B Entrepreneurship and Small Business Management

INSTRUCTIONS: All questions are compulsory

SECTION A

Tick the appropriate option on the question paper, tie and submit it together with the answer
booklet. No cancellation or deepening is allowed. Use pen only.

1. Management of Desperate Group of companies wants to develop a new venture to their

business portfolio. They can obtain secondary data from all of the following sources except
A. internet
B. magazine *
C. bureau of statistics
D. focus group

2. You want to write a business plan for your small fresh tomato business. Which of the
following shall not be considered as a major area to be included in the business plan?
A. Executive summary
B. Cultural differences
C. Venture description
D. Assessment of risk

3. Marketing mix entails the specific combination of interrelated and interdependent

marketing activities which an organization engages to meet its objectives. It
includes………….
A. distribution *
B. financing
C. consuming
D. retailing

4. Marketing research involves the gathering of data to provide information to answer all
the following questions to make new venture successful except………
A. Who will buy the product?
B. What price should be charged?
C. What is the most effective promotion strategy?
D. How will profit from sales be shared? *

5. Which of the following best describes the professional who makes risky investment from
a pool of financial capital of third-party investors to obtain a high rate of return on
investments?
A. Venture capitalist *
B. Entrepreneur
C. Businessman
D. Buyer
6. Which of the following sources of short-term finance enables the customer to order,
obtain delivery, and sells the items before he/she pays for it?
A. Bank overdraft
B. Factoring
C. Trade credit
D. Customers

7. There are various factors that influence the choice of finance for a venture. It is therefore
prudent for the entrepreneur to assess the different types of finance based on all the
following criteria except…………
A. amount of money required
B. how quickly the money is needed
C. the repayment plan
D. the amount of risk involved *

8. Target marketing enables the entrepreneur to identify a specific group of customer at

whom the business aims it products. Which of the following is not part of the steps in
target marketing?
A. Market segmentation
B. Market targeting
C. Market positioning
D. Marketing mix

9. You want to conduct a market research for your new venture. Which of the following
stages is the first step to consider when undertaking such an activity?
A. Problem definition
B. Data collection
C. Data interpretation
D. Drawing conclusion

10. Entrepreneurs call upon a number of control mechanisms to co-ordinate the activities of
their organization and direct the use of resources. Such activities includes all the
following except……
A. direction and delegation of tasks
B. setting up of routines and heterogeneous procedures *
C. creating an organizational culture
D. leading through visionary management

11. Which of the following techniques is an excellent method for initially screening ideas and
concepts in addition to generation new ideas?
A. Focus group *
B. Brain storming
C. Problem inventory analysis
D. Reverse brainstorming
12. An entrepreneur into the production of fresh fruit drink business discovered that the
reason why the product was not selling was due to its colour. What could be the best
source of this information?
A. Supplier
B. Retailer *
C. Competitor
D. Government agencies

13. The process in marketing which involves the division of a market into distinct subsets
that have common preference for needs or behave in the same way is referred to as
A. Target market
B. Market analysis
C. market segmentation *
D. Marketing strategy

14. If in Saudi Arabia, the manufacture, importation, sales, and consuming of alcohol is
prohibited in the country, whereas this is allowed in Ghana, such differences could be
capture under the …….. environment.
A. economic
B. political
C. cultural *
D. technological

15. Business of all sizes may form synergy for various reasons. One of the major reasons an
entrepreneur forms a joint venture is to share the …………… of a business or project.
A. resources
B. cost
C. cost and risk *
D. profit

16. The product planning and development process includes series of stages to come out with
a successful product. Which of the following stages specifically highlights or considers
the concert of product lifecycle?
A. Test marketing stage
B. Product development stage
C. Commercialization stage
D. Idea generation stage

17. Business statistics indicates that about 80% of all new products are reported to fail. This
is due to various factors such as all the following except………
A. too little differentiation from existing products
B. poor planning and execution of the introduction
C. inadequate knowledge of the market
D. analysis of strengths, weakness, opportunities and threats *
18. Entrepreneurs are motivated by many considerations to start up a new business.
According to Birley and Westhead (1994), all the following are reasons motivating
people to start a new venture except the ……..
A. need for approval
B. need for interdependence *
C. need for personal development
D. perception of wealth

19. Which of the following control elements in the business plan is designed to make sure
that the products of the venture performs satisfactorily?
A. Inventory control
B. Production control
C. Quality control
D. Disbursement control

20. Financial ratios help the entrepreneur to make informed judgment about the company’s
financial condition overtime or in relation to other firms. However, this is not without
limitations. All the following are limitations of financial ratios except………
A. similar conditions exist in one business in different years
B. past financial statements are used
C. many rations use end of period figures
D. it requires adjustments if price levels change *

21. Which of the following describes the specific combination of interrelated and
interdependent marketing activities in which organization engages to meet its objectives?
A. Marketing concept
B. Marketing analysis
C. Marketing mix *
D. Marketing research

22. Which of the following marketing strategies attempts to increase sales by introducing
existing products or services into new market?
A. Market development
B. Market penetration
C. Market segmentation
D. Product development

23. Which of the following orientations to market segmentation involves dividing the market
into groups based on variables such as age, gender, income and occupation?
A. Behavioral segmentation
B. Demographic segmentation
C. Geographic segmentation
D. Psychographics segmentation
24. Which of the following market coverage strategies is also termed as the niche marketing?
A. Concentrated marketing strategy
B. Differentiated marketing strategy
C. Marketing positioning strategy
D. Undifferentiated marketing strategy

25. Listed below are sources of short term finance for a business except …….
A. bank overdraft
B. factoring
C. shares
D. trade credit

26. Which category of ratios measure a firm’s ability to meet its long term obligations?
A. leverage ratios
B. Liquidity ratios
C. Activity ratios

Use the case below to answer questions 27 – 30

Sprint Athletes Shop mini case
Sprint Athletes shop is owned and managed by Mr Rexford Kaku. Rex, affectionately
called by his friends and family, wants to open a store that caters for athletes. However,
due to space and budgetary constraints, he recognizes that he will not be able to offer the
same variety and selection of products as does the local athletic mega-store, so he has
decide to focus specifically on runners. He stocks shoes and related gear for runners, and
maintains a staff that is knowledgeable and enthusiastic about running. Rex’s advertising
campaign emphasizes his store’s high standard of customer service and selection of
products specifically tailored to meet the needs of the runner.

