Doubts in Ques: 100097, 100100, 100081
CMAT 2026: Innovation & Entrepreneurship
Practice Questions (91 – 100)
An entrepreneur who can contribute to combine technologies, knowledge, market understanding and resource limitations to create new value demonstrates:
Correct Option: 4
Rationale: Entrepreneurial Orientation (EO) refers to the strategic posture characterized by innovativeness, risk-taking, and proactiveness. Combining diverse resources to create value is a core tenet of the innovativeness dimension of EO.
Rationale: Entrepreneurial Orientation (EO) refers to the strategic posture characterized by innovativeness, risk-taking, and proactiveness. Combining diverse resources to create value is a core tenet of the innovativeness dimension of EO.
Match List I with List II:
| List I (Stages of Innovation) | List II (Key objectives) |
|---|---|
| A. Ideation Stage | I. Translating selected ideas into viable prototypes |
| B. Concept Development | II. Generating creative ideas and identifying unmet market needs |
| C. Implementation | III. Defining value proposition, business model and feasibility |
| D. Commercialisation | IV. Launching innovation to the market and scaling operations |
Correct Option: 1
Rationale: A-II: Ideation is about creative generation. B-III: Concept development involves defining value/feasibility. C-I: Implementation is the prototype phase. D-IV: Commercialisation is market launch and scaling.
Rationale: A-II: Ideation is about creative generation. B-III: Concept development involves defining value/feasibility. C-I: Implementation is the prototype phase. D-IV: Commercialisation is market launch and scaling.
A startup in India in early stage funding under SIDBI SMILE scheme must primarily show:
Correct Option: 3
Rationale: SIDBI SMILE (Soft Loan Fund for MSMEs) aims to provide quasi-equity to help small ventures meet debt-equity requirements. For startups specifically, the primary criteria are innovation and growth potential leading to employment (job creation), aligned with the “Make in India” initiative.
Rationale: SIDBI SMILE (Soft Loan Fund for MSMEs) aims to provide quasi-equity to help small ventures meet debt-equity requirements. For startups specifically, the primary criteria are innovation and growth potential leading to employment (job creation), aligned with the “Make in India” initiative.
In case of entrepreneurial financing, which of the following is a correct sequence of stages from idea to exit?
A. Growth | B. Exit | C. Validation | D. Financing | E. Ideation
A. Growth | B. Exit | C. Validation | D. Financing | E. Ideation
[Image of Startup Lifecycle Stages]
Correct Option: 1
Rationale: The standard lifecycle follows: Ideation (E) → Validation (C) → Financing (D) → Growth (A) → Exit (B).
Rationale: The standard lifecycle follows: Ideation (E) → Validation (C) → Financing (D) → Growth (A) → Exit (B).
______ financing allows the investors to release funds in phases based on milestone achievement, reducing exposure to failure risk while incentivizing entrepreneur to meet strategic goals.
Correct Option: 2
Rationale: Staged Financing is a risk-mitigation strategy where Capitalists provide funds in distinct rounds (Seed, Series A, etc.) only after certain milestones are reached.
Rationale: Staged Financing is a risk-mitigation strategy where Capitalists provide funds in distinct rounds (Seed, Series A, etc.) only after certain milestones are reached.
Which of the following entities is responsible for coordinating entrepreneurship policy in India?
Correct Option: 3
Rationale: The Department for Promotion of Industry and Internal Trade (DPIIT) is the nodal body for the “Startup India” initiative and general entrepreneurship policy.
Rationale: The Department for Promotion of Industry and Internal Trade (DPIIT) is the nodal body for the “Startup India” initiative and general entrepreneurship policy.
“Make in India” focuses on:
Correct Option: 3
Rationale: The primary objective of “Make in India” is to transform the country into a global manufacturing hub by promoting domestic production.
Rationale: The primary objective of “Make in India” is to transform the country into a global manufacturing hub by promoting domestic production.
Design thinking does not involve the following:
A. Test | B. Empathize | C. Incubation | D. Brain Storming | E. Prototyping
A. Test | B. Empathize | C. Incubation | D. Brain Storming | E. Prototyping
[Image of Design Thinking Process Flow]
Correct Option: 4 (C only)
Rationale: The five stages of Design Thinking are Empathize, Define, Ideate (which includes Brainstorming), Prototype, and Test. Incubation is a business support service, not an internal stage of the Design Thinking methodology. CMAT Actual key says C & D but “C & D only” is wrong Because: Brainstorming (D) is explicitly part of the Ideation phase. Removing D would incorrectly exclude a core Design Thinking activity. So C & D cannot be correct.
Rationale: The five stages of Design Thinking are Empathize, Define, Ideate (which includes Brainstorming), Prototype, and Test. Incubation is a business support service, not an internal stage of the Design Thinking methodology. CMAT Actual key says C & D but “C & D only” is wrong Because: Brainstorming (D) is explicitly part of the Ideation phase. Removing D would incorrectly exclude a core Design Thinking activity. So C & D cannot be correct.
Social or environmental spillover effects beyond direct financial returns of a venture can be best termed as:
Correct Option: 4
Rationale: Externalities are costs or benefits incurred by third parties who are not part of the transaction. Positive externalities include social or environmental spillovers.
Rationale: Externalities are costs or benefits incurred by third parties who are not part of the transaction. Positive externalities include social or environmental spillovers.
