CONFIDENTIAL BMV/APR 2009/ETR300 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : FUNDAMENTALS OF ENTREPRENEURSHIP COURSE CODE : ETR300 EXAMINATION APRIL 2009 TIME : 2HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of four (4) parts: PART A (20 Questions) PART B (20 Questions) PART C (3 Questions) PART D (2 Questions) 2 ‘Answer ALL questions from PART A, PART B, PART C and one (1) question from PART D i) Answer PART A in the Objective Answer Sheet. ji) Answer PART B in the True/False Answer Sheet iii) Answer PART C and PART D in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the Invigilator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ji) an Answer Booklet — provided by the Faculty ill) @ True/False Answer Sheet — provided by the Faculty iv) an Objective Answer Sheet — provided by the Faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of © printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 2 BMI/APR 2009/ETR300 PART A 1 The following is 2 step in the process of identifying, evaluating and selecting a business opportunity EXCEPT: A. Identifying the needs and wants of customers B Scanning the environment C. Identifying the business nsk D. Screening of business opportunities E. None of above 2. Seif evaluation involves all of the following, EXCEPT A Working experience B Knowledge and skill C. Financial capability D. Self interest = Legality 3. En, Faizal has allocated RM2, 100 to hire a new marketing executive for nis advertising business. The allocation is inclusive of basic salary. 13% contribution to EPF and 2% contribution to SOCSO. Calculate the maximum basic salary he can offer to the new staff. tye Re s A. RM 1,826 ee BRM 2,415 Cc. RM 2,100 D. RM 1,800 ERM 1,785 4 A business pian should include all of the following items EXCEPT A. Overview of business purpose and highlight of key elements of the pian B__Nature of the industry, including economic trends, important legal or regulatory issues, and potential risks. C. Product characteristics, distribution, promotion, pricing and market research D. _Deseription of the organization's decision making process. E. Explanation about the management plan for the proposed business venture. 5 The term “ENTREPRENEUR’ refers to moomw> The process that leads to the setting up of a business entity The competencies that should be possessed by a successful person The characteristics of a successful person The person who manages a business The person who undertakes to organize, manage, and assume the risk of a business. RAMEINEAITIALCONFIDENTIAL 3 BMIAPR 2009/ETR300 6 The following are characters of a small business, EXCEPT: A. Size of business is small relative to industry 8B Management is independent C. Area of operation is mainly local D. The business is operating with limited resources E The business is formed as only sole trader or sole proprietor 7 Symbols in the Operation Plan describe: mooD > The symbol is used when in process materials or finished products are stored in the storage The symbol is used when in process material is restrained in a location waiting for next activity. ‘Transport activities occur when materials are transported from one point to another Activity that measures standard of the in process material, finished product or service Activities that modify transform or give values to the input 8. In planning the operation’s manpower needs, the following information is required i) ii) ii) moom> © Hak Cipta Uni Rate of production Standard time to produce a unit of product Man productive hours Process flow chart Layout plan i, ii and iv only ii, iii and iv only i, ii, and ili only i, and iv only All of the above Which of the following ts NOT part of a production / operation plan? Description of the production process Description of the product Acquisition of machinery and equipment Operations budget Material requirement planning rat Teknologi MARA CONFIDENTIALCONFIDENTIAL 4 BM/APR 2009/ETR300 10. The following factors should be considered when selecting business location i) Distance from source of materials ii) Workers productive hour iii) Costs of transportation iv) Number of output v) Availability of labour iii ii and iv Kil, and v i, ii and iit i, ii and v i, fii and v moowp> 11. Which of the following statement is TRUE? The cost incurred to register a business is not included in the project implementation cost schedule Working capital includes all expenses needed to finance day-to-day operation of a business The pro forma cash flow statement shows the amount of expected profit the business could achieve The external sources of fund refer only to financial assistance extended by commercial banks All of the above moo@ > 412, Which of the following is NOT considered as an element of cash outflow in a pro-forma cash flow statement? A. Payment for deposits B. Collection of receivable C. Purchase of fixed assets D. Hire purchase repayment E Miscellaneous expenses 43. Which of the following financial statement shows the firm's cash position? A Financial Plan Budget B Cash Flow Statement c. Income Statement D. Balance Sheet E. Profit and Loss Statement 414. Which of the following is NOT considered as financial risks? A Loans B. Credit C.— Liquidity level D. Financial Linkages E. Foreign Exchange @ Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 5 BM/APR 2009/ETR300 45. 16. 17. 18. 19. 20. These are the primary users of a business plan EXCEPT, moomp Employees Marketers Suppliers Entrepreneur Bankers ‘The design of an organization structure depends on all the listed factors EXCEPT moomw> s> moom> Numbers of workers si Organization target profit Functions Products workable Business Plan normally be supported by valid or reliable information. nich of the following is not a source of information? Speculation Research Annual Report Daily newspaper Journal To manage the business, entrepreneurs must: mo oO @ > Outline the activities that are necessary to achieve and stated goals of the organization Divide and coordinate the tasks and responsibilities into departments, section oF units. Control operations by comparing actual results with plans or budgets, and take corrective actions, if necessary Inspire the workers to work harder All of the above refers to any entity that has the purchasing power to acquire goods and Services to fulfill its needs and wants. moon> Market segment Market share Market penetrations Target market Market size Aisyah Nabilah completed her project earlier and at a lower cost. Her action can be considered as an example of the following entrepreneurial competency moowp Commitment to work contract Efficiency orientation High quality of work Problem solving Persistence (© Hak Cipte Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 6 BM/APR 2009/ETR300 PART B | 3. O 6 8 10. 