July– December 2019 Summative Assessment Examination Revision

Module: Introduction to Business Management (HBMN102-1)

Instructions:
In preparation for the upcoming Summative Assessment 1, please see below 50 Multiple Choice
Questions with solutions:

QUESTION 1
What is the difference between a product and a service?

A. A product can be touched or seen, while a service is an intangible activity that

cannot be touched or seen.
B. A service differs from a product in that once the period in which the service
being undertaken ends, the service itself does not.

C. It is easy to evaluate the quality of a product, but difficult to accurately evaluate

the quality of a service rendered.
D. Products of the same nature are all the same, whereas services of the same
nature can be varied.

QUESTION 2
‘Factors of production’ refers to the four basic sets of resources, including land, capital
and labour. What is the fourth resource?

A. Water
B. Savings
C. Specialisation
D. Entrepreneurship

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 QUESTION 3
How would you define a ‘command economic system’?

A. An economy where only the small areas of the country are controlled by the
government.

B. An economy that is characterised by the ‘invisible hand’ of market forces.

C. An economy in which all factors of production are government-owned or state-

owned.

D. An economy where people only produce what they need for themselves in order
to survive.

QUESTION 4
What is one advantage of a market economic system?

A. Decision-making is centralised.

B. It allows for a high degree of individual freedom.

C. The system provides for the basic needs of all citizens.

D. The system changes in order to accommodate the needs of an economy.

QUESTION 5
Which statement describes a tool that can be used by industry to manage the negative
impact of some macro-environmental forces?

A. SWOT Analysis

B. RESTLE Analysis

C. PESTLE’s Four Forces

D. Porter’s Five Forces

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 QUESTION 6
Why is management within an organisation so important?

A. People with leadership skills like to lead.

B. Predetermined business goals are achieved.

C. Management maximises profit.

D. Management is about controlling people.

QUESTION 7
Which is one of the three characteristics of management?

A. It is a process that consists of one-off activities.

B. It is a process of second-guessing employees.

C. It focuses on achieving business objectives.

D. It requires working with competitors.

QUESTION 8
Which management style is being displayed by a manager who unilaterally makes
decisions, without consulting any subordinates?

A. Effectual management

B. Democratic management

C. Consultative management

D. Autocratic management

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 QUESTION 9
Which level of management is responsible for implementing plans in accordance with
company policy?

A. Top-level management

B. Middle-level management

C. Supervisory-level management

D. Low-level management

QUESTION 10
Which managerial role can be classified as a decisional role?

A. Entrepreneur

B. Leader

C. Disseminator

D. Figurehead

QUESTION 11
Which is an advantage of decentralised purchasing?

A. Direct single-point contact with suppliers

B. No competitive buying of parallel departments

C. Fast responses and decision-making

D. Dispersed negotiating leverage

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 QUESTION 12
Materials behave and function in a specific way. Which factor of quality control
represents this behaviour?

A. Industrial standards

B. Chemical composition

C. Performance specifications

D. Dimensional measurements

QUESTION 13
Which option is an advantage of the fixed order quantity approach of purchasing?

A. Continuous monitoring is not necessary.

B. Out of stock items are ordered straight away.

C. Items are procured in the optimal economical quantity.

D. It is ideal for items with inconsistent usage and lead times.

QUESTION 14
Which advantage is associated with the JIT management system of inventory
management?

A. There is enough inventory in case demand exceeds forecast.

B. There is enough inventory in case delivery is late.

C. There is enough inventory to cover unforeseen manufacturing breakdowns.

D. There is improved communication with suppliers.

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 QUESTION 15
Which term defines a stage of the outsourcing process?

A. Competitor analysis

B. Product assessment

C. Supplier assessment

D. External environment assessment

QUESTION 16
What type of process is sometimes referred to as an assembly line?

A. Repetitive

B. Job shop

C. Project

D. Mass

QUESTION 17
Which is generally considered a characteristic of a job-shop process?

A. Operations and machinery are dedicated to the product.

B. Processes are linear and often continuous.

C. Products or services are standardised and produced in large volumes.

D. The product or service is made according to a specific customer order.

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 QUESTION 18
What type of process would you use to design a website?

A. Batch process

B. Continuous process

C. Job-shop process

D. Project process

QUESTION 19
What do decisions relating to sales and operations planning (aggregate planning)
involve?

A. Both short-term and medium-term forecasting

B. Long-term forecasting

C. Medium-term forecasting

D. Short-term forecasting

QUESTION 20
What does ‘EOQ’ stand for?

A. Economic order quantity

B. Equal order quantity

C. Essential order quantity

D. Economic order quotient

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 QUESTION 21
Which option reflects the purpose of the National Qualifications Framework Act of
2008?

A. This Act stipulates the activities of the National Qualifications Framework.

B. This Act aims to increase levels of investment in education and training in

the labour market.

C. This Act provides for a skills development levy to be imposed.

D. This Act aims to advance economic development and social justice.

QUESTION 22 (U5 – P61)

The first step in a plan to fill an employment gap is conducting a job analysis. What is
the second step?

