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Bmgt 414: Business Entrepreneurship Question Paper
Bmgt 414: Business Entrepreneurship
Course:Bachelor Of Commerce
Institution: Kabarak University question papers
Exam Year:2009
KABARAK UNIVERSITY
EXAMINATIONS
2008/2009 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE
COURSE CODE: BMGT 414
COURSE TITLE: BUSINESS ENTREPRENEURSHIP
STREAM: Y4S1
DAY: FRIDAY
TIME: 9.00 – 11.00 A.M.
DATE: 20/03/2009
INSTRUCTIONS:
- Answer THREE questions in all.
- Question ONE is compulsory.
QUESTION ONE – CASE STUDY (40 marks)
Read this case and answer the questions that follow
When she was 11 years old, Kim Merritt sampled chocolate at a candy store (sweets
shop) and thought she could do better. She made her own recipe and began selling small
candy bars in her home town of Cumberland, Maryland. The effort was much like that of
many youngsters who open lemonade stands to earn a few dollars to spend at the movies;
however, people began asking her for more. Using meager profits and her mother’s
kitchen, Kim began making large batches of candy, then designed her own wrappers and
developed a commission system for friends who sold chocolates at several schools.
Business was so good that it became an obsession. Kim worked after school, weekends,
and holidays and side from a brief period when the health department suspended her
operations until she could obtain proper permits to cook candy, she made candy by hand
until she graduated from high school. At first, she could meet demand without special
equipment or sacrificing other activities, but when she provided candy for a school
fundraising event, demand exceeded capacity and Kim found herself buying professional
equipment, hiring helpers and purchasing bulk supplies.
Looking back, Kim recalls the obsession, the long hours and the challenge to learn about
business. Always on the initiative, Kim set about placing orders with local stores and
developing contracts with dozens of schools and civic organizations. Her business,
Kim’s Chocolates, soon occupied her entire family and closest friends and she registered
the company and set up a chocolate boutique. During the first month, she had 18,000
orders and before graduating from high school, Kim was distributing specialty chocolates
to retail stores in three major towns.
In 1989, at age 21, Kim repositioned her company as a major distributor of specialty
candies and began planning a chain of upscale chocolate shops for the 1990s. The chain
would complement her candy manufacturing and distribution system, but it would also
mean major changes in her organization. She paused to think about her plans, realizing
that to launch a regional or national chain would mean a corporate endeavour. She and
her family could not handle all the responsibilities and the nature of Kim’s chocolates
would change. This was not a pleasant thought, although the idea of pursuing a major
business was exciting.
Reflecting on her business, Kim realized that she had had fun and made a great deal of
money, but many people considered her success no more that the luck of a personable
young lady who made good candies and accidentally stumbled into a few good markets.
On the other hand, Kim knew that she had worked extremely hard to attract clients. Most
of their customers had not been comfortable buying from a young high school student
and she was seldom taken seriously by customers until they had dealt with her for a long
time. Winning over her customers had always been a challenge to Kim, not a roadblock
and creating unusual candies had been a joy not a job.
Thinking about her plans, she was not anxious to become a corporate manager and
although she had always worked well with others, Kim liked the feeling of independence.
Running a company would mean sacrificing her autonomy, yet the idea of a chain of
stores selling her specialty candies had been a dream for years. At the same time,
expansion would mean financial risk, and Kim had always avoided debt; she dealt in cash
and had always carefully calculated her expenses to avoid even the slightest loss. She
realized that she was at a major crossroad in her young career and the choice seemed to
be whether to follow her dream and expand or to be content with her existing business.
(Adapted from, Entrepreneurship: New venture creation by David Holt)
Questions (30 marks)
1. Identify at least FIVE entrepreneurial characteristics of Kim Merritt and how they
correspond to characteristics described for successful entrepreneurs.
(10mks)
2. Discuss the FOUR key strategies used by Kim to grow her business, Kim’s
Chocolates. (10mks)
3. Based on the facts in this case are entrepreneurs born or are they made? Discuss
this statement and draw an academically agreeable conclusion.
(5mks)
4. Take a position regarding the decision facing Kim whether to expand into a chain
of stores. Explain your position in terms of personal objectives you perceive
essential to Kim and in terms of her perceived abilities. (5mks)
QUESTION TWO (20 MARKS)
With the use of relevant examples, distinguish between the following terms.
a) Sub-contracting and Joint-ventures
b) Business Collaboration and Franchising
c) Family business and Partnership
d) Total Quality Management (TQM) and Business Re-engineering.
QUESTION THREE (20 MARKS)
Your friend who has been living and working in Dubai for the last 8 years is coming back
home to Kenya to start a business. Explain to him FIVE major challenges that he is
likely to face in this endeavour and possible ways to overcome them.
QUESTION FOUR (20 MARKS)
The Kenyan government has put in place various policies to develop entrepreneurship in
the country: examples include the Sessional Paper No. 2 of 1992 on small enterprise and
Jua kali Development in Kenya and the sessional paper No. 2 of 2005 on Development of
Micro and Small Enterprises for Wealth and Employment Creation for Poverty reduction.
Despite these good initiatives, Kenya is still not well developed and is faced with
potentially explosive unemployment situation and rampant poverty.
a) What in your opinion, went wrong if any?
b) Based on the discussion in this course, explain the way forward to prosperity for
this nation.
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