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: Small Business Management and Entrepreneurship

SECTION A
Answer All Questions from Section A. Each Question Carries 1 Mark 1 X 20 = 20 Marks
1. Which of the following class of entrepreneurs primarily take up manufacturing activities?
A. Service entrepreneurs
B. Corporate entrepreneurs
C. Industrial entrepreneurs
D. Business entrepreneurs
2. Which of the following class of entrepreneurs undertake their business activities under
legally registered company or trust
A. Service entrepreneurs
B. Corporate entrepreneurs
C. Industrial entrepreneurs
D. Business entrepreneurs
3. Which of the following define entrepreneur as the unity of factors of production?
A. Richard Cantilon
B. J. B Say
C. Adam Smith
D. J. A Schumpeter
4. Which of the following class of entrepreneurs need skills and vocational training for its
success?
A. Service entrepreneurs
B. Corporate entrepreneurs
C. Industrial entrepreneurs
D. Business entrepreneurs
5. Who propounded the Social Change Theory;?
A. Max Weber
B. Thomas Cochran
C. Frank Young
D. E. Hagen
6. All the following are proponents of Economic Theories except:
A. Stoke
B. Schumpeter
C. Kirzner
D. Papanek and Haris
7. The Theory of Religious Belief was propounded by:
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A.
B.
C.
D.
8. -----------Theory
A.
B.
C.
D.

Max Weber
Thomas Cochran
Frank Young
E. E, Hagen
propounded the theory of X-efficiency which is popularly called Gap filling
Stoke
Leibenstein
Schumpeter
F.Young

9. Which of the following is a legal requirement for establishing a small business?


A. Location
B. Capital
C. No Objection Certificate
D. Labour
10. -------------is an important instrument for accelerating entrepreneurial development
A. Monetary policy
B. Tariff protection
C. Import license
D. Rebates
11. --------- influences the production process of both small scale and large scale industries.
A. Monetary policy
B. Tariff protection
C. Import license
D. Rebates
12. The sum total of all long term securities issued by a firm or enterprise and the surplus not
meant for distribution is known as;
A. Capital
B. Capitalization
C. Capital structure
D. Capital gearing
13. Additional money to start sales and manufacturing after a firm has spent its start-up capital
is
A. First round financing
B. Second round financing
C. Third round financing
D. Fourth round financing
14. Fourth round financing is also known as:
A. Bridge finance
B. Venture capital
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C. Seed money finance


D. Start-up capital
15. Which of the following theory is relevant to entrepreneurial behavior?
A. Kaos Model
B. F. Drucker
C. McClellands need achievement theory
D. J. F Smith

16. Providing conducive working environment for good work culture is;
A. Responsibility towards work
B. Responsibility towards shareholders
C. Responsibility towards employees
D. Responsibilities towards community
17. Which of the following is a social factor which is critical for the growth of entrepreneurship?
A. Return on investment
B. Family background
C. Spirit of capitalism
D. Profit
18. Creating immediate employment opportunities in small enterprises and business sector is an
example of
A. Stimulatory role
B. Supportive role
C. Sustaining role
D. Socio-economic role
19. Additional financing for full-capacity utilization is
A. Stimulatory role
B. Supportive role
C. Sustaining role
D. Socio-economic role
20. Availability of local agencies with trained personnel for entrepreneurial counseling and
promotion is.
A. Stimulatory role
B. Supportive role
C. Sustaining role
D. Socio-economic role

SECTION B
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Answer any 10 Questions from Section B. Each Question Carries 2 Mark 2x10 = 20 Marks
1. An entrepreneur is A Person and entrepreneurship is A
Process. Putting them together is An Enterprise..
2. Distinguish between entrepreneurship and an enterprise
Entrepreneur is a person. Enterprise is the business unit

3.

4.
5.

6.

7.

