MIDLANDS STATE UNIVERSITY FACULTY OF COMMERCE CENTRE FOR ENTREPRENEURSHIP ENTREPRENEURSHIP 1 CODE: ENT205 OCTOBER/NOVEMBER SESSIONAL EXAMINATIONS 2017 DURATION: 3 HOURS INSTRUCTIONS Section A is compulsory and carries 20 marks. Section 8 is compulsory and carries 20 marks. . Section C is eompulsory and carries 20 marks. Answer any 2 questions from Section D Each question in section D corries 20 marks. Non- programmable silent electronic or financial calculatars may be used.Section A (compulsory and carries 20 marks) 4. Case: Pain of Partnership Mahesh and Raja met while working at a Compaq disc production company. Mahesh was in charge of editorial and production, Raja ran the sales force. Mahesh decided to start his own company and invited Raja to join him. Raja would handle sales and administration, while Mahesh managed the clients and directed production. MR communications seemed like a perfect partnership. Things seemed to be going well, and they even landed a major project. AS time went by, Raja decided that he wanted a “creative” job too. He spent most of his time producing Compaq discs rather than looking for new business. Mahest’s loyalty to Raja made him blind to many things that were obvious to others. Because of their friendship, he trusted that Raja was taking care of his side of the business. As it tuned out, Raja was not very good at the tasks he had taken on. He made mistakes that reduced expected profits. He was not making new sales contacts, which was supposed to be the main part of his job. If that were not enough, the feeling that he was letting his friend down made Raja feel even worse. Raja began to avoid talking to Mahesh. He stopped coming into the office. Finally, he stopped returning phone calls. By the time Mahesh realised what was happening to the business, it was too late. There were no new sales. What Mahesh thought were profits was the result of Raja not paying their bills. Mahesh was left with more than $55, 000 in unpaid bills and other debts. A tearful message on the answering machine from Raja “I'm moving out to Chennai for a while. Sorry it didn’t work out.” It took Mahesh three years to dig out of the financial mess and get his new company up and running successfully. Case Questions i. How could Mahesh and Raja have avoided the problems that led to the end of their partnership? (5 marks) ii, Why is this situation a good example of the difficulty in maintaining partnerships between friends? (5 marks) iii, Had Mahesh and Rajah managed to work together what are some of the benefits that they could have realised from forming a partnership? (10 marks) 20f6Section B (True or False and multiple choice) - compulsory and carries 20 marks 1. An entrepreneur is a person who comes up with an idea and creates a new business amidst uncertainty and risk to achieve profits and growth opportunities. a. True b. False 2. Entrepreneurs must in most cases make decisions in a highly uncertain environment with considerable emotional investment. a. Tue b. False 3. Typically, an entrepreneur learns from failures more than the successes. a. True b. False 4. The motivation to manage one’s own business is usually driven out of personal profits, a. True ». False 5. The intellectual property right refers to the rights given to a person on account of their creativity and can either be copyright or industrial property right. a. True ». False 6. Entrepreneurial training is a powerful resource designed to help one develop a solid knowledge as well as learn what it takes to establish a thriving business, a. True ». False 7. The economic theories of entrepreneurship recognize open and dynamic nature of market systems as well as taking into consideration the uniqueness of entrepreneurial activity and downplay the diverse contexts within which entrepreneurship occurs. a. True b. False 8. According to opportunity based theory people having strong internal control locus believe that their actions can easily influence the external world a. True b. False 9. An entrepreneur can be both an employee and an owner a. True b. False 10. Entrepreneurs are aware of what exactly they want, and know how to go for it, and they never quit. a. True b. False 30f6Multiple Choice Questions 11. When a person initiates a decision to start a business, several factors have to be put into consideration. Which one of the below factors is the most important? A. Decision-making B. Drafting a business plan C. Seeking funds D. Employing people to assist in doing the business 12, Which one of the following