Fundamentals of Business MCQ Quiz - Objective Question with Answer for Fundamentals of Business - Download Free PDF

The correct answer is Central Board of Indirect Taxes and Customs.

Key Points

• The Central Board of Indirect Taxes and Customs (CBIC) started capturing district-wise data on the origin of export goods in 2020.
• This initiative aims to enhance the granularity of export data to better understand the geographical distribution of export activities in India.
• The captured data helps in identifying and promoting districts as export hubs, aligning with the "Districts as Export Hubs" initiative.
• It also facilitates targeted export promotion policies and strategies to boost the local economy and employment.

Additional Information

• Central Board of Indirect Taxes and Customs (CBIC)
  • CBIC is a part of the Department of Revenue under the Ministry of Finance, Government of India.
  • It is responsible for administering customs, central excise, service tax, and narcotics in India.
  • CBIC plays a crucial role in the formulation of policies related to the levy and collection of indirect taxes.
  • It is also involved in preventing smuggling and other illegal trade practices.
• Districts as Export Hubs Initiative
  • This initiative aims to promote district-level exports to boost local economic growth.
  • It focuses on developing export-oriented manufacturing and service hubs in each district.
  • The initiative is part of the broader "Atmanirbhar Bharat" (self-reliant India) campaign.
  • It seeks to enhance the competitiveness of local products in the global market.
• Export Promotion Policies
  • These policies are designed to encourage the production and export of goods and services.
  • They include measures like tax incentives, subsidies, and infrastructure development.
  • Export promotion policies aim to improve the balance of trade and create jobs.
  • They also help in diversifying the export basket and exploring new markets.
• Granularity of Export Data
  • Granular data provides detailed insights into specific aspects of export activities.
  • It helps in identifying trends, strengths, and weaknesses at a micro-level.
  • This data is crucial for making informed policy decisions and strategic planning.
  • Granular export data can reveal regional disparities and opportunities for improvement.

The correct answer is All of the above.

Key Points

The reason for business failure can be multifaceted, and often, it's not due to just one factor but a combination of several. Each of the options provided sheds light on a critical aspect of business operations that, if not managed well, can lead to the failure of the business. Let's delve into why each of these reasons is pivotal.

Lack of Market Research: Understanding the market is fundamental to any business's success. Market research helps in identifying target customers, understanding their needs and preferences, analyzing competitors, and recognizing trends. Without adequate market research, a business may offer products or services that have little to no demand, price them inappropriately, or fail to differentiate from competitors. This misalignment with market needs can lead to poor sales and eventually, business failure.

Poor Financial Control: Financial management is the backbone of any business operation. It includes budgeting, forecasting, cash flow management, and controlling expenses. Poor financial control can result in running out of cash, incurring unnecessary debt, and making unprofitable investments. Businesses that fail to keep a close eye on their finances may end up spending more than they earn, which can quickly lead to insolvency and business closure.

Poor Management: Effective management involves planning, organizing, leading, and controlling a business's resources to achieve its objectives. Poor management can manifest in numerous ways, such as inadequate strategic planning, poor decision-making, ineffective leadership, and inability to adapt to change. These shortcomings can lead to operational inefficiencies, demotivated employees, customer dissatisfaction, and eventually, business failure. Managers who fail to address problems, ignore feedback, or resist innovation are often at the helm of failed businesses.

When combined, lack of market research, poor financial control, and poor management create a scenario ripe for business failure. They are interrelated, and weaknesses in one area can exacerbate problems in another. For instance, without proper market research, even the best financial planning may be based on inaccurate assumptions, leading to misallocated resources. Similarly, poor management can negate the efforts of diligent market research and financial control by failing to execute effectively.

Thus, a holistic approach that addresses all these critical areas is essential for business success.

The correct answer is Social Objectives.

Key PointsSocial objectives of management deal with the commitment of an organization towards society. Here's why:

• Social Responsibility: Organizations, as members of society, have a responsibility to contribute to the well-being of the community they operate in. Social objectives address this responsibility.
• Examples of Social Objectives:
• Using eco-friendly production methods
• Creating employment opportunities
• Providing community support (e.g., scholarships, charitable contributions)
• Adhering to ethical business practices

Additional Information1. Economic Objectives:

Profitability: This is a primary objective for many organizations, ensuring financial health and sustainability.
Growth: Expanding the organization's market share, revenue, or production capacity.
Resource Utilization: Optimally utilizing resources like personnel, materials, and finances to minimize waste and maximize efficiency.
2. Organizational Objectives:

