replacement
(a) The implementation of plans to achieve long-term aims
Answer:
(a) The implementation of plans to achieve long-term aims

Question 11.

Upstream supply chain is:

(a) Exclusively inside an organization
(b) The distribution of products or delivery of services to customers
(c) Both the a and b
(d) Involved with procurement of material from suppliers.
Answer:
(a) Exclusively inside an organization

Question 12.

can be used to reduced rest time

(a) Batch method
(b) Low technology job
(c) High technology job.
(d) Flow method
Answer:
(d) Flow method

Question 13.

The typical aim of the break of task in supply chain management is:

(a) To increase costs of distribution
(b) To enhance product and service quality
(c) To reduced costs of new product development
(d) Both the b and c
Answer:
(c) To reduced costs of new product development

Question 14.

Assessment of competitive rivalry does not include an understanding of.

(a) The extent to which competitors are in balance
(b) Market growth rates. ‘
(c) Fixed costs, exit barriers and operational efficiency.
(d) The management structure of an organisation.
Answer:
(d) The management structure of an organisation.

Question 15.

By concept of budgeting we mean

(a) Formulation of plans for future company in numerical terms
(b) Deciding the future of company
(c) Preparing the plans for the company
(d) None of the above
Answer:
(a) Formulation of plans for future company in numerical terms

Question 16.

By the term SCM we mean

(a) Supply chain management
(b) Supply chain monitoring
(c) Supply chain movement
(d) None of the above
Answer:
(a) Supply chain management

Question 17.

When the data is shared with the Company’s suppliers in SCM than it is called

(a) Upstream
(b) Downstream
(c) Both a and b
(d) None of the above
Answer:
(a) Upstream

Question 18.

When the data is shared with the Company’s clients in SCM than it is called

(a) Upstream
(b) Downstream
(c) Both a and b
(d) None of the above
Answer:
(b) Downstream

Question 19.

Scope of financial management does not include

(a) Financial decisions
(b) Investment decisions
(c) Dividend decisions
(d) None of the above
Answer:
(d) None of the above

Question 20.

An appropriate strategy to achieve expectations of investors is

(a) Corporate strategy
(b) Efficient replacement
(c) Business unit strategy
(d) Operational strategy
Answer:
(a) Corporate strategy

Question 21.

An appropriate strategy to develop market for company is:

(a) Business unit strategy
(b) Corporate strategy
(c) Efficient replacement strategy
(d) Operational strategy
Answer:
(a) Business unit strategy

Question 22.

An appropriate strategy to optimize resources and people is

(a) Corporate strategy
(b) Operational strategy
(c) Business unit strategy
(d) Efficient replacement strategy
Answer:
(b) Operational strategy

Question 23.

A transaction involves……..

(a) At least two parties
(b) Each party has something that might be of value to the other party
(c) Each party is capable of communication and delivery
(d) All of the above
Answer:
(d) All of the above

Question 24.

Marketing management is………

(a) Managing the marketing process
(b) Monitoring the profitability of the companies products and services
(c) Selecting target markets
d The art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer Value
Answer:
d The art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer Value

Question 25.

A business tool used for determining a products offering is

(a) Marketing mix
(b) Administration
(c) Human resource management
(d) Selling
Answer:
(a) Marketing mix

Question 26.

A major advantage of the corporate form of organization is:

(a) Reduction of double taxation.
(b) Limited owner liability.
(c) Legal restrictions.
(d) Ease of organization.
Answer:
(a) Reduction of double taxation.

Question 27.

The company sets its marketing budget by estimating the investment in current assets at different points of time. Select the type of budget keeping in view the above mentioned purpose

(a) Sales Budget
(b) Cash-Budget
(c) Working capital Budget
(d) Production Budget
(b) Cash-Budget

Question 28.

To develop its market segments, Dabur planned to produce 20000 bottles of Roohafza everyday. This approach of setting budget is

(a) Sales budget
(b) Production budget
(c) Cash budget
(d) None of the above.
Answer:
(a) Sales budget

Question 29.

The import of strategies on the general dissection and basic character of a company is strategy

(a) Medium large
(b) Short large
(c) Long large
(d) Temporal
Answer:
(b) Short large

Question 30.

Which of the following is true?

(a) Corporate strategy is shaped by functional strategy.
(b) Functional strategy is shaped by corporate strategy.
(c) Corporate mission is shaped by functions strategy.
(d) None of the above.
Answer:
(d) None of the above.

Question 31.

Downstream supply chain is:

(a) Exclusively inside an organisation
(b) Involved with procurement of material from suppliers
(c) The distribution of products or delivery of services to customers
(d) Both the a and b
Answer:
(b) Involved with procurement of material from suppliers

Question 32.

……….. offers the opportunity to produced goods as per customer and specific need.

(a) Job method
(b) Batch method
(c) Flow method
(d) All of the above.
Answer:
(d) All of the above.

Question 33.

Out of these which is not a function normally performed by the HR department?

(a) Recruitment and selection
(b) Pay and reward.
(c) Accounting
(d) Employee relations.
Answer:
(d) Employee relations.

Question 34.

As marketing manager for globalisation, of your company one should take care of various things except

(a) Informal liquidation.
(b) Deregulation of antitrust lows
(c) Working around the clock
(d) Political stability
Answer:
(a) Informal liquidation.

Question 35.

For international development of business enterprise it should always take care of following points

(a) Unnecessary controls on Industrial licensing, reduction in tax, rates, socio-cultural
(b) Reduction in tax, unnecessary controls on industrial licensing, shareholders
(c) Media, socio-cultural, shareholders
(d) Unnecessary controls on industrial licensing, reduction in taxes, freedoms in fixing prices.
Answer:
(d) Unnecessary controls on industrial licensing, reduction in taxes, freedoms in fixing prices.

Question 36.

The marketing mix when applied to international markets must:

(a) Be standardised throughout the global market.
(b) Ignore the cultural and environmental
variations between the different markets
(c) Take into account the cultural and environmental differences between markets.
(d) a and b
Answer:
(c) Take into account the cultural and environmental differences between markets.

Question 37.

The process of privatisation is where:

(a) Services that were previously supplied internally are outsourced.
(b) A company is transferred from public limited by closure of an enterprise.
(c) A state-owned or nationalised corporation is sold to the private sector through sale of equity.
(d) All of the above.
Answer:
(d) All of the above.

Question 38.

Identify the best definition of planning

(a) An integrated process in which plans are formulated, carried out and controlled
(b) The core activity of planners and planning departments
(c) Devising ways of achieving the objectives of an organization
(d) Setting an organization’s objectives and the means of reaching them
Answer:
(d) Setting an organization’s objectives and the means of reaching them

Question 39.

Which one of the following may NOT be a factor behind starting a business?

(a) Routine workload
(b) Size of the firm
(c) Finance
(d) Location of the business
Answer:
(a) Routine workload

Question 40.

What doe we mean by ITES

(a) Indian Technology enabled services
(b) International Telecommunication extra services.
(c) IT enabled services.
(d) None of the above
Answer:
(c) IT enabled services.

Question 41.

An auditor has the right to communicate the audit results to

(a) Employers
(b) Some other auditor
(c) Company
(d) a and c
Answer:
(c) Company

Question 42.

Which one of the following is not correctly matched?

(a) Record keeping: Accounting
(b) Managing procedural formalities: secretarial functions
(c) Programs to enhance renewable resource: accounting
(d) None of the above.
Answer:
(c) Programs to enhance renewable resource: accounting

Question 43.

These are the factors location of business

(a) Labour
(b) Communication
(c) Suppliers
(d) All of the above
Answer:
(d) All of the above

Question 44.

“A trader is not a middleman bringing the buyer and seller together and receiving the commission for the services provided by him” Is the statement

(a) True
(b) False
(c) Depends on the condition
(d) There is nothing specified about it
Answer:
(a) True

Question 45.

From a system perspective the correct sequence of an organisation’s supply chain.

(a) Transformation process, delivery to customers, acquisition of resources.
(b) Acquisition of resources, transformation process, delivery to customers
(c) Delivery to customers, acquisition of resources, transformation process.
(d) All of the above
Answer:
(a) Transformation process, delivery to customers, acquisition of resources.

Question 46.

Why do companies spend on research and development

(a) To do business in a streamlined way
(b) It is a part of business
(c) Change is a crucial part of business.
(d) None of the above.
Answer:
(b) It is a part of business

Question 47.

What is the primary purpose of budgeting?

(a) Planning
(b) Control
(c) Organizing
(d) Direction
Answer:
(b) Control

Hint:
Budgets are plans and budgetary control are the comparisons of plans with the actual performance. Control is provided by comparisons of actual results against budget plan

Question 48.

These influences the choice of location business:

a. Labour
b. Government Assistance
(c) Population
(d) All of the above
Answer:
(d) All of the above

Hint:
The main factors affecting location are:
(a) Raw materials
(b) Market
(c) Transport costs:
(d) Land
(e) Labour
(f) Population
(g) Waste disposal
(h) Government
(i) Overseas location decisions

Question 49.

Main factor for spending on R and D are

a. For survival in the market
b. For change in environment
c. For change in government policies
(d) Change in company’s image.
Answer:
b. For change in environment

Hint:
Flow production (Process Production) is also a very common method of production. Flow production is when the product is built up through many segregated stages; the product is built upon at each stage and then passed directly to the next stage where it is built upon again. The production method is financially the most efficient and effective because there is less of a need for skilled workers.

Question 50.

What is the chief work done by top authorities in of structure of management?

(a) Decision-Making
(b) Recruiting Manpower
(c) Holding Meeting ‘
(d) Selling Products
Answer:
(a) Decision-Making

Hint:
The top level management is doing the work of thinking, planning and deciding that is why they are called brain of the organisation.

Question 51.

Which one of the following strategy deals vyith day-to-day activities of a business?

(a) Corporate strategy
(b) Operational strategy
(c) Business unit strategy
(d) None of the above.
Answer:
(b) Operational strategy

Hint:
Corporate Strategy- is concerned with the selection of business in which company should compete. It is a crucial level since it is a deciding factor for investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a “mission statement”. .

Question 52.

Which level of management is responsible for strategic planning in an organisation?

(a) Lower level management
(b) Middle level management
(c) Top level management
(d) All of the above.
Answer:
(c) Top level management

Hint:
Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations. Since it involves various aspects of planning it is done by top level managers of organisation.

Question 53.

Which one of the following is the responsibility of human resource management?

(a) To ensure respect for individual employer
(b) To ensure reconciliation of individual goals with those of the organisation
(c) To achieve and maintain high morals among the employees
(d) All of the above.
Answer:
(d) All of the above.

Hint:
The various objectives of Human resource management are To effectively achieve organisational objective To develop and maintain employees To ensure respect for individual employer To attend legal, social, ethical issues.
To ensure reconciliation of individual goals with those of the organisation

Question 54.

Marketing is a……….concept than selling.

(a) Narrow
(b) Older
(c) Broader
(d) None of the above
Answer:
(c) Broader

Question 55.

Which one of the following is not a part of Porter’s generic strategy?

(a) Focus
(b) Cost leadership
(c) Differentiation strategy
(d) Market segmentation.
Answer:
(d) Market segmentation.

Hint:
The three strategies of porter are
(A) Cost leadership
(B) Differentiation
(C) Focus

Question 56.

Which one of the following is not a part of ‘marketing mix’?

(a) Planning
(b) Product
(c) Price
(d) Place.
Answer:
(a) Planning

Hint:
The 4Ps is one way – probably the best-known way of defining the marketing mix. The 4Ps are: Product (or Service) Place, Price, Promotion.

Question 57.

In marketing, a distinctive group of consumers is known as:

(a) A class
(b) A segment
(c) An emerging market
(d) None of the above.
Answer:
(b) A segment

Question 58.

Car servicing is an example of

(a) Batch processing
(b) Job processing
(c) Flow processing
(d) Contract processing.
Answer:
(b) Job processing

Hint:
In Job method Products are manufactured to meet the requirements of a specific order. The quality involved is small and the manufacturing of the product will take place as per the specifications given by the customer. It is used when a product is produced with the labour of one or few workers and is scarcely used for bulk and large scale production. Thus this process is always non-standardised

Question 59.

Which of the following type of budget is prepared to assess the level of inventories, receivables etc.?

(a) Material Budget
(b) Profitability Budget
(c) Cash Budget
(d) Working Capital Budget.
Answer:
(d) Working Capital Budget.

Hint:
Working capital budget is a part of the total budgeting process of a business. It is prepared by estimating the future long-term and short-term working capital needs for example current assets like inventory, debtors, receivables, etc.

Question 60.

