& MIDLANDS STATE UNIVERSITY FACULTY OF BUSINESS SCIENCES CENTRE FOR ENTREPRENEURSHIP AND INNOVATION ENTREPRENEURSHIP 1 CODE: ENT205 SESSIONAL EXAMINATIONS AUGUST 2021 DURATION: 3 HOURS i INSTRUCTIONS, 4. Answer all questions in Section A and B 2 3, 4 ‘Answer any ONE question in Section C. 1. Start each question on a fresh page Credit will be given for logical, systematic, and neat presentations. Page 1 of 6Section A (Compulsory Question 1 Case study- Looking for leaks by Schaper, Volery, Weber & Gibsom 2014) adapted “Alan wanted advice- he had long since retired from practising 98 © lawyer and was out of touch with current business environment. However, he was sure he had found the perfect ‘Risness opportunity and wanted to know if he should proceed. Hie arranged 2 meeting with a business adviser and, after the introductory small talk, Allan got down to the details of the opportunity he was looking s.a leak detection franchise worst has huge market potential because it ean pinpoint leaks in ‘underground water pipes ar nut having to dig them up first. This saves huge amounts of time in repairing leaks because plumbers can go straight tothe problem. rather than wart hours trying to find it vera vent on to explain that the business has been operating for three years, and generated at of its work from plumbers who- other than viewing {he semicl Ff threat to their ros ood: saw it asa valuable service to improve their workflow and profitability The adviser, Tobias, commented that building trades such as plumbing often involved Areking in confined spaces, lifting weights and general hard labour and this might be the case for the leak detection business. Case an had already been retired for several years, Tobias asked if Allan was prepared for {he challenge of running a business that might be physically demanding. tat this point Allan interjected, saying thatthe business was no® for him, but rather his son ‘The adviser paused and took stock. Why was Allan asking for advice about a business that cee ee Yor him? Alan explained, “My son isa surveyor and has been involved in the building trade for years. However, he was sent broke when a developer collapsed owing him lots of tnaney, He does not want to go back to surveying because of ‘what happened to him but sees real epportunity inthis business. Saving water is now more important than ever- especially ‘with water charges to households increasing constantly. with anther explained that his son had since taken a job in the mines 25 © contract worker Ghways travelling to different places, but wanted to spend mors time at home with his wife dnd young children, Buying his own business would provide him with income and a lifestyle fe wae seeking. Allan went on, “The problem is that my son cannot ri ‘business loan. He ae aan x have any assets to provide security because his last business collapsed, and his credit toes oot nat Look so good. That's why I need to know if this will be 8 good business. It's a treat opportunity, especially as it's an untapped market and He ‘will be the first franchisee.” Se eee its the first franchise, the franchisor is discounting thet start OP package from $200000 to $150000, and including extra raining, support and equipment However, we need eo move quickly, as the franchisor has someone else looking at the province. We do not want one it because itis where my son lives and has the best potential of all the provinces. It is the largest and there is nobody else there doing anything like this.” ‘Kilan explained thatthe franchisor had verbally advised him that 6 ‘good operator can do four aan Teak detection jobs a day, with an average price of $100.00 per job ~amounting to a sexy healthy annual income. Allan sounded Tike he had already ‘convinced himself that he was going to lend the money to his son, but Tobias was sceptical about the proposition. He began aorting up a list of additional due diligence issues for Allan and his son to consider. Questions What are the advantages and disadvantages of starting anew business? [10 marks} Page 2of6bb. What are the advantages of being a franchisee? [10 marks] brake son worked an average of six day a weck and detects an aveee of five leaks per day, calculate his expected annual income [10 marks} Section B (Compulsory) multiple choice questions. Choose the correct answer. Question 2 a. You bought a motor vehicle for $30000. Using a straight line method what will be the net book value of the car after three years? [5 marks] b. ‘A table is bought for $75 and the mark up is $0%. Caleulate the selling Price [5 marks] «Calculate the net profit fora retailer from the following information Sales 399489 Closing stock 19066 71858 8803 Advertising 1000 Stationery 1000 Postage 100 Telephone 200 Security 5722 Rent 5800 Salaries 6800 Electricity 2000 [10 Marks] Se Question 3 [20 Marks) i, What is an entrepreneur? ‘a, Someone who invest time and money to start a business. b. Someone who makes lots of money ¢. Someone who takes a risk to make a profit 4. Both aande ji, Define an enterprise fa. A business taking risks to make a profit b. Aprogramme administered by government c. People in business trying to make a profit d. A business adventure or undertaking. iii, Capital is a, Money available to invest. b. Prohibitive cost of entry: ©. A guarantee that a company will be successful d. Aandb. Page 3 of 64 a b. 4. ix jv. The following are included in a business plan Financial information, production/operational plan, and personnel plan. Goals of the business and how they are achieved. ‘A step by step plan for success of your business All of the above. \. A market survey is important because it tells us how How many and what type of people are shopping at @ store ‘Tells you what the customers will buy. Tells you how much the customer will pay for a product. All of the above. Use the following price list to do the problems (vi and vii) below: Hot dog $0.75 hamburger $0.85 Cheeseburger 30.95 lettuce & tomato $0.30 Onions $0.10 large chips $0.85 ‘Small chips $0.65 large soft drink $0.80 Small soft drink $0.65 milkshake $81.10 4.10 (en) people one humburger with lettuce, tomato, onion- and a small drink and the total cost is, a $1.85 b. $1.80 c. $19 gd. $18.00 ii The driver ordered 2 hotdogs, 1 small chips, and a milkshake and the bill is a, $3.00 b. $3.15 c. $3.20 d. 3.25 viii, Gross profit is a. Add up the sales b. Add up the sales and subtract the cost of ‘sales 2 ‘Aad up the cost to produce the produet and subtract total sales 4. Add the cost to produce and add the total sales Key features of a well written business plan would include all of the following except: a. A financial plan b, A description of the product c. Ananalysis of the market 4. A review of the advertising firms. Page 4 ofvx. One study focus that entrepreneurs tend to demonstrate all the following except a. Opinionated b. Emotionally aloof. . Focused d. Aggressive si: Entrepreneurship is derived from the seventh century French word, entreprendre. a. True b. False sii, One of the greatest difficulties in buying an existing business is determining how much fone should pay for the business. a. True b. False xij, An entrepreneur usually doesn’t have to work hard to make large profits. a. true b. false xiv, A chain is a business that has one location owned by several people a. true b. false ‘xv_A franchise fee is the money that the outside person Pays the chain owner for the right to use the chain’s brand name a. true b. false xvi All chains are a part ofa franchise, but not all franchises offer chains, a. true b. false sev The costs to start a new business are called start-up costs a. true b, false sili, Entrepreneurs have a natural tendency to predict lower sales and higher costs than are realistic. a. true b, false jxx. A business plan is often deseribed as the most important tool of the entrepreneur. a, true b. false vx. One of the greatest difficulties in buying an existing Pusiness is determining how much ‘one should pay for the business. a. true b. false (20 marks) Question 4 ‘You want to sell a product on campus. Outline what you will do to make students buy your product ahead of alternatives in the market. (20 marks) Page 5 of 6juestion S Discuss the issues (ANY FIVE) you will consider when choosing a location for your new ‘business. (20 marks) Question 6 ‘entify any FOUR sources of funding for start-up businesses and highlight the advantages and diswivaniages ‘ofeach source. (20 marks) END OF PAPER Page 6 of 6