Introduction to entrepreneurship

Correct answer: B. The plan does not satisfy legal feasibility

A business plan must comply with applicable laws as well as meet financial and practical requirements. High expected profit does not make an activity feasible if local regulations prohibit it. Thus, option B is correct; ignoring the rules could result in penalties or closure.

Correct answer: B. Total loss may increase as the number of sales rises

If each sale makes a loss, selling more units can add to the total loss rather than solve the problem. For example, if the loss per unit stays the same, each additional unit adds that loss again. Therefore, option B is correct; a low price or high sales volume does not by itself guarantee profit.

Correct answer: B. Quality, reliability, and delivery time are also important

A supplier should be assessed on more than price. Poor-quality materials can cause defects or waste, and late deliveries can disrupt production. Quality, reliability, and delivery time therefore matter alongside cost, making option B correct.

Correct answer: A. Privacy and ethical responsibility

Keeping customer data secure and using it only with proper permission protects people’s privacy. It also shows ethical responsibility because the entrepreneur respects customers’ rights and maintains trust. Aggressive selling concerns sales behaviour, cost leadership concerns competing through lower costs, and production expansion concerns increasing output; none of these directly explains responsible handling of personal information.

Correct answer: A. The business may become irrelevant in the future

Technology can change how products are made, promoted, delivered, and used. If an entrepreneur ignores such changes, customers may prefer newer solutions and competitors may offer them more effectively. The business can therefore lose relevance and market share. The other statements are unsupported: customers do not always stay, costs will not certainly fall, and competitors may actively adopt new technology.

Correct answer: B. Refuse to change a failing method despite repeated evidence

Perseverance means continuing to work toward a worthwhile goal while learning from results and adapting methods. Stubbornness is different: it means refusing to reconsider a method even when repeated evidence shows that it is failing. Options A, C, and D show flexibility, learning, or persistence with adaptation. Therefore, refusing to change the unsuccessful method is the clearest example of stubbornness.

Correct answer: A. Products may reach customers late

Increasing production creates more goods, but customers can receive them only if transport, warehouses, delivery staff, and other distribution arrangements are sufficient. If distribution capacity remains unchanged, products may wait in storage or be delivered late, which can reduce customer satisfaction. Higher production does not automatically double sales, remove storage needs, or guarantee fewer complaints, so A is the most likely effect.

Correct answer: A. To identify performance gaps and make improvements

Comparing planned sales with actual sales shows whether the business is meeting its target. A shortfall or excess is a performance deviation that may require examining price, product quality, promotion, demand, or distribution. The entrepreneur can then take corrective action and improve future plans. This comparison is used for monitoring and control, not specifically for raising taxes, identifying age, or changing a product’s name.

Correct answer: A. A human-resource and work-environment problem

Frequent employee turnover is an important warning sign even when the business is profitable. It may point to poor working conditions, unfair pay, weak supervision, limited growth opportunities, or ineffective leadership. The entrepreneur should collect employee feedback and examine retention patterns before the problem harms productivity and service quality. The other options do not logically follow: turnover does not prove that market demand has ended, that the product is guaranteed to succeed, or that financial records are unnecessary.

Correct answer: B. The current unit has quality problems and a cash crisis

Expansion usually requires additional money, people, equipment, and management attention. If the existing unit already has quality failures and a cash crisis, adding another location or product line may spread resources too thin and multiply the same problems. The entrepreneur should first stabilize quality, control cash flow, and improve basic operations. Stable demand, repeat purchases, and reliable supply are generally signs that can support expansion when other conditions are also ready.

Correct answer: B. Create suitable offerings and promotion for each group

When customer groups have different needs, segmentation helps the entrepreneur understand each group and targeting helps select how to serve it. The business can adjust features, prices, communication, or promotion so that each offer is more useful and relevant. This does not mean every group must receive a completely different product, but it does require thoughtful adaptation. Forcing one message on everyone or abandoning a group without evidence ignores customer differences.

Correct answer: A. Sales volume alone does not show success

Sales volume measures how many units were sold, whereas profit depends on the money left after costs. A discount reduces the selling price and may reduce profit per unit. Even if more units are sold, the extra contribution may be smaller than the discount and other costs, causing total profit to fall. Therefore, the entrepreneur should compare revenue, variable costs, fixed costs, and the number of units sold. The other statements are absolute or deny the clear relationship between price, cost, and profit.