Which of the following strategy focuses on issues of production processes, material, etc. ?

(a) Operation Strategy
(b) Business Unit Strategy
(c) Corporate Strategy
(d) Marketing Strategy.
Answer:
(a) Operation Strategy

Hint:
An operation strategy for a business is the company’s plan for how the business will operate to achieve a set of goals.

Question 61.

Generally, is responsible for complying procedural .formalities relating to corporate restructuring in a company

(a) Finance function
(b) Marketing function
(c) Secretarial function
(d) Administration function
Answer:
(c) Secretarial function

Question 62.

Which of the following is not an accounting function:

(a) Maintaining accounts in compliance with Accounting Standards
(b) Arranging for finance
(c) Journalisation and preparation of final accounts
(d) Attrition monitoring
Answer:
(b) Arranging for finance

Hint:
The finance department of a business takes responsibility for organising the financial and accounting affairs including the preparation and presentation of appropriate accounts and the provision of financial information for managers. The main areas covered by the financial department include preparation of balance sheet, providing management advice etc. Arranging of finance is a financial service not accounting function

Question 63.

A means of obtaining financial resources that involves the sale of part of the ownership of the business is called:

(a) Bankruptcy
(b) Equity financing
(c) Commercial loans
(d) Debt financing
Answer:
(b) Equity financing

Hint:
Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.

Question 64.

Film production is done by which method of production?

(a) Job method
(b) Batch method
(c) Flow method
(d) Group method
Answer:
(a) Job method

Hint:
Job Method: In this system Products are manufactured to meet the requirements of a specific order. The quality involved is small and the manufacturing of the product will take place as per the specifications given by the customer. It is used when a product is produced with the labour of one or few workers and is scarcely used for bulk and large scale production. Thus this process is always non-standardised.

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Emerging Trends in Business MCQ Questions

by

CS Foundation Emerging Trends in Business MCQ Questions

Question 1.

Good marketing is no accident, but a result of careful planning and……..

(a) Execution
(b) Selling
(c) Strategies
(d) Tactics.
Answer:
(a) Execution

Question 2.

Compared to licensing, franchising is a more advantageous entry mode because:

(a) It generates economies of scale in marketing to international customers
(b) It is low-risk and low-cost
(c) It offers greater control
(d) All the above
Answer:
(d) All the above

Question 3.

…….. is the cornerstone of international franchising.

(a) Focus
(b) Concentration
(c) Standardisation
(d) Adaptation
Answer:
(c) Standardisation

Question 4.

If you are purchasing a franchise, one of the reason could be:

(a) It is always much cheaper than setting up a new business venture
(b) There is complete control over important decisions
(c) The business can use its own name in advertisements
(d) The risks of failure are lower as it is buying a well known business idea.
Answer:
(a) It is always much cheaper than setting up a new business venture

Question 5.

Which of the following is not the feature of B2B e-commerce?

(a) Pricing is based on quantities and often negotiable
(b) Manufacturers, retailers involved in this type of transaction
(c) More rapid response to customer enquiries
(d) Mostly commodities goods.
Answer:
(c) More rapid response to customer enquiries

Question 6.

Where buyers name their own prices, such type of ecommerce is called

(a) B2C.
(b) B2B.
(c) C2B.
(d) None of the above.
Answer:
(d) None of the above.

Question 7.

The classification of E-commerce domain that involves business activity initiated by the consumer and targeted to businesses is known as:

(a) Business to Consumer (B2C)
(b) Consumer to Business (C2B)
(c) Consumer to Consumer (C2C)
(d) Business to Business (B2B)
Answer:
(b) Consumer to Business (C2B)

Question 8.

……. is a B2B type of trading network that links a particular seller with its own trading partners.

(a) Search driven network
(b) Private trading network
(c) Virtual network
(d) Catalog driven network
Answer:
(b) Private trading network

Question 9.

A Website that is designed not to sell the company’s products directly rather to build customer goodwill is known as a…..website.

(a) Customer service
(b) Marketing
(c) Private Trading
(d) Sales Marketing
Answer:
(a) Customer service

Question 10.

Website that engages consumers in interactions that takes them closer to a direct purchase is known as a website.

(a) Customer service
(b) Marketing
(c) Private trading
(d) Sales marketing
Answer:
(c) Private trading

Question 11.

While preparing a website, designers should take care that the site enables user-to-user communication. This design feature is known as………..

(a) Context
(b) Connection
(c) Community
(d) Commerce
Answer:
(b) Connection

Question 12.

Out of these which statement is true?

(a) Both private and public companies need one director
(b) Private companies need two directors but ” public companies need 3
(c) Private companies need one director but public companies need two
(d) Both private and public companies need two directors
Answer:
(a) Both private and public companies need one director

Question 13.

What relationship best suits between these two concepts?

(a) E- business is a principle of e-commerce
(b) E-commerce is a subset of e-business
(c) E- business and e- commerce are both equal
(d) All of the above
Answer:
(a) E- business is a principle of e-commerce

Question 14.

Outsourcing is used by an organization for the interest of:

(a) Redirecting or conserving energy directed at the competencies of a particular business
(b) Making more efficient use of worldwide labor, capital, technology and resources
(c) Lowering firm costs or to make more efficient use of worldwide labor, capital, technology and resources
(d) Any of the above
Answer:
(d) Any of the above

Question 15.

Which of the following is not effective in preventing a potential competition from entering the market?

(a) High capital costs
(b) Differentiation.
(c) Retaliation
(d) Low switching costs are buyers
Answer:
(a) High capital costs

Question 16.

A company’s marketing environment includes various……….. that are made up of groups that have an actual or potential interest in, or impact on, an organisation’s ability to achieve its objectives.

(a) Publics
(b) Intermediaries
(c) Teams
(d) Audiences
Answer:
(a) Publics

Question 17.

The term loyalty is closely associated with

(a) Licensing
(b) Direct exporting
(c) Contract manufacturing
(d) Piggybacking
Answer:
(a) Licensing

Question 18.

Franchising is a……….method

(a) Workforce-oriented
(b) Market-oriented
(c) Production-oriented
(d) Management-oriented
Answer:
(b) Market-oriented

Question 19.

The advantage that is not available with BPO is……..

(a) Flexible
(b) Focus
(c) Speed
(d) Communication
Answer:
(d) Communication

Question 20.

Invariably the benefits of BPO are.

(a) Taking case of core business.
(b) It is cost effective
(c) A double edged sword
(d) A and B
Answer:
(d) A and B

Question 21.

Franchising is a part of

(a) Privatization
(b) Liberalization
(c) Globalization
(d) None of the above.
Answer:
(a) Privatization

Question 22.

The characteristic word “reach” when achieved by e-business it refers to:

(a) Different number of customers can interact with categories of products.
(b) The effectiveness of relationship.
(c) Non-standardized goods sold here.
(d) None of the above.
Answer:
(a) Different number of customers can interact with categories of products.

Question 23.

………… is the term that involves the use of electronic platforms such as intranets, extranets and the internet to conduct a company’s business

(a) E-commerce
(b) Commerce
(c) Both a and b
(d) None of the above
Answer:
(a) E-commerce

Question 24.

Advantages to a franchisor in a franchise are

(a) Capital injection
(b) Market penetration
(c) Risk sharing
(d) All of the above
Answer:
(d) All of the above

Question 25.

E- business is:

(a) The use of electronic communications for all business processes.
(b) An organization using electronic media to purchase from its suppliers.
(c) An organization using electronic media to sell direct to its customers
(d) Any electronically mediated communication between- an organization and its stakeholders.
Answer:
(d) Any electronically mediated communication between- an organization and its stakeholders.

Question 26.

Select the benefits an organization can receive from outsourcing

(a) Increase technical abilities
(b) Financial savings
(c) Market agility
(d) All of the above
Answer:
(a) Increase technical abilities

Question 27.

The most uncommon reason why companies outsource is

(a) Better manage the costs of internal processes
(b) More market exposure
(c) Tap outside sources of expertise
(d) Reduce headcount and related expenses
Answer:
(d) Reduce headcount and related expenses

Question 28.

Which of the following are the influential drivers affecting the growth of outsourcing markets?

(a) Rapid growth
(b) Core competencies
(c) Industry changes
(d) All of the above
Answer:
(d) All of the above

Question 29.

Which of the following is an outsourcing risk?

(a) Gain of control
(b) Flexibility
(c) Geopolitical certainty
(d) None of the above
Answer:
(c) Geopolitical certainty

Question 30.

What is the outsourcing option that includes the closest location and direct customer control?

(a) Offshore outsourcing
(b) Nearshore outsourcing
(c) Onshore outsourcing
(d) None of the above
Answer:
(d) None of the above

Question 31.

Which of the following is a challenge of outsourcing?

(a) Contract length
(b) Competitive edge
(c) Confidentiality
(d) All of the above
Answer:
(d) All of the above

Question 32.

What categories should an organization evaluate when making an outsourcing decision?

(a) Salary cost .
(b) Geopolitical risk
(c) English proficiency
(d) All of the above
Answer:
(c) English proficiency

Question 33.

………. is the corner stone of international franchising

(a) Concentration.
(b) Adaptation
(c) Standardization
(d) Focus
Answer:
(c) Standardization

Question 34.

One Advantage of outsourcing the services is

(a) It is economical
(b)It helps in diversifying the business
(c) The time zone problem is solved
(d) All of the above.
Answer:
(a) It is economical

Question 35.

Compared to licensing, franchising is a more advantageous mode of entry because

(a) It offers greater control
(b) It generates economies of scale in marketing to international customers.
(c) It is low-risk and low-cost
(d) All the above.
Answer:
(d) All the above.

Question 36.

In line with a franchising agreement, a franchiseed.may use:

(a) Geographic region exclusively
(b) Patents, designs, trade secrets and business know-how
(c) Trade marks copyright and trade secrets
(d) All of the above.
Answer:
(d) All of the above.

Question 37.

Near shore outsourcing is.

(a) Contracts done by company with other companies within a company’s own country.
(b) Contracts done by a company with neighbouring countries companies
(c) Contracts with companies excluding neighbouring countries.
(d) None of the above.
Answer:
(b) Contracts done by a company with neighbouring countries companies

Question 38.

The contracting of a specific business task, such as payroll to a third party service provider is

(a) BPO
(b) Insourcing
(c) Outsourcing
(d) Offshore-outsourcing
Answer:
(a) BPO

Question 39.

Advantages to the franchisee in a franchise are

(a) Marketing
(b) Economies of scale
(c) Instant goodwill
(d) All of the above
Answer:
(d) All of the above
Question 40.

Network marketing includes how many distribution channels?

(a) 0
(b) 1
(c) 2
(d) 3
Answer:
(a) 0

Hint:
Network Marketing is a business model in which a distributor network is needed to build the business. It is also known as multilevel marketing. In this kind of marketing the distribution channel is at 0 level as the firm sells goods directly to distributors.

Question 41.

Network marketing involves:

(a) Direct Marketing
(b) Indirect Marketing
(c) Both (a) and (b)
(d) None of the above. .
Answer:
(a) Direct Marketing

Hint:
Network marketing is Direct selling method in which independent-agents serve as distributors of goods and services

Question 42.

Which one of the following is a category in which Business Process Outsourcing can be categorised?

(a) Back office outsourcing
(b) Front office outsourcing
(c) Offshore outsourcing
(d) All of above
Answer:
(d) All of above

Hint:
In this, third party agencies perform your back office as well as front office data entry tasks effectively in quick turnaround times. In the 90s we used outsourcing to refer to big business sending jobs offshore.

Question 43.

Which among the following is one of the largest ‘Job providers’ in India?

(a) Network marketing
(b) Business process outsourcing
(c) Medical tourism
(d) Film industry.
Answer:
(b) Business process outsourcing

Question 44.

Which one of the following is a great concern for E-COMMERCE?

(a) Speed
(b) Quality
(c) Security risk
(d) Maintenance cost.
Answer:
(c) Security risk

Hint:
Disadvantages of E- Commerce Increased competition Security
High start up cost Slow adoption
Customer Relations Problems No human interaction Returning goods Fraud

Question 45.

The online purchase of a book from f1ipkart.com is an example of-

(a) B2B e-commerce
(b) B2C e-commerce
(c) C2B e-commerce
(d) C2C e-commerce
Answer:
(b) B2C e-commerce

Hint:
B2C (Business-to-Consumer)
The two or more entities that interact in this type of transactions involve a business and a consumer. The businesses offer a set of merchandise at given prices, discounts and shipping and delivery options.

Question 46.

For a car manufacturing firm, which of the following business process is most suitable for outsourcing?

