Sample Questions and Answers
Which of the following best describes the “balanced scorecard”?
a) A financial measurement tool used to track company performance
b) A strategic planning and management system used to align business activities with the company’s vision and strategy
c) A marketing tool that tracks customer satisfaction
d) A forecasting tool for predicting business trends
Answer: b) A strategic planning and management system used to align business activities with the company’s vision and strategy
Explanation: The balanced scorecard is a strategic management tool used to track performance against business goals and align activities with long-term objectives.
What is “market penetration”?
a) The expansion of a company’s product line to new markets
b) The process of entering new geographic markets to increase sales
c) The introduction of new products to existing customers
d) The effort to increase sales of existing products in current markets
Answer: d) The effort to increase sales of existing products in current markets
Explanation: Market penetration involves increasing the sales of existing products in the current market, often by attracting new customers or encouraging more purchases from existing customers.
What is the “economies of scale”?
a) The cost advantages that a business can achieve by increasing its scale of production
b) The process of lowering product prices to match competitors
c) The increase in operating costs as a company expands its production capacity
d) The benefits derived from purchasing products in bulk
Answer: a) The cost advantages that a business can achieve by increasing its scale of production
Explanation: Economies of scale occur when a company’s cost per unit decreases as its production scale increases, due to factors like bulk purchasing or more efficient use of resources.
Which of the following is an example of “niche marketing”?
a) A company offering a broad range of products to appeal to many different consumer groups
b) A company focusing on a specific segment of the market with specialized needs
c) A company using price discounts to attract a mass market
d) A company trying to develop a brand that appeals to all customer demographics
Answer: b) A company focusing on a specific segment of the market with specialized needs
Explanation: Niche marketing targets a very specific segment of the market, often with tailored products or services that meet the specialized needs of that group.
What does “porter’s five forces” framework analyze?
a) The internal factors affecting a business’s operations
b) The external factors that can influence a company’s competitive position
c) The relationship between a company and its suppliers
d) The factors determining the cost of production
Answer: b) The external factors that can influence a company’s competitive position
Explanation: Porter’s Five Forces model helps businesses analyze the competitive forces in the market, including the bargaining power of buyers and suppliers, threat of new entrants, threat of substitute products, and industry rivalry.
Which of the following describes a “supply chain”?
a) The process of selling finished goods directly to consumers
b) The sequence of processes involved in the production and distribution of a product
c) The distribution network for selling products at retail stores
d) The methods used to increase market share for a product
Answer: b) The sequence of processes involved in the production and distribution of a product
Explanation: A supply chain includes all steps involved in the production and distribution of a product, from raw materials to final delivery to consumers.
What is “brand loyalty”?
a) The level of popularity a brand enjoys in a particular market
b) The degree to which customers continue to buy a product or service from the same brand over time
c) The rate at which a brand introduces new products
d) The willingness of customers to switch to a competitor for better prices
Answer: b) The degree to which customers continue to buy a product or service from the same brand over time
Explanation: Brand loyalty occurs when customers consistently prefer and repurchase a product or service from the same brand, often due to trust or satisfaction.
What is “disruptive innovation”?
a) The development of a product that maintains the status quo in an industry
b) An innovation that creates a new market and eventually disrupts existing markets
c) The process of improving existing products to maintain market share
d) The ability to reduce operational costs through new technologies
Answer: b) An innovation that creates a new market and eventually disrupts existing markets
Explanation: Disruptive innovation refers to a new product or service that creates a new market, often displacing established products and companies in the process.
Which of the following best describes “elasticity of demand”?
a) The responsiveness of supply to changes in demand
b) The degree to which demand changes in response to changes in price
c) The stability of demand over time
d) The ability of companies to control the demand for their products
Answer: b) The degree to which demand changes in response to changes in price
Explanation: Elasticity of demand measures how sensitive the demand for a product is to changes in its price. If demand changes significantly with price adjustments, the product is considered elastic.
What is “organic growth”?
a) Growth achieved by acquiring or merging with other companies
b) Growth generated through internal business development, such as expanding products or entering new markets
c) Growth achieved by reducing operational costs
d) Growth driven by external economic factors
Answer: b) Growth generated through internal business development, such as expanding products or entering new markets
Explanation: Organic growth refers to the growth a company achieves through internal efforts, such as launching new products, expanding into new markets, or increasing sales.