Entrepreneur is a decision- taker.Enterprise serves as the framework within which


decision concerning what to do are taken by the Entrepreneur
Who is a corporate entrepreneur?
Corporate entrepreneur is a person who demonstrates his innovative skill in
organizing and managing corporate undertaking.
A corporate undertaking is a form of business organization, which is registered
under some statute or Act, which gives it a separate legal entity.
The process by which an opportunity is identified is described as opportunity
analysis
Distinguish between Intrapreneur and Entrepreneur ?
INTRAPRENEUR"A person within a large corporation who takes direct
responsibility for turning an idea into a profitable finished product through
assertive risk-taking and innovation".
ENTREPRENEUR:People who have a talent for seeing opportunities and the
abilities to develop those opportunities into profit-making businesses.
List four important economic factors which very often affect entrepreneurship
- Economic system
- Economic Planning
- Industrial Policies
- Fiscal incentives
- Taxation
- Rebates
- Import Duty
- Export Duty
- Commercial Policy
- Foreign Exchange control
- Import license
- Monetary policy
Danhof classified entrepreneur into four classes. What are they ?
Innovating entrepreneurs: An innovative entrepreneur ins one, who introduces new
goods, inaugurates new method of production, discovers new market and recognizes
the enterprise.
Adoptive or Imitative entrepreneurs: These types of entrepreneurs creatively
imitate the innovative technical achievement made by another firm.
Imitative entrepreneurs are suitable for underdeveloped countries as it is hard for
them to bear the high cost of innovation.

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Fabian entrepreneurs: Fabian entrepreneurs are characterized by very great


caution and skepticism to experiment any change in their enterprises.
They usually do not take any new challenge.
They imitate only when it becomes perfectly clear that failure to do not so would
result in a loss of the relative position in the enterprise.
Drone entrepreneurs: They are characterized by a refusal to adopt any change even
at cost of severely reduction of profit. They are conservative and hold on to
traditional systems of business.
8. Define pure entrepreneur
Pure Entrepreneur : A pure entrepreneur is an individual who is motivated by
psychological and economic rewards. He undertakes an entrepreneurial activity for
his personal satisfaction in work, ego or status.
9. Distinguish between Overcapitalization and Undercapitalization ?
Overcapitalization; - it a situation when an enterprise possesses excess of capital
than warranted by its capacity. In this case, the actual earnings are lower than the
expected ones.
Undercapitalization; - It a situation when capital utilized by an enterprise is lower
than that warranted by its earning capacity. In this case, the market value of shares
is higher than that of shares of similar enterprise.
10. What is the difference between seed money finance and start-up finance ?
Seed money finance: small amount of financing needed to prove a concept or to
create a product.
These early financings may be directed toward product development, market
research, building a management team and developing a business plan.
Start up: financing for a firm that stated up in the past one year.
Funds are utilized to pay for marketing and product development
Start-up financing provides funds to companies for product development and initial
marketing.
11. Define rural entrepreneurship ?
Rural entrepreneurship means rural industrialization.
Rural entrepreneurs are those who carry out entrepreneurial activities by
establishing industrial and business units in the rural sector of the economy.
12. Explain Venture capital
venture capital is a source of financing for new businesses
It is a form of equity financing especially designed for funding high-risk, hightechnology and high-reward projects.
Venture capital is invested in exchange for an equity stake in the business.
As a shareholder, the venture capitalist's return is dependent on the growth and
profitability of the business
13. What do you mean by export finance
Export finance is the credit facilities offered to exporters at the pre-shipment and
post-shipment stages.
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Pre-shipment finance- this is given before the actual shipment of the goods.
It is meant for the cost of packaging, advance against incentives and duty
drawbacks.
14. List four challenges women entrepreneurs are likely to face
Psychological constrains:
Lack of motivation
Conflicts of dual responsibility
Risk taking ability
Social constrains:
Male dominance
Social norms
Role conflicts
Technical constrains:
Project ideas
Lack of process know- how
Implementation capacity
Economic constrains:
access to finance
stiff competition
15. List four roles of entrepreneurs in bringing about social stability and developments of
industries
1. Develop Qualities in social environment
2. Brings social life standard at high level
3. Creates employment in society
4. Reduces Social evils
5. Reduction in social migration
6. A vehicle in constructive Activities in society
SECTION C
Answer any 4 Questions from Section C. Each Question Carries 5 Marks

