Introduction to entrepreneurship

Correct answer: B. A small pilot with instalment payments or community financing

Demand is not enough for a viable business if the payment method does not fit customers’ cash flow. A small pilot can test product use, repayment, maintenance, and real demand while instalments or community financing reduce the upfront burden. Large production without testing payment ability would increase financial risk.

Correct answer: A. Demand exists but operational capability will determine the opportunity's success

The survey identifies a demand condition: speed of delivery is part of the value customers expect. The entrepreneur must check whether inventory, suppliers, staff, transport, location, and cost can reliably support one-day delivery. Thus market demand and operational feasibility must be evaluated together.

Correct answer: B. Value-based differentiation

Value-based differentiation competes by offering customers benefits beyond the basic product, such as reliable service, support, convenience, assurance, or warranty. The customer may accept a higher price because the total value and reduced risk are greater. This differs from competing mainly through the lowest price or production quantity.

Correct answer: B. Cash flow risk

Accounting profit does not mean that cash has already been received. The business may still need cash for wages, rent, suppliers, and loan payments while waiting for customers to pay. The entrepreneur should monitor receivables, payment terms, credit limits, and a cash-flow forecast. This is a liquidity risk, not a branding issue.

Correct answer: B. Study local customer behaviour and run a controlled pilot in one city

Success in one location does not prove that customer preferences, income, competition, distribution, or regulations are the same elsewhere. A controlled pilot in one new city allows the entrepreneur to learn at lower cost, adapt the offer, and measure results before wider expansion. Doubling advertising without diagnosis may waste resources.

Correct answer: B. When the same failing strategy continues despite repeated negative evidence

Perseverance is valuable when it keeps the purpose alive while allowing learning and adjustment. Repeating the same failed strategy despite consistent negative evidence is stubbornness, not productive persistence. It consumes money, time, and effort without improving the chance of success. Evidence should guide changes in method or even the decision to stop.

Correct answer: B. Weak because the solution offers no comparative value

A genuine customer problem creates a starting point, but a viable opportunity also needs a solution that delivers enough value compared with alternatives. If the solution is more expensive and less convenient, customers have little reason to switch unless another important benefit offsets the disadvantages. Novelty alone does not prove competitiveness.

Correct answer: B. Add technical expertise or obtain training

A technical product requires competence in design, development, testing, maintenance, and sometimes safety or compliance. The team should close the gap through training, hiring, partnership, or expert advice before launch. Strong marketing may attract attention, but it cannot compensate for a product that is unreliable, unsafe, or technically unsupported.

Correct answer: A. Because the response may be socially desirable while purchase behaviour differs

People may give an environmentally positive answer because it sounds responsible, yet their actual purchase may depend on price, convenience, performance, and trust. This is called a gap between stated preference and behaviour. The entrepreneur should test willingness to pay, trial use, pre-orders, or real purchases rather than relying on a general opinion question.

Correct answer: B. Conduct another test with diverse real customers

Friends may be unusually supportive and may not share the needs, budget, or behaviour of the target market. Their feedback is useful for early refinement but is not representative evidence for a large investment. Testing with diverse real customers can reveal usability, objections, willingness to pay, and repeat-use patterns before scaling.

Correct answer: B. Misleading and unethical conduct

The package gives customers incorrect information about what they are buying, so the practice is deceptive even if the price remains unchanged. Transparent cost management would clearly disclose the new quantity and price. Misleading packaging can violate applicable rules, destroy trust, and create complaints; it is not proper segmentation or social entrepreneurship.

Correct answer: B. Number of complaints per hundred sales

A complaint rate standardises complaints against the number of sales, making comparison fair when sales volume changes. For example, a business can check complaints per 100 orders before and after an improvement. Total complaints alone may rise simply because sales rose, while advertising spend and employee count do not directly measure customer experience.

Correct answer: B. A cash flow and loan repayment plan for the initial months

The branch may incur rent, wages, utilities, inventory, interest, and loan instalments before it generates revenue. A cash-flow plan should estimate these outflows, available funds, repayment dates, and a reserve for delays or lower sales. Without it, a profitable long-term expansion may face a short-term liquidity crisis.