14. 15 The third process of identifying, evaluating and selecting @ business opportunity is @ screening of business opportunity It is quite unethical for entrepreneur to translate sociai problems into business opportunities. A financial plan is prepared after all expenses pertaining to marketing, operations and administrative activities are identified. Entrepreneur should only use primary information when preparing a business plan as secondary information is usually incorrect, Uncertainty of stocks prices due to foreign exchange rate is an example of financial risks in business. To prepare a process chart, an entrepreneur will first identify all the product activities required for the production of the product or for delivering the service. ‘An increase in disposible income can lead to lower purchasing power and customer unafiordability Business opportunity cannot be realized it it goes beyond tne iaw A customer could be one of the audiences for a business plan. Business pian should be prepared after an entrepreneur identifies the viability proposed business venture. Uncertainty of stocks prices due to foreign exchange rate is an example of financial risks in business. - Capacity planning is a method to calculate machinery and manpower requirements so that production demand based on based on sales forecast can be met Operations costs include costs of direct material, indirect labor and overheads. Jazz Event Sdn Bhd is preparing a Business Plan to obtain additional financing te expand their existing business. They want to show the Letter of Agreement between them with a new strategic partner to undertake a big project together. The copy of the Letter of Agreement will be placed as Appendices in the Business Plan A business plan can be used as a communication too! to convince potential investors of the viability of the new venture. © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 16. 17, 18. 19. 20. 7 BM/APR 2009/ETR300 Factors influencing choice of business will be included in the operation pian. Elements of project cost include provision for emergencies. Remuneration of manpower will be listed under Administrative Plan. The purpose of preparing a Business Plan is usually to express the message that the entrepreneur wanted to convey to its audience. Description of the production process is not part of an operation plan. CONFIDENTIAL © Hak Cipta Universiti Teknologi MARACONFIDENTIAL, 8 M/APR 2009/ETR300 PART C QUESTION 1 Financial plan is a very important part of a good business plan to determine the financial requirement of a new venture. State five (5) objectives of financial plan. (S marks) QUESTION 2 Financial analysis is 2 technique of examining financial statements in order to determine financial position and performance of the business. Discuss the significance of liquidity ratios and profitability ratios (5 marks) fentified ee explain the basic management functions of successful business (5 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 9 BM/APR 2009/ETR300 PARTD QUESTION 1 Briefly explain the following five (5) criteria of self assessment in the process of identification, evaluation and selection of business opportunities. a) Experience b) Knowledge and skills c) Capital d) Interest e) Networking, (25 marks) QUESTION 2 a) What is layout? List and discuss three (3) types of layout (10 Marks) b) It is important for the entrepreneur to choose the right location for the business because a strategic location can contribute to the success of the business. Briefly explain five (5) factors that intiuence the choice of location. (15 marks) END OF QUESTION PAPER Hak Cinta Universiti Teknologi MARA CONFIDENTIALPART A (40 marks) ALOns PART B (20 marks) asons mommo anand FUNDAMENTALS OF ENTREPRENEURSHIP 2OarD aorta mooom a4s4a7 ETR 300 APR 2009 "1 12. 13. 14, 15 1. 12 13, 14 15. w>oom Aanaa 16 17 18. 19. 20. 16. 17. 18. 19. 20. wom>o madamPART C Suggestion Question 1 Financial plan is a very important part of @ good business plan to determine the financial requirement of 2 new venture. State five (5) objectives of financial plan (5 marks) Answer To determine the size of investment that is the project implementation costs To identify and propose the relevant sources of finance. To ensure the initial capital is sufficient To evaluate the feasibility of the project To be used as @ guideline for implementation oReNa Question 2 Financial analysis is a technique of examining financial statements in order to determine financial position and performance of the business. Discuss the significance of liquidity ratios and profitability ratios (6 marks) ‘Suggestion Liquidity ratio ~ the availability of liquid asets to meet short term obligations. This indicate the ability of firm pay its immediate obligation. Example: Current ratio-current asset/current liabilities, Quick ratio= (current assets-stock)/current liabilities Profitability ratio- it indicate the profit performance of the business. It measures the performance and growth potential of the business. Example: Gross profit margin=gross profit/sales Net profit margin=net profil sales (5 marks) Question 3 Identified and briefly explain the basic management functions of successful business organization. (5 marks) Answers: Planning ~ formulating company policy and procedures Organizing — designing an organizational structure Leading — Getting the job done through other people Controlling - ensuring all activities carried out according to planPART D QUESTION 1 Briefly explain the following five criteria of self assessment in the process of identification, evaluation and selection of business opportunities. 