5x4 = 20 Marks

1. Define entrepreneur. Explain briefly the characteristics of an entrepreneur


Entrepreneur is a Person who have a talent for seeing opportunities and the abilities
to develop those opportunities into profit-making businesses.
Characteristics are:
The ability to learn from others entrepreneurs tend to be good at networking.
They benefit from being members of organization where they can learn best
practice ideas from others.
Self confidence a belief in their own abilities and ideas.
Being innovative/inventive being able to generate ideas, either for new
products/services or new ways of applying them.
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Self motivation and determination the drive to keep going and see things through.
Showing initiative it is necessary to have not only the ideas for the business, but
also the detailed plans to achieve objectives (both thinking and doing).
Analytical abilities capable of researching and evaluating each aspect of the
business, from development, through finance, production, to marketing and sales.
The ability to make decisions and to take (considered) risks.
A focus on results that ensures products are sold for a profit.
Independence- most of the entrepreneurs start on their own because they dislike to
work for others.
Risk-bearing- they take decision under uncertainty and thus willing to take risk but
they never gamble with results.
Positive self-concept- they are always positive in their action. They strive to achieve
goals using SWOT analysis.
Ability to find and explore opportunities.
Hope of success- Entrepreneurs set their goals with a hope of success rather than
fear of failure.
Analytical ability of mind- they are not affected by personal likes or dislikes, they
stand beyond these prejudices as they are realistic in their approach.
Openness to feedback and learning from experience
Innovators- they constantly put their efforts in introducing new products, new
methods of production, opening new markets and reorganizing the enterprise.
Business communication skill- they must posses good communication skills in order
to communicate well.

2. What is Innovation? Critically examine the theories of innovation propounded by J. A


Schumpeter
The process of translating an idea or invention into a good or service that creates
value or for which customers will pay.

According to him, an entrepreneur is one who perceives the opportunities to


innovate.
Innovation involves problem solving and the entrepreneur is problem solver.
Innovation Cover 5 Cases:
The introduction of new goods
The introduction of new method of production
The opening of new market
The conquest of a new source of supply of raw material or semimanufactured goods.

3. State the steps in setting up a small scale business


4. Discuss the various environmental factors affecting entrepreneurship
Business environment is the sum total of all factors internal and external to the
business firm and that greatly influence their functioning.
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Internal environmental
Internal environmental factors are events that occur within an organization.
They are easier to control than external environmental factors.
Some examples are as follows:
Management changes
Employee morale
Culture changes
Financial changes.

Social environment
This comprises of entire social interaction within the organization.
It includes social factors like customs, traditions, values, beliefs, poverty, literacy,
life expectancy rate etc.
The social structure and the values that a society cherishes have a considerable
influence on the functioning of business firms.
Ethical Business Environment
It covers ethical values a business upholds in doing business.
It mostly pertains to ethics and belief system of the society or country where such
business operates.
Legal environment - the entire framework of law.
External environment of business
This comprises of all the factors that are mostly not controllable by the business
Most important of them are political and economic environments of business.
Political Environment
Political environment of a country has direct impact on external business
environment.
Good political environment ensures business security. More and more businesses are
established in congenial environment.
Economic Environment
There are four important variables in economic environment of business. These are:
Land ,:abour,capital and Organization

Legal Environment
This refers to set of laws, regulations, which influence the business organisations
and their operations. These include;
Companies Act, 1956
Foreign Exchange Management Act, 1999
The Factories Act, 1948
Industrial Disputes Act, 1972

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5. What is entrepreneurship development? Discuss the need for entrepreneurship


development. ?
Entrepreneurship development is a human resource development task, process
which deals with human motivation, skills, competencies, social and economic risks
and investment of technical and physical resources of the individual and the state. It
is a complex process of changes. The development of entrepreneurs through
systematic entrepreneurship development programmes has
emerged as an
important strategy for development of human resources for promoting small
business enterprises.
The needs are:
To improve individual / national income
To improve resource of the nation
To increase employment generation
To develop the individual skill
To increase the income of the individual
To ensure a dignified life
To disseminate skill and knowledge
To empower the society socially and economically
6. Discuss the role of entrepreneur in generation of employment opportunities
An entrepreneur can create basically three types of employment:
A. Self-employment
B. Generation of employment opportunities in own u unit
C. Ancillary employment opportunities
7. Explain the role played by an entrepreneur in import substitution and export promotion
Import substitution means to produce importing goods and services with in the
country, to establish needed industries for it and to reduce imports by placing high
import tariff on international trade.
The benefits are:
- Industrial development can be made rapid by using import tariff
- the economy can become self-independent
- the balance of payment becomes balance at international level
- the problem of shortage of foreign exchange can be reduced
8. What recommendations can you suggest for developing rural entrepreneurship?
Training and development
Supply of raw materials
Availability of credit facilities.
Government support- tax incentives, import and exports policies
Availability of markets

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