MNE202V/201/2/2011

DEPARTMENT OF BUSINESS MANAGEMENT

BUSINESS MANAGEMENT
INTRODUCTION TO ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT (MNE202V) TUTORIAL LETTER 201/2/2011

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MNE202V/201/2/2011

CONTENTS 1 2 3 4 5 6 INTRODUCTION CONTACT DETAILS OF LECTURERS FEEDBACK ON ASSIGNMENT 01 FEEDBACK ON ASSIGNMENT 02 GUIDELINES ON THE EXAMINATION CONCLUDING REMARKS

Dear Students 1 INTRODUCTION

The purpose of this tutorial letter is to provide feedback on Assignments 01 and 02 - each comprising 25 multiple-choice questions. If you submitted Assignment 01 on the mark-reading sheet you have gained admission to the examination. Both assignments contributed to your year mark. See Tutorial Letter 101 for details of how your year mark will be calculated. Please use the feedback provided when evaluating your answers. 2 CONTACT DETAILS OF LECTURERS

The lecturers for this module in 2011 are as follows: Lecturer Prof Chiloane-Tsoka Primary lecturer: MNE202V Mr. Radipere Secondary lecturer:MNE202V Prof Ladzani Section head: Entrepreneurship Email address chiloge@unisa.ac.za radipns@unisa.ac.za wladzani@unisa.ac.za

The lecturers offices are situated on the third and fifth levels of the AJH van der Walt Building, Unisa, Muckleneuk Ridge, Pretoria.

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3 3 FEEDBACK ON ASSIGNMENT 01

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Question 1 The correct answer is 3. See page 15 in the prescribed textbook. Entrepreneurial success factors include the following: creativity and innovation; risk orientation; leadership; good human relations; a positive attitude; perseverance and commitment. Knowledge of competitors and work of a high quality are managerial success factors. Question 2 The correct answer is 4. See page 34 in the prescribed book. Pull factors in entrepreneurship are: independence, achievement, recognition, personal development and personal wealth. Unemployment and job insecurity are push factors in entrepreneurship. Question 3 The correct answer is 3. See pages 11 to 12 in the prescribed book. Factors that encourage an entrepreneurial orientation include: culture, education, work experience, personal orientation as well as family and role models. Question 4 The correct answer is 2. See page 32 in the prescribed book. When a person has a high need for achievement, he or she is highly motivated to excel. Question 5 The correct answer is 2. See page 30 in the prescribed book. Subsistence entrepreneurs are inexperienced in business management and require general support and training in technical and managerial skills in order to operate their businesses successfully. Question 6 The correct answer is 2. See textbook page 85 The following actions are required by an entrepreneur when opening the window of opportunity: Start the business activity Obtain the commitment of the ventures stakeholders

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MNE202V/201/2/2011

Question 7 The correct answer is 3. See page 114 in the prescribed book. When developing a business plan to attract shareholders, the emphasis should be on the strategy to achieve profit and on growth projections. Question 8 The correct answer is 3. See page 85 in the prescribed book. Option 3 is incorrect. The competitive advantages for Amy, the owner of a gift shop in a neighbourhood shopping centre are: a unique service feature; value for money customer experience; customer convenience; and notable product attributes. Question 9 The correct answer is 2. See page 56 in the prescribed book. Creativity is the result of the thinking process. Question 10 The correct answer is 3 see textbook page13 Question 11 Match Column A and B The correct answer is 5. See page 137 in the prescribed book. A trade mark is a device used by a company to identify its product and to distinguish it from products sold by competitors Question 12 The correct answer is 4. See textbook page 135 Copyright is the protection provided by the law to authors against the unauthorised reproduction of their original works of authorship. Question13 The correct answer is 1. See textbook page 136. A patent is a registered exclusive right of an inventor to make or sell an invention.