1) Experience ll) Knowledge and skills ll) Capital !v) Interest v) Networking. (25 marks) Answer: i) Experience Choosing a business that an individual has got prior experience is important because this can definitely helpful due to having a lot of information pertaining to nature of work. For example someone who works in @ construction industry before would like (u be involved in the construction business. He or she will have an advantage compare to those who do not have any experience in this industry before. ii) Knowledge and skills Knowledge and skill would ensure that an entrepreneur can run a particular business effectively and efficiently. Through knowledge and skills the entrepreneur cannot be cheated by anybody. Using the same example as above, someone who works in a construction industry before will have the knowledge on all the materials and costing. As a result he or she cannot be cheated in handling the business. Capital Having enough capital to start a business is very essential. An entrepreneur should assess himself or herself weather he or she has enough capital to start the business. Capital is needed to finance short and long term capital requirement. An entrepreneur should avoid taking too much loan as this will create risk. Therefore it is advisable for an entrepreneur to choose a business that the amount of capital needed is within his or her capabilities. iv) Interest Having a deep interest in the field of business that an entrepreneur want to embark in is crucial in the sense that it can create the attitude of persistence which is very much needed in business. Most businesses will face critical time at the early stage; therefore having a deep interest will push the entrepreneur to be steadfast and not willing to give up easily.v) Networking In business, we need @ lot of friends and associates. An entrepreneur should assess whether he has got a lot of friends that can help him to succeed in business. If the entrepreneur have a lot of contact in the business area, chances of succeeding are high. In this globalization era, competition is very strong. Networking with suppliers, intermediaries, government officials, “bankers, politicians is very important to complement good business strategies. ( 5 marks each; total 25 marks ) Question 2 a) Whats layout? List and discuss three (3) types of layout (10 Marks) b) __Itis important for the entrepreneur to choose the right location for the business because a strategic location can contribute to the success of the business. Briefly explain five factors that influence the choice location. (15 marks ) Answer a) What is layout ? List and discuss three (3) types of layout Layout - the arrangement of machinery, equipment, workers and other facilities used in the operation (1 mark) List and discuss three types of layout: 1. Layout based on product 2. Layout based on process 3. Layout based on marketing (List and suitable explanation = 3 marks x 3 = 9 marks ) b) It is important for the entrepreneur to choose the right location for the business because a strategic location can contribute to the success of the business Briefly explain five factors that influence the choice location 1. Distance from the source of raw materials 2. Availability of manpower 3. Transportation facilities Distance from customer Price of premises (Each point and suitable explanation = 3 marks x 5= 15 marks )CONFIDENTIAL BMIOCT 2009/ENT300/ETR300 Ss ee UNIVERSITI TEKNOLOG! MARA FINAL EXAMINATION COURSE FUNDAMENTALS OF ENTREPRENEURSHIP COURSE CODE : ENT300/ETR300 EXAMINATION OCTOBER 2009 TIME : 3HOURS IN IONS TO CANDIDATES 1 This question paper consists of four (4) parts: PART A (10 Questions) PART B (10 Questions) PART C (5 Questions) PART D (4 Questions) a Answer ALL questions trom PAK A, B, C, and three (3) questions from PART D. ) Answer PART A in the True/False Answer Sheet. ii) Answer PART B in the Objective Answer Sheet. iil) Answer PART C and PART D in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigitator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ii) an Answer Booklet — provided by the Faculty lil) a True/False Answer Sheet — provided by the Faculty iv) an Objective Answer Sheet — provided by the Faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 7 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 2 BMIOCT 2009/ENT300/ETR300 PART A 10. Entrepreneurship is a process of innovation and new venture creation. The statement, “companies don't just produce innovative goods and services, but they also use innovative methods in everything they do’, is associated with operational innovation. In Malaysia, small and medium enterprises (SMEs) employ less than 50% of the total labour force in manufacturing sector. Acquiring a franchise is the most popular methods of starting a business. Since a “service” is intangible and cannot be seen, it will not be included in the “product strategy” section of the marketing aspect in the business plan for a service- based business. Business support system refers specifically to the financial assistance given by the government and commercial banks to help entrepreneurs to start new businesses or to develop an existing ones. Labour, raw materials and capital are examples of business output that will add value in the transformation process. One of the main reasons for preparing a pro-forma income statement is to ensure that the start-up capital is sufficient for the project to take off. Deposits and pre-operating expenses are examples of working capital that are required to start a business. Perbadanan Usahawanan Nasional Berhad (PUNB) is specifically set up by the government to manage, promote and monitor the growth of entrepreneurship in this country (© Hak Cipta Universiti Teknologl MARA CONFIDENTIAL,CONFIDENTIAL 3 BM/OCT 2009/ENT300/ETR300 PART B 1. Who viewed an entrepreneur as a person with a high need for achievement? ‘A. Joseph Schumpeter B. Adam Smith C. David McClelland D. Carl Menger E. —tbnu Khaldun 2. The statement, “a successful entrepreneur identifies new and potentially unique ideas to achieve his goals", is associated with A. Commitment to work contract B. Concern for high quality of work C. _ Efficiency orientation D. Systematic planning E. Problem solving 3. Which of the following phases of creativity process involves gathering information through observation? ‘A. Background or knowledge accumulation B. _Incubation process C. Idea experience D. Evaluation and implementation E. —_None of the above 4, Which of the following is a source of innovation within the social environment? Unexpected occurrence Incongruities Process needs New knowledge