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Small Business Management(Entr 543) Question Paper

Small Business Management(Entr 543)

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2012

TIME: 3 HOURS
INSTRUCTIONS:
Answer Question ONE and any Other THREE Questions
Use the case to answer Question one
All Questions carry 15 marks
Question One
CASE: LJ ELECTRONICS CO.
In 1993, Larry Jones sat at a national trade organization banquet held in his honour. He had just been named "Entrepreneur of the year" by his peers. The speaker at the dons described to the audience how Larry had formed a company called LJ Electronics only before three years to buy up the rights under-performing consumer electronics products. Using creative marketing and attention packaging his company publicly opened three new product lines and no one at the banquet knew it yet. But his investment bank was already, exploring opportunities for additional financing in order to expand even further.
After one year the company posted a loss of 6 million and he was on the brink of bankruptcy. The stock price had plunged and there were real doubts as to whether the company could survive. Looking at the company in details it was easy to spot a severe underestimation of the effects of discounts and volume rebates. Sales were going up exponentially but the deep discounts charge backs and promotions that were becoming a norm in the industry meant that an item that listed for $ 20.00 was in some cases actually only bringing in $ 5.00. Somehow in the process of the company`s rapid growth, no one noticed they were selling the product for less than it cost to make it.
But if runaway discounts were what brought Larry Jones and LJ Electornics company to their knees, the underlying cause of the collapse was much more fundamental: infrastructure. LJ Electronics management was too busy making money to notice how little they knew about their situation.
Required:
a) In reference to the above case, discuss problems the company faces as it makes the transition from entrepreneurial start-up to rapidly expanding midsized company? (8marks)

b) If you were hired as a consultant for LJ Electronics what suggestions would you have provided to Larry Jones to ensure the company stayed a float? (7marks)

c) Discuss the importance of ethical behavior to the success of a small
enterprise. (5marks)

d) Define corporate social responsibility and discuss ways in which small scale enterprises may implement corporate social responsibility (CSR) principles in the community. (5marks)

Question Two
a) Discuss the role of marketing in the success of small businesses.
(15marks)
b) Small businesses in most cases are creations of entrepreneurs. However, small business ownership and entrepreneurship are not necessarily the same. Distinguish the two and discuss. (10marks)

Question Three
a) Enterprises more likely to survive take up Franchise rather than start from scratch. Discuss (10marks)

b) Small business usually go through various hurdles which the owner
must overcome to ensure survival and growth. Discuss the
entrepreneurial and managerial competencies required to ensure
survival. (15marks)

Question Four
a) Peter has just completed his MBA degree course specializing in
Entrepreneurship and Small Business Management. He wants to set up a small business consultancy firm. What skills does he require to be
Successful? (15marks)

b) What problems do small family businesses face in your country in the management of their enterprises and what suggestions would you provide to them? (10marks)

Question Five
a) Explain the importance of good consultant client relationship and
highlight four reasons why the relationship may fail. (15marks)

b) Explain what is involved in the problem diagnoses and why it is
important as part of the consulting process. (10marks)

Small Business Management(Entr 543) Question Paper

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