Efficiency: Minimizing resource utilization while maximizing output.
Effectiveness: Achieving the desired results and fulfilling the organization's purpose.
Innovation: Fostering creativity and introducing new ideas to improve products, services, or processes.
3. Social Objectives:

Corporate Social Responsibility (CSR): Contributing positively to society through ethical business practices, environmental sustainability, and community engagement.
Social Responsibility: Fulfilling obligations towards society by minimizing negative environmental impact, ensuring fair labor practices, and adhering to ethical principles.
4. Employee Objectives:

Employee Satisfaction: Creating a positive work environment that motivates and engages employees.
Employee Development: Providing opportunities for professional growth and skill development.
Employee Well-being: Promoting a healthy and safe work environment that fosters physical and mental well-being.

The correct answer is Statement I is correct but Statement II is incorrect

Key Points

• The three types of foreign exchange exposure that one may face when making transactions in FX include transaction, translation, and economic exposure.
• Economic exposure, also sometimes called operating exposure, is a measure of the change in the future cash flows of a company as a result of unexpected changes in foreign exchange rates (FX).
• Economic forex exposure arises from the effect that unexpected currency fluctuations have on market value and future cash flows. Economic exposure is usually long-term and for this reason may affect your long-term strategies.
• Transaction exposure is the most basic type of foreign exchange exposure and is associated with business transactions in foreign currency.

• The exposure may arise due to the time it takes from an entitlement to receive money from a customer and the actual date of the money’s delivery. It may also arise during the time between placing a purchase order and settling the invoice.

Important Points Statement I is correct because economic exposure refers to the change in the value of firm caused by unexpected changes in the exchange rate.

Statement II is incorrect because transaction exposure refers to short term cash flow exposure, and not long term cash flow exposure.

Therefore, the correct answer is Statement I is correct but Statement II is incorrect.

The correct answer is Synthetical Industry.

Key Points

• Synthetical Industry:
  • This type of industry combines various raw materials or components to create a new product.
  • Examples include the chemical industry, where different chemicals are combined to produce new substances, and the pharmaceutical industry, which synthesizes different compounds to create medications.
• Incorrect Options Explained:
  • Analytical Industry: This industry involves breaking down raw materials into their constituent parts. An example is the oil refining industry.
  • Assembling Industry: This industry involves putting together various finished products or parts to make a complete new product, like the automobile industry.
  • Processing Industry: This industry includes changing the form of raw materials into finished or semi-finished products. Examples include the food processing and textile industries.

Additional Information

• Industry Categories:
  • The categorization of industries helps in understanding different manufacturing processes and their economic impacts.
• Importance of Synthetical Industry:
  • Synthetical industries are crucial for innovation and development, particularly in sectors like chemicals, pharmaceuticals, and materials science.

The correct answer is Central Board of Indirect Taxes and Customs.

Key Points

• The Central Board of Indirect Taxes and Customs (CBIC) started capturing district-wise data on the origin of export goods in 2020.
• This initiative aims to enhance the granularity of export data to better understand the geographical distribution of export activities in India.
• The captured data helps in identifying and promoting districts as export hubs, aligning with the "Districts as Export Hubs" initiative.
• It also facilitates targeted export promotion policies and strategies to boost the local economy and employment.

Additional Information

• Central Board of Indirect Taxes and Customs (CBIC)
  • CBIC is a part of the Department of Revenue under the Ministry of Finance, Government of India.
  • It is responsible for administering customs, central excise, service tax, and narcotics in India.
  • CBIC plays a crucial role in the formulation of policies related to the levy and collection of indirect taxes.
  • It is also involved in preventing smuggling and other illegal trade practices.
• Districts as Export Hubs Initiative
  • This initiative aims to promote district-level exports to boost local economic growth.
  • It focuses on developing export-oriented manufacturing and service hubs in each district.
  • The initiative is part of the broader "Atmanirbhar Bharat" (self-reliant India) campaign.
  • It seeks to enhance the competitiveness of local products in the global market.
• Export Promotion Policies
  • These policies are designed to encourage the production and export of goods and services.
  • They include measures like tax incentives, subsidies, and infrastructure development.
  • Export promotion policies aim to improve the balance of trade and create jobs.
  • They also help in diversifying the export basket and exploring new markets.
• Granularity of Export Data
  • Granular data provides detailed insights into specific aspects of export activities.
  • It helps in identifying trends, strengths, and weaknesses at a micro-level.
  • This data is crucial for making informed policy decisions and strategic planning.
  • Granular export data can reveal regional disparities and opportunities for improvement.