Market change moom> 5. Which of the following statements is NOT TRUE about a partnership business? A. Ina partnership, the business risks can be reduced and distributed among partners B. In a parinership business, the responsibility of managing and handling the business can be divided equally among partners. C. _ Apartnership business is incorporated under the Partnership Act 1961. D. A partnership business is incorporated under the Business Registration Act 1956 E. Ina partnership business, owners’ equity can be increased through enlisti additional partners. © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 4 BM/OCT 2009/ENT300/ETR300 6. Which of the following statements is TRUE? A An entrepreneur engaging in any manufacturing activity has to obtain a license from Malaysian Industrial Development Authority (MIDA) B Construction of buildings can only be undertaken with the written approval from Malaysian Industrial Development Authority (MIDA). C. _Insetting up a manufacturing business, a planning permission from Tenaga Nasional Berhad (TNB) is needed. D. _ All manufacturers are required to contro! industrial activities that may result in a new source of effluent or discharge. - All completed building need to be certified as being fit for occupation by the Ministry of Housing and Local Government. 7. Which of the following statements is TRUE about a business plan? A business plan is a written document that describes the proposed business or project in a comprehensive manner. B. A business plan can be used as a basis for determining the viability of the new business. Cc. A business plan can be used as a communication tool to convince potential investors of the viability of the new venture. D. _A business plan enables the entrepreneur to distribute business resources more effectively. = All of the above statements are true. 8 Which of the following is NOT an objective of preparing a financial plan? A. To determine the size of investment B. To identify and propose the relevant sources of finance. Cc. To ensure that the initial capital is sufficient. D. To analyse the viability of the project. E. _ Toassess the feasibility of the business idea. 9. Which of the following statement is TRUE? A. Elements of project cost should include provision for contingencies. B. Sources of finance refer to the amount of cash used to finance a particular project. C. Sources of finance refer to the amount of fund obtained from external sources, D. The only internal source of finance for new venture is the entrepreneur's own cash. E. Sources of external funds for a new venture should equal the total project implementation cost. © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 5 BM/OCT 2009/ENT300/ETR300 10. Which of the following statements is TRUE? A. Pro forma cash flow statement refers to the projected statement of cash inflow and outfiow throughout the planned period B. __ Pro forma income statement shows the expected profit or loss for the planned period. Cc. Pro forma balance sheet shows the financial position of the business at a specific point in time in terms of assets owned and how those assets are financed. D. Current ratio generally shows the business’ ability to generate cash to meet its short-term obligations. E. _Alllof the above are true © Hak Cipta Universiti Toknologi MARA CONFIDENTIALCONFIDENTIAL, 6 BM/OCT 2009/ENT3O0/ETR300 PART C QUESTION 1 Explain the common characteristics that are associated with achievement oriented entrepreneurs, (5 marks) QUESTION 2 What are the environmental factors that should be considered in analysing entrepreneurial opportunities? (5 marks) QUESTION 3 Briefly explain the components of an operation system that are involved in the transformation process. (5 marks) QUESTION 4 In the “introduction” section of an organization plan, it is important to state the business's mission, vision and objective. Briefly explain the terms “mission”, “vision” and “objective” (5 marks) QUESTION 5 Give five (5) types of financing that can be obtained by entrepreneurs to finance their new ventures (5 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 7 BM/OCT 2009/ENT300/ETR300 PART D QUESTION 1 Define the term “personal entrepreneurial competency”. Discuss, with examples, five (5) entrepreneurial competencies that have been proposed by McClelland and McBer. (15 marks) QUESTION 2 What is a business plan? Why is a business plan important to the entrepreneur? Explain the kind of information that should be provided in the competitors’ analysis of the business plan. (15 marks) QUESTION 3 Ahmad Zaki is planning to start a courier service. He knows that he needs to prepare a marketing plan but does not know how to proceed. You are required to advise Ahmad Zaki on the steps that he should take in preparing the marketing plan for his new business. (15 marks) QUESTION 4 Explain four (4) common methods of starting a new venture. Explain the advantages and disadvantages of ONE of the methods. (15 marks) END OF QUESTION PAPER © Hak Cipta Universiti Teknologi MARA CONFIDENTIALENT300/ETR 300 ~- FUNDAMENTALS OF ENTREPRENEURSHIP OCTOBER 2009 EXAM MARKING SCHEME PART A (10 MARKS) oxen maaan soarne mauaad (10 x 1 mark = 10 marks) PART B (20 MARKS) c eens ou>m 2 Omne m> mm > (40 x 2 marks = 20 marks) PART ¢ (25 MARKS) QUESTION 4 Explain the common characteristics that are associated with achievement oriented entrepreneurs. Answer common characteristics that are associated with achievement oriented entrepreneurs: + Drive to achieve + Calculated risk taking + Internal locus of contro! + Tolerance for failure + Seek Feedback + Integrity and reliability (Spoints x 1 mark = 5 marks) 1QUESTION 2 What are the environmental factors that should be considered in analysing entrepreneurial opportunities? Answer The environmental factors that should be considered in analysing entrepreneurial opportunities: + Economic forces + Social forces + Technological advances + Political and regulatory statues (4 points x 1.5 marks = max 5 marks) QUESTION 3 Briefly explain the components of an operation system that are involved inthe transformation process. Answer The components of an operations system that is involved in the transformation process + Business Input + Transformation Process + Output + Feedback + External Environment (5 points x 1 mark = 5 marks) QUESTION 4 in the “introduction” section of an organization plan, it is important to state your business's mission, vision and objective. Briefly explain the terms “mission”, “vision” and “objective’. Answer + "Mission" are statements of how entrepreneurs will achieve their purposes in the environments in which they conduct business. It is also states the reason why an organization exists.