(a) Production Management
(b) Quality Assurance
(c) Customer Relationship
(d) None of the above.
Answer:
(c) Customer Relationship

Hint:
Outsourcing simply refers to subcontracting an internal business function to an outside provider. Business process outsourcing is a great option for organizations looking to streamline business processes and increase productivity and profit.
Outsourcing gives you access to experts in fields related to your business. Marketing gurus, certified public accountants, certified human resource professionals and customer service coordinators are ready and waiting to help you grow your business. Thus for a car manufacturing outsourcing customer relations is most suitable.

Question 47.

In which of the following, personal digital assistants (PDAs) are used for buying and selling of goods and services?

(a) E-commerce
(b) M-commerce
(c) V-commerce
(d) All of the above.
Answer:
(b) M-commerce

Hint:
M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).

Question 48.

What is e-commerce?

(a) It refers to the use of computer network
(b) It refers to the idea of extracting business intelligence
(c) It refers to the buying and selling of goods and services
(d) Both (a) and (c)
Answer:
(a) It refers to the use of computer network

Hint:
E-commerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet.

Question 49.

Franchiser helps franchisee on setting up business or not-

(a) yes
(b) No
(c) Partly yes
(d) Can’t say
Answer:
(a) yes

Hint:
A franchisor is a party who owns trade mark or trade name. He provides support in the form of marketing, advertising, training, sometimes finance. In return of this he receives fees.

Question 50.

What is the other name of network marketing?

(a) Multi level marketing
(b) Zero level marketing
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)

Hint:
Network marketing, also known as Multi-Level Marketing (MLM), is a business model where independent contractors buy into a company and earn a commission on the products they sell.

Question 51.

Which amongst the following is the disadvantage of E-commerce?

(a) Lower transaction cost
(b) Difficulty in training and maintenance
(c) Security problems
(d) Both (b) and (c)
Answer:
(d) Both (b) and (c)

Hint:
Disadvantages of E- Commerce Increased competition Security
High start up cost Slow adoption
Customer Relations Problems No human interaction Returning goods
Difficulty in training and maintenance Fraud

Question 52.

BPO not only gives specialised performance, but also provides

(a) Same Cost
(b) Saving in Cost
(c) Different Cost
(d) None of the above
Answer:
(b) Saving in Cost

Hint:
Advantages of outsourcing are
1. Outsourcing saves time
2. Outsourcing expands your knowledge base
3. Outsourcing saves money
4. Increase efficiency
5. Start new projects quickly.
6. Level the playing field

Question 53.

……….. refers to the idea of extracting business intelligence from the competitive web pages.

(a) Web farming
(b) Web theft
(c) Web heating
(d) None of these
Answer:
(a) Web farming

Hint:
The idea of extracting business intelligence from the competition’s Web pages is called Web farming, a term coined by Richard Hackathon.

Question 54.

Customer care department in call centre handles:

(a) Does telemarketing only
(b) Inbound and outbound activities
(c) Inbound activities only
(d) Outbound activities only.
Answer:
(b) Inbound and outbound activities

Hint:
A customer service representative interacts with a company’s customers to provide them with information to address inquiries regarding products and services. In addition, they deal with and help resolve any customer complaints. Inbound customer service, the customer calls your company with a service request or an inquiry. Outbound-customer service represents a more proactive approach. An agent from your call center contacts customers to follow up on a service issue or to notify customers of new products or policy changes.

Question 55.

………. is a mode of direct marketing by the manufacturer. It consists of recruitments of persons who act as distributors of company’s products:

(a) Viral marketing
(b) Integrated marketing
(c) Network marketing
(d) Aggressive marketing.
Answer:
(c) Network marketing

Hint:
Network marketing, also known as Multi-Level Marketing (MLM), is a business model where independent contractors buy into a company and earn a commission on the products they sell. Network Marketing is a business model in which a distributor network is needed to build the business

Question 56.

E-Commerce results in ………Transaction cost and……..margin.

(a) Higher, lower
(b) Lower, lower
(c) Lower, higher
(d) Higher, higher
Answer:
(c) Lower, higher

Hint:
e-commerce can reduce transaction costs by making a marketplace more efficient. These reduced transaction costs or, equivalently, marketplace benefits can give higher margins.

Question 57.

PDA, smart phone, computer mediated network are the need in…….

(a) Network marketing
(b) E-Commerce
(c) M-Commerce
(d) Marketing
Answer:
(c) M-Commerce

Hint:
M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs).

Question 58.

Who amongst the following allows to use his trademark and provides assistance in business for a particular amount?

(a) Franchisee
(b) Government
(c) Partnership
(d) Company
Answer:
(a) Franchisee

Hint:
A franchisor is a party who owns trade mark or trade name. He provides support in the form of marketing, advertising, training, sometimes finance. In return of this he receives fees.
A franchisee is a party who uses the trade name or trade mark. He,starts and expands business on the basis of support received from franchisor. He pays fees to franchisor in return of all the support he gets from fi’im.

Question 59.

BPO that is contracted to a company’s neighbouring (or nearby) country is called

(a) off shore outsourcing
(b) near shore outsourcing
(c) on shore outsourcing
(d) None of the above
Answer:
(b) near shore outsourcing

Hint:
Near shore Outsourcing is the way of business operation performed by the nearby or neighboring countries to provide solutions for their clients.

Question 60.

Full form of E-Commerce is …….

(a) electric commerce
(b) electricity commerce
(c) electronic commerce
(d) None of the above
Answer:
(c) electronic commerce

Hint:
Ecommerce (e-commerce) or electronic commerce, a subset of e-business, is the purchasing, selling and exchanging of goods and services over computer networks.

Question 61.

Which of the following are example of B 2 C?

(a) Online shopping websites
(b) Heavy key industries
(c) Purchase by a wholesaler from manufacturer
(d) None of the above
Answer:
(a) Online shopping websites

Hint:
B2C (Business-to-Consumer)
The two or more entities that interact in this type of transactions involve a business and a consumer. The businesses offer a set of merchandise at given prices, discounts and shipping and delivery options.

Question 62.

If a person post an advertisement to sell his product on OLX website, it is an example of

(a) B 2 C
(b) B 2 B
(c) C 2 C
(d) C 2 B
Answer:
(c) C 2 C

Hint:
C2C (Consumer-to-Consumer)
There are many sites offering free classifieds, auctions and forums where individuals can buy and sell. eBay’s auction service is a great example of where person-to-person transactions take place.

Question 63.

Selling + customer satisfaction =

(a) Network Marketing
(b) E-Commerce
(c) M Commerce
(d) Marketing
Answer:
(d) Marketing

Hint:
Marketing
Selling + Customer satisfaction = Marketing

Question 64.

Automobile parts are being purchased from ABC company, by placing orders through its website. This is an example of

(a) Viral marketing
(b) Network marketing
(c) BPO
(d) E-Commerce
Answer:
(d) E-Commerce

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Scales of Business MCQ Questions

by

CS Foundation Scales of Business MCQ Questions

Question 1.

Which of these is an Indian Multinational Company?

(a) Hindustan Unilever
(b) Videocon
(c) Cargill
(d) Tesco
Answer:
(b) Videocon

Question 2.

A MN(c) is defined by an organisation

(a) Carrying out production in more than one country.
(b) Having sales in more than one country.
(c) Having a multi-ethni(c) workforce
(d) Having- suppliers in more than one country
Answer:
(a) Carrying out production in more than one country.

Question 3.

Which of the following is not the requirement in Partnership deed?

(a) Capital contribution by each partner
(b) Profit sharing
(c) Total assets of the partner
(d) Method of dissolution
Answer:
(d) Method of dissolution

Question 4.

Out of these which is not a function normally performed by the HR department?

(a) Recruitment and selection
(b) Pay and reward.
(c) Accounting
(d) Employee relations.
Answer:
(c) Accounting

Question 5.

For the economic and industrial development Micro, Small and Medium Enterprises play an important role such as

(1) They have the capacity to absorb skilled and unskilled labour available in the country.
(2) Such institutions provide lots of employment and allow income to get concentrated in few hands or in few areas.
(3) They help in eradication of poverty by providing self-employment opportunities. Select the correct option

(a) Only (1)
(b) Only (2)
(c) Only (3)
(d) Only (1) and (3)
Answer:
(d) Only (1) and (3)

Question 6.

For multinational activity, ‘Internalization’ means.

(a) To undercut the prices of ‘local’ producers in overseas markets as multinational have an approach and exposure to global market and their scale of production is large enough.

(b) To set up an overseas production operation because of the fear of franchising operations that has been given to ‘local’ firms already in the market.

(c) Exploiting a well-established global brand image to dominate overseas markets.

(d) All of the above
Answer:
(c) Exploiting a well-established global brand image to dominate overseas markets.

Question 7.

The Multinational corporations provides lot of benefits as it

(a) Increases the transfer of technology between nations.
(b) They always produce the goods.
(c) Host countries progress is mostly dependent on them.
(d) None of the above.
Answer:
(a) Increases the transfer of technology between nations.

Question 8.

Which of the following is not the disadvantage of MNC?

(a) Strain on foreign exchange reserve of the host country
(b) More employment opportunities
(c) Creation of monopolies
(d) May kill domesti(c) industry.
Answer:
(b) More employment opportunities

Question 9.

The characteristics feature of a multinational enterprise (MNE) include

(a) It owns its subsidiaries in other countries
(b) It may operate in another country
(c) These are established due to difference in the rate of return on capital between the two countries
(d) Both (a) and b.
Answer:
(d) Both (a) and b.

Question 10.

It is NOT a large scale industry;

(a) IT industry
(b) Telecom
(c) Sugar industry
(d) Fashion technology
Answer:
(d) Fashion technology

Question 11.

It is common to find micro enterprises in developing countries because

(a) Relative lack of formal section jobs.
(b) Relative lack of workforce.
(c) Relative lack of resources.
(d) Relative lack of income.
Answer:
(a) Relative lack of formal section jobs.

Question 12.

Micro enterprises depend more on micro credit because.

(a) They need less loans
(b) They do not have access to commercial banking system.
(c) They are entrepreneurs
(d) None of the above.
Answer:
(b) They do not have access to commercial banking system.

Question 13.

For a manufacturing enterprise to come under the preview of micro enterprise the total investment should not be more than.

(a) Rs. 25 lakhs
(b) Rs. 20 lakhs
(c) Rs. 50 lakhs
(d) Rs. 15 lakhs
Answer:
(a) Rs. 25 lakhs

Question 14.

For a small scale industry it is not UNCOMMON to be

(a) More labor intensive than larger organization
(b) Less labor intensive than larger organization
(c) Not at all labor intensive
(d) None of the above.
Answer:
(a) More labor intensive than larger organization

Question 15.

Multinational Corporations can be defined as a firm which:

(a) is having all the government benefits of the origin country
(b) is counted amongst the biggest industries in the host country
(c) Owns companies in more than one country
(d) All of the above
Answer:
(c) Owns companies in more than one country

Question 16.

Some MNCs have their economy as large as the economy of many developing countries. For instance, Wal-Mart.

(a) False
(b) True
(c) Not relevant
(d) None of the above
Answer:
(b) True

Question 17.

Which can be a disadvantage to the home country of MN(c) investment?

(a) Transfer of capital from home country to host country.
(b) No employment to the people.
(c) Both a and b
(d) None of the above
Answer:
(b) No employment to the people.

Question 18.

Coir industry is a

(a) Medium scale industry
(b) Medium small scale industry
(c) Traditional small scale industry
(d) Large industry
Answer:
(c) Traditional small scale industry

Question 19.

The factors that make enormous opportunities for SSI are

(a) Project profiles
(b) Less capital intensive
(c) Tooling and testing support
(d) All of the above.
Answer:
(d) All of the above.

Question 20.

Macro-environment is concerned with

(a) Socio-cultural and demographers
(b) Political and legal
(c) Technology.
(d) Above all.
Answer:
(d) Above all.

Question 21.

If the investment in fixed assets of plant and machinery does not exceed one crore Rupees then that is

(a) Tiny industry
(b) Village industry
(c) Small scale industry
(d) Cottage industry
Answer:
(c) Small scale industry

Question 22.

Branch office kind of business form

(a) Can undertake any activity.
(b) Can undertake activity which is specifically permitted.
(c) Can work without being registered with Registrar of Companies,
(d) Can not carry on research work.
Answer:
(c) Can work without being registered with Registrar of Companies,

Question 23.

Which of the following statement is true for small scale industries?

(a) Four persons are employed for 1,00.000 of rupee investment
(b) Small scale industries are less labour intensive than larger organisation.
(c) They are not good for income generation.
(d) Opportunities in small scale industries are rare.
Answer:
(d) Opportunities in small scale industries are rare.

