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Entre 548:Business Planning Question Paper
Entre 548:Business Planning
Course:Master Of Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2012
KENYA METHODIST UNIVERSITY
SCHOOL OF BUSINESS AND MANAGEMENT
END OF SEMESTER EXAMINATION FOR MASTER IN BUSINESS ADMINISTRATION DECEMBER, 2012 (EVENING)
UNIT CODE : ENTR 548
UNIT TITLE : BUSINESS PLANNING
TIME: 3 HOURS
INSTRUCTIONS
Answer question ONE and any other THREE questions.
Question One
A case study of Air Compressor Device (KENYA AIR COMPRESSOR LTD)
In evaluating the marketing failure of their Air compressor new device, Mr. Shah, an executive of Kenya Air Compressor blamed faulty pricing. He maintained that had the product been properly priced it would have been a highly profitable venture. As it was, it was a dismal failure.
The Air compressor gadget was a relatively small portable device that would fit into the car boot and used when the tyre pressure goes down to charge. It has received enthusiastic reception among motor industry throughout Kenya and great hopes had been held for it. The product had been priced to retail at Ksh. 800 and it cost Ksh. 250 to make. The dealers were given 40% and the wholesalers 20% margins.
Mr. Khamalla, the managing director, blamed its market failure upon one of its attributes- the relatively slow flow air it permitted. It would take approximately 15 minutes for a size fourteen tyre to fill the pressure. There was nothing the local engineers could do about this slow rate of the flow of air unless they made a larger unit or installed separate motor. All of these suggestions would increase the price of the unit considerably.
Mr. Shah maintained that the article had been horribly under priced. He insisted that the company should have asked Ksh.3,000 for the unit. First he said, "How can anyone think this really does what we claim it does if it only costs Ksh.800? Moreover, we needed all the money to promote and market it. This item needed a lot of promotion behind it, and we did not have enough margins to do it."
Evaluate Mr. Shah’s thinking on the business risk business especially pricing of the new air compressor.
(5 Marks)
Evaluate Mr. Khamalla thinking on the failure of the product.
(10 Marks)
Discuss how business planning can overcome the product’s weakness.
(5 Marks)
As a business planning consultant, what would you have done?
(5 Marks)
Question Two
A good business plan must pass through three tests. Discuss these tests in details.
(6 marks)
In business planning process there are a number of pitfalls to avoid. Sample out five of such pitfalls and discuss giving relevant local examples.
(9 Marks)
Assessment of external uncontrollable variables that may impact the business plan is necessary to identify trends and changes occurring in the country. Discuss such factors giving example on how they impact the business world.
(10 Marks)
Question Three
Discuss in details the following components of a business plan. (25 Marks)
Executive summary.
Financial segment.
Business description.
Management team.
Operations section.
Question Four
What is supposed to be discussed and included in the following sections of a business plan? Critical risk, milestone schedule, appendix and harvest strategy.
(12 Marks)
List down the key assumptions of Break-even point.
(5 Marks)
Write sample of a cover letter and mission statement.
(8 Marks)
Question Five
Financial analysis can be applied from two directions: vertical analysis and horizontal analysis. Discuss any three ratios for the following categories: managers, owners, short-term creditor and long-term creditors. In your discussion capture formulae, what its measures and what it tells you.
(18 Marks)
Benefits are derived from business plan for both entrepreneur and financial sources that read it and evaluate the venture. Discuss briefly the benefits gained specifically by entrepreneurs.
(7 Marks)
Question Six
Discuss the process of business planning. (25 Marks)
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