+ “Vision” is a statement that describes what the organization aspires to be in the long term. It is a description of the way in which the business wants to be perceived by others at some future date. + “Objective” is defined as the goal that the business hopes and plan to achieve. It supports the achievement of a business's mission and vision. Objective is more specific, stated in a shorter term and has a definite time frame. (3 definitions x 3.5 marks = max 10 marks) (Total 15 marks) QUESTION 5 Give five (5) types of financing that can be obtained by entrepreneurs to finance their new ventures. Answer Five types of financing for new business: + Entrepreneur's own cash + Entrepreneur's existing fixed assets + Loan from bank + Hire-purchase from finance companies + Government financing scheme (S types x 1 mark = 5 marks) PART D (45 MARKS) QUESTION 4 Define the term "personal entrepreneurial competency’. Discuss, with examples, five (5) entrepreneurial competencies that have been proposed by McClelland and McBer. Answer The term "personal entrepreneurial competency" refers to the key characteristics that should be possessed by successful entrepreneurs in order to perform entrepreneurial functions effectively ‘The entrepreneurial competencies that have been proposed by McClelland and McBer: + Initiative - The entrepreneur should be able to take actions that go beyond his job requirements and to act faster. He is always ahead of others and able to become a 3leader in the field of business. Examples: (i) The entrepreneur acts to extend the business into new areas, products or services. (ii) The entrepreneur acts to extend the business into new areas, products or services Sees and acts on opportunities - An entrepreneur always looks for and takes action on opportunities. Examples: (i) The entrepreneur seizes unusual opportunities to obtain financing, equipment, land, work space or assistance. (ji) The entrepreneur sees and acts on new business opportunities Persistence - An entrepreneur is able to make repeated efforts or to take different actions to overcome an obstacle that get in the way of reaching goals. Examples: An entrepreneur takes repeated or different actions to overcome an obstacle. Information Seeking - An entrepreneur is able to take action on how to seek information to help achieve business objectives or clarify business problems. Examples: (1) The entrepreneur does personal research on how to provide a product or service. (ii) The entrepreneur consults experts or experienced persons to get relevant information. Concern for High Quality of Work. An entrepreneur acts to do things that meet certain standards of excellence which gives him greater satisfaction. Examples: (i) The entrepreneur states a desire to produce or sell a top or better quality product or service (ii) The entrepreneur compares own work or own company's work favorably to that of others Commitment to Work Contract - An entrepreneur places the highest priority on getting a job completed. Examples: (i) The entrepreneur takes personal sacrifice or expends extraordinary effort to complete a job. (ii) The entrepreneur accepts full responsibility for problems in completing a job for customers. (iii) The entrepreneur pitches in with workers or works in their place to get the job done. Efficiency Orientation - A successful entrepreneur always finds ways to do things faster or with fewer resources or at a lower cost. Examples (i) The entrepreneur looks for or finds ways to do things faster or at less cost. (ii) The entrepreneur uses information or business tools to improve etticiency. (iil) Ihe entrepreneur expresses concern about costs vs, benefits of some improvement, change, or course of action. 4Systematic Planning - An entrepreneur develops and uses logical, step-by-step plans to reach goals. Examples: (i) The entrepreneur plans by breaking a large task down into sub-task. (ii) The entrepreneur develops plans that anticipate obstacles. (ili) The entrepreneur takes a logical and systematic approach to activities Problem Solving - Successful entrepreneur identifies new and potentially unique ideas to achieve his goals. Examples: (i) The éntrepreneur switches to an alternative strategy to reach a goal. (ii) The entrepreneur generates new ideas or innovative solutions. Self-Confidence - A successful entrepreneur has a strong belief in self and own abilities. Examples: (i) The entrepreneur expresses confidence in own ability to complete a task or meet a challenge. (ii) The entrepreneur sticks with own judgment in the face of opposition or early lack of success. Assertiveness - An entrepreneur confronts problems and issues with others directly. Examples: ()) The entrepreneurs confronts problems with others directly. (ji) The entrepreneur tells others what they have to do.(iii) The entrepreneur reprimands or disciplines those failing to perform as expected. Persuasion - An enlepreneur can successfully persuade or influence olhers for mobilizing resources, obtaining inputs, organizing productions and selling his products or services. Examples: (i) The entrepreneur convinces someone to buy a product or service. (ji) The entrepreneur convinces someone to provide financing. (iii) The entrepreneur convinces someone to do something else that he would like that person to do. Use of Influence Strategies - An entrepreneur is able to make use of influential people to reach his business goals. Examples: (i) The entrepreneur acts to develop business contracts. (ji) The entrepreneur uses influential people as agents to accomplish own objectives. (iii) The entrepreneur selectively limits the information given to others. (Definitio = 5 marks) (Any 5 competencies x 1 mark = 5 marks) (Examples for each competency x 1 mark = 5 marks) (Total = 15 marks) 5QUESTION 2 What is a business plan? Why is a business plan important to the entrepreneur? Explain the information that should be provided in the competitors’ analysis of the business pian. Answer Business Plan: A business plan is a written document which described the proposed business or project to be undertaken in a comprehensive manner. It is also known as a working paper, business proposal, project paper or prospectus. (5 marks) Importance of business plan to the entrepreneur: The business pian will enable the entrepreneur to: 1, assess the proposed business venture objectively, critically and practically. 