Question 24.

We read in the newspaper that the foreign direct investments are preferred over the capital inflow. In this context, please consider the following. Which statement is more suitable for this statement?

(a) FDI brings in latest technology
(b) FDI does not involve large outflow
(c) FDI improves efficiency of the economy
(d) None of the above
Answer:
(a) FDI brings in latest technology

Question 25.

Which of the following pairs of MNC and the countries where they are headquartered is/one correctly matched?

1. Mero-Germany
2. Walmart -USA
3. Tesco- UK
4. Carore four-France

(a) 123 only
(b) 1,2,3
(c) 4,1,2
(d) 1,2,3 and 4
Answer:
(a) 123 only

Question 26.

International trade in goods and services is sometimes used as a substitute for all of the following except

(a) International movements of capital.
(b) Domesti(c) production of different goods and services,
(c) International movement of labour .
(d) International movement of technology
Answer:
(b) Domestic production of different goods and services,

Question 27.

International trade is based on the idea that

(a) Exports should exceed imports
(b) Resources are less mobile internationally that are goods
(c) Resources are more mobile internally than are goods.
(d) Imports should not be there.
Answer:
(b) Resources are less mobile internationally that are goods

Question 28.

Technological improvements are -similar to international trade since both.

(a) Increase the nation’s aggregate income.
(b) Reduced unemployment for all domesti(c) markers.
(c) Neither helps in exports nor in imports.
(d) Make loss to nation.
Answer:
(a) Increase the nation’s aggregate income.

Question 29.

A MNC is defined by an organisation

(a) Carrying out production in more than one country.
(b) Having sales in more than one country.
(c) Having a multi-ethni(c) workforce
(d) Having- suppliers in more than one country
Answer:
(a) Carrying out production in more than one country.

Question 30.

New incoming partner pays his share of goodwill in cash and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners:

(a) As their old profit ratio
(b) According to new ratio
(c) According to sacrifice ratio
(d) None of these
Answer:
(a) As their old profit ratio

Question 31.

Micro, Small and Medium Enterprises play an important role in a country’s economic and industrial development that is

(1) They have the capacity to absorb skilled and unskilled labour available in the country.
(2) Such institutions provide lots of employment and allow income to get concentrated in few hands or in few areas.
(3) They help in eradication of poverty by providing self-employment opportunities. Select the most appropriate

(a) Only (1)
(b) Only (2)
(c) Only (3)
(d) Only (1) and (3)
Answer:
(d) Only (1) and (3)

Question 32.

Out of the following schemes which scheme launched by the Government of India aims at enhancing the livelihood security of the people in rural areas by guaranteeing hundred days of employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work?

(a) Pradhan Mantri Gram Sadak Yojana
(b) Kutir Jyoti Scheme
(c) ASHA
(d) MGNREGA
Answer:
(d) MGNREGA

Question 33.

The problem faced by small Business is/are

(a) Lack of adequate finance
(b) Outdated technology
(c) Shortage of raw materials
(d) All
Answer:
(d) All

Question 34.

Which of the following is not a key advantage of MNC?

(a) Technology movement
(b) Support enterprises in host countries
(c) Product duplication
(d) Provide services to professionals
Answer:
(c) Product duplication

Question 35.

Which of the following is an example of a multinational corporation?

(a) McDonald’s
(b) Nirma
(c) World trade organization
(d) United Nations Organization
Answer:
(a) McDonald’s

Question 36.

Home location for most of the world’s MNC is at

(a) America.
(b) America and Asia.
(c) Europe.
(d) Singapore.
Answer:
(a) America.

Question 37.

Multinational corporations, sometimes provide benefits to their home countries, except which one?

(a) Boost the industrial development in home country
(b) Allow for production of cheaper components for their products
(c) Marketing opportunities for the products produced in home country,
(d) Shift home country technology overseas via licensing
Answer:
(d) Shift home country technology overseas via licensing

Question 38.

Multinational corporation’s trade analysis differs from our conventional trade analysis because multinational corporation analyses

(a) Purely competitive markets rather than regular markets.
(b) The international movement of inputs as well as the movement of finished goods.
(c) Absolute cost differentials rather than comparative cost differentials.
(d) None of the above.
Answer:
(b) The international movement of inputs as well as the movement of finished goods.

Question 39.

The advantage of Multinational corporations is

(a) Business gets management expertise from MNC.
(b) Always enjoy political harmony in host countries in which their subsidiaries operate.
(c) Enjoy subsidies from government in order to conduct worldwide operations.
(d) Both a and b.
Answer:
(a) Business gets management expertise from MNC.

Question 40.

Liaison office act as a communication channel between

(a) Foreign corporation and Indian customers.
(b) Foreign corporation and educational institutes.
(c) Foreign corporation and art galleries.
(d) None of the above.
Answer:
(a) Foreign corporation and Indian customers.

Question 41.

The Multinational corporations

(a) Always do the marketing of the primary goods.
(b) Always produce manufactured goods.
(c) Always do the marketing of the manufactured goods.
(d) None of the above.
Answer:
(d) None of the above.

Question 42.

Below mentioned are the features of a public enterprise except

(a) Its primary objective is to serve Government departments
(b) They are not accountable to public
(c) In some specific areas, they have monopoly.
(d) Both (a) and b.
Answer:
(d) Both (a) and b.

Question 43.

MNC . Select the most suable

(a) are Indian companies that trade their securities on the other countries exchange.
(b) are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries
(c) are doing business at a large scale for public
(d) are Indian companies that sell goods and services in other countries
Answer:
(b) are firms that conduct their operations in more than one country through subsidiaries, divisions, or branches in foreign countries

Question 44.

A foreign corporation may open its Project office

(a) Without permission from Reserve Bank of India
(b) With permission from Reserve Bank of India
(c) Only for research work
(d) Both b and c
Answer:
(b) With permission from Reserve Bank of India

Question 45.

The Act formed for the development of Micro, small and medium enterprises is

(a) Micro, Small and Medium Enterprises Development Act, 2005
(b) Micro, Small and Medium Enterprises Development Act, 2006
(c) Micro, Small and Medium Enterprises Development Act, 2004
(d) Micro, Small and Medium Enterprises Development Act, 2003
Answer:
(a) Micro, Small and Medium Enterprises Development Act, 2005

Question 46.

What is true for Branch office?

(a) It is not allowed to carry on manufacturing activity on its own.
(b) It is allowed to carry on manufacturing on its own.
(c) It is allowed to carry on business without the permission of RBI
(d) None of the above.
Answer:
(a) It is not allowed to carry on manufacturing activity on its own.

Question 47.

Which type of company should be formed depends on.

(a) Liability
(b) Control
(c) Both a and b
(d) None of the above.
Answer:
(c) Both a and b

Question 48.

For an service sector enterprise to come under the preview of micro enterprise the total investment in plant and machinery should not be more than.

(a) Rs. 25 lakhs
(b) Rs. 20 lakhs
(c) Rs. 50 lakhs
(d) Rs. 10 lakhs
Answer:
(d) Rs. 10 lakhs

Question 49.

From below mentioned which is large-scale industry?

(a) Fertilizer
(b) Natural gas
(c) Banking
(d) All of the above.
Answer:
(d) All of the above.

Question 50.

Which is not likely to be a benefit that host countries will obtain from MNCs?

(a) Technology Transfer
(b) Import substitution
(c) Tax revenues
(d) Job creation
Answer:
(c) Tax revenues

Question 51.

In 1979-80 the ratio of total output is to total, share in employment for Traditional small scale industry is

(a) 135: 56%
(b) 135: 74%
(c) 135: 33%
(d) 135: 36%
Answer:
(a) 135: 56%

Question 52.

Invariably a drawback of traditional small scale industry is

(a) They can not provide employment for whole year
(b) They require high labour employment
(c) They can earn only foreign exchange
(d) None of the above.
Answer:
(a) They can not provide employment for whole year

Question 53.

Glass industry is a

(a) Small scale industry
(b) Cottage industry
(c) Traditional small scale industry
(d) Mega industry
Answer:
(a) Small scale industry

Question 54.

40% of the Indian economy gross value is given by

(a) Small scale industry
(b) Micro scale industry
(c) Micro industry
(d) Publi(c) Enterprises
Answer:
(a) Small scale industry

Question 55.

Which one of the following is true about micro enterprises?

(a) Labour intensive
(b) Capital intensive
(c) Technology intensive
(d) None of the above.
Answer:
(a) Labour intensive

Hint:
Micro enterprises has been recognised as an engine of growth ail over the worl(d) The sector is characterised by low investment requirement, labour intensive, operational flexibility, location-wise mobility and import substitution.

Question 56.

Which one of the following is a key in the firm’s growth phase?

(a) Increase in scale
(b) Increase in profit
(c) Increase in capital
(d) All of the above
Answer:
(b) Increase in profit

Question 57.

In which year was the new economic policy ushered that gave a new direction to Indian economy?

(a) 1993
(b) 1989
(c) 1991
(d) 1985
Answer:
(c) 1991

Hint:
On 24th July, 1991 the Government of India announced its industrial policy to improve the performance of business organisation.

Question 58.

The definition of Micro, Small and Medium Enterprises (MSMEs) in India is based on:

(a) Total sales of the unit
(b) Investment in machines and equipments
(c) Market coverage
(d) Export turnover.
Answer:
(b) Investment in machines and equipments

Hint:
Enterprises have been classified under the Micro, Small and Medium Enterprises Development Act, 2006. According to this Act enterprises are classified into micro, small and medium based on investment in plant and machinery and in equipments respectively.

Question 59.

Which one of the following is a push factor influencing the internationalisation of a company?

(a) Difficulty in finding skilled staff in the home country
(b) The need to be close to key resources
(c) Low-cost labour in other countries
(d) Financial incentives from governments in emerging markets
Answer:
(c) Low-cost labour in other countries

Hint:
Some of the reasons why companies wish to become multinationals are

  • To secure cheaper premises and labour- cost of land and labour will be cheaper in developing countries.
  • To increase market share- companies may find they are at saturation point in the domesti(c) market and need a new outlet. They may start by exporting to other countries but eventually they will-want to being production overseas

Question 60.

The abbreviation ‘BIFR’ with reference to sick companies in India means:

(a) Board for Indian Financial Reserves
(b) Board for Industrial and Financial Resources
(c) Board for Industrial and Financial Reconstruction
(d) Board for International Fund Reserves.
Answer:
(c) Board for Industrial and Financial Reconstruction

Question 61.

Foundation of public enterprises in India was laid down by:

(a) Indira Gandhi
(b) Jawaharlal Nehru
(c) Dr. Rajendra Prasad
(d) Dr. S. Radhakrishnan Questions of December 2013
Answer:
(b) Jawaharlal Nehru

Question 62.

Transfer pricing litigations are generally related to

(a) Domestic Companies
(b) Multinational Companies
(c) Public Enterprises
(d) Statutory Authority
Answer:
(b) Multinational Companies

Hint:
Transfer pricing is the setting of the price for goods and services sold between controlled or related legal entities within an enterprise. It is one of the disadvantage associated with MN(c) Transfer pricing is used as a profit allocation method to attribute a multinational corporation’s net profit (or loss) before tax to countries where it does business. Thus MNC use it to avoid tax.

Question 63.

Coca-Cola is an example of:

(a) MNC
(b) Indian Company
(c) Foreign Company
(d) None of these .
Answer:
(a) MNC

Hint:
A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country.

Question 64.

…….. is responsible for revival of Public Sector Enterprises.

(a) NTPC
(b) BIFR
(c) BRPSE.
(b) MNC
Answer:
(b) BIFR

Hint
The Board for Industrial and Financial Reconstruction (BIFR) is an agency of the government of India for revival and rehabilitation of business enterprises.

Question 65.

Microsoft is a:

(a) Indian Government Company
(b) Multinational Company,
(c) Statutory Corporation
(d) Public Limited Company
Answer:
(b) Multinational Company,

Question 66.