Match List I with List II:
| List I | List II |
|---|---|
| A. Startup | I. Self-employment and small-scale ventures growth |
| B. Atal Innovation Mission | II. 100% FDI in retail trade without approval |
| C. Entrepreneurial Development Programmes (EDP) | III. Grassroot innovation and incubation |
| D. NABARD | IV. Rural Development |
Correct Option: 4
Rationale: D-IV: NABARD is for rural development. B-III: Atal Innovation Mission focuses on grassroots innovation. C-I: EDPs are for self-employment. A-II: In the given matching context, startups are associated with the easing of FDI norms.
Rationale: D-IV: NABARD is for rural development. B-III: Atal Innovation Mission focuses on grassroots innovation. C-I: EDPs are for self-employment. A-II: In the given matching context, startups are associated with the easing of FDI norms.
CMAT 2026: Innovation & Entrepreneurship
Practice Questions (81 – 90)
The quality of an entrepreneur to recover quickly from failure can be described as:
Correct Option: 2
Rationale: Resilience is defined as the capacity to recover quickly from difficulties or failure. In entrepreneurship, it is the crucial trait that allows founders to bounce back from setbacks, pivot, and continue pursuing their goals.
Rationale: Resilience is defined as the capacity to recover quickly from difficulties or failure. In entrepreneurship, it is the crucial trait that allows founders to bounce back from setbacks, pivot, and continue pursuing their goals.
The strategic advantage of bootstrapping in entrepreneurial finance is:
Correct Option: 2
Rationale: Bootstrapping means funding a startup using personal resources and revenue. Early bootstrapping allows the entrepreneur to retain control and signals to future investors that the model is efficient and validated.
Rationale: Bootstrapping means funding a startup using personal resources and revenue. Early bootstrapping allows the entrepreneur to retain control and signals to future investors that the model is efficient and validated.
“Ambidexterity theory in innovation strategy requires successful entrepreneurs to simultaneously explore ______ opportunities while exploiting ______ resources.”
Correct Option: 2
Rationale: Organizational Ambidexterity involves Exploration (searching for new possibilities/markets) and Exploitation (refining and using existing resources/competencies).
Rationale: Organizational Ambidexterity involves Exploration (searching for new possibilities/markets) and Exploitation (refining and using existing resources/competencies).
Following factors are essential for judging the adequacy of market for a proposed business idea:
A. Demand in Domestic Market
B. Competitors and their market share
C. Demand in Export Market
D. Treasury bond yields
E. Customer tastes and preferences
A. Demand in Domestic Market
B. Competitors and their market share
C. Demand in Export Market
D. Treasury bond yields
E. Customer tastes and preferences
Correct Option: 3
Rationale: Market adequacy depends on Demand (Domestic/Export), Competitors, and Customer Tastes. Treasury bond yields (D) are macroeconomic indicators and not a direct factor for individual business idea market adequacy.
Rationale: Market adequacy depends on Demand (Domestic/Export), Competitors, and Customer Tastes. Treasury bond yields (D) are macroeconomic indicators and not a direct factor for individual business idea market adequacy.
While Conducting cost-benefit analysis for an entrepreneurial innovation, which of the following represents a non-monetary benefit that would be quantified if possible?
Correct Option: 2
Rationale: Licensing, depreciation, and patent fees are monetary/financial. Brand equity and social impact are intangible (non-monetary) benefits that analysts attempt to quantify in a CBA.
Rationale: Licensing, depreciation, and patent fees are monetary/financial. Brand equity and social impact are intangible (non-monetary) benefits that analysts attempt to quantify in a CBA.
Assertion [A]: Entrepreneurs are innovators.
Reason [R]: They convert new ideas into commercially viable products.
Reason [R]: They convert new ideas into commercially viable products.
Correct Option: 1
Rationale: Entrepreneurs are innovators because their primary function is to commercialize inventions or ideas. [R] is the fundamental definition that explains [A].
Rationale: Entrepreneurs are innovators because their primary function is to commercialize inventions or ideas. [R] is the fundamental definition that explains [A].
Entrepreneurs are called as ‘agents of change’, because:
Correct Option: 1
Rationale: Schumpeter viewed entrepreneurs as the force of “creative destruction.” They introduce new methods and products, forcing modernization and structural economic change.
Rationale: Schumpeter viewed entrepreneurs as the force of “creative destruction.” They introduce new methods and products, forcing modernization and structural economic change.
Statement I: Venture capital funds should always specialize narrowly in a single sector to maximise returns.
Statement II: Diversification across industries and stages helps venture capitalists to manage portfolio risk, while maintaining strategic focus.
Statement II: Diversification across industries and stages helps venture capitalists to manage portfolio risk, while maintaining strategic focus.
Correct Option: 4
Rationale: Narrow specialization increases concentration risk. Statement II is correct as diversification is a fundamental principle of risk management in Venture Capital portfolios.
Rationale: Narrow specialization increases concentration risk. Statement II is correct as diversification is a fundamental principle of risk management in Venture Capital portfolios.
According to Schumpeter, the entrepreneur is primarily a:
Correct Option: 3
Rationale: Joseph Schumpeter defined the entrepreneur specifically as an Innovator who revolutionizes patterns of production by exploiting untried technological possibilities.
Rationale: Joseph Schumpeter defined the entrepreneur specifically as an Innovator who revolutionizes patterns of production by exploiting untried technological possibilities.
Which of the following provides incubation support in India?
Correct Option: 2
Rationale: The Atal Innovation Mission (AIM) by NITI Aayog is the flagship initiative for promoting innovation, specifically through the establishment of Atal Incubation Centres (AICs).
Rationale: The Atal Innovation Mission (AIM) by NITI Aayog is the flagship initiative for promoting innovation, specifically through the establishment of Atal Incubation Centres (AICs).