2. study and evaluate the feasibility of the business. 3. convince venture capitalists, investors and bankers in order to raise capital and obtain support for the venture. FS use it as a guideline for day-to-day management of the business. 5. be able to distribute business resources more effectively. (6 points x 1 mark = 5 marks) The information that should be provided in the competitors’ analysis: 1. Names of major competitors 2. Their market positions and strategies i.e.; product quality, pricing, distribution and promotion 3. Their strengths and weaknesses 4. Duration in market 5. Their target market (5 points x 1 mark = 5 marks) (Total 15 marks) QUESTION 3 Ahmad Zaki is planning to start a courier service. He knows that he needs to prepare a marketing plan but does not know how to proceed. You are required to advise Ahmad Zaki on éthe steps that he should take in preparing the marketing plan for his new business. You are also required to explain to him the kind of information to be included in the marketing strategy section of the marketing plan. Answer Steps in preparing marketing plan Set Marketing Objectives Determine product or service Identify target market Analyze market trend and size Assess competition Forecast sales Develope marketing strategy Plan for marketing personnel © MPNOHRON SA Prepare marketing budget (Max 7 points x 1 mark = 7 marks) The information to be included in the marketing strategy section: 1. Service strategy - Service attributes (quality & design), service package, service differentiation, and after sales services. 2. _ Pricing strategy - Pricing method (e.g. based on cost, perceived value, or competition), pricing tactics (e.g. price lining, discounting, psychological, etc.), and factors to consider in pricing (¢.9. marketing objective, demand & supply, competitors’ pricing) 3. Place — Factors to be considered (type of product, target market, market coverage, transportation, product standardization) 4. Promotion strategy — Advertising, sales promotion, personal selling, and publicity. (4 points 2 = 8 marks) (Total 15 marks)QUESTION 4 Explain four (4) common methods of starting a new venture. Explain the advantages and disadvantages of ONE of the methods. Answer Four common methods of starting a new venture: 4 2 3. 4 Starting from scratch Buying an Existing Business Family Business Succession Acquiring a Franchise (4 points x 2 marks = max 7 marks) Advantages and disadvantage (CHOOSE ONLY ONE METHOD): Starting from scratch: Advantages a. Entrepreneurs are free to make his/her own decisions. b. Entrepreneurs have the opportunities to try and practice his/her own ideas. c. Entrepreneurs are free to choose suitable business location and premise, and acquiring appropriate machine and equipments for the business. d. Entrepreneurs are free to develop business image and personality that suits their desire and interest. Disadvantages: a. Entrepreneurs need to put in a lot of efforts. It requires more time, energy and money in ensuring the business kick-off. b. Higher chances of losses due to high project implementation cost. c. Entrepreneurs are not able to accurately estimate sales, cost and profit. ( zero business history (i.e. sales record, costing and so on) d. Anew venture usually has no track record. Therefore, itis difficult for entrepreneurs to convince the financial institutions in getting the financingBuying an Existing Business Advantages a. The time entrepreneurs spent to start the business is faster compared to starting a new venture from scratch The probability of getting the financing is greater if the existing business has a good track record. Existing market and loyal customers of existing business Established networking with suppliers, supporting agencies and communities. Disadvantages a. Buying existing business requires bigger amount of capital either to buy the whole business or part of the business. If the existing business is not well managed by the previous owner, entrepreneurs need to put in a lot of efforts, money and time to improve the situation. Entrepreneurs have to respect and abide the agreements that have been made by the previous owner with related parties (i.e. suppliers, agencies etc.) Conflicts could arise between the new owner and existing employees Family Business Succession Advantages a. b. ©, Freedom and flexibility in decision making. Pride of family culture, high commitment and motivation lead to business stability Family members willingness to “sacrifice” their time and money (e.g. no salary taken for 1" year of operation). High possibilty of achieving great monetary success due to high commitment. Family members have good exposure to business environment. Disadvantages Unstructured early-stage business organization Early-stage limited financial resources. Family conflicts such as siblings and/or cousins rivalry. Nepotism among family members (e.g. incompetent family member is given a better management position).e. Traditions practiced by older generation passed on to new generation could lead to resistance to change. f. Difficulty in getting the right successor. Acquiring a Franchise Advantages: To the Franchisee - a. Lower business risks as franchisee shares the business risks with the franchisor. b. Better market acceptance of products and/or services offered as they are established products and/or services of the franchisor. c. Benefits of economies of scales d. Guidance by the franchisor's management team Continuous support from the franchisor and government agencies that involved in the development franchise industry. To the Franchisor - a. The franchisor's business expansion can be done through recruitment of new franchisees. b. Benefits of economies of scales Lower business risks as franchisor shares the business risks with the franchisees Problems related human resource management is reduced due to the fact that the franchisees have to manage the human resource