A. Writing a job description

B. Writing a job proposal

C. Writing a job specification

D. Writing a job benchmark

QUESTION 23
Which statement is correct in terms of a job description?

A. A job description is the same as a job analysis.

B. A job description is the same as a job specification.

C. A job description details the required duties and responsibilities.

D. Desirable criteria in the job description refer to the minimum requirements

an employee must hold

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 QUESTION 24
Which two crucial elements does the process of workplace planning include?

A. Where and when to hire employees

B. Urgency of the vacancy versus the cost of filling the vacancy

C. Labour demand versus labour supply

D. Unexpected vacancies versus planned vacancies

QUESTION 25
The first stage of recruitment is sourcing appropriate job applicants. What is the
second stage?

A. Shortlisting potential candidates

B. Interviewing potential candidates

C. Designing interview questionnaires

D. Designing job advertisements

QUESTION 26
Consumers have limited resources. What do they base their purchasing choices on?

A. Physical needs only

B. Immediate gratification

C. Availability, regardless of price

D. The value they get from the exchange relative to their need

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 QUESTION 27
There are three components related to consumer attitudes. Which option represents
these components?

A. Cognitive, affective and conative

B. Cognitive, effective and conative

C. Cognitive, effective and conative

D. Cognitive, affective and conative

QUESTION 28
Which measure is used by marketers in an attempt to form positive attitudes in
consumers?

A. Direct exposure

B. Family and friends’ influence

C. Creative influence

D. Positive communication

QUESTION 29
What model, developed by marketers, is used to group consumers according to
lifestyle and socio-economic class?

A. Lifestyle Standards Measure

B. Living Standards Model

C. Living Standards Measure

D. Lifestyle Standing Measure

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 QUESTION 30
When designing a marketing communication strategy, the marketing manager can use
various platforms. Which is considered a form of mass communication?

A. Catalogues

B. Packaging inserts

C. Telemarketing

D. Company blogs

QUESTION 31
What does ‘IMC’ stand for?

A. International Monetary Council

B. International Marketing Communication

C. Integrated Marketing Communication

D. Integrated Marketing Conveyance

QUESTION 32
What is the difference between public relations (PR) and marketing?

A. Marketing focuses on sales, while PR focuses on customer relations.

B. There is no difference; both are interrelated communication functions.

C. Marketing focuses on long-term relationships with stakeholders.

D. Marketing focuses on external relationships, while PR focuses on internal

relationships.

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 QUESTION 33
Which is required in an organisation that wants to improve its internal communication?

A. Support of senior management

B. Cultural and language similarity of employees

C. Disseminating messages level by level

D. Communicating on a ‘need-to-know’ basis only

QUESTION 34
How does the size of a business influence the opinion of stakeholders?

A. The size of a business has no influence on stakeholder opinion.

B. Large businesses are seen as more successful.

C. Smaller organisations always deliver more personalised service.

D. The larger the business, the more out of touch they are with customers.

QUESTION 35
In what way does corporate identity differ from corporate image?

A. Corporate image is about how an organisation wants to be seen by

stakeholders.

B. Corporate image is formulated by stakeholders, whereas corporate identity

is controlled by the organisation itself.

C. Corporate image is essentially the visual identity of the organisation.

D. Corporate image is the outward identity of an organisation.

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 QUESTION 36
What does ‘CSR’ stand for?

A. Customer service representative

B. Common sense reality

C. Corporate social responsibility

D. Centre for space research

QUESTION 37
Why are companies involved in CSR?

A. They are compelled by legislation to be involved.

B. To enhance profits through reputational improvement.

C. To look good in the eyes of consumers.

D. To encourage sustainable consumption by consumers.

QUESTION 38
On which three pillars is the triple bottom-line approach of sustainability built?

A. People, plan, profit

B. People, planet, profit

C. People, planet, plants

D. Public, planet, profit

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 QUESTION 39
What type of sustainability is practised by an organisation that establishes a hiring
practice that promotes a diverse workforce?

A. Social sustainability

B. Business sustainability

C. Economic sustainability

D. Environmental sustainability

QUESTION 40
More companies are adopting a socio-economic model of social responsibility. Why
would a business follow this approach?

A. Because of pressure from government

B. Because a business ultimately functions to make profit

C. Because a business is part of society, and so it cannot ignore social issues

D. Because a business lacks the infrastructure to tackle complex social issues

QUESTION 41
What are the three key financial decision-making areas?

A. Investment, financing and profit decisions

B. Investment, financing and asset management decisions

C. Capital, investment and asset management decisions

D. Capital, investment and profit decisions

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 QUESTION 42
Which is a long-term financial objective?

A. Maximising profits

B. Maximising shareholder wealth

C. Increasing EPS on a yearly basis

D. Input cost reduction

QUESTION 43
What is the formula for ROI?

A. ROI = (Total investment – Cost of investment)

Total investment

B. ROI = (Total investment – Cost of investment)

Cost of investment

C. ROI = ( Gain from investment – Cost of investment)

Cost of investment

D. ROI = (Gain from investment – Cost of investment)

Gain from investment

QUESTION 44
Which ration would you use when determining how a company is managing its assets?

