Characteristics of Entrepreneurship

 

Part A

Unit IV

Chapter 13

Types of Business Activities

Multiple Choice Questions

a.       Which of the following statements about business is correct?

i. An activity which involves continuous production and supply of goods.

ii. A system where services and goods are exchanged for money.

iii. Regular manufacture and sale of goods with an objective of earning money.

iv. All of the above.

 

b.      Into which of the two categories goods can be classified.

i. Consumer goods and producer goods

ii. Consumption goods and production goods

iii. Intangible goods and tangible goods

iv. Business goods and personal goods

 

c.       Which of the following are the examples of the service industry?

i. Politics                                                  ii. Media

iii. Hospitality                                         iv. Both ii and iii

 

d.      Which of the following statements about manufacturing business is correct?

i. A place where raw material is converted into a finished good.

ii. Follows legal regulation and laws.

Iii Both (i) and (ii)

iv. None of the above

 

e.      Which form of business entity is owned by two or more persons who contribute resources for the setup?

i. Public Ltd Company                           ii. Unlimited Company

iii. Partnership                                          iv. Sole Proprietorship

Short Answer Type Questions.

1.       What do you understand by the term business?

Ans. A business is a commercial activity which involves providing goods or services with a primary motive of earning profit.

2.       Enlist any four characteristic features of business.

 

       Ans. The following are the four characteristic features of business:

(i)                  Main objective is profit

(ii)                Involves risks and uncertainties

(iii)               Marketing and distribution of goods

(iv)              Deals in goods and services

 

3.       Differentiate between producer goods and consumer goods.

Ans. Producer goods are used by producer of further production of finished goods, whereas consumer goods are used by final consumers for consumption.

4.       What is a hybrid business?

Ans. A hybrid business combines different business models or operational approaches to create a unique offering. For example, a business might have both an online presence and physical storefronts, or a music company providing services to teach music and selling musical instruments also. 

5.       What is merchandising business?

Ans. A merchandising business buys finished products from manufacturers or wholesalers and resells them to consumers for a profit.  Examples include grocery stores, and department stores.

6.       Enlist any two features of a Private Ltd Company.

Ans. The following are the two features of a Private Ltd Company:

(a) This type of company has minimum two and maximum 50 members.

(b) The right of the stakeholders to transfer their share is restricted.

Long Answer Type Questions.

1.       Differentiate between service and product business.

Ans.  The service business is involved in producing intangible products. The services division activities can be described by their economic activities as physical, aesthetic, intellectual and other practical activities. The services provided by this sector are hospitality, education, travel, transportation, media, entertainment etc. However a product business is an enterprise where a seller and buyer exchange an item which can be seen and touched. A product can be made and stored in a shop or a warehouse.

 

2.       What is manufacturing business? Give examples.

Ans.  A manufacturing business mainly involved in manufacturing finished goods from raw materials. These finished goods are then sold to whole seller, consumers or to other manufacturing businesses that use them for making a different product. Manufacturing plants usually use an assembly line. By moving the product through an assembly line, the finished goods are put together quicker and uses less manual labour. Examples of manufacturing businesses are car manufacturing plant, consumer’s goods factories, etc.

3.       Explain the following:

i. Sole Proprietorship     ii. Partnership        iii. Cooperative

Ans.  i. Sole Proprietorship: IT is a form of business entity in which a single individual handles the entire business stagnation. He/she is the sole recipient of all the profits and bears all the losses.

ii. Partnership: A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profit of the business among themselves.

 

iii. Cooperative: It is a form of voluntary organization in which the members work together for mutual benefit. There is no restriction to the entry or exit of any member.