related matters themselves. fe. The franchisor can put more focus on product research and development since business expansion is done through franchise system. Disadvantages To the Franchisee - a. Limited freedom and flexibility to manage the business according to franchisees’ desire b. The franchise right granted by the franchisor has its price to pay; the franchise fee, royalty and advertising & promotional contribution c. Limited product varieties; the franchisees are allowed to market and sell only the franchisor's products d. Fear of chain-reaction; bad reputation and tarnished image due to the fault of either the franchisor or the franchisee would affect the whole franchise system 10To the Franchisor - a. Franchisee conformity; it is difficult to manage the franchisees especially in ensuring the conformity of the operational methods of all franchisees in the system due to the fact that they are not franchisor's employees b. The franchisor/franchisee goal incompatibility; the franchisor and franchisees may have different business objectives as well as personal objectives that could jeopardize the business “marriage”. c. "Wrong" franchisee; there are franchisees who want an “easy-ride” in an attempt to gain instant popularity for the business. d. Competition through imitation of business concept and model (One method only: any 4 advantages x 1 mark = 4 marks Any 4 disadvantages x 1 mark = 4 marks) (Total 15 marks)CONFIDENTIAL f BM/APR 2010/ENT300/ETR300 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE FUNDAMENTALS OF ENTREPRENEURSHIP COURSE CODE ENT300/ETR300 EXAMINATION APRIL 2010 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of four (4) parts: PART A (20 Questions) PART B (20 Questions) PART C (5 Questions) PART D (2 Questions) 2 Answer ALL questions from PART A, B, four (4) questions from PART C, and one (1) question from PART D. i) Answer PART A in the True/Faise Answer Sheet. ii) Answer PART B in the Objective Answer Sheet. ii) Answer PART C and PART D in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigilator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ii) an Answer Booklet — provided by the Faculty ili) @ True/False Answer Sheet — provided by the Faculty iv) an Objective Answer Sheet — provided by the Faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 70 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 2 BMIAPR 2010/ENT3O0/ETR300 PART A 4 10. a 12, 13. 14. 15. According to motivation theorists, an entrepreneur is a person who has high need for power (n Pow) Joseph Aloysius Schumpeter described an entrepreneur as an innovator. Entrepreneurial motivation is viewed as the willingness of an entrepreneur to sustain his entrepreneurial behavior. The term “creativity” refers to the generation of ideas that result in improved efficiency or effectiveness of a system. In a franchise system, the royalty refers to an on-going payment made by the franchisee to the franchisor based on the percentage of sales as agreed upon during the signing of franchise contract. The most popular method of starting a business in Malaysia is through family business succession. All small enterprises in Malaysia are registered under the Business Registration Act 1956. in a partnership business, the liability of a partner is limited to the amount of capital invested in the business, whereas in a sole-proprietorship business, the liability of the ‘owner is not limited. Under the Employees Provident Fund Act 1991, all employers and employees including foreign workers and expatriates must contribute to the Employees Provident Fund (EPF). ‘The preparation of a business plan involves the search for and discovery of business opportunities. ‘The business plan can be used as a tool to convince potential employee about the attractiveness of working with the business, “Market share” is the term used to describe the total potential purchase of the target market. Target market refers to the group of customers whose needs and wants can be satisfied by the business through the supply of goods or services. The main purpose of preparing a marketing plan is to ensure that the business is able to produce output or to provide service that can fulfill the expected market demand or sales. The “process chart” refers to the diagram showing the job position and hierarchy of personnel in a particular organization at a particular point in time. © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 3 BM/APR 2010/ENT300/ETR300 16, 47, 18. 19, 20. © Hak Cipta Universiti Teknolog! MARA The best way to introduce a business organization is to state the business's vision and objectives in the “Introduction” part of the Business Plan. In the business pian, the value and benefits of products or services to customers are discussed in the marketing plan. The number of personnel who are directly involved in the operation of the business is determined in the administrative/organizational plan. In hire-purchase scheme, the money borrowed trom banks or financial institutions is used to finance the acquisition of fixed asset. The most common source of finance for a new business is the revenue generated by the business. (20 marks) CONFIDENTIALCONFIDENTIAL 4 PART B 1 A B c. D. E. “A successful entrepreneur always finds ways to do things faster or with fewer resources or at a lower cost’. Which of the following entrepreneurial competencies best describe the above statement: B. D. E. BMIAPR 2010/ENT300/ETR300 defined an entrepreneur as a knowledgeable individual who \strumental in the development of city-state. Joseph Schumpeter ‘Adam Smith Jean Babtiste Say Carl Menger tonu Khaldun ‘Commitment to work contract Concern for high quality of work Efficiency orientation ‘Systematic planning Problem solving In the creativity process the discovery of ideas or solutions to the problems is involved in the following phase: moom> Background or knowledge accumulation Incubation process Idea experience Evaluation and implementation Idea exploration Which of the following statements is NOT TRUE about innovation? mo om > Operational innovation is more process oriented and tends to be incremental in nature, Innovation is a process of converting opportunities into marketable ideas. Organizational innovation are breakthrough inventions that have wide- reaching impact and influence which benefit society and