The correct answer is Management helps in the development of society.

Key Points

The basic characteristics of management are, 

• It is a goal-oriented process: An organisation has a set of basic goals which are the basic reason for its existence. These should be simple and clearly stated.
• Management is all-pervasive: The activities involved in managing an enterprise are common to all organisations whether economic, social or political.
• Management is multidimensional: Management is a complex activity that has three main dimensions.
• These are:
  • Management of work
  • Management of people
  • Management of operations
• Management is a group activity: An organisation is a collection of diverse individuals with different needs. 
• Management is a dynamic function: Management is a dynamic function and has to adapt itself to the changing environment
• Management is an intangible force: Management is an intangible force that cannot be seen but its presence can be felt in the way the organisation functions. 
• 'Management helps in the development of society is an objective of the Management and not the characteristics. Hence option 4 is correct. 

The correct answer is Survival.

Key Points

• Organisational Objectives: Management is responsible for setting and achieving objectives for the organisation.
• It has to achieve a variety of objectives in all areas considering the interest of all stakeholders including, shareholders, employees, customers and the government.
• The main objective of any organisation should be to utilise human and material resources to the maximum possible advantage, i.e., to fulfill the economic objectives of a business.

These are survival, profit and growth.  

Survival: The basic objectives of any business are survival.

• Management must strive to ensure the survival of the organisation.
• In order to survive, an organisation must earn enough revenues to cover costs.

Profit: Mere survival is not enough for business.

• Management has to ensure that the organisation makes a profit.
• Profit provides a vital incentive for the continued successful operation of the enterprise. Profit is essential for covering costs and risks of the business.

Growth: A business needs to add to its prospects in the long run, for this it is important for the business to grow.

• To remain in the industry, management must exploit fully the growth potential of the organisation.
• Growth of a business can be measured in terms of sales volume increase in the number of employees, the number of products or the increase in capital investment, etc.
• There can be other indicators of growth.  

The correct answer is The work is completed within 10 days even at a higher cost per unit

Key Points

• The concept of effectiveness is related to the completion of the task within the stipulated time irrespective of the cost involved.
• Management aims at guiding their efforts towards achieving a common objective — a goal.
• Thus, management has to see that tasks are completed and goals are achieved (effectiveness) with the least amount of resources at a minimum cost (efficiency)

The correct answer is actual user condition.

Key PointsEPCG Scheme - In order to improve the production quality of goods and services and boost India's competitiveness in the global manufacturing market, the EPCG Scheme was introduced in the 1990s.

Under the plan, manufacturers are not required to pay any customs duties while importing capital goods for pre-production, production, or post-production items.

Important Points

• Under the Export Promotion Capital Goods (EPCG) programmed, imports of capital equipment for use in pre-, during-, and after-production are permitted at a zero percent customs tax rate.
• Import of capital goods imported under the EPCG scheme shall be subject to Actual user condition, until the export obligation is completed
• The plan requires the authorization holder (or exporter) to export finished items worth six times the real tariff saved in value terms during a six-year period.
• Instead of the earlier stipulated term of 90 days, requests for export obligation extensions must be submitted within six months of their expiration.
• However, there is a late fee of Rs 10,000 per permission for applications submitted after six months and up to six years.

Actual User Condition:

The Actual User Condition means the importer of the goods will use the goods in manufacturing of finished goods and after that sell the finished goods to a customer.

The correct answer is Statement I is correct but Statement II is incorrect

Key Points

• The three types of foreign exchange exposure that one may face when making transactions in FX include transaction, translation, and economic exposure.
• Economic exposure, also sometimes called operating exposure, is a measure of the change in the future cash flows of a company as a result of unexpected changes in foreign exchange rates (FX).
• Economic forex exposure arises from the effect that unexpected currency fluctuations have on market value and future cash flows. Economic exposure is usually long-term and for this reason may affect your long-term strategies.
• Transaction exposure is the most basic type of foreign exchange exposure and is associated with business transactions in foreign currency.

• The exposure may arise due to the time it takes from an entitlement to receive money from a customer and the actual date of the money’s delivery. It may also arise during the time between placing a purchase order and settling the invoice.

Important Points Statement I is correct because economic exposure refers to the change in the value of firm caused by unexpected changes in the exchange rate.

