Entre 432:Business Planning Question Paper
Entre 432:Business Planning
Course:Business Administration
Institution: Kenya Methodist University question papers
Exam Year:2012
KENYA METHODIST UNIVERSITY
END OF 2ND TRIMESTER 2012 (DAY) EXAMINATIONS
SCHOOL : BUSINESS AND ECONOMICS
DEPARTMENT : BUSINESS ADMINISTRATION
UNIT CODE : ENTR 432
UNIT TITLE : BUSINESS PLANNING
TIME: 2 HOURS
INSTRUCTIONS
Answer question one and any other two questions.
Question One
Read case study "it is just a matter of time," and answer the following questions;
IT’S JUST A MATTER OF TIME
Michael-Smith has been a computer analyst for five years. In his spare time he has developed a word processing software program that is more comprehensive and powerful that any on the market. Since he does not have a great deal of money, Michael-Smith believes the first step in producing and marketing this product should be to get the necessary venture capital. The software program has been written and trial-tested by Michael-smith and a handful of friends to whom he gave the material. Two of these friends are full-time typists who told him that the program is faster and easier to use than anything on the market. Michael-smith believes that these kinds of testimonials point out the profit potential of the product. However, he still needs to get financial support.
One of Michael smith friends has suggested a meeting with a venture capitalist. "These guys have all sorts of money to lend for new ventures," the friend told Michael-Smith. "All you have to do is explain your ideas and yours is certain to be one of the best they have seen in a long time." Michael-Smith agrees with his friend but believes he should not discuss the matter with a venture capitalist until he has thought through answers to the various types of questions likely to be asked. In particular, Michael-Smith believes he should be able to provide the venture capitalist with projected sales for the first three years and be able to explain the types of expenses that would be incurred. Once he has done this Michael-Smith feels he will be ready to talk to the individual. "Right now, he told his friend, it’s just a matter of time. I will think that within seven to ten days, I will be ready to present my ideas and discuss financial needs."
In additional to financial questions, what other questions is the venture capitalist likely to ask Michael-Smith?
(10 Marks)
Would a business plan be of any value to Michael-Smith and the capital venture? Why or why not.
(5 Marks)
How would you recommend Michael-Smith get ready for his meeting with venture capitalist? Be complete in your answer.
(5 Marks)
Describe each of five planning pitfalls Michael-Smith is likely to encounter.
(10 Marks)
Question Two
Many people argue that the executive summary is the most important section in business plan. What is the basis if this argument? Do you think the executive summary is the most important section in a business plan or think this argument is overstated?
(5 Marks)
Why is it important for a business plan to follow a conventional structure rather than be highly innovative and creative?
(5 Marks)
What are milestones important to a business plan?
(5 Marks)
What can you do to make a business plan easy to read and understand?
(5 Marks)
Question Three
Brian is in motor cycle business. The total fixed costs for operation is kshs.25, 000,000. The selling price for a unit of motor cycle is ksh.65, 000 and variable cost for a unit of the motor cycle is Ksh.35, 000.
Calculate the break-even point in terms of unit and also in Kenya shilling.
(7 Marks)
Suppose Brian decides that 25% return on fixed costs would make the profit worth the investment. Calculate how many units he must sell to achieve this level of profits and also the sales volume to realize the same profit. (8 Marks)
Sketch a graph of break even point angle of incidence, profit area, loss zone and margin of safety.
(5 Marks)
Question Four
What are the five elements included in the marketing segments of a business plan.
(5 Marks)
Why is it important for an enterprise to describe the industry in which it intends to compete as part of its business plan? Discuss the most important topic in this section.
(10 Marks)
Define the term critical risks and discuss why it is important for a business plan to address critical risk factors.
(5 Marks)
Question Five
Discuss in details the process of business planning. (20 Marks)
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