Correct answer: A. Cost per unit and profit per unit

Higher sales volume alone does not guarantee higher total profit. After a price reduction, profit per unit may fall, or the cost per unit may be too high. Cost per unit and profit per unit therefore directly show why increased sales are not producing more profit. Competitors’ packaging may be useful market information, but it does not directly explain the unchanged profit. Exam tip: When analysing profit, check unit cost and margin along with sales volume.

Correct answer: A. Inconsistent decisions and unclear accountability

Delegation works only when authority is matched with clear objectives, boundaries, and accountability. Without these, employees may make conflicting choices, duplicate work, or avoid responsibility when results are poor. Thus, inconsistent decisions and unclear accountability are the direct risks; the other options are unsupported automatic benefits.

Correct answer: B. The environmental value proposition is inconsistent

An environmental value proposition should be supported by the important parts of the product’s life cycle, including materials, production, packaging, and disposal. An eco-friendly product placed in excessive plastic packaging creates additional waste and weakens the business’s green claim. Therefore, the claim is inconsistent, although the product itself may still have some environmental benefits. Options A, C, and D make unjustified absolute assumptions.

Correct answer: B. Improve process efficiency to reduce cost

The entrepreneur should reduce avoidable costs rather than reduce the value received by customers. Better workflow, less waste, improved purchasing, and efficient resource use can lower unit cost while maintaining quality. Hence process efficiency is the sound strategy; cutting quality or making false claims damages trust and long-term viability.

Correct answer: A. Low competition may indicate weak demand or difficult operations

Low competition is only a signal, not proof of a good opportunity. It may exist because customers have little need, entry is difficult, regulations are restrictive, or operations are costly. The entrepreneur must investigate the underlying cause before investing. Therefore, option A identifies the missed risk.

Correct answer: B. Group customers with similar needs and offer limited options

Segmenting customers with similar needs allows the business to offer a few standardised variants instead of designing every item from zero. This preserves meaningful choice while controlling production, inventory, and service costs. Completely removing customisation may reduce value, while unlimited customisation is financially unsafe. Hence B is balanced.

Correct answer: A. The score may not represent the entire customer base

A ten-percent response rate may produce non-response bias because respondents can differ from customers who ignored the survey. Satisfied customers, highly dissatisfied customers, or particularly engaged users may be overrepresented. The score should therefore be treated cautiously and checked with broader, more representative evidence. A is correct.

Correct answer: B. Improve the cost structure or create a differentiated value proposition

A price below a high cost creates losses unless the cost structure is changed or another source of value supports the price. The business can improve efficiency, negotiate inputs, or offer distinctive quality, service, or convenience that customers value. Continuing losses or hiding defects is not sustainable. Therefore B is the appropriate long-term response.

Correct answer: A. Whether the required skills, resources and management capacity are available

An unrelated opportunity may require unfamiliar technology, suppliers, customers, regulations, and managerial skills. Before entering it, the entrepreneur should check whether the organisation has the resources and capability to execute the idea without weakening the existing business. A name or friends’ opinions cannot establish feasibility. Thus A is correct.

Correct answer: B. Compare customer value, cost, feasibility and risk

The correct option evaluates customer value, cost, feasibility of implementation, and possible risk together. A solution is not automatically the best simply because it is new or expensive, and implementing the first idea without comparison can be risky. Exam tip: In entrepreneurship questions, prefer decisions that consider both customer needs and practical business constraints.

Correct answer: A. Possibility of equipment failure and larger costs

Maintenance is a preventive business expense that helps equipment work safely and reliably. Stopping it may reduce costs temporarily, but wear and small defects can develop into breakdowns, production delays, unsafe conditions, and expensive repairs or replacement. Thus, the apparent monthly profit may hide a larger future loss. Options B, C, and D are not guaranteed results and do not follow from avoiding maintenance.

Correct answer: A. Confirmation bias

Confirmation bias occurs when a person seeks or interprets information mainly to support an existing belief and neglects evidence that could disprove it. Such a survey is not neutral, so it may overstate demand and hide weaknesses. Good research includes open questions and contrary evidence. Therefore the problem is confirmation bias, option A.