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5 Question 14

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The correct answer is 3. See page 106 in the prescribed book. In the operational plan of your business plan you would focus on controlling the quality of your proposed products. Question 15 The correct answer is 2. See page 16 of your prescribed textbook The entrepreneurial success factors that Erick should posses are: Perseverance Risk creativity Question 16 The correct answer is 3. See page 34 in the prescribed book. Pull factors in entrepreneurship are independence, achievement, recognition, personal development and personal wealth. Unemployment and job insecurity are push factors in entrepreneurship. Question 17 Match Column A and B (Stages of creative process) The correct answer is 4. See prescribed book page 62. Requirement for incubation stage in creative process include: Imagination Absorption Seeking ideas, possible answers and solutions Independence Psychological freedom Question 18 The correct answer is 5. See prescribed book page 62. Requirement for illumination stage in the creative process include: Ability to switch from intuitive to analytical patterns of thought Eureka Ah-ha!

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6 Question 19 The correct answer is 1. See prescribed book page 62

MNE202V/201/2/2011

Requirement for verification stage in the creative process include: Critical attitude Analytical ability Testing

Question 20 The correct answer is 3. See page 59 of the prescribed book. The following economic-environmental factors create barriers to creativity: family and friends lack of understanding and support for new ideas no risk taking families with an autocratic decision-making structure cultural barriers

Question 21 The correct answer is 3. See page 96 in the prescribed book. The expression, Measuring the window of opportunity, best describes the stage in which the entrepreneur conducts a feasibility and viability study to determine whether or not the market would be receptive to the new idea or product. Question 22 The correct answer is 4. See page 87 in the prescribed book. Option 4 is incorrect. The competitive advantages for Mando, the owner of a coffee shop in shopping centre are: a unique service feature; value for money; customer experience; customer convenience; and notable product attributes. Question 23 The correct answer is 2. See page 115 in the prescribed book. When developing a business plan to help position the business in the market. the emphasis should be on: The reasons for selecting a specific positioning strategy Scientific market research to identify opportunities UNISA

MNE202V/201/2/2011

Resources for positioning itself for desired position in the market Potential impact for profit in the long term growth The reason for selecting a specific positioning strategy

Question 24 The correct answer is 3. See page 88 in the prescribed book. The attractiveness of a market is determined by the following: Market structure Market size Market capacity Market share Cost structure Question 25 The correct answer is 3. See page 128 in the prescribed book. Option 1 is incorrect because a close corporation has legal entity Option 2 is incorrect A CC can have up to 10 members Option 3 is correct Partnerships have minimal legal requirements imposed by government Option 4 is incorrect. Dont have limited liability close Option 5 is incorrect. They elect board of directors to manage the company on their behalf. FEEDBACK ON ASSIGNMENT 02

Question 1 The correct answer is 4. See page 180 in the prescribed book. The debenture is another form of loan capital that companies use in a form of funding. Debentures are printed documents that are fully negotiable and transferable. Option 4 is the answer. Question 2 The correct answer is 3. See page 162 in the prescribed book. The reduction risk management entails the following: Revise the business plan regularly Implement management control system Implement safety programmes. Option 3 states implementing management control system could be achieved through reduction

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MNE202V/201/2/2011

Question 3 The correct answer is 2. See page 162 in the prescribed book. Samuel is using reduction strategy by implementing strict safety programmes as a means to manage the risk of losing his building. A reduction strategy is considered if the possibility of lose cannot be illuminated completely, but its impact can be reduced. Question 4 The correct answer is 2. See page 129 in the prescribed book. The Sole Proprietor is the owner and therefore liable for the debts accruing in the business. Partnership Skills or assets can be his contribution. A private company must have at least one director. Question 5 The correct answer is 3. See page 264 in the prescribed book. The following are non quantitative factors when valuing a business. Legal commitment Employee contracts Competition Future community developments

Question 6 The correct answer is 3. See page 174 in the prescribed book. The benefits of paying or replacing trade credits via bills payable or promissory notes to both the buyer and seller as negotiable instruments. Option 3 where the buyer is given credit for the period stipulated in the bill The seller possesses a negotiable instrument. This means he can obtain cash for the bill by selling it to a financial institution

