Introduction to business management practice questions.

Which activity best represents the quaternary sector?

• extracting coal from a mine
• manufacturing cars in a factory
• selling groceries in a shop
• research and knowledge services

Answer: research and knowledge services

The quaternary sector involves knowledge-based, intellectual services such as research, information and consultancy, one step beyond the service (tertiary) sector.

Which statement best describes a partnership?

• it is owned and controlled by a single person
• two or more owners who share unlimited liability
• its shares are freely traded on a stock exchange
• the owners have no responsibility for business debts

Answer: two or more owners who share unlimited liability

A partnership pools the capital and skills of 2+ owners; in a standard (unincorporated) partnership the partners share profits and carry unlimited liability.

Which of the following is an EXTERNAL stakeholder of a business?

• a factory worker
• a department manager
• a materials supplier
• the managing director

Answer: a materials supplier

External stakeholders (suppliers, customers, government, local community) are affected by the business but are not part of it; the others are internal stakeholders.

In a SMART objective, what does the 'M' stand for?

• motivating
• measurable
• marketable
• managed

Answer: measurable

SMART = Specific, Measurable, Achievable, Relevant and Time-bound; measurable objectives allow progress to be quantified and reviewed.

According to the Ansoff matrix, selling existing products in new markets is known as:

• market penetration
• market development
• product development
• diversification

Answer: market development

Ansoff's four growth strategies: penetration (existing product/existing market), market development (existing product/new market), product development (new product/existing market), diversification (new product/new market).

Launching a brand new product into a brand new market is which Ansoff strategy?

• market penetration
• product development
• diversification
• market development

Answer: diversification

Diversification (new product + new market) carries the highest risk in the Ansoff matrix because the firm has no existing experience of either the product or the market.