business Innovation will take place when there is a creative ideas generation Allof the above are not true. Which of the following statements is related to a partnership business? moo @ > A partnership business can take legal action and face legal action under its own name. A partnership business is registered under the Business Registration Act 1958 The liabilities of the members are limited to the total shares contributed to the company's capital. The life span of the entity does not depend on the resignation of its members. It is compulsory for the entity to appoint a qualified auditor approved by the Ministry of Finance. (© Hak Cipta Universiti Teknologl MARA, CONFIDENTIALCONFIDENTIAL 5 BM/APR 2010/ENTSO0/ETR300 6 Which of the following statements is NOT TRUE about a sole-proprietorship business? A. Asole-proprietorship business is easy to manage compared to other forms of m 09 @ businesses. A sole-proprietorship business is easy to form and dissolve with minimum formalities. A sole proprietorship business is formed under the Companies Act 1965. The owner of a sole proprietorship business pays income tax based on his total individual income. A sole proprietorship business in not subjected to much government rules and regulation in comparison to other form of business. 7. Which of the following statements is NOT TRUE about a franchise business? moom > A franchise is a product and/or service distribution system governed by a contract made between two parties namely, the franchisor and the franchisee. The franchisor is a company which sells the right to another party to operate the franchise. The franchisor will pay royalty to the franchisee based on the percentage of sales as agreed in the franchise contract. The franchisee is a person who purchases the right from the franchisor to operate the franchise. Alll of the above are not true. 8. Which of the following statements is NOT TRUE? moogm > ‘An entrepreneur engaging in any manufacturing activity has to obtain a license from Malaysian Industrial Development Authority (MIDA).. Construction of buildings can only be undertaken with the written approval from Local Authority. A planning permission is required from local authority in order to set up a manufacturing business All manufacturers are required to control industrial activities that may result in a new source of effluent or discharge. All manufacturers are required to obtain design approval of certificate machinery and certificate of fitness from Local Authority. 9. Which of the following ministries/agencies does not provide financial assistance for enbepreneurs? moop> Ministry of Science, Technology and Innovation (MOST) Multimedia Development Corporation (MDeC). Perbadanan Nasional Berhad (PNS). Perbadanan Usahawan Nasional Berhad (PUNB). Malaysian Industrial Development Authority (MIDA) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 6 BM/APR 2010/ENT300/ETR300 10. 1 12. 13, 14, Which of the following ministries/agencies does not provide marketing assistance for entrepreneurs? Ministry of International Trade and Industry (MITI) Malaysian External Trade Development Corporation (MATRADE) Federal Agricultural Marketing Authority (FAMA) Perbadanan Usahawan Nasional Berhad (PUNB). Alllof the above agencies provide marketing assistance to entrepreneurs. moom> Which of the following statements is TRUE about a business plan? A business plan can be used as a basis for determining the viability of the new business. A business plan can be used as a communication tool to convince potential investors of the viability of the new venture. The format of the business plan includes cover letter, cover page, table of contents, executive summary, and the main body. A business plan enables the entrepreneur to distribute business resources more effectively. Alll of the above are true. moo > The following parties are the readers of the business plan EXCEPT: A Investors. B. Bankers c. ‘Suppliers D. Auditors E. Customers The “marketing plan’ section of a business plan should include all of the following items, EXCEPT: A Competitors’ analysis. Products’ attributes. Sales forecast. Pricing strategy. Business location. develop mission and vision of the business. identify required resources in order to manufacture the products. evaluate customers’ acceptance of the products or services. estimate total project cost of the business. 8. c. D. E. A well prepared marketing plan helps entrepreneurs to: A B. c D. E. assess the profitability of the business. © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 7 BM/APR 2010/ENT300/ETR300 45. Which of the followings factors is unnecessary in calculating the number of ‘employees needed in an operation? standard time to produce one unit product planned rate of production productivity index workers productive hours. All of the above factors are necessary moow> 16. In an operation system, the business input includes: technology information end product equipment transformation process 1, Wand iL 1, Wand Iv I, and V 1, Mand V 1, (Vand V 17. The statement, “To be a reputable halal Chinese cuisine restaurant in the region”, is an example of the company’s ‘ MOOD> © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL a 19, 20. BMIAPR 2010/ENT3OO/ETR300 Which of the following statements is NOT TRUE? mo om> Elements of project cost should include provision for contingencies. ‘Sources of finance refer to the sources of funds to finance a particular project. Sources of finance to fund the project cost may come from external and internal sources. ‘One of the internal sources of finance for new venture is the entrepreneur's ‘own capital. Sources of external funds for a new venture should equal the total project implementation cost. Which of the following statements is/are TRUE? moomp> A project implementation cost incorporates both long-term and short-term expenditure needed to start a project. Pro forma cash flow statement refers to the projected statement of cash inflow and outflow throughout the planned period. Pro forma income statement shows the expected profit or loss for the planned period Current ratio generally shows the business’ ability to generate cash to meet its long-term obligations. land tl only Vand Ill only J and IV only 1, Wand Ill only All of the above are true (40 marks) © Hak Cipta Universit Teknologi MARA CONFIDENTIAL