What does “intellectual property” include?
a) The physical assets of a business
b) The unique ideas, inventions, and creations of a business that are protected by law
c) The public reputation of a business
d) The financial statements of a business
Answer: b) The unique ideas, inventions, and creations of a business that are protected by law
Explanation: Intellectual property includes patents, copyrights, trademarks, and trade secrets, protecting the creative and innovative work of businesses.
What is “business diversification”?
a) The process of expanding a product line within a single market
b) A strategy where a company enters into new industries or markets
c) The practice of focusing on a single product in a specific market
d) The process of reducing product variety to streamline operations
Answer: b) A strategy where a company enters into new industries or markets
Explanation: Diversification involves expanding into new markets or industries, often to reduce risk by spreading operations across different sectors.
What is “customer relationship management” (CRM)?
a) A process of maintaining an inventory of products
b) A system for managing a company’s interactions with current and potential customers
c) A marketing strategy used to promote a product to a wide audience
d) A financial analysis tool for measuring customer profitability
Answer: b) A system for managing a company’s interactions with current and potential customers
Explanation: CRM involves using technology and strategies to build and maintain strong relationships with customers, often through data analysis and personalized communication.
What is “benchmarking”?
a) The practice of copying competitors’ strategies
b) A method of analyzing competitors’ performance to identify best practices
c) A technique for setting the price of a product
d) The process of improving internal processes without comparing them to others
Answer: b) A method of analyzing competitors’ performance to identify best practices
Explanation: Benchmarking involves comparing a company’s performance with that of others in the industry to identify areas for improvement and adopt best practices.
What is “lean manufacturing”?
a) A manufacturing process focused on minimizing waste and maximizing efficiency
b) A process of adding more features to products to increase their value
c) A process of increasing product inventory to meet customer demand
d) A method of creating large quantities of products at lower costs
Answer: a) A manufacturing process focused on minimizing waste and maximizing efficiency
Explanation: Lean manufacturing aims to reduce waste, improve efficiency, and lower costs by streamlining processes and minimizing unnecessary steps in production.
What is “corporate social responsibility” (CSR)?
a) A business’s obligation to minimize operational costs
b) A company’s efforts to contribute positively to society and the environment
c) A company’s strategy for maximizing shareholder value
d) The process of complying with local and international laws
Answer: b) A company’s efforts to contribute positively to society and the environment
Explanation: CSR refers to a company’s responsibility to take actions that benefit society and the environment, such as ethical labor practices or environmental sustainability.
What does the term ” economies of scope” refer to?
a) The cost savings a company achieves by producing related goods
b) The increase in production cost as a company expands
c) The expansion of a company into new markets
d) The efficiency gained from increasing the scale of production of a single product
Answer: a) The cost savings a company achieves by producing related goods
Explanation: Economies of scope occur when a company produces a variety of related products, which allows it to share resources and reduce overall costs.
Which of the following is an example of a “first mover advantage”?
a) A company that is the first to enter a new market and gain brand recognition
b) A company that follows competitors and learns from their mistakes
c) A company that engages in aggressive price cutting to take over market share
d) A company that offers exclusive deals to customers
Answer: a) A company that is the first to enter a new market and gain brand recognition
Explanation: First mover advantage refers to the competitive advantage gained by being the first company to enter a market, allowing it to establish a brand and customer base before competitors arrive.
What is the purpose of a “SWOT analysis”?
a) To identify a company’s financial status
b) To assess the strengths, weaknesses, opportunities, and threats related to a business or project
c) To track the performance of a company’s marketing campaigns
d) To compare a company’s products with its competitors
Answer: b) To assess the strengths, weaknesses, opportunities, and threats related to a business or project
Explanation: SWOT analysis is a strategic tool that helps businesses identify their internal strengths and weaknesses, as well as external opportunities and threats, to improve decision-making.
Which of the following is an example of “discretionary income”?
a) Money allocated for rent and bills
b) Money spent on food and healthcare
c) Money remaining after necessary expenses for non-essential items
d) Money used for saving for retirement
Answer: c) Money remaining after necessary expenses for non-essential items
Explanation: Discretionary income refers to the money a person has left over after covering essential expenses like housing, utilities, and food, which can be used for luxury goods, entertainment, or savings.