27. In the mini case, the process of dividing the athletic market into different subsets of shoes
consumers, such as runners, basketball players, and golfers, is known as…………
A. market targeting
B. product placement
C. product positioning
D. market segmentation

28. In the case, Rex decides to focus his attention on that segment of the market that is
interested in running. This selection of a specific market segment is known as ……….
A. social marketing
B. market targeting
C. product placement
D. market segmentation
29. By portraying his store as a one-stop-shop for all your running needs, Rex has developed
a distinct image for his store. This is an example of ………..
A. segmentation
B. targeting
C. placement
D. positioning

30. Which of the four elements of the marketing mix does Rex emphasize in positioning his
store in the marketplace?
A. place
B. product/service
C. positioning
D. promotion

31. Which of the following sources of business ideas require the entrepreneur to formally
monitor and evaluate the products and services of organizations already in the market?
A. consumers
B. Distribution channel
C. Existing companies *
D. Research and development

32. The phase of a new business which begins with initiation of sales activity and ends when
the business is firmly established is the ……….. phase.
A. post-start up
B. prestart-up
C. start-up
D. venture

33. Which of the following critical factors require the venture to have special characteristics
and design concepts draws customers to the venture?
A. Customer availability
B. Investment size
C. Sales growth
D. uniqueness of the venture

34. The following are financial difficulties that contribute to the failure of a new venture
except…………
A. assuming debts too early
B. initial under capitalization
C. product design problems * (is not financial difficulty related but is a reason for failure)
D. venture capital relationship problem * (picked this cause it’s not in the book)
35. Which of the following elements in the market feasibility analysis is concerned with
customers and customer demand patterns?
A. Competitive data
B. General economic trends
C. Market data
D. Pricing data

36. Which of the following options for small business buyers refers to the purchase of a
business or significant part of it by its current management?
A. Buy-in
B. Buy-in management buy-out
C. Buy-out
D. Outright purchase

37. The advantages of buying an existing business includes all the following except………
A. buying immediate turnover and income
B. buying possible liabilities with assets
C. goodwill with existing customers
D. overcomes barriers to market entry

38. All the following are benefits a franchisee enjoys as a result of franchising except……..
A. less capital requirement
B. management training and support
C. product acceptance
D. substandard quality of good/service

39. The written outline of the entrepreneur’s proposed venture, its operations and financial
details, its marketing opportunities and strategies is the best referred to as ……….
A. business plan
B. business profile
C. idea generation
D. market feasibility

40. All the following are reasons why business plan fail except………….
A. consistent total commitment
B. customer needs underestimated
C. little to no experience
D. setting unreasonable goals
 SECTION B
ANSWER ALL QUESTIONS FROM THIS SECTION

1. Credit worthiness is very important when it comes to securing short term sources of
finance. Enumerate five factors that are considered in assessing credit worthiness. [5
marks]

Character: Here the bank considers the reputation and character of the entrepreneur. Some
expected things are the entrepreneur’s experience in running a business, required technical
skills needed and personal entrepreneurial characteristics.

Capacity: The banks may consider the cash flow of your business in order to find out its ability
to pay. In doing this the income statement and balance sheet of the business is required.

Capital: It is expected that the entrepreneur starts the business with personal funding. By
accessing loans, banks will find out how much you have invested in the business.

Collateral: This represents a repayment source for the bank in the worst case scenario. If the
entrepreneur fails to pay, the bank requires that the value of the assets being used as collateral
is more than the loan accessed.

Conditions: The conditions and terms of the loan are very crucial to the banks. The amount
needed, for how long, what it will be used for and how will it play a major role in accessing
loan.

2. Venture Capital Trust Fund provides low cost financing to businesses so that they can
grow, create wealth and jobs. State any four requirements small businesses need to meet
before accessing to a start-up. (4 marks)
:
-Legal structure
-Insurance
-License and permit
-Financial requirements

3. The pre-start up and the start-up phases of a new venture are the critical segment for the
entrepreneur. State four factors that are critical during these two phases. (4 marks)
:
- The relative uniqueness of the venture
- The relative investment size at start-up
- The expected growth of sales and/or profits as the venture moves through its start-up.
- The availability of products during the pre-start-up and start-up phases
- The availability of customers during the pre-start-up and start-up phases
4. The success of a new venture depends on a comprehensive business plan. Identify four
reasons why a business plan may fail. (4 marks)
:
- Goals are not measurable
- Goals set by the entrepreneur are unreasonable
- The entrepreneur has not made a total commitment to the business or the family.
- The entrepreneur has no experience in the planned business.
- The entrepreneur has no sense of potential threats or weaknesses to the business
- No customer need was established for the proposed product or service

5. To start a franchise, both the franchisor and the franchisee have to look out for some critical
factors which are likely to affect the effectiveness of the franchise. According to Ibrahim
and Ellis, (1992), potential franchisors should assess three essential issues. Outline those
three critical factors that must be assessed by the potential franchisor. (3 marks)
:
- The window of opportunity and the business concept
- Transferability of the business concept to different areas
- Adequate resources including financial management resources