Correct answer: B. Risk response planning

Making a list of possible risks is the identification stage, but effective risk management continues beyond recognition. The entrepreneur must decide how to prevent each risk, reduce its effect, assign responsibility, monitor warning signs, and respond if it occurs. A backup supplier, an emergency fund, or a recovery procedure can be examples of response planning. Since the risks have already been listed, identification is not the missing step. Target-market selection and brand building are useful business activities but do not answer this specific gap.

Correct answer: B. The product is new but useless to customers

Innovation is not simply the introduction of something new. It creates customer value when it solves a problem, saves time or cost, improves quality, or provides a meaningful benefit. A product may be original but still fail if customers cannot use it or do not need it. Therefore, the useless new product in option B represents novelty without value; the other options describe clear customer benefits.

Correct answer: A. Decline in brand trust and customer satisfaction

Quality checks help detect defects before products reach customers. If they are removed during rapid expansion, faulty or inconsistent products may be delivered, causing complaints, returns, safety concerns, and loss of trust. Production may become faster, but that improvement is not guaranteed to be sustainable or beneficial. Hence option A is the main risk; the other choices are unrealistic results.

Correct answer: A. Benefit of the next best alternative given up because of the chosen option

Opportunity cost is the value of the next best alternative that is given up when a choice is made. For example, if an entrepreneur uses savings to open a shop instead of investing them in training or another business, the benefit of that best rejected option is the opportunity cost. It is not the same as tax, production expense, or customer-acquisition cost, so option A is correct.

Correct answer: B. Assess capacity, cost, time, and possible partnerships

Before accepting a large order, the entrepreneur should compare the required quantity and deadline with available staff, equipment, materials, money, and time. The entrepreneur can then consider overtime, investment, or a reliable partner and communicate a realistic commitment. Accepting blindly, hiding limitations, or reducing quality can damage trust and the business. Therefore, option B is the responsible choice.

Correct answer: A. The message may not effectively reach target customers

Choosing a target market is only one part of promotion. The communication channel must also match where those customers obtain information and how they prefer to respond. If the channel is unsuitable, the message may receive little attention even when the product meets customer needs, leading to wasted promotional effort and weak sales. Thus option A is correct; the other effects do not automatically follow from channel choice.

Correct answer: B. Long-term capability building

Using profit for better technology and employee training is reinvestment in the business. It may not give the highest immediate return, but it can improve skills, productivity, product quality and competitiveness over time. Therefore, it is a long-term capability-building decision. It is not a personal expense, customer avoidance or business closure.

Correct answer: A. Feedback is collected only from satisfied customers

Customer satisfaction data can be misleading when feedback is collected only from satisfied customers. This creates selection bias because dissatisfied or former customers, who may have important complaints, are excluded. The results may then make the business appear more successful than it really is. Including different kinds of customers gives a fairer picture.

Correct answer: A. The needs and behaviour of the two markets may differ

A strategy that works in one city may depend on its customers, income levels, culture, competition, location and buying habits. These conditions can be different in another city, so copying the strategy without research may lead to poor demand or losses. Local success is useful evidence, but it does not guarantee success everywhere.

Correct answer: A. Fewer customers may also result in fewer complaints

The number of complaints must be interpreted together with the number of customers and sales. If many customers stop buying, fewer people remain to complain, so complaints may fall even while the business is performing poorly. Other measures, such as repeat purchases, satisfaction ratings and sales trends, should also be examined before deciding that service has improved.

Correct answer: A. Because long-term business depends on multiple stakeholders

A responsible entrepreneur recognises that a business affects and depends on many stakeholders, including employees, customers, owners, suppliers, the community and the environment. Fair treatment can build trust, improve loyalty and support long-term survival, while profit remains necessary for continuity. Thus, balancing these interests is more sustainable than focusing on only one group.

Correct answer: B. Identify an opportunity, analyse the market and resources, plan, test, and implement

A sound process starts by identifying an opportunity, then examines the market and available resources. Planning and testing help assess the idea before it is implemented. Option B follows this logical sequence; the other options put important steps in an unsuitable order or omit key analysis.

Correct answer: A. Opportunity recognition

The student observed a customer need and converted it into a possible product or service. Recognising an unmet demand is the first important step in identifying an entrepreneurial opportunity; later steps may include planning, testing and resource organisation. A is correct, while spending money, receiving a salary or copying others does not explain the central action.