What is the “product life cycle”?
a) The stages through which a product passes from introduction to decline
b) The time it takes to design and create a product
c) The method of calculating the cost of production for a product
d) The marketing process used to introduce a product to the market
Answer: a) The stages through which a product passes from introduction to decline
Explanation: The product life cycle describes the different stages a product goes through, from its introduction in the market, through its growth and maturity, to its eventual decline.
Which of the following best describes a “merger”?
a) The process where a company combines with another to form a new entity
b) The acquisition of a competitor to increase market share
c) The creation of a new company from multiple smaller businesses
d) The sale of a company’s assets to pay off debts
Answer: a) The process where a company combines with another to form a new entity
Explanation: A merger occurs when two companies combine to form a new company, often in order to increase market share or reduce competition.
Which of the following is an example of “price elasticity”?
a) The change in the quantity demanded when a product’s price changes
b) The shift in market trends due to technological advances
c) The ability of a company to cut costs to maximize profits
d) The factors influencing customer preferences and purchasing habits
Answer: a) The change in the quantity demanded when a product’s price changes
Explanation: Price elasticity measures how much the demand for a product changes in response to a change in its price. If demand changes significantly, the product is considered elastic.
What is “just-in-time” (JIT) inventory management?
a) Ordering inventory in large quantities to reduce per-unit costs
b) Keeping inventory levels as low as possible while ensuring production needs are met
c) A method of reducing waste by producing more than what is needed
d) Storing excess products for future sales
Answer: b) Keeping inventory levels as low as possible while ensuring production needs are met
Explanation: JIT inventory management focuses on minimizing inventory levels and ordering supplies only as they are needed for production, reducing waste and storage costs.
Which of the following is a characteristic of “differentiation strategy”?
a) Competing primarily based on price
b) Offering a unique product or service that stands out in the market
c) Targeting a broad customer base with similar products
d) Creating barriers to entry to prevent new competitors from entering the market
Answer: b) Offering a unique product or service that stands out in the market
Explanation: A differentiation strategy involves offering products or services that are perceived as unique or superior in some way, often justifying a higher price point.
Which of the following is an example of “viral marketing”?
a) A company running traditional TV and radio advertisements
b) A company sending emails to potential customers promoting a new product
c) A company creating a social media campaign that is widely shared by users
d) A company offering loyalty rewards for repeat customers
Answer: c) A company creating a social media campaign that is widely shared by users
Explanation: Viral marketing relies on social sharing and word-of-mouth to spread a marketing message rapidly across a wide audience, often using social media platforms.
What does “financial leverage” refer to?
a) Using a company’s assets to secure a loan
b) The use of borrowed funds to increase the potential return on investment
c) Investing a portion of profits into savings or retirement funds
d) The use of equity capital to finance a business’s operations
Answer: b) The use of borrowed funds to increase the potential return on investment
Explanation: Financial leverage involves using debt to finance a business’s operations, which can amplify returns on equity if the business performs well, but also increases the risk.
What is a “dividend”?
a) The amount of money invested in a company’s stock
b) A share of a company’s profits paid to its shareholders
c) The amount of money a company allocates for research and development
d) The tax rate applied to a company’s earnings
Answer: b) A share of a company’s profits paid to its shareholders
Explanation: A dividend is a portion of a company’s profits paid to shareholders, typically on a regular basis (quarterly or annually).
What is “employee empowerment”?
a) Giving employees authority and responsibility to make decisions within their roles
b) Providing employees with financial incentives to boost performance
c) Training employees to perform tasks efficiently
d) Allowing employees to decide on the company’s overall strategic direction
Answer: a) Giving employees authority and responsibility to make decisions within their roles
Explanation: Employee empowerment involves giving employees more control and decision-making authority over their work, leading to increased motivation and job satisfaction.
Which of the following best describes “crowdsourcing”?
a) A method of outsourcing tasks to specialized external companies
b) Using social media to increase a company’s market presence
c) Gathering ideas or content from a large group of people, often via the internet
d) A method of reducing production costs by increasing worker productivity
Answer: c) Gathering ideas or content from a large group of people, often via the internet
Explanation: Crowdsourcing involves obtaining input, ideas, or services from a large group of people, typically online, often for innovation or problem-solving.
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