DEDAN KIMATHI UNIVERSITY OF TECHNOLOGY

UNIVERSITY EXAMINATIONS 2020/2021 ACADEMIC YEAR

FOURTH YEAR SUPPLEMENTARY/SPECIAL EXAMINATION FOR THE DEGREE
OF BACHELOR OF SCIENCE IN COMPUTER SCIENCE AND BACHELOR OF
SCIENCE IN BUSINESS INFORMATION TECHNOLOGY

CIT 4201: ENTREPRENEURSHIP AND PRODUCT DEVELOPMENT

DATE: 18/10/2021 TIME: 08.30-10.30 A.M.

INSTRUCTIONS:
(a) Answer Question 1 and any other two questions.
(b) Question 1 is compulsory and carries 30 Marks.
(c) The other two questions account for 40 Marks.

QUESTION ONE: Read the following case study and answer the questions that follow
thereafter

CASE STUDY (30 Marks)

Peris takes pride in the fact that she is able to pursue a business in line with her academic
background and her passion of baking into a profitable business. Peris is the Chief Executive
Officer (CEO) of Yummy Cookies Company ltd Kenya. She started up with six permanent
employees and two temporary staff. “I was certain that this was something that I wanted to do on
a commercial scale, hence the decision to set up an online shop for my cookies”, she declared.
Peris established the business with a capital of Kshs. 25,000 that she got from her parents. Today,
the business generates a monthly income of Kshs. 540, 000 on average. Although she had
experience in baking at home since she was 11 years old, Peris started baking commercially in
2008 when she was a student at the University of Nairobi. Business at the University was good
since she did not face any competition as most of the staff and students preferred buying her
cookies rather than going to the noisy congested Nairobi city to buy them
At that time she sold at least two packets of cookies every day at an average price of Kshs. 400.
According to her, this price was relatively lower than what was quoted by other bakers in Nairobi
town, and this gave her business an edge. Unlike her competitors, she did not have to worry about
paying rent as she baked from her hostel room. After graduating in 2009, Peris continued to bake
from her parents’ house. However, last year in 2011, she moved her business to a premise in the
city to give her customers easier access. This was also prompted by improved sales which had
increased from an average of 60 packets of cookies per month to about 30 packets per week. The

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relocation meant that she had to start factoring costs like rent into the price of her cookies and do
it in such a way as not to scare away her customers. Like any successful business person, she
consulted widely on how to take into account the extra Kshs. 17,000 monthly rent without losing
her clients. “with the new costs, prices had to go up but I made sure that whenever I introduced a
new price, I explained to my customers the reasons for it”, she said. She also maintained the quality
of her baking, which earned her customers loyalty. From the low of Kshs. 400 average price of the
cookies, when she first started, her products now cost as much as Kshs. 1000 depending on the
size of the packet. Her attempt to also produce and sell bread at her city premises however didn’t
succeed and she had to abandon the idea immediately. Customers rejected the price of her bread
and most of them said they were already used to other brands already in the market. Peris had to
price the bread high because of high taxation and new government regulations besides new
government requirement that all new business premises must be inspected by Nema at least once
every year.
Peris says that she is working on an online payment portal which will integrate the use of cards
and mobile money payments systems to cater for her customers who prefer to pay online. She has
also entered into a partnership with her friend Joyce an accountant by profession to strengthen her
capital base and her skills set for the company.
(a) Explain EIGHT qualities/characteristics of a successful entrepreneur that Peris, the CEO
of Yummy Cookies Company has exhibited in the above case study (8 Marks)
(b) Discuss FOUR reasons new products fail in the market as Peris’s bread did (4 Marks)
(c) From the case study, Peris, the CEO of Yummy Cookies Company ltd Kenya has
demonstrated success as an entrepreneur, surmounting many huddles that kill many small
businesses. Using her success story, discuss FOUR barriers to self-employment that many
young people face (4 Marks)
(d) All entrepreneurs must consider macro -environmental factors when starting a business.
Using Yummy Cookies Company ltd Kenya, explain to Peris FOUR macro –economic
factors she needs to consider when starting a new business line in future (4 Marks)
(e) Peris has brought on board Joyce her friend as a partner. Discuss FOUR advantages of
partnership business (8 Marks)
(f) Leadership is cited as one of the challenges that lead to failure of small businesses. Using
the Peris leadership of the Yummy Cookies Company Ltd, state and explain TWO
leadership skills necessary for any successful business ( 2 Marks)

QUESTION TWO
(a) Using examples of your choice, discuss the consumer adoption process (10 Marks)
(b) Wanjiru has invented a dynamic use of worn out car tyres and has immediately asked the
local chief to call for a village meeting for her to share her ideas with her neighbor. Explain
to her SIX reasons for the importance of intellectual property rights (6 Marks)
(c) Discuss FOUR ways entrepreneurship contributes to economic development (4 Marks)

QUESTION THREE
(a) Human resource is a critical resource in a business. Mary your University friend has
approached you to advise her on how to motivate her employees. As a graduate of
entrepreneurship, advise her on FIVE methods of employee motivation (10 Marks)

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 (b) Explain FIVE important uses of operating a business with a business plan (5 Marks)

(c) Describe FIVE external factors that propel people to entrepreneurship. (5 Marks)

QUESTION FOUR
(a) Discuss FIVE benefits of market research to new product innovators (10 Marks)
(b) State and explain FIVE forces that have influenced the emergence of one-to-one marketing in
Kenya (10 Marks)

QUESTION FIVE
(a) Innovation is now the wheel driving business sustainability. Discuss FOUR dimensions of
innovation giving relevant examples (8 Marks)
(b) The communications mix sometimes also called the promotional mixes which are tools
that help it reach out to the customer base, raise awareness about its product/brand and
establish sustained purchase. Discuss FOUR components of the marketing mix tools that
an entrepreneur can apply in their business (8 Marks)
(c) The definition of a product goes way beyond being a physical object or a service. Phillip
Kotler defines a product as anything that can meet a need or a want. Using relevant
examples, discuss FOUR levels of a product (4 Marks)