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Ent 5011 Entrepreneurship And Small Business Management Question Paper
Ent 5011 Entrepreneurship And Small Business Management
Course:Master Of Business Administration In Corporate Management
Institution: Kca University question papers
Exam Year:2014
UNIVERSITY EXAMINATIONS: 2013/2014
EXAMINATION FOR THE MASTERS OF BUSINESS ADMINISTRATION
(MBA) CORPORATE MANAGEMENT
ENT 5011 ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT
KITENGELA CAMPUS
DATE: AUGUST, 2014
TIME: 3 HOURS
INSTRUCTIONS: Answer Question One and Any Other Three Questions
QUESTION ONE (31 MARKS)
Socially Responsive Investment
Make no mistake; most venture capitalists aren’t social do gooders. Most venture capitalists are strictly
interested in making money. They want to invest their funds in high tech or innovative ventures that
need an influx of capital and maybe a little guidance to make company revenues soar. In the best case
scenario, venture capitalists want to empower companies that have the potential to go public and make
everyone, including the venture capitalist, very rich.
However, a small group of venture capital funds are now focused on the “double bottom line.” Their
objective is not only to build the revenues of new ventures, but also to create new jobs in economically
depressed communities. So far, the impact of these socially responsive firms has been quite small; it
was estimated that at the end of 1999, these 70 funds had a total capital of $300 million, of which only
about $100 million was invested in economically disadvantaged areas. However, new legislation
passed bty the US Congress in December 2000 should increase these numbers significantly.
According to the Small Business Administration, low income communities in the US are often unable
to attract sufficient equity capital and technical assistance for new or expanding businesses, especially
capital from the private sector. The US government’s response to this problem was to create the New
Markets Venture Capital (NVMC) programme. This programme will encourage the development of
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new, privately managed venture capital firms that are committed to creating jobs and promoting
economic development in specific low income geographic areas. Congress also appropriated $150
million in debenture guarantees for these new NMVC enterprise for 2001, along with $30 million for
technical assistance programmes. These allocations should come close to doubling the amount of
money available to entrepreneurs in low income communities.
Along with the money, there is lots of red tape. Potential NMVC firms had to pay a $2000 fee and
then spend an estimated 160 hours filling out an application form the 15 to 20 that are approved will
then have to raise $6.5 million from the private sector in less than five months order to access the
federal funds. They will then only receive those federal funds in a dollar by dollar match as they raise
additional funds from the private sector over the next 2 years. The low income geographic area where
investments can be made are also limited. To qualify, an area must have a poverty rate of 20 % or more
and either be a designated Urban or Rural Empowerment Zone, an Urban Or Rural Enterprise
Community, or be outside a metropolitan area.
The new markets programme has attracted considerable criticism. “There is a considerable difference
between putting money in a depressed areas and actually doing good for lo income people”, notes Julia
Sass Rubin, who has studied the role of venture capital in community development at Harvard. She
cites San Jose, California, as an example. Ten years ago, San Jose had a high poverty level. However,
thanks to a venture capitalist, today San Jose has a thriving economic base. “You could argue that they
got rid of poverty, but they didn’t. They just got rid of poor people,” claims Rubin.
Some existing “double bottom line” venture capital firms welcome the New Markets programme
because they think it could lead to better programmes down the line, and because they feel it will
legitimize economic investments in low income areas. “ It’s not perfect, but it’s better than no
programme at all,” says Nick Smith, president of a Minnesota fund that had already invested $15
million in the creation of new jobs before your taxes created NMVC.
Required:
(a) Explain the expression “most venture capitalists aren’t social do gooders” (5 Marks)
(b) What is the significance of the “double bottom line” (5 Marks)
(c) What is likely to be the impact of the red tape on the programme? (5 Marks)
(d) Do you think it’s the role of the government to create jobs? (5 Marks)
(e) The new markets programme has attracted considerable criticism. Explain why? (5 Marks)
(f) Do you think this programme would work in Kenya? Explain. (5 Marks)
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QUESTION TWO (23 MARKS)
a)
If you were the cabinet secretary in charge of business, explain five policies you could propose
for the development of entrepreneurship in Kenya.
b)
(12 Marks)
All that a business requires to succeed is credit. Discuss. (11 Marks)
QUESTION THREE (23 MARKS)
a)
In relation to business environment analysis and using relevant examples, explain the
significance of the following:
(i) (ii) monitoring
(iii) forecasting
(iv)
b)
scanning
assessing
(10 Marks)
What can Third World societies like Kenya that have little or no history of entrepreneurship do
to encourage and sustain it?
(13 Marks)
QUESTION FOUR (23 MARKS)
a)
Analyze how the following factors can culminate in an entrepreneurial event:
i) ii) Being between things
iii) Positive pull
iv)
b)
Negative displacement
Positive push.
(10 Marks)
Analyse how the sociological approach to entrepreneurship can be used to promote an
enterprise culture within a country such as Kenya.
(13 Marks)
QUESTION FIVE (23 MARKS)
a) How are entrepreneurs behaviourally different from other managers?
b) Using relevant examples, explain the role of the following factors in the development of
entrepreneurship: i) industry knowledge ii) entrepreneurial motivation iii) skills
(10 Marks)
(13 Marks)
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QUESTION SIX (23 MARKS)
a)
According to Joseph Schumpeter’, the economic development of a country depends on the
ability of that country to be innovative. A country that is not innovative can never develop.
Discuss. (10 Marks)
b) Discuss how technological change creates entrepreneurial opportunities. (6 Marks)
c) What are some of the current changes underway and what opportunities do they create?
(7 Marks)
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