Test on Entrepreneurship: From Idea to Business

Question 1: Entrepreneurs must conduct both feasibility and viability studies before implementing a new idea or opportunity.

A. Ano

B. Ne

Explanation: The study materials state that it is important to undertake both feasibility and viability studies before any new idea or opportunity is implemented.

Question 2: An entrepreneur who buys a franchise is responsible for establishing the brand name and developing new production systems.

A. Ano

B. Ne

Explanation: Buying a franchise means the entrepreneur gets a business where the name/brand is already established and successful. Entrepreneurs buy the right to use the franchisor’s name, logo, and production systems, which have a proven and established customer base.

Question 3: Which section of a business plan is specifically responsible for detailing the income earning potential of an opportunity and includes projected financial statements?

A. Market Analysis

B. Financial Plan

C. Production Plan

D. Organisational Plan

Explanation: According to the study materials, the Financial Plan section provides particulars of the income earning potential of the idea/opportunity (i.e., viability analysis) and includes projected financial statements. Market Analysis focuses on the market, customer behavior, and competitors. Production Plan details how factors of production will be transformed into goods/services. Organisational Plan outlines necessary positions, skills, business layout, and key management tasks.

Question 4: According to the study materials, which of the following statements accurately describe considerations an entrepreneur faces when starting a new business?

A. It often involves lower legal costs and less effort to get the business going compared to buying an existing business.

B. The entrepreneur must decide on the best form of ownership and complete necessary formation procedures.

C. It is generally more costly because the entrepreneur needs to purchase all assets required for operations.

D. It is considered less risky than buying an already established business with a proven track record.

Explanation: Starting a new business requires the entrepreneur to decide on the best form of ownership and complete the necessary formation procedures. It is also more costly than buying an existing business because all assets needed to manufacture goods/services must be purchased. The study materials indicate that buying an existing business lowers legal costs and effort and that starting a new business is more risky than buying an established one or a franchise.

Question 5: A family business often achieves a high success rate primarily because the entrepreneur focuses on developing entirely new products and services, rather than their deep understanding of existing business processes.

A. Ano

B. Ne

Explanation: The study materials state that a family business has a high success rate because the entrepreneur has usually grown up in the business and understands the processes of the business and the customer base, not primarily due to focusing on developing entirely new products and services.