is not a role of professional training and development program? ‘A. Help the entrepreneur put the business idea to test B. Enhances business plan development skills C. Increases the market size of the company D. Increases the chances for success and reduces the costs related to trial and error 13, What is venture capital? ‘A. Money invested when borrowing, either in terms of collateral on your assets or in cash B. Money loaned by parents, spouse, friends, or family C. Money that is provided as seed in early business stages given in exchange for equity D. Money gotten from wealthy retired company executives or individuals 14. Which of the following is NOT among the reasons why people become entrepreneurs? ‘A, Opportunity B. Become Risk Takers C. Desire for Change D. Autonomy 16. The following are different forms of government funding. Which one is not? A. Direct Grant B. Soft loan C. Bank loans. D. Equity finance 16. Which of the following is not among the components of sociocultural environment that affect entrepreneurship? A. Religion B. Beliefs C. Lifestyle D. Political stability 408617. The following are some of the main reasons for setting up industrial parks. Which one is not? ‘A. Enhance a dedicated concentration of infrastructure in an area B. Attract new businesses through provision of an integrated infrastructure C. Reduce the environmental impacts of industrial wastes D. None of the above 18. Which of the following is NOT among the myths of entrepreneurship? A. Entrepreneurs are aware of what exactly they want and know how to go for it B. An entrepreneur is his/her own boss C. Entrepreneurs should not be connected D. Entrepreneurship needs huge funding 19. Why is the participation of university students in entrepreneurship in your country very limited? A. Lack of education B. Sociocultural restrictions and customs C. Inadequate funding D. Political instability 20. Which of the following ways is NOT a wise way for an entrepreneur to pay him/herself out of the proceeds of a business? A. dividend B. commission C. salary D. profit retention Section C (Financial mathematics) - Compulsory and carries 20 marks 1.a) Company XYZ is considering an investment of $100,000. The useful life of the project is 10 years. The cutoff period (payback) is three (3) years. The board of directors has identified two alternatives A and B, The expected annual cash flows are as follows: [Cost or Cash Flow [investment A Investment B Initial Cost ($100,000) $100,000) [Cash flow year 1 [33,000 [33,000 [Cash flow year 2 [25,000 3 [Cash flow year 3 37,000 [Cash flow year 4 [40,000 Required: i. Calculate the payback period for Investment A (4 marks) ji. Caloulate the payback period for investment B (4 marks) iii. Which project should the company investment $100 000 on and why? (2 marks) Sof 61.b) Nkosi is planning to run a small poultry business from her house in order to supplement her meager salary. Her anticipated costs are as follows: Day old chicks (batch of 50) $100 Starter feed (@$30 per 50kg bag) 360 Grower's feed (@$30 per 50kg bag) $60 Finisher feed (@$35 per 50kg bag) $70 Chemicals and dosages $15 Due to the continuous increase in the number of people venturing into this line of business Nkosi expect the selling price to fall down from $7.50 to $4.50 per chicken, Required i. Would you advise Nkosi to venture into this business (use profit and loss to justify your answer)? (5 marks) ii, Calculate for Nkosi the unit cost of keeping a single chicken. (6 marks) Section D — carries 40 marks (answer any 2 questions) 1 Various studies show that chances of failure of a business are far higher than the chances of success. Still, entrepreneurs plunge into the realm undertaking business. What are the reasons that result in the failure of a business and how can they be overcome? Explain by citing any FIVE (5) concrete examples. (20 marks) The most crucial aspect of a business pian is to scientifically undertake ‘Market Research and Analysis’. Citing any FIVE (5) examples explain the significance of market research and analysis before starting any business. (20 marks) Would you recommend buying an existing business as an entry strategy for small businesses in Zimbabwe? Motivate your answer. (20 marks) Discuss the relevance of your degree programme in developing your ability to become a successful entrepreneur (20 marks) Discuss how the current economic, social, political, ecological, technological factors in your country are positively influencing entrepreneurship development. (20 marks) 6of6