Chapter 3: Enterprise, business growth and size

The advantage of a person becoming an entrepreneur is:

• more money'll always be earned than working for an employer
• there is more independence than when working for an employer 
• Less risk of business failure 
• no oppotunity cost involved in becoming anentepeneur

An important characteristic of a successful entrepreneur is that:

• they are always rich
• they are risk takers
• they are usually shy
• they want to avoid hard work

A business plan for a new business will include all of the following except

• financial forecasts
• market research data
• details of the business owners
• previous years' accounts

What benefit does drawing up a business plan bring for a new entrepreneur?

• it shows exactly how much money the firm will make
• it makes sure the bank will lend all the capital needed
• it means that the business start up has no risk of failure
• it helps in organising the resources needed for the new firm

Which of the following is not an effective way of measuring the size of a business?

• number of employees
• value of sales
• value of capital invested
• profit level

Which of the following options is most likely to be a reason why a firm may wish to expand?

• To keep control of the business
• To increase the level of profits the firm will make
• To encourage competition
• To avoid publicity

Which of the following is an example of horizontal integration between two businesses?

• An oil company and an insurance company merge
• A shoe shop buys out a shoe factory
• A steel firm takes over a coal mine that supplies coal
• Coca-Cola takes over a small soft drink business

One of the reasons for vertical integration between two businesses could be to:

• diversify into a completely different industry
• reduce competitors supplying the same product
• control the supply of raw material
• obtain higher market share

One of the most common reasons for a new business not surviving is:

• too much time spent on developing the business plan
• no competitors in the industry
• poor cash flow as a result of poor financial planning
• consumers like dealing with small firms providing a service

If the risks of starting up a business are so high, why do entrepreneurs create new businesses?

• The rewards are always extremely low
• The rewards can be very high
• The risks of the business failing are very low