Advantages of multinationals to home countries are

(a) Ensure optimum utilisation of resources
(b) Promote bilateral trade relations .
(c) Promote global Co-operations
(d) All of the above
Answer:
(d) All of the above

Hint:
Advantages of MNC’s to Host Countries

  • The companies bring much needed money into the country.
  • The companies help the development of the country by bringing in technology and knowledge that the host country does not possess.
  • Multinationals create jobs which boosts the local economy and more workers to tax.
  • Multinationals are in a position to benefit from economies of scale. This means the cost per unit can be lowered through specialisation – with a large workforce work can be divided up and people can do their limited job expertly.
  • The new companies often help to improve transport links around the area.
  • The new multi-national companies act as growth poles for other similar companies. They could encourage more companies to locate in that country once they see the benefits that it brings.
  • The host country’s business also gets management expertise from MNC’s.
  • The domesti(c) traders and market intermediaries of the host country gets increased business from the operation of MNC’s.
  • The host country can reduce imports and increase exports due to goods produced by MNC’s in the host country. This helps to improve balance of payment.
  • Their size and scale of operation enables them to benefit from economies of scale enabling lower average costs and prices for consumers. This is particularly important in industries with very high fixed costs, such as car manufacture and airlines.

Question 67.

For the goods having artistic features size of enterprise is preferred.

(a) Small scale
(b) Large scale
(c) Corporation
(d) Very large scale
Answer:
(a) Small scale

Hint:
Small scale enterprises employ local resources like raw material, artistic features, entrepreneurial skill
more effectively like khadi, village industry.

Question 68.

Which is not a criterion for defining small business?

(a) Usually employs fewer people
(b) Is Geographically localised
(c) Is considered smaller in relation to competitors
(d) Financed by a large number of investors.
Answer:
(d) Financed by a large number of investors.

Hint:
Small scale industries are the industries which are organized on a small scale and produce goods with the help of small machines, hired labour and power.

Question 69.

Push factors for locating a business includes:

(a) Availability of skilled labour
(b) Rising competition in an area
(c) Government support
(d) Technological advancement
Answer:
(b) Rising competition in an area

Hint:
Push factors include rising competition in an area, rising costs, poor communications systems, falling demand, there are a number of push and pull factors drawing firms towards certain locations and away from others. Factors that draw a business away from a certain location are “push” factors.

Question 70.

The size and structure of business depends on many factors which (are):

(a) Arbitrary and random
(b) In the control of enterprises
(c) Range from internal to external factors which are beyond the control of enterprises
(d) Beyond the control of enterprises
Answer:
(c) Range from internal to external factors which are beyond the control of enterprises

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Forms of Business Organisation MCQ Questions

by

CS Foundation Forms of Business Organisation MCQ Questions

Question 1.

The key elements of public enterprises are:

a. Recruitment and state control
b. Recruitment and Useful to various sectors
c. Public accountability and state control
d. Recruitment and Public accountability
Answer:
c. Public accountability and state control

Question 2.

State-owned enterprises differ from privately funded companies because:

a. Public companies can never belong to individual shareholders
b. Public ownership involves workers in the running of the company then in the private sector.
c. They are funded out by government, funded from taxation.
d. None of the above
Answer:
a. Public companies can never belong to individual shareholders

Question 3.

Food co-operation of India is

a. A joint stock company
b. Company managed by department
c. Company established by Special Act of Parliament
d. None of the above.
Answer:
c. Company established by Special Act of Parliament

Question 4.

An enterprise incorporated by a Special Act of Parliament or the State Legislature intending to carry on some business of national importance is called.

a. Public company
b. Statutory corporation
c. Registered company
d. Registered statutory company
Answer:
b. Statutory corporation

Question 5.

One of the best advantages of proprietorship is that:

a. Limited liability is enjoyed
b. Shares can be sold to raise capital
c. Profits are to be shared
d. The owner has independence
Answer:
d. The owner has independence

Question 6.

One of the hardships of a sole proprietorship is that:

a. Capital is limited to owner’s savings and bank loans
b. It has to complete too many registration formalities
c. As they are government owned there is no profit motive
d. More tax is charged on them
Answer:
a. Capital is limited to owner’s savings and bank loans

Question 7.

A, B, C, and D are partners A retires, B dies, the status of partnership

a. Remains unchanged
b. Comes to an end
c. Reconstituted
d. All of the above
Answer:
b. Comes to an end

Question 8.

Looking at the below mentioned options one of the advantages of a partnership form of business organization is that:

a. All partners always have limited liability
b. All the decisions are taken by one partner
c. The business survives on the death of the partners
d. The business has access to more capital than a solq trader
Answer:
d. The business has access to more capital than a solq trader

Question 9.

Select out the feature which is NOT found in a private limited company?

a. Raising capital for the business is easier.
b. Shares can be bought and sold on the Stock Exchange.
c. Subscribers of the business have limited liability
d. The business continues after the death of shareholders
Answer:
b. Shares can be bought and sold on the Stock Exchange.

Question 10.

Many private limited companies convert into public limited companies because:

a. They do not want to change their business
b. They want to gain the benefits of limited liability
c. They want to get guarantee from its members
d. They want to raise additional capital to expand the business
Answer:
d. They want to raise additional capital to expand the business

Question 11.

Amongst all of the following which statements about co-operative business organizations is true?

a. All co-operatives are only for public sector
b. Profits are shared equally amongst members.
c. They are owned by government
d. Workers have no say in decision-making
Answer:
b. Profits are shared equally amongst members.

Question 12.

Legal controls, restrictions are more and strict on public companies:

a. True
b. False
c. Not relevant
d. Nothing applicable
Answer:
a. True

Question 13.

Which of the following can have minor as members?

a. HUF
b. Proprietorship
c. Private limited Company
d. All of the above
Answer:
a. HUF

Question 14.

Which of the following is an advantage of a corporation that is not an advantage of being a limited partner in a partnership?

a. Limited liability
b. Double taxation
c. Easy transfer of ownership
d. All of the above
Answer:
b. Double taxation

Question 15.

Limited liability company posses not more than 2 of the following characters

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
a. 2 and 4

Question 16.

Limited liability partnership posses not more than 2 of the following character

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. No Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
b. 1 and 2

Question 17.

For partnership agreement should be

a. Written agreement
b. Oral agreement
c. Written or oral
d. None of these
Answer:
c. Written or oral

Question 18.

An Indian citizen cannot make …….. form of organization in America.

a. HUF
b. Partnership
c. Company
d. Society
Answer:
a. HUF

Question 19.

Invariably……. is the disadvantage of co-operative society

a. Business secrecy
b. Low prices
c. Limited liability
d. Open membership
Answer:
a. Business secrecy

Question 20.

An auditor has the right to communicate the audit results to

a. Employers
b. Some other auditor
c. Company
d. a and c
Answer:
c. Company

Question 21.

The most suitable definition of a sole trader form of business organization is:

a. The business who manufacture only one product
b. The business is owned by one person
c. The firm has a single buyer
d. There is a single seller is the industry
Answer:
b. The business is owned by one person

Question 22.

For the formation of an ideal organization it is not uncommon to keep factors in mind

a. Lawful business
b. Number of people making organization
c. Risk involved
d. All of the above
Answer:
d. All of the above

Question 23.

Which of the following statements suits best to private limited company?

a. It is owned by the government.
b. It is owned by shareholders who can sell their shares in the Stock Exchange
c. It is formed for the benefit of society at large
d. Its accounts can be kept private and it receives little coverage in the business
Answer:
d. Its accounts can be kept private and it receives little coverage in the business

Question 24.

Which of the following statement about most public limited companies is true?

a. They are owned and controlled by the employees
b. They are owned by the directors but controlled by the shareholders.
c. They are owned by shareholders but controlled by directors
d. They are owned and controlled by the promoters
Answer:
b. They are owned by the directors but controlled by the shareholders.

Question 25.

To determine demand for internet services in a market, companies should survey:

a. Percentage purchase made online
b. Percentage use of the internet.
c. Percentage that have access to the internet.
d. All of the above.
Answer:
d. All of the above.

Question 26.

A partner can transfer his share to an outsider

a. Without the consent of other partners but with the consent of Registrar of companies.
b. With the consent of other partners and the consent of registrar of companies
c. With the consent of other partners
d. None of the above.
Answer:
c. With the consent of other partners

Question 27.

A partner can carry on business to that of the firm.

a. Similar
b. Not similar
c. Both a and b
d. None of the above
Answer:
b. Not similar

Question 28.

Everything is an advantages of joint ventures except.

a. The costs of a new project can be split between the companies involved
b. Manufacturing costs will be divided between the firms in the venture
c. Joint ventures between firms in different countries can create new market opportunities
d. Management of the joint venture will lead to disagreements.
Answer:
d. Management of the joint venture will lead to disagreements.

Question 29.

Process to start LLP is

1. Acquire DPIN, Acquire DSC
2. Register DPIN, DSC with LLP
3. Check name availability
4. Download LLP forms
5. File electronically
6. Track status
7. Receive certificate after
8. LLP ready to function Correct sequence will be

a. 1, 2, 3, 4, 5, 6, 7, 8
b. 1,2,4, 3, 6, 5, 7, 8
c. 2, 1,3,4, 6, 5, 7, 8
d. 2, 1, 4, 3, 6, 5, 7, 8
Answer:
a. 1, 2, 3, 4, 5, 6, 7, 8

Question 30.

Co-operative society has

a. Separate legal entity
b. Government support
c. Service motive
d. All of the above
Answer:
d. All of the above

Question 31.

What categories should an organization evaluate when making an outsourcing decision?

a. Salary cost
b. Geopolitical risk
c. English proficiency
d. All of the above
Answer:
c. English proficiency

Question 32.

Minimum number of subscribers required for LLP are

a. 3
b. 2
c. 4
d. 6
Answer:
b. 2

Question 33.

Limited liability company has not more than two of the following character

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
a. 2 and 4

Question 34.

DIN is a unique identification number for

a. Existing director of the company
b. Person intending to become director of the company
c. Existing Chairman of the company
d. Both a and b
Answer:
d. Both a and b

Question 35.

Karta of HUF is of his family

a. Owner
b. Representative
c. Employee
d. None of the above
Answer:
b. Representative

Question 36.

When it is not registered, a partnership firm is

a. Deemed to be illegal organization and disallowed to carry on business
b. Allowed to carry on business subject to payment of penalty
c. Allowed to carry on business subject to certain disabilities
d. All of the above
Answer:
c. Allowed to carry on business subject to certain disabilities

Question 37.

Limited liability is enjoyed by

a. A general partnership.
b. A corporation.
c. A sole proprietorship.
d. None of the above.
Answer:
b. A corporation.

Question 38.

It was found that the liabilities of a corporation are far excess than its assets after it became bankrupt. You are a shareholder in that corporation. You will be called on to pay:

a. A proportionate share of all the liabilities claims based on the number of shares that you own.
b. A proportional share of all creditor claims based on the number of common shares that you own.
c. An amount that could, at most, equal what you originally paid for the shares of common stock in the corporation.
d. Nothing.
Answer:
b. A proportional share of all creditor claims based on the number of common shares that you own.

Question 39.

Money market mutual funds

a. Enable individuals and small businesses to invest indirectly in money-market instruments.
b. Are available only to high net-worth individuals.
c. Are used in acquiring and placing mortgages.
d. Are mostly tradable on stock exchange
Answer:
c. Are used in acquiring and placing mortgages.

Question 40.

A partnership agreement should be

a. Written agreement
b. Oral agreement
c. Written or oral
d. None of these
Answer:
c. Written or oral

Question 41.

A new partner may be admitted to a partnership:

a. With the consent of all partners
b. With the consent of two third of old partners
c. With the consent of any one of the partners
d. Without consent of old partners
Answer:
a. With the consent of all partners

Question 42.

The partnership may come to an end due to the

a. Death of a partner
b. Insolvency of partner
c. By giving notice
d. All of the above
Answer:
d. All of the above

Question 43.

At the time of retirement of a partner full goodwill is credited to the accounts of:

a. All partners
b. Only retiring partner
c. Only remaining partner
d. None of the above
Answer:
a. All partners

Question 44.

If the remaining partner want to continue the business, after the retirement of a partner, a new partnership agreement:

a. Necessary
b. Not necessary
c. Optional
d. None of above
Answer:
a. Necessary

Question 45.

Company is defined under which section of the Companies Act?

a. Section 3(1)
b. Section 4(2)
c. Section 2(4)
d. Section 1(3)
Answer:
a. Section 3(1)

Question 46.

Assets of the company belongs to

a. Company
b. Shareholders
c. Members
d. Promoters
Answer:
a. Company

Question 47.

Minimum number of members in case of private company is:—

a. 1
b 2
c. 3
d. 5
Answer:
d. 5

Question 48.

A handed over 500 units of cement bags to B. This kind of an arrangement is

a. Partnership
b. Sole proprietorship
c. HUF
d. None of the above
Answer:
d. None of the above

Question 49.

Management of a business organization should be on compulsory basis in the hands of

a. Shareholders
b. Workers
c. Both a and b
d. None of the above.
Answer:
a. Shareholders

Question 50.

