Get premium membership and access revision papers, questions with answers as well as video lessons.
Bmgt 414: Business Entrepreneurship Y4s1 Question Paper
Bmgt 414: Business Entrepreneurship Y4s1
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2010
KABARAK UNIVERSITY
UNIVERSITY EXAMINATIONS
2009/2010 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF
COMMERCE
COURSE CODE: BMGT 414
COURSE TITLE: BUSINESS ENTREPRENEURSHIP
INSTRUCTIONS:
1. Answer question ONE and ANY OTHER THREE questions.
QUESTION 1
CASE STUDY
When Scott Shane taught at Dupree College of Management at Georgia Tech, an MBA student
went to his office one day asking for advice on financing his new company, which had just
developed a new inventory Management software program. The students had just received a
phone call from Atlanta area venture capital firm that wanted to finance his venture, and he
wanted to talk to Scott Shane about term she had been offered.
The venture capital firm proposed providing the new venture with $1 million in financing in
return for 30% of the company. The plan would be to use their investors’ capital to refine the
prototype of the software, do better test, and launch the product. However, the student was not
sure he should take the financing offer. He had only asked for $ 500,000 in seed capital to refine
the prototype and then seek more capital when the production begins. Moreover, he had a
business angle willing to take those terms. Scott Shane urged the student to take the venture
capital financing, arguing that it is more important to raise enough capital than to get the best
valuation of the new company. But the student stuck on the terms, ‘why’ he asked, “should I give
up 30% of the company to get $500,000. If I do two financing rounds at $ 500,000 I would still
have 80% of the company left. And beside, the venture will be so much further developed by the
time of the next round that will get the next round of money for even less quality.”
Scott Shane wanted explained that the venture might run into a rough spot along the way and that
might not be able to raise sufficient money he needed later. “Take the money when you can get
it”, said Scott Shan. “You never know when it will be offered to you again.” The student decided
to go with the business angle’s offer, and put the $500,000 he received towards developing the
software. Unfortunately it proved to be a lot harder to develop the software than the student had
originally thought, and he ran through his capital very quickly.
When the money started running out, the student went out looking for additional financing.
However, because the project did not find anyone to give him the capital he needed. The
entrepreneur in this case survived for six months by selling equipment and giving employees
stock in place of their pay checks but that was not enough. After spending $750,000, he still did
not have working capital. Although the students probably could have solved the software
problems in a few months, no one would give him the $250,000. He had to close up shop.
a) Discuss the financing lesson learned from this case. (10 marks)
b) What is the role of Scott Shane at this stage of entrepreneurship process? (3 marks)
c) Identify and explain the two modes of financing a business singled put in
this case. (10 marks)
d) What is actually the main problem that forced the entrepreneur to close down the
business and would you say it is a common problem in Kenya today? (5 marks)
e) Apart from the two financing options identifiable from the case, what other options based
on your reading the entrepreneur may have painfully attempted to exploit without
success? (5 marks)
QUESTION 2
a) Outline and discuss the legal aspects required to start and operate a small business in
Kenya. (10 marks)
b) Explain five qualities of successful entrepreneurs. (5 marks)
QUESTION 3
a) How can a viable business be identified? (5 marks)
b) Discuss the role of small business in developing economies like Kenya. (10 marks)
QUESTION 4
a) A memorandum of Association is a very important document when forming a company.
Explain the six clauses contain in them. (6 marks)
b) Discuss the advantages and challenges of self-employment. (9 marks)
QUESTION 5
a) Explain the meaning of the following terms;
(i) Innovation
(ii) Invention
(iii) Discovery. (6 marks)
b) Discuss the various components which need to be included by an entrepreneur when
writing a business plan. (9 marks)
More Question Papers
Popular Exams
Return to Question Papers