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Ird 305: Entrepreneurship For Small Business Question Paper
Ird 305: Entrepreneurship For Small Business
Course:Entrepreneurship For Small Business
Institution: University Of Eldoret question papers
Exam Year:2015
UNIVERSITY OF ELDORET
THIRD YEAR FIRST SEMESTER EXAMINATION
2015/2016 ACADEMIC YEAR
IRD 305: ENTREPRENEURSHIP FOR SMALL BUSINESS
MAIN PAPER
INSTRUCTIONS TO CANDIDATES: answer question one in section A and any other three from section B
Scudamore started his company 1-800-GOT-JUNK in 1989 straight out of high school with USD700 and beat-up and old pick-up truck .Today they have 95 franchise partners across North America with a true National presence ;they are in 47 of North America's top 50 cities. Scudamore was a risk taker ,but in firm vision."With a vision of creating the 'FedEx' of junk removal,'"says Scudamore , "I dropped out of university with just one year left to become a full-time JUNKMAN! Yes,my Father ,a liver transplan surgeon,was not impressed to say the least".He chuckles,"He is onside now". Many entrepreneurs minimize their risks by outsourcing to contractors.Scudamore chose a different route.
"I hired my first employee a week after I started .I knew I needed the help.His name was David Sniderman -a good friend of mine.I really didn't know yet how to hire so I jus asked a buddy."It may have started as a matter of simply not knowing what else to do ,but it became a philosophical issue for him." On a bigger level, I always believed in hiring people vs contract or consultants .I felt that if I wasn't willing to make the investment then I was questioning my own faith in the business"
On the other hand ,he's a big believer in letting other people share some of the risk.His choice of franchising as a business model allowed him rapid growth without having to turn to outside investors other funding sources."it's the ultimate leverage model.people pay you a fee up-front to help them grow.Rather than lose control my vision by going public _ I chose franchising.it's the ultimate growth model."Their recipe for success has been simple ".Take a fragmented business,add clean shiny trucks that act as mobile billboards,uniformed drivers,on_time service and up-front rates,and then mix in with a culture that is young ,fun and completely focused on solid , healthy growth.He has managed to retain 100% ownership and bootstrapped the business solely out of cash flow -something that is very rare these days.
Although this is a simple business,they couldn't possibly have grown this quickly without technology.Taking a low tech business and putting a high tech spin on it allowed them to rapidly distinguish themselves from their competition.All calls come into a central 1-800_GOT-JUNK? Call centre where they do all the booking and dispatch for their franchise partners.Franchise partners then assess all of their real time reports,schedules , customer info,etc.off of JUNKNET,their cooperate intranet.This allows franchise partners to get into business quickly,and to focus solely on growth _working on the business vs working in the business.1800_GOT_JUNK? Will do about USD32 million in 2004 _ not a bad return on a USD700.00 investment! Brian's BHAG (Big Hairy Audacious Goal) is USD100 million and 250 franchise partners by Dec 31st,2006.He says confidently ,"we will get there."
I) Describe the activities Brian Scudamore should have carried out before starting this business. (4marks)
II) Identify the entrepreneurial characteristics Brian Scudamore had that lead to his success. (5marks)
III) Describe the decisions Brian Scudamore made that lead to the growth of his company? (7marks)
IV) Discuss the growth challenges Brian Scudamore faced in managing this mechanical workshop. (4marks)
V)How would you assist Brian Scudamore to improve his business? (5 marks)
Section B (45marks)
2. a) Makutano county is faced with a shortage of housing in its city of Timbuktu where county headquarter is located.Many more employees have been engaged than those who worked for Timbuktu urban council.The government of Makutano is therefore embarked on a housing project to build 1000 two-bed roomed houses at shauri estate located 9km from the city centre.it is estimated that this project will only ease housing pressure on the middle class government employees whose income bracket is betweenKshs.50,000_kshs.60,000 per month.You have perused through the construction plans and noticed that there will also be a commercial centre,primary school and three pre-primary schools.
(I) Identify four informal entrepreneurial activities that may arise on completion of this project.(2marks)
(II) Explain six micro-enterprises that may arise on completion of this project. (3 marks)
(III) Suggest two formal enterprises that might find their way to the new estate. (2marks)
b) In the last five years,it was observed that there is tremendous increase in the numbers of informal businesses in Eldoret Town.As an entrepreneurship student you are expected to account for this phenomenon? (8marks)
3. During a class discussion on who entrepreneurs are, students expressed different opinions on this subject. Can you group their ideas into schools of thought and discuss each. (15marks)
4. a) Explain five sources of business ideas. (5marks)
b) Identify the entry paths to full entrepreneurship and discuss the advantages and disadvantages of each path. (10 marks)
5.Onyango has been awarded the tender to run a snack room at the university.He has saved Ksh.40,000- for any investment. His preliminary search for information has given the following data. -Rent Ksh.10,000 per month with an initial deposit of Ksh 30,000. -Running expenses are estimated to be Ksh.15,000 per month. -Cost of food sold in the first month is estimated to be Kshs.20,000. -Selling price of food is cost price plus 40% per month but shall not exceed shs.240,000/-.
a)Draw a cash flow statement for the first eight months of operations (9marks)
b)What is the requirement for additional funds required for the success of this venture? (1mark)
c) State ten various unethical practices found in small business (5marks)
6. a)Box Ltd started its operations in transport industry five years ago is in need of finances to boast it's operations. The company has two options of acquiring credit,namely debt or equity financing.The company has approached you to advice on the option to take in this Case. (10 marks)
b)What challenges may one encounter before and during the running of a new business . (5marks).
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