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Bmgt 214: Business Entrepreneurship Question Paper
Bmgt 214: Business Entrepreneurship
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2009
KABARAK UNIVERSITY EXAMINATIONS
2008/2009 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF SCIENCE IN
ECONOMICS & MATHEMATICS
COURSE CODE: BMGT 214
COURSE TITLE: BUSINESS ENTREPRENEURSHIP
STREAM: Y2S2
INSTRUCTIONS:
- Answer question ONE and any other TWO questions.
MARQUES PASTRIES LIMITED
Mr. Pasque Kariuki and his wife Mary Kariuki fascinated with the idea of creating a
chain of retail outlets in Nairobi, resigned from their formal employment and established
Masques Pastries in 1987. In a span of 20 years, the company had become a leader in the
food industry with outlets all over the city and is now a household name in the business
of pastries and confectionaries. The company’s phenomenal growth was through sheer
determination and hard work by the directors, who wanted to excel in life. To make the
company more visible, the directors erected promotional billboards at strategic highway
inter sections and streets all over the city. The billboards displayed mouth watering
delicacies which were very inviting especially to the youth and house-wives. Young
couples could not imagine a day without Masques pastries, which seemed to breath a new
life to the youth.
Masques Convenient stores provided these pastries all the time. The Masques brand of
pastries was conveniently packaged with the state of the art packing material. The
Masques brand “Logo” was visible from a kilometer away.
Mr. Kariuki, the managing director is s holder of a masters degree in Business
Administration (MBA) from the prestigious Harvard University in the United states of
America. His wife Mary, is a legal counsel and a graduate of lacs from the University of
Nairobi. She acted as the company’s legal counsel and marketing director. Mr. Omollo,
a graduate of Food Science and Technology from Lousine Univeristy, Switzerland, is the
technical director. He joined the company during a period of recession and unfavourable
business environment. Mr. Kariuki met Mr. Omollo during a golf tourney at Limuru
Golf Club. Mr. Kariuki who had never considered operations a strength or joy, was
impressed with Mr. Omollo’s credentials, enthusiasm and apparent operational prowess.
After one month, Mr. Omollo became the company’s technical director.
Masques’ core business was pastries and confectioners. The company’s pastries were
done according to its unique style perfected over the years. A rolled rectangular piece of
pastry dough layered with butter was folded like a business letter, forming four layers of
dough and two layers of butter, turned and rolled. The process was repeated a minimum
of five times and sometimes more, with careful monitoring of dough temperature and
consistency. If the mixture became too warm, the dough required refrigeration before the
process could continue. Some chefs insisted that the dough cool and rest for an hour in
between each turn. Therefore, the product quality at each location, depends on the mood
and attitude of the bakers. Each unit operates a self-contained production backroom with
a retail store at the front. Controls, training and selection of the sales personnel also
varied per location as decided by each store manager.
By 1990, Masques had prospered and aggressively expanded to include semi-urban
centres, 6 stores in the greater Westland’s area, had an attractive location in other up
market suburbs. The company employed over 200 people and had a turnover of over
Kshs. 10 million. Now, a recognized leader in the industry segment, the company was the envy of many food service companies and the recipient of several unsolicited
franchise requests. Buoyed by the current state of affairs, the directors decided to borrow
a loan of Ksh. 50 million from a local bank to help the company open more stores in
Thika town and Athi River township. After a few years of operation, the company
revenue started to drop. By the end of the fourth financial year of this loan, the
company’s financials nose dived. The company could not service its loan and the
direction called an “impromptu” meeting to discuss the present state of affairs of the
company. During the meeting, the principles agreed that the company risked bankruptcy
unless fundamental operational changes were made and viable concept developed.
Due to escalating production cost and lost of revenue, Mr. Kariuki the CEO, fired several
sales managers and centralized production. This was borne from his Havard studies,
which taught him that, if you decreased production costs and spread them out over many
units you are able to break even easily. Secondly this would allow the company to pay
fewer skilled people, reduce overlead costs and improve product quality. True to the act,
the break-even point dropped from Ksh. 10,000 to Ksh. 5,000 per store per week. The
parets principle also taught him that 20% of the customers accounts for 80% of the sales,
20% of staff causes 80% of the problems and 20% of the sales persons create 80% of the
sales and so on. Thus applying the principle, the sales force was reduced from 200 sales
persons to 40 sales persons. Mr. Kambona, the sales team leader was told by the CEO to
increase the sales immediately or face the sack.
The present scenario shows a company on the declining phase. Its market share was
dropping and competition intensifying. Mr. Kariuki, the CEO was putting intense
pressure on individuals in the organization to perform. The directors were looking for
internal causes as contributors to then company problems. Then management style was
authoritarian.
1. a) A management consultant has been invited by Mr. Kambona to engage the
CEO to agree on how to solve the problems currently facing the company.
Explain the approach he would use to engage the CEO for a fruitful
consultative session. (10mks)
b) The meeting with the CEO was successful and the consultant was asked to
write a proposal on how to solve the current problems facing the company.
Analyze the contents of the proposal (10mks)
c) Advise the CEO of Marques Pastries on how to design a contract for
awarding a consultancy assignment. (5mks)
d) Explain the hard and soft data the company should avail to the consultant
to make the intervention succeed. (5mks)
2. a) Entrepreneurs are considered as leaders when they identify a business
opportunity and translate it into reality.
Explain how this principle manifests itself in entrepreneurs (10mks)
b) Issa has identified an opportunity to start a business manufacturing
cooking fats. Explain to Issa the indicators he should consider in
determining the viability of this opportunity. (10mks)
3. Mwanzia retired from Genet Co. Ltd five years ago after serving for over twenty
years. He is qualified to deal with both mechanical and electrical problems of
vehicles. He recently started a garage as an income generating project and the
business is doing well.
a) Explain the possible reasons behind the growth of his business.
(10mks)
b) Identify some challenges that Mwanzia is likely to face in his garage.
(10mks)
4. Discuss the factors that lending institutions take into considerations when
appraising a loan application form for a business venture.
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