The sole purpose of business organization is to

a. Conduct business
b. Earn profit
c. Establish relationship between men and material
d. All of the above.
Answer:
b. Earn profit

Question 51.

It is uncommon in a business organization

a. To have a unlawful purpose
b. To have continuity
c. To have risk
d. To deal in goods and services.
Answer:
a. To have a unlawful purpose

Question 52.

A florist opened a shop in the year 2000 but due to certain looses he did wind it up in a single day after 9 years of operation i.e. in 2009. What kind of organization it is

a. Sole proprietorship
b. Company
c. Limited liability partnership
d. None of the above.
Answer:
a. Sole proprietorship

Question 53.

Mr. Varun wanted to start a bakery shop with limited money. What kind of business organization you would suggest him.

a. Sole proprietorship
b. HUF
c. Partnership
d. Corporation
Answer:
a. Sole proprietorship

Question 54.

Mr. Varun is a rich man with ample amount of working capital. He wants to go for a business of chain of 5 star hotels. What kind of business organization you will suggest him.

a. Company
b. Partnership
c. Sole proprietorship
d. Trust
Answer:
a. Company

Question 55.

An Indian citizen cannot make ………. form of organization in America.

a. HUF
b. Partnership
c. Company
d. Society
Answer:
a. HUF

Question 56.

Maximum no. of members in case of private company is

a. 50
b. 100
c. 150
d. 200
Answer:
d. 200

Question 57.

Maximum no. of members in case of public company is

a. 0
b. Unlimited
c. 50
d. 100
Answer:
a. 0

Question 58.

Minimum paid up share capital in case of a private company is

a. 1 Lakh
b. 2 Lakhs
c. 3 Lakhs
d. 4 Lakhs
Answer:
c. 3 Lakhs

Question 59.

Minimum paid up share capital in case of a public company is

a. 1 Lakh
b. 3 Lakhs
c. 5 Lakhs
d. 7 Lakhs
Answer:
c. 5 Lakhs

Question 60.

Minimum no. of Directors in case of private company is

a. 1
b. 2
c. 3
d. 4
Answer:
b. 2

Question 61.

Partnership firm liability is generally

a. Limited
b. Unlimited
c. Situation does not arise
d. None of the above
Answer:
d. None of the above

Question 62.

Who has the power to transfer the joint property of HUF so as to bind the interest of both adult and minor coparceners?

a. Son’s of the HUF
b. Daughters of the HUF
c. All the co-parceners of HUF
d. Karta of HUF
Answer:
d. Karta of HUF

Question 63.

Who all can be co parceners in HUF

a. Daughters of family
b. Son’s of family
c. Both a and b
d. None of the above.
Answer:
c. Both a and b

Question 64.

Mr. X is planning to take a business of manufacturing cheap medicines in India. The most suitable type of organization will be

a. Company
b. Corporation
c. Co-operative
d. Society
Answer:
b. Corporation

Question 65.

If the objective for the business organization is self help as well as mutual help. It is type of organization.

a. Partnership
b. Sole proprietorship
c. Co-operative society
d. Company
Answer:
c. Co-operative society

Question 66.

A co-operative society can promise maximum ……….. amount of interest on the money contributed by its members.

a. 9%
b. 6%
c. 5%
d. unlimited rate of interest
Answer:
a. 9%

Question 67.

AMUL is a

a. Company
b. Co-operative society
c. Co-operation
d. None of the above.
Answer:
b. Co-operative society

Question 68.

Invariably………is the disadvantage of co-operative society

a. Business secrecy
b. Low prices
c. Limited liability
d. Open membership
Answer:
a. Business secrecy

Question 69.

If there is no LLP agreement for limited liability partnership it is governed by

a. Schedule 11 of Limited Liability Partnership Act.
b. Schedule 1 of Limited Liability Partnership Act.
c. Schedule 7 of Limited Liability Partnership Act. .
d. None of the above.
Answer:
b. Schedule 1 of Limited Liability Partnership Act.

Question 70.

This is UNTRUE about LLP

a. It has no perpetual existence
b. No requirement of minimum capital
c. Easy to wind up
d. Less cost of formation.
Answer:
a. It has no perpetual existence

Question 71.

……….is a feature of partnership form of business.

a. Separate legal entity from the firm
b. Limited scope for raising finance
c. The liability of a partner is limited to his contribution to capital
d. Registration of partnership is compulsory
Answer:
b. Limited scope for raising finance

Hint
Partnership form of business main features are:—
• Ease of formation is its most important feature because it is not required to go through elaborate legal formalities.
• No agreement is to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.
• The firm has no legal existence separate from its owner.
• The capital required by the organisation is supplied wholly by the owner himself and he depends largely on his own savings and profits of his business.
• Owner alone enjoys the benefits or profits of the business and he alone bears the losses.
• The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
• Owner has a complete control over all the aspects of his business and it is he who takes all the decisions though he may engage the services of a few others to carry out the day-to-day activities.
• The formation and operation of a sole proprietorship form of business organisation requires almost no legal formalities.
• The legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.

Question 72.

………form of business is/are appropriate for retail business.

a. Sole proprietorship
b. Partnership
c. Company
d. Both (a) and (b)
Answer:
d. Both (a) and (b)

Hint
Business which provide direct services like restaurants, professional services, retail services etc. are generally organised as proprietary concerns or partnership while some more organised drawing large amount of capital are generally Public limited or private limited companies.

Question 73.

Which one of the following does not have perpetual succession?

a. Company
b. Statutory Corporation
c. Sale Proprietorship
d. Co-operative Society
Answer:
c. Sale Proprietorship

Question 74.

What is the maximum number of partners involved in the non-banking organisation in India?

a. 10
b. 15
c. 20
d. 7
Answer:
c. 20
The maximum number of partners as per Companies Act, 2013 can be 100.

Question 75.

In a Hindu Undivided Family, liability of is unlimited.

a. Karta
b. Co-parceners
c. Both a and b
d. Neither a and b
Answer:
a. Karta

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 76.

In relation to business organisation structure, which one of the following is easy to form and wind up?

a. A company
b. A sole proprietorship
c. Statutory corporation
d. Public enterprises
Answer:
b. A sole proprietorship

Hint:
A sole proprietorship is the simplest and least expensive business structure to establish. Just like formation it is also very easy to wind up the business.

Question 77.

Which is not a feature of LLP?

a. Separate legal entity
b. All LLP have existence for fixed period.
c. Partners in an LLP are required to turn into an agreement
d. In an LLP, partners are not liable for the act of other partners.
Answer:
b. All LLP have existence for fixed period.

Hint
The characteristic features of LLP are
• The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
• It offers limited liability protection for its partners. As a sole trader or partnership business, personal
assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP. ‘
• The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act, 2008. The act provides flexibility to devise the agreement as per their choice.
• Renowned and accepted form of business worldwide
• An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from
its partners. Corporate entity status enables LLP to be taken more seriously than a
proprietorship/partnership status does.
• Every LLP shall have at least two partners and shall also have at least two individuals as Designated
Partners, of whom at least one shall be resident in India. The duties and obligations of Designated
Partners shall be as provided in the law.
• The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
• The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
• The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act, 2008.
• The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.
• Low cost of Formation and compliances.
• Body corporate can be a partner of an LLP

Question 78.

Voting right that vests with each member of co-operative society is:

a. One member one vote
b. Right to vote in proportion of capital contributed
c. Right to vote as mentioned in memorandum
d. None of the above.
Answer:
a. One member one vote

Question 79.

Gas Authority of India Limited is an example of:

a. Limited liability partnership
b. Private limited company
c. Public enterprise
d. None of the above.
Answer:
c. Public enterprise

Hint
Public enterprise, a business organization wholly or partly owned by the state and controlled through a public authority.

Question 80.

Which one of the following is treated as a separate legal entity different from its members?

a. Sole proprietorship
b. Hindu undivided family
c. Partnership
d. Limited liability partnership.
Answer:
d. Limited liability partnership.

Hint
An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status does.

Question 81.

Why co-operative marketing society is formed?

a. To protect the interest of general consumers
b. To sell the product of small farmers and producers
c. To protect the interest of small producers
d. To provide financial support to the members. Questions of December 2013
Answer:
b. To sell the product of small farmers and producers

Hint
According to RBI “Co-operative Marketing is a co-operative association of cultivators formed primarily for the purpose of helping members to market their produce more profitably”.

Question 82.

The choice of an appropriate form of business organisation largely depends upon:

I. Ease of formation
II. Continuity and stability
III. Liability aspects Correct option is

a. I and II
b. II and III
c. I and III
d. I, II and III.
Answer:
b. II and III

Hint
Factors which should be checked while deciding the form of organisation most suitable for business are
• Ease of formation
• Adequacy of capital
• Nature of business
• Liability
• Control
• Tax liability
• Flexibility

Question 83.

The minimum number of members required to get a co-operative society registered is—

a. 15
b. 20
c. 10
d. 5
Answer:
c. 10

Question 84.

Which of the following entity is created under an Act of the Parliament or an Act of the State legislature?

a. Statutory corporation
b. Government companies
c. Co-operative society
d. Limited Liability Partnership.
Answer:
a. Statutory corporation

Question 85.

Which form of business organisation has a separate legal entity ?

a. Hindu Undivided Family (HUF)
b. Co-operative society
c. Partnership firm
d. Sole proprietorship.
Answer:
b. Co-operative society

Hint
After registration a co-operative enterprise becomes a body corporate independent of its members i.e. a separate legal entity. Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.

Question 86.

What is the liability of each partner under LLP?

a. Limited
b. Unlimited
c. Partially Limited
d. None of the above
Answer:
a. Limited

Hint
LLP offers limited liability protection for its partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.

Question 87.

Which of the following is not a form of organisation?

a. Partnership
b. Company
c. Partners
d. Sole Proprietorship
Answer:
c. Partners

Hint
Partners is not any form of organisation.

Question 88.

Who can be the head of Joint Hindu Family business?

a. Karta
b. Coparcener
c. Manager
d. Director
Answer:
a. Karta

Hint
A Hindu undivided family do business jointly under the control of the head of the family who is known as the ‘Karta’.

Question 89.

Maximum number of partners in case of non-banking business is

a. 10
b. 20
c. 30
d. 40
Answer:
The minimum number of partners must be two, while the maximum number can be 100.

Question 90.

Members of HUF are known as

a. Partners
b. Shareholders
c. Members
d. Coparceners
Answer:
d. Coparceners

Hint
The members of the family are known as ‘Coparceners’

Question 91.

Head of HUF is known as

a. Karta
b. Coparceners
c. Manager
d. Head
Answer:
a. Karta

Hint
The characteristic features of LLP are
• The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
• It offers limited liability protection for its partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.
• The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act, 2008. The act provides flexibility to devise the agreement as per their choice.
• Renowned and accepted form of business worldwide
• An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than’ a proprietorship/partnership status does.
• Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
• The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
• The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
• The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act, 2008.
• The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.
• Low cost of Formation and compliances.
• Body corporate can be a partner of an LLP.

Question 92.

Which amongst the following is a feature of LLP?

a. Separate legal entity
b. Unlimited liability
c. No perpetual succession
d. Not a body corporate
Answer:
a. Separate legal entity

Question 93.

In case of HUF what are liabilities of Coparcener

a. Both have unlimited liability.
b. Coparcener’s liability is limited while Karta’s
c. Karta’s liability is limited while Coparcener’s
d. Both have limited liability.
Answer:
b. Coparcener’s liability is limited while Karta’s

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 94.

To ………. form a partnership, the minimum capitalcontribution should be:

a. Rs. 1 Lakh
b. There is no minimum limit
c. Rs. 1 Crore
d. Rs. 5 Lakh.
Answer:
b. There is no minimum limit

Hint
Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. There is no minimum capital contribution required for this form of organisation.

Question 95.

The Karta in Joint Hindu Family business has:

a. Unlimited liability
b. Joint liability
c. Limited liability
d. No liability for debts.
Answer:
a. Unlimited liability

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 96.

The objects and powers of a statutory corporation:

a. May not change
b. May not be changed easily
c. May change easily
d. None applicable.
Answer:
b. Company

Hint
It is very difficult to form statutory corporations because it requires lengthy documentation, complicated formalities and passing of statue.
The policies once approved, the statue once passed cannot be changed easily. It can be done by the parliament only and this is very time consuming.

Question 97.

Which corporation has both characteristics i.e. of a partnership and of a separate legal entity?

a. Limited Liability Partnership (LLP)
b. Company
c. Partnership
d. Statutory Body.
Answer:
a. Limited Liability Partnership (LLP)

Hint
A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.

Question 98.