Statement II is incorrect because transaction exposure refers to short term cash flow exposure, and not long term cash flow exposure.

Therefore, the correct answer is Statement I is correct but Statement II is incorrect.

The correct answer is the Processing industry.

Key Points

•  The industry that combines various ingredients into a new product is commonly known as the processing industry or the manufacturing industry. This industry involves transforming raw materials or components into finished goods through different processes such as mixing, assembling, refining, or modifying the ingredients.
• In the processing industry, companies take raw materials or intermediate products and apply a series of operations or transformations to create a final product. This can involve activities such as blending, mixing, cooking, cutting, packaging, and other manufacturing processes. The goal is to convert the ingredients or components into a finished product that meets specific quality standards and customer requirements.
• The processing industry is diverse and encompasses various sectors such as food processing, chemical manufacturing, pharmaceutical production, textile manufacturing, electronics assembly, and many others. Each sector within the processing industry has its own set of specific processes and technologies tailored to the type of product being manufactured.
• The industry relies on efficient manufacturing practices, quality control measures, and adherence to safety and regulatory standards to ensure that the final products meet customer expectations. It plays a crucial role in adding value to raw materials or intermediate products by transforming them into consumer-ready goods.

The correct answer is identifying, analyzing and responding to.

Key Points Risk Management can be defined as the art and science of identifying, analyzing, and responding to risk factors throughout the life cycle of a project.

Risk management is a critical part of any project, as it helps to ensure that the project is completed on time, within budget, and to the required quality standards. By identifying and managing risks early on, project managers can reduce the likelihood of problems occurring and mitigate the impact of any problems that do occur.

The risk management process typically involves the following steps:

• Risk identification: The project manager and team members identify all of the potential risks that could impact the project.
• Risk analysis: The project manager and team members assess the probability and impact of each risk.
• Risk response planning: The project manager and team develop plans for responding to each risk.
• Risk monitoring and control: The project manager and team monitor the project for risks and implement the risk response plans as needed. 

The correct answer is Innovation.

Key Points

Innovation:

• The process of translating an idea or invention into a good or service that creates value or for which customers will pay.
• Innovation represents the process of making a new one.
  • ​It is literally the meaning of the term innovation.
• Innovation management is the process of coming up with and introducing new things and developing the business.
  • To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need.
  • It involves deliberate application of information, imagination and initiative in deriving greater or different values from resources.
  • It includes all processes by which new ideas are generated and converted into useful products.

Additional Information

Business model:

• It primarily refers to a company's plan for making a profit.
• It identifies the products or services the business plans to sell, its identified target market, and any anticipated expenses. 
• There are primarily eight types of business models-
  • Product
  • Service
  • Shared Assets
  • Subscription
  • Lease/Rental
  • Insurance
  • Reselling
  • Agency/Promotion

Flexibility is the capacity to change and to adapt to a challenging environment.

• It can be either adaptive, i.e. when challenges are present in the environment .
• It can also be spontaneous i.e., a preference for change without any external pressure.

A management model is a set of decisions the leadership team at a company makes about the future direction of a system, process, or business.

• The choices are made regarding how they define objectives, coordinate activities and allocate resources.

Explanation:

• Blood pressure is a measure of the force that the heart uses to pump blood around the body.
• Blood pressure is measured in millimetres of mercury (mmHg) and is given as:
• Systolic pressure: the pressure when the heart pushes blood out.
• Diastolic pressure: the pressure when the heart rests between beats.

Errors in Blood Pressure measurement:

The size and position of the cuff are wrong:

• The proper size cuff. The inflatable part of the blood pressure cuff should cover about 40% of the distance around the circumference of the upper arm. The cuff should cover 80% of the area from the elbow to the shoulder.
• Improper placement of the cuff over clothing can cause the blood pressure measurement to increase by 10 to 50 points. If the cuff is too small, it can add 2 to 10 points to the bp measurement.

The patient's arm is positioned above or below the level of the heart:

• The arm must also be horizontal at the level of the heart as denoted by the midsternal level.
• Dependency of the arm below heart level leads to an overestimation of systolic and diastolic pressures and raising the arm above the heart.

The sphygmomanometer is pressed too firmly against the brachial artery:

• The stethoscope should be placed lightly over the brachial artery, about 2–3cm below the edge of the cuff.
• If the stethoscope and the sphygmomanometer are pressed too firmly against the artery, it may cause turbulence and the disappearance of sound, thus artificially reducing the diastolic pressure.