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9 Question 7

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The correct answer is 3. See page 267 in the prescribed book. To value the business the market based approach uses the technique that relies on the financial markets to estimate the prices of similar businesses that have recently been sold. Option 3 is correct. Question 8 The correct answer is 3. See page 141 in the prescribed book. Thabo has to register his employees with the Department of labour for UIF. The correct option is 3 Question 9 The correct answer is 3. See page193 in the prescribed book. Paballo wants to start a catering business. He approaches the SEDA office with his idea in order to get advance on how to operate a business successfully. Paballo is using an extended network. Question 10 The correct answer is 3. See pages 115 to 136 in the prescribed book. Seejay is seeking legal protection through a patent. Patent is defined as an exclusive right of an inventor to make use of, or sell an invention. In this way he makes sure that other companies cannot copy his invention Question 11 The correct answer is 2. See page 161 in the prescribed book. Bankruptcy is a personnel risks or loss of income that the entrepreneur can face. Personnel risks are: Employee dishonesty Loss of key executives Competition from former employees Question 12 The correct answer is 3. See pages193 in the prescribed book. The network that Mandy follows is regarded as a personal network Networking with partners, Customers UNISA

10 Suppliers Bankers Distributors Professional bodies

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Question 13 The correct answer is 2. See page 184 in the prescribed book. Option 2 is correct option 1, 3 and 4 are incorrect because they refer to back end costs: Investment banking fees Legal fees Brokerage fees Listing fees Question 14 Option 3 is correct. Refer to page 174 in the prescribed book. Acceptance credit refers to a facility that is made available by merchant banks, whereby first-class client borrowers are issued a letter of credit permitting them to draw bills to a specify limit. Question 15 The correct answer is 4. See page 225 in the prescribed book. The steps of succession plan in a family business are as follows: Determine the needs of the owner now and in the future Evaluate the succession goals to confirm compatibility Develop a preliminary succession plan Communicate the plan Implement the plan Question 16 The correct answer is 4. See pages 263 to 264 in the prescribed book. Capitalised earning methods are used to determine the earnings for the coming year by using previous income statements

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11 Question 17

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The correct answer is 1. See page 263-264in the prescribed book. The discounted future earnings method is used to determine the value of the business based on the present value of its future earnings. Therefore column B, number 1, is appropriate. Question 18 The correct answer is 5. See pages 263 to 264 in the prescribed book. The excess earning method is used as a combination of the value of the businesss existing assets and an estimation of future earnings. Question 19 The correct answer is 3. See page 239 in the prescribed book. Option 3 is correct because the advantages of franchising from the franchisors viewpoint are: dedication owner operation rapid expansion. start up assistance and proven systems are advantages from the franchisees viewpoint Question 20 The correct answer is 3. See page174 in the prescribed book. Factoring is a method used to raise funds by the selling or assignment of book debts to a third person. Question 21 The correct answer is 2. See page 162 in the prescribed book. Rani adopts a transfer strategy to manage risk in her business.

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22-24 MATCH THE COLUMNS Question 22 The correct answer is 4. See page 105 to106 in the prescribed book. A marketing plan describes how you will attract customers to make the change to your product and to continue buying it. Question 23 The correct answer is 5. See page105 to 106in the prescribed book. The operational plan offers information on how a product is manufactured. Question 24 The correct answer is 1. See page 105-106 in the prescribed book. The management plan describes the new firms organisational structure and backgrounds of its key players. Question 25 The correct answer is 4. See page184 in the prescribed book. The back-end costs of raising finance for a new and growing business venture are legal fees, investment banking fees, brokerage fees and listing fees.

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GUIDELINES ON THE EXAMINATION INFORMATION ON THE

NOTE THE FOLLOWING IMPORTANT EXAMINATION FOR THIS MODULE.

Format of the examination The duration of the examination paper for this module is two hours. The paper will count 70 marks and will consist of two sections: section A and section B. Section A is a compulsory section and will consist of 30 multiple-choice questions worth one mark each and you have to answer these questions on a mark-reading sheet. Section B will consist of three questions, each worth 20 marks. In section B, question 1 is compulsory. Thereafter you have to answer either question 2 or question 3. These questions may be based on case studies. The examination paper will cover all the prescribed work. 6 CONCLUDING REMARKS We trust that you find the feedback in this assignment helpful. Do not hesitate to contact us should you have any problems with Assignment 01 or Assignment 02 or the feedback on them. Best wishes LECTURERS IN ENTREPRENEURSHIP AND MANAGEMENT DEPARTMENT OF BUSINESS MANAGEMENT UNISA SMALL BUSINESS

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