A. Inventory turnover ratio

B. Gross profit margin ratio

C. Return on asset ratio

D. P/E ratio
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 QUESTION 45
Which is a key output of short-term financial planning?

A. Fixed asset outlay plan

B. Long-term financial plan

C. Current statement of financial position

D. Pro forma statement of financial position

QUESTION 46
Which can be considered a purpose of budgeting?

A. Measure projected performance against strategy

B. Assist in planning long-term goals

C. Coordinate and control various departmental activities

D. Motivate managers and employees to spend less money

QUESTION 47
Which is included in an operating budget?

A. Sales budget

B. Projected financial position

C. Pro forma expenses budget

D. Cash budget

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 QUESTION 48
What does a master budget comprise of?

A. The budgeted cash flow

B. The entire set of prepared budgets

C. The budgeted statement of comprehensive income

D. The budgeted cash flow, budgeted statement of comprehensive income and

the budgeted statement of financial position

QUESTION 49
What is the starting point for preparing a master budget?

A. Preparing the manufacturing overhead budget

B. Preparing the sales budget

C. Projected statement of profit or loss

D. Sales and administrative overheads budget

QUESTION 50
Which documents are used to prepare cash budgets?

A. Statements of financial position

B. Income tax and depreciation information

C. Statements of profit or loss and other comprehensive income

D. Receipts from debtors

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 Solution:
1. B. A service differs from a product in that once the period in which the
service being undertaken ends, the service itself does not. (Unit 1, Page
4-5)

2. D. Entrepreneurship (Unit 1, page 13)

3. C. An economy in which all factors of production are government-owned or

state-owned. (Unit 1, page 15)

4. B. It allows for a high degree of individual freedom. (Unit 1, page 16)

5. D. Porter’s Five Forces (Unit 1, page 34)

6. B. Predetermined business goals are achieved (Unit 2, page 47)

7. C Predetermined business goals are achieved (Unit 2, page 47)

8. D. Autocratic management (Unit 2, page 48)

9. B Middle-level management (Unit 2, page 54)

10. A. Entrepreneur (Unit 2, page 57)

11. C. Fast responses and decision-making (Unit 3, page 108)

12. C. Performance specifications (Unit 3, page 113)

13. C. Items are procured in the optimal economical quantity (Unit 3, page 117)

14. D. There is improved communication with suppliers. (Unit 3, page 125)

15. C. Supplier assessment (Unit 3, page 140)

16. D. Mass (Unit 4, page 162)

17. D. The product or service is made according to a specific customer order.

(Unit 4, page 162)

18. C. Job-shop process (Unit 4, page 162)

19. C Medium-term forecasting (Unit 4, page 173)

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 20. A Economic order quantity (Unit 4, page 179)

21 A. This Act stipulates the activities of the National Qualifications Framework

(Unit 5, page 202)

22. A. Writing a job description (Unit 5, page 205)

23. C. A job description details the required duties and responsibilities. (Unit 5,
page 206)

24. C. Labour demand versus labour supply (Unit 5, page 207)

25. D. Designing job advertisements (Unit 5, page 209)

26. D. The value they get from the exchange relative to their need
(Unit 6, page 257)

27. A. Cognitive, affective and conative (Unit 6, page 264)

28. B. Family and friends’ influence (Unit 6, page 265)

29. C Living Standards Measure (Unit 6, page 267)

30. B Packaging inserts (Unit 6, page 289)

31. C. Integrated Marketing Communication (Unit 7, page 308)

32. A. Marketing focuses on sales, while PR focuses on customer relations.

(Unit 7, page 313)
33. A. Support of senior management (Unit 7, page 322)

34. B. The size of a business has no influence on stakeholder opinion. (Unit 7,

page 328)

35. B. Corporate image is formulated by stakeholders, whereas corporate

identity is controlled by the organisation itself. (Unit 7, page 333)

36. C. Corporate social responsibility (Unit 8, page 357)

37. D. To encourage sustainable consumption by consumers. (Unit 8, page 358)

38. B. People, planet, profit
(Unit 8, page 363)

39. A. Social sustainability

(Unit 8, page 363)

40. B Because a business ultimately functions to make profit (Unit 8 page 381)

41. B Investment, financing and asset management decisions

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 (Unit 9, page 398-399)

42. B. Maximising shareholder wealth (Unit 9, page 403)

43. C. ROI = ( Gain from investment – Cost of investment)

Cost of investment (Unit 9, page 406)

44. A. Inventory turnover ratio (Unit 9, page 417- 418)

45. D. Pro forma statement of financial position (Unit 9, page 424)

46. C. Coordinate and control various departmental activities

(Unit 10, page 436)

47. A. Sales budget (Unit 10, page 440)

48. D. The budgeted cash flow, budgeted statement of comprehensive income

and the budgeted statement of financial position (Unit 10, page 440)

49. B. Preparing the sales budget (Unit 10, page 440)

50. D Receipts from debtors (Unit 10, page 452)

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