Kendriya Bhandar is a:

a. Co-operative Credit Society
b. Consumers Co-operative Society
c. Producers Co-operative Society
d. Co-operative Marketing Society
Answer:
d. Co-operative Marketing Society

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Business Environment MCQ Questions

by

CS Foundation Business Environment MCQ Questions

Question 1.

Which of the following does not characterise the business environment?

(a) Uncertainty
(b) Relativity
(c) Employers
(d) Complexity
Answer:
(d) Complexity

Question 2.

Out of the following the main sets of forces mostly affecting organisations are:

(a) External stakeholders, management and staff.
(b) Existing and potential competitors, suppliers, customers and substitute products or service.
(c) General environmental factors, competitive forces, factors internal to the organisation and the interests of stakeholders.
(d) Government, competitors and consumers.
Answer:
(c) General environmental factors, competitive forces, factors internal to the organisation and the interests of stakeholders.

Question 3.

When we analyze the processes of change in the business environment it conceptualizing it as:

(a) Complex
(b) Static
(c) Dynamic
(d) Diverse
Answer:
(c) Dynamic

Question 4.

The key word that can be used to describe the basic economic problem that all societies face is:

(a) Selfishness
(b) Greed
(c) Inequality
(d) Scarcity
Answer:
(d) Scarcity

Question 5.

Out of the following statements which is most likely to be true:

(a) As incomes rise the demand for food items in general will fall
(b) As incomes rise the percentage of total income spent on food items in general tends to fall
(c) As incomes rise the percentage of total income spent on food items in general tends to rise
(d) As incomes rise total spending on food items in general will fall
Answer:
(d) As incomes rise total spending on food items in general will fall

Question 6.

Appropriate Technology

(a) Is technology that seeks to replace energy intensive and polluting technologies
(b) Is technology that is best suited to the local internal and external environment in which a business operates
(c) Will occur when “high-tech” solutions replace “low-tech” ones
(d) Is when one business copies the technology that has been developed by another
Answer:
(b) Is technology that is best suited to the local internal and external environment in which a business operates

Question 7.

If there is a transfer of assets from the public sector to the private sector it is referred as:

(a) Privatization
(b) Deregulation
(c) Nationalization
(d) Individualism
Answer:
(a) Privatization

Question 8.

Political environment refers to:

(a) Global integration
(b) Legislature
(c) Economic factor
(d) None of the above
Answer:
(b) Legislature

Question 9.

As there has been globalization of markets, the tastes and preferences of consumers world-wide are:

(a) Converging upon a global norm.
(b) So different that they can be ignored by international organizations.
(c) Being encouraged by multinational organizations to become increasingly similar.
(d) Becoming similar to the tastes and preferences of American consumers.
Answer:
(a) Converging upon a global norm.

Question 10.

Internal factors of business environment include

(a) Vision of the organization
(b) Mission of the organization
(c) Vision and mission of the organization.
(d) Vision and mission of the organization and other internal mechanism of the organization.
Answer:
(d) Vision and mission of the organization and other internal mechanism of the organization.

Question 11.

General forces that affect business environment do NOT include:

(a) Investor
(b) Social conditions
(c) Customers
(d) Suppliers
Answer:
(a) Investor

Question 12.

Business environment is dynamic in nature means:

(a) Early identification of opportunities
(b) Changes are always taking place in the business environment
(c) Identification of threats
(d) Giving directions for growth
Answer:
(b) Changes are always taking place in the business environment

Question 13.

Business environment is multifaceted as’:

(a) It is an opportunity for some but a threat for others
(b) It has multiple work to do
(c) There are 40 many different businesses.
(d) None of the above.
Answer:
(a) It is an opportunity for some but a threat for others

Question 14.

Internal strategy of a business invariably takes care of:

(a) Taking care of political environment
(b) Media
(c) Employees.
(d) Both b and c.
Answer:
(d) Both b and c.

Question 15.

Out of the following which would you NOT classify as a political-legal factor in the external environment?

(a) European Union directive on working hours.
(b) Government policy on corporate and personal income taxes
(c) Regulatory requirements for the tele-communications industry.
(d) Consumer attitudes to greater competition in the gas and electricity industries
Answer:
(d) Consumer attitudes to greater competition in the gas and electricity industries

Question 16.

Keeping the view of marketing, an organization that enjoys competitive advantage in an industry has done so by:

(a) Constantly enlarging its marketing activities
(b) Creating superior value for customers.
(c) Focusing on long-term profit.
(d) Charging lower prices than competition
Answer:
(b) Creating superior value for customers.

Question 17.

The main factors in global marketing are:

(a) Social and technical changes.
(b) Government policy and legislation.
(c) Marketing activities and plans.
(d) All of the above.
Answer:
(c) Marketing activities and plans.

Question 18.

Select out the one that is not a part of the macro-environment

(a) Demographic forces.
(b) Competitors’ forces.
(c) Political forces.
(d) Natural forces.
Answer:
(b) Competitors’ forces.

Question 19.

The most recent wave of globalisation has emphasized the outsourcing of:

(a) Natural resource extraction and mining job.
(b) Services and white collar jobs.
(c) Agricultural and forming jobs.
(d) Manufacturing and blue collar jobs.
Answer:
(b) Services and white collar jobs.

Question 20.

It is observed that there has been a decrease in the price of A’ the most certain explanation for this is:

(a) The demand for A has increased or the supply has decreased or both
(b) The demand for A has increased or the supply has increased or both
(c) The demand for A has decreased or the supply has increased or both
(d) The demand for A has decreased or the supply has decreased or both
Answer:
(c) The demand for A has decreased or the supply has increased or both

Question 21.

What is human capital?

(a) The development of robots in industry
(b) The rise of Information technology
(c) The skills pnd abilities of humans to learn
(d) Technological ideas of people
Answer:
(c) The skills pnd abilities of humans to learn

Question 22.

The exercising of political authority at a higher level is often referred as:

(a) Economic policies
(b) Economic conditions
(c) Technology
(d) Globalization
Answer:
(a) Economic policies

Question 23.

Delhi is often described as a ’cosmopolitan’ city. This means that it:

(a) Is the principal city
(b) Is a city of great wealth
(c) Is a city with a global reputation
(d) Is a city with an ethnically diverse population
Answer:
(d) Is a city with an ethnically diverse population

Question 24.

NAFTA is:

(a) Treaty signed between two companies of Europe
(b) Free trade between America and Europe
(c) Free trade agreement between US, Canada and Mexico.
(d) Free treaty between any two countries
Answer:
(c) Free trade agreement between US, Canada and Mexico.

Question 25.

By…….. EXIM policy we mean

(a) External and internal policy
(b) Export-import policy
(c) Extra import policy
(d) None of the above.
Answer:
(b) Export-import policy

Question 26.

First mover advantage refers to:

(a) Early identification of business opportunities
(b) Early identification of uncertainty
(c) Early identification of business rivals
(d) Early identification of uncertainty in business.
Answer:
(a) Early identification of business opportunities

Question 27.

Liberalization does NOT include:

(a) Reduction in taxes
(b) Simplifying exports
(c) Reducing administrative burden on state.
(d) Abolishing industrial licensing requirement for most of the industries.
Answer:
(c) Reducing administrative burden on state.

Question 28.

WTO helped in:

(a) Privatization
(b) Cross burden trade
(c) Helped in providing political stability for companies who are doing international business
(d) All of the above.
Answer:
(b) Cross burden trade

Question 29.

Fast growth in the private sector was after the policy reforms announced in:

(a) 1992
(b) 1991
(c) 1998
(d) 2001
Answer:
(b) 1991

Question 30.

The goals of international marketing are to:

(a) Create and retain customer in global markets.
(b) Eliminate competition in international markets.
(c) Expand business activities abroad.
(d) Gain market share and increase profit.
Answer:
(a) Create and retain customer in global markets.

Question 31.

If it is a global organization it means:

(a) Creating both standardized and customized products.
(b) Creating standardized products for homogeneous markets.
(c) Customizing the product range for each segment in part.
(d) None of the above.
Answer:
(a) Creating both standardized and customized products.

Question 32.

Out of the following …….. represents a company’s effort to identify and categorize groups of customers and countries according to common characteristics:

(a) Global targeting.
(b) Global marketing research
(c) Global market segmentation
(d) Global positioning.
Answer:
(c) Global market segmentation

Question 33.

Global market leader is an organization which:

(a) Has more than 50% global market share.
(b) Is recognized as being ahead of the rest in terms of market share.
(c) Is ahead of the competition in terms of global innovation.
(d) Has the monopoly over several foreign markets.
Answer:
(b) Is recognized as being ahead of the rest in terms of market share.

Question 34.

The objective of global marketing is to:

(a) Coordinate the marketing activities within the constraints of the global environment.
(b) Satisfy global customers better than competition.
(c) Find global customers.
(d) Achieve all of the above.
Answer:
(d) Achieve all of the above.

Question 35.

The importance of globalization for multinational firms is:

(a) Home demand, home factor conditions and domestic rivalry are no longer important to multinational firms.
(b) A multinational firm can gain a competitive advantage in a foreign country.
(c) The home base is no longer important to multinational firms.
(d) All of the above.
Answer:
(d) All of the above.

Question 36.

lincrease in the number of working women and the rise in no family households are examples of:

(a) The geographic shifts in population.
(b) The changing family.
(c) The changing age structure of the population.
(d) A better-educated and more white-collar population
Answer:
(b) The changing family.

Question 37.

The insecurity due to tomorrow’s products that haven’t even been invented yet, reflects which aspect of the technological environment?

(a) Concentration on minor improvements.
(b) Increased regulation.
(c) High R.and D budgets.
(d) The fast pace of technological change
Answer:
(d) The fast pace of technological change

Question 38.

Analysing the business environment best assists in:

(a) Identifying key competitive forces; identifying competitive position; identifying key opportunities, threats, strengths and weaknesses.
(b) Auditing macro-environmental influences, Identifying key opportunities and threats.
(c) Auditing external and organizational factors, identifying key competitive forces, identifying competitive positions, identifying key opportunities and threats. .
(d) Assessing historical trends; auditing environmental dangers; identifying strategic capabilities; identifying competitive position.
Answer:
(b) Auditing macro-environmental influences, Identifying key opportunities and threats.

Question 39.

The following factors are key drivers of globalisation:

(a) Government action, exchanges rates, competition and socio-demographic factors.
(b) Market convergence, competition, exchange rates and cost advantage.
(c) Cost advantages, government action, economic cycles and competition.
(d) Market, cost, competition and government policies.
Answer:
(d) Market, cost, competition and government policies.

Question 40.

Analysing process of change in the business environment involves conceptualizing it as:

(a) Complex
(b) Static
(c) Dynamic
(d) Diverse
Answer:
(c) Dynamic

Question 41.

Invariably Globalisation:

(a) Lowers poverty in developing countries.
(b) Leads to conservative market.
(c) Increases the world inflation rate.
(d) Mostly increases the corruption level.
Answer:
(a) Lowers poverty in developing countries.

Question 42.

Which of the following is not an example of social environment?

(a) Composition of family.
(b) Literacy rate. .
(c) Money supply in the economy.
(d) Technology.
Answer:
(d) Technology.

Question 43.

Research has shown that the most important demographic feature of India regarding oversell attraction?

(a) Easy availability of skilled labour.
(b) Easy availability of working population.
(c) Easy availability of mobile people.
(d) Easy availability of intermediary people.
Answer:
(a) Easy availability of skilled labour.

Question 44.

The type of business environment within a company is called………. environment:

(a) Culture.
(b) Employers
(c) Customers
(d) Internal
Answer:
(d) Internal

Question 45.

The 6 MS of internal environment are:

(a) Media, management, money, monitory policy, mission man
(b) Monitory policy, man, marketing, resources, money, machinery miscellaneous factors.
(c) Man, marketing resources, machinery, management, money, miscellaneous, money machinery
(d) None of the above
Answer:
c. Man, marketing resources, machinery, management, money, miscellaneous, money machinery

Question 46.

A society’s basic values, lifestyle, culture,preferences are all parts of its………… Environment:

(a) Cultural-economic
(b) Physical environment
(c) Natural
(d) Socio-cultural
Answer:
(d) Socio-cultural

Question 47.

The acronym STEEP means:

(a) socio-cultural and demographics, Technology, Economic conditions, Ecology and physical environment, Political and legal
(b) Suppliers, Technology conditions, Ecology and physical environment, Political and legal
(c) Employees and Political legal
(d) Shareholders
Answer:
(a) socio-cultural and demographics, Technology, Economic conditions, Ecology and physical environment, Political and legal

Question 48.

Globalisation has brought:

(a) Economic growth best growing inequalities wealth and
(b) Resentment from low skilled workers who see there jobs go abroad
(c) a and b
(d) Real jobs in less developed countries and closed the poverty gap.
Answer:
(c) a and b

Question 49.

Which of the following is a part of liberalisation process?

(a) Making industrial licensing requirement mandatory in most of the industry
(b) Regulating the scale of business activities
(c) Fixing of prices of goods and services
(d) Simplifying the procedures for imports and exports.
Answer:
(d) Simplifying the procedures for imports and exports.

Hint Liberalisation can be termed as removal of controls. It is actually elimination of unnecessary controls and restrictions on the business organization. Characteristic features of Liberalisation are:
– Abolishing industrial licensing
– Reduction of tax rates .
– Freedom in fixing of price of goods and services
– Simplifying the procedure of export and import
– Simple policies to enhance the investment from foreign companies
– Development of stiff competition
– Low inflation rate

Question 50.

Macro factors of business environment are generally:

(a) As controllable as micro factors
(b) Less controllable than micro factors
(c) More controllable than micro fqctors
(d) None of the above.
Answer:
(b) Less controllable than micro factors

Hint
The macro-environment includes those things that may impact businesses but which are outside of their control. It is the larger, external environment within which businesses operate from an industry or economic standpoint. It is also known as General or Remote environment.

Question 51.

Which one of the following is the result of product differentiation?

(a) Brand Equity
(b) Competitive Advantage
(c) Value System
(d) None of the above.
Answer:
(b) Competitive Advantage

Hint
Product differentiation is a marketing strategy that businesses use to distinguish a product from similar offerings on the market. For businesses, a product differentiation strategy may provide a competitive advantage in a market.

Question 52.

Which one of the following is the desired future position?

(a) Financial Statement
(b) Vision Statement
(c) Objectives
(d) All of the above.
Answer:
(b) Vision Statement

Hint
By vision we mean what an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision. Vision is actually the future goal of the enterprise and for achieving that goal some measurements are to be followed by company

Question 53.

Mission Statement of a company is derived from its:

(a) Articles of Association
(b) Vision Statement
(c) Memorandum of Association
(d) Prospectus.
Answer:
(b) Vision Statement

Hint
Vision is actually the future goal of the enterprise and for achieving that goal some measurements are to be followed by company. These measurements are the mission of the enterprise. Elements of Mission and Vision Statements are often combined to provide a statement of the company’s purpose, goals and values. However, sometimes the two terms are used interchangeably.

Question 54.

There is a close and interaction between the business and its environment:

(a) Frequent
(b) Continuous
(c) Seldom
(d) Occasional
Answer:
(b) Continuous

Hint
As a business environment is uncertain and dynamic, an enterprise has to keep itself fit to survive in this environment. An enterprise has to constantly keep an eye on this changing environment. It can be said that there is close and continuous interaction between business and its environment.

Question 55.

Which one of the following shows a big picture of what a company wants to achieve in future?

(a) Vision statement
(b) Mission statement
(c) Value statement
(d) Quality statement.
Answer:
(a) Vision statement

Hint
Every enterprise has to have a vision and mission for its progress. By vision we mean an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision.

Question 56.

Value system of an organisation have an impact on its: I. Objectives II. Policies III. Practices IV. Profit The correct option is:

(a) I and II only
(b) I, II and III only
(c) II, III and IV only
(d) I, II, III and IV.
Answer:
(b) I, II and III only

Hint
By value system we mean what is the policy of the organization regarding the right and wrong. It is the business ethics that the organization follows which defines the organization’s policy about right and wrong. Internal factors like organizational structure and the corporate culture decides the motivation of the employee with the company.

Question 57.

Which among the following are the key drivers of globalisation?

(a) Government action, exchange rates, competition and socio-demographic factors
(b) Market convergence, competition, exchange rates and cost advantages
(c) Cost advantages, government action, economic cycles and competition
(d) Market, cost, competition and government policies.
Answer:
(b) Market convergence, competition, exchange rates and cost advantages

Hint
Reasons for Globalization:
– Domestic markets are not enough and other markets are required for the progress of industry
– World is shrinking because of the development of the transportation, communication, technological changes etc.
– An organization named WTO (World Trade Organization ) was established for the development of cross border trade
– For the development of business a new technology is needed which could be taken from overseas
– To cut down the manufacturing cost, industries may set up manufacturing units overseas where manufacturing cost is favourable
– To set up a business in a place which is politically more stable
– Adverse business environment in home country pushes the companies to look for global market
– Most companies move their headquarters to overseas to avoid their respective home countries’ high taxes and other costs associated in business operation in those countries
Thus, we can say that, market convergence, competition, exchange rates and cost advantages are the key drivers of globalization.

Question 58.

Which one of the following is not a feature of business environment?

(a) Dynamic nature
(b) Image building
(c) Uncertainty
(d) Totality of external forces.
Answer:
(b) Image building

Hint
The features of business environment are:
(i) Dynamic
(ii) Multi-faceted
(iii) Complex
(iv) Uncertainty
(v) Totality of external forces
(vi) Far reaching impact
Therefore, image building is not a feature of business environment.

Question 59.

Which one of the following describes the desired future position of a company?

(a) Mission Statement
(b) Vision Statement
(c) Competitive advantage
(d) Qualitative’ policy.
Answer:
(b) Vision Statement

Hint
Every enterprise has to have a vision and mission for its progress. By vision we mean an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision.

Question 60.

The process of eliminating unnecessary controls and restrictions on the smooth functioning of a business enterprise is known as:

(a) Liberalisation
(b) Globalisation
(c) Privatisation
(d) None of the above
Answer:
(a) Liberalisation

Hint
Liberalisation can be termed as removal of controls. It is actually elimination of unnecessary controls and restrictions on the business organization.

Question 61.

Business environment consists of which element?

(a) Internal
(b) External
(c) Both (a) and (b)
(d) None of these
Answer:
(c) Both (a) and (b)

Hint
Mainly there are two types of business environment.
(a) Internal
(b) External

Question 62.

Which of the following is not an economic policy?

(a) Industrial Policy
(b) Fiscal Policy
(c) Exim Policy
(d) Technological Policy
Answer:
(d) Technological Policy

Hint
The economic environment constitutes to economic conditions, economic policies and the economic system that is important to external factors of business. Economic policies are fiscal policies, Industrial policies, taxation policy, exchange rates, EXIM policy but not technological policy.

Question 63.

Macro-environment is concerned with major issues and upcoming changes in the environment:

(a) True
(b) False
(c) Partly True
(d) Partly False
Answer:
(a) True

Hint
Macro-environment study the overall issues of firms and broader dimensions. It is mainly concerned with major issues.

Question 64.

Which of the following factor is not included in micro-environment?

(a) Customers
(b) Employees
(c) Suppliers
(d) Technology
Answer:
(d) Technology

Hint
Some of the Micro-environment are:
(a) Employees
(b) Customers
(c) Shareholders
(d) Suppliers
(e) Media
(f) Competitors

Question 65.

The economic environment of business in India is changing at a fast rate mainly due to economic policies:

(a) True
(b) False
(c) Partly Yes
(d) Partly No
Answer:
(b) False

Hint
The economic environment constitutes to economic conditions, economic policies and the economic system that is important to external factors of business. The economic environment of business in India is changing at a fast rate’ mainly due to government policies.

Question 66.

Which of the following affects an individual enterprise?

(a) General forces
(b) Specific forces
(c) Both (a) and (b)
(d) None of these
Answer:
(b) Specific forces

Hint
Specific forces affect the individual enterprises.

Question 67.

Which among the following is the vision of ICSI?

(a) “Promoting global excellence”
(b) “To be a global leader in promoting good corporate governance”
(c) “Partners in Nation building”
(d) “Building corporate responsibility”
Answer:
(b) “To be a global leader in promoting good corporate governance”

Hint
Every enterprise has to have a vision and mission for its progress. By vision we mean an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision. Thus to be global leader for promoting good corporate governance is vision of ICSI.

Question 68.

When a state owned enterprise is given in private hands, it is known as:

(a) Liberalisation
(b) Globalisation
(c) Privatisation
(d) Transformation
Answer:
(c) Privatisation

Hint
The transfer of ownership, property or business from the Government to the private sector is termed as privatisation. The government ceases to be the owner of the entity. Privatisation is considered to bring more efficiency and objectivity to the company.

Question 69.

Who started the process of Liberalisation ?

(a) Yashwant Singh
(b) Jashwant Singh
(c) Manmohan Singh
(d) Mahatma Gandhi
Answer:
(c) Manmohan Singh

Question 70.

Mission Statement is derived from –

(a) Future position of the company
(b) Company’s business and its objectives
(c) Both (a) and (b)
(d) None
Answer:
(b) Company’s business and its objectives

Hint
Vision is actually the future goal of the enterprise and for achieving that goal some measurements are to be followed by company. These measurements are the mission of the enterprise.

Question 71.

Which of the following is not an example of mission statement?

(a) NIKE — To bring inspiration and innovation.
(b) FACEBOOK — Power to share and make the world open and connected.
(c) GOOGLE — To organise the world’s information.
(d) ICSI — To be a global leader in promoting good corporate governance.
Answer:
(b) FACEBOOK — Power to share and make the world open and connected.

Hint
This is the vision statement of ICSI.

Question 72.

Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing it to competitors. The mentioned advantage can be categorised under:

(a) First mover advantage
(b) Initial identifier advantage
(c) Earlier advantage
(d) Second mover advantage.
Answer:
(a) First mover advantage

Hint
First Mover’ is a form of competitive advantage that a company earns by being the first to enter a specific market or industry. Being the first allows a company to acquire superior brand recognition and customer loyalty.

Question 73.

Liberalization in India did not result in:

(a) A high growth rate
(b) A healthy and flourishing stock market
(c) Easy availability of goods at competitive . prices
(d) Low foreign exchange reserves.
Answer:
(d) Low foreign exchange reserves.

Hint
Benefits of liberalization are:
(a) Removing Barriers to International Investing .
(b) Improves stock market performance ’
(c) Low inflation rate
(d) High growth rate
(e) Unrestricted flow of capital
(f) Availability of goods at competitive price
(g) Reduces political risk to investors
But it does not result in low foreign exchange reserves.

Question 74.

Recruitment of public relations consultants are a part of:

(a) Operating Environment
(b) General Environment
(c) Macro-Environment
(d) Competitive Environment.
Answer:
(d) Competitive Environment.

Hint
A competitive environment is the dynamic external system in which a business competes and functions. The more sellers of a similar product or service, the more competitive the environment in which you compete. Recruitment of public relation consultant is a part of competitive environment. Human resource is the most important resource used by organisations to counter competition.

Question 75.

Where is company’s mission statement derived from?

(a) From the vision of the company
(b) From the company policies
(c) Memorandum of Association of the Company
(d) All of the above
Answer:
(a) From the vision of the company

Hint
Every enterprise has to have a vision and mission for its progress. By vision we mean an enterprise wants to be. Thus it is the future of an enterprise and mission is to reach that vision. Vision is actually the future goal of the enterprise and for achieving that goal some measurements are to be followed by company. These measurements are the mission of the enterprise.

Question 76.

Opening up of an industry that has been reserved for the public sector to the private sector is an example of:

(a) Modernisation
(b) Liberalisation
(c) Globalisation
(d) Privatisation
Answer:
(d) Privatisation

Hint
The transfer of ownership, property or business from the Government to the private sector is termed privatisation.

Question 77.

Mission statement is derived from:

(a) Vision statement
(b) Laws and statutes
(c) Company policies
(d) The company’s memorandum of association
Answer:
(a) Vision statement

CS Foundation Business Environment and Entrepreneurship MCQ

CS Foundation Business Environment and Entrepreneurship MCQ Questions with Answers

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Business Environment and Entrepreneurship MCQ Questions with Answers CS Foundation

CS Foundation Business Environment and Entrepreneurship Notes

Business Environment and Entrepreneurship Syllabus

PART A BUSINESS ENVIRONMENT (30 Marks)

1. Business Environment
2. Forms of Business Organisation
3. Scales of Business
4. Emerging Trends in Business
5. Business Functions

PART B BUSINESS LAWS (40 Marks)

6. Introduction To Law
7. Elements of Company Law
8. Elements of Law Relating to Partnership
9. Elements of Law Relating to Contract
10. Elements of Law Relating to Sale of Goods
11. Elements of Law Relating to Negotiable Instruments

PART C ENTREPRENEURSHIP (30 Marks)

12. Entrepreneurship
13. Entrepreneurship — Creativity and Innovation
14. Growth & Challenges of Entrepreneurial Venture