This paper consists of thirteen (13) pages and instructions for the completion

of a mark reading sheet.

This examination paper remains the property of the University of South Africa
and may not be removed from the examination room.

Section A is a compulsory section, which you have to answer on a mark

reading sheet. In section B, you must answer question 1 and then either
question 2 or question 3.
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SECTION A

Answer the following 30 multiple-choice questions on the mark reading

sheet. The questions are worth one (1) mark each, so the total for the
section is 30 marks. Make sure that the following information appears on the
mark reading sheet:

• your student number

• the module code (MNE202V)
• the unique number of the paper

1 Which of the following individuals are not entrepreneurs?

a John and Sam buy old books which they resell at their flea
market stall.
b Mary turns part of her home into a day-care centre.
c Jack resigns from his job as a teacher to manage his uncle’s
restaurant.
d Peter sells snacks at a soccer match for SAFA. He gets paid
R20 an hour.

1 ab
2 bc
3 cd
4 ad

2 Which of the following characteristics distinguish the entrepreneurial

venture from a small business?

a innovation
b competitive advantage
c potential for growth
d economic growth

1 ab
2 ac
3 bd
4 cd
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3 Entrepreneurial orientation is crucial to the survival and growth of firms

and economic prosperity of nations.

Factors that encourage an entrepreneurial orientation include _____.

a unemployment
b culture
c job insecurity
d education

1 ab
2 ac
3 bd
4 cd

4 Which one of the following characteristics of an entrepreneur best

describes an entrepreneur who is driven internally by a strong desire to
compete against self-imposed standards and pursue and attain
challenging goals?

1 locus of control
2 passion
3 need for independence
4 need for achievement

5 Match the legal form of a business in the first column with the
corresponding characteristics in the second column.

Form of ownership Characteristics

a Sole proprietorship i Must have at least one director
b Partnership ii Owner personally liable for the
debts of the business
c Private company iii Skills or assets can also be part of
contribution

1 a (i) b (ii) c (iii)

2 a (ii) b (iii) c (i)
3 a (iii) b (i) c (ii)
4 a (ii) b (iii) c (ii)
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6 Fatal flaws in the business opportunity would include ______.

a markets that are small

b markets with less competition
c markets where entrants cannot produce a sustainable
competitive advantage
d markets with low cost of entry

1 bd
2 ac
3 ab
4 cd

7 Which of the following are the actions required by an entrepreneur

when “opening” the window of opportunity?

a Search market for gaps.

b Start business activity.
c Obtain commitment of venture’s stakeholders.
d Identify ways customers needs can be served.

1 ab
2 bc
3 cd
4 ad

8 Which information about the business products and services must

be provided to the investors or lenders in order for an entrepreneur to
obtain a loan?

a number of products to be produced by the business

b description of the products and services to be sold
c what the business will do to ensure quality and control of
inventory
d description of any features of the product that will give
advantage over competition

1 ab
2 ac
3 bd
4 cd

9 At which stage of the creative process can an individual seek answers/

solutions to the problems?

1 preparation stage
2 incubation stage
3 illumination stage
4 verification stage
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10 Peter used to work at a building construction company. He decided to
start his own building construction company and asked his former
employer for advice on this business.

Peter is using a/an _____ network for entrepreneurs.

1 social
2 personal
3 extended
4 business

11 In an effort to show your parents what you have learnt in MNE202V,

you tell them the following: “The success in a family business can only
be ensured if the two broad systems of ______ and ____ are
balanced.”

1 family members; family systems

2 business; investors
3 family; employees
4 family; business

12 Which of the following are advantages of franchising from the

franchisee’s viewpoint?

a rapid expansion
b a proven system
c dedicated owner-operators
d start-up assistance

1 ab
2 bd
3 ac
4 cd
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13 Identify the correct sequence of steps in the process of risk

management.

a Select methods to manage risk.

b Identify risk.
c Evaluate and review at regular intervals.
d Implement the decision.
e Evaluate risk.

1 abedc
2 ebacd
3 baecd
4 beadc

14 Bills payable and promissory notes are negotiable instruments used in

the process of paying or replacing trade credit.

Which of the following are benefits to the buyer and seller of the goods
when signing a bill to pay the debt?

a The buyer is given credit for the period stipulated in the bill.
b The buyer is given cash for the period stipulated in the bill.
c The buyer possesses a negotiable instrument.
d The seller possesses a negotiable instrument.
e The seller is given credit for the period stipulated in the bill.

1 abc
2 bde
3 ad
4 ce

15 The _____ method uses the price of similar businesses sold as a

guideline to determine the value of a business.

1 asset-based
2 earning-based
3 market-based
4 discounted future earnings
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16 Which of the following factors in controlling and planning for growth

should be reflected in the mission statement of the firm?

1 the desire to grow

2 the direction of growth
3 a strategy for growth
4 the potential for growth

17 The measurement of financial growth can be expressed in various

ways, including ______.

a increase in expense
b decrease in total assets
c increase in return on investment
d increase in sales

1 ab
2 bc
3 ad
4 cd

18 Creativity is ________.

1 the generation of frequent and common ideas

2 the result of thinking processes
3 an innate skill that cannot be acquired by means of training
4 the development of new products

19 The bank was impressed with John’s application for finance and his
business plan, but suggested that he first register his business as a
close corporation (CC). When registering his CC in South Africa, John
will have to adhere to ____ legal prescriptions and incur ____ costs,
unlike when registering a private company.

1 many; minor
2 few; minor
3 many; considerable
4 few; considerable
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20 Portia Kale recently decided on a form of ownership for the preschool

business she intends starting in Pretoria. The form of ownership she
has chosen means that her business will have a separate legal
personality and will be created by the registration of a founding
statement.

The type of business Portia has chosen is a ______.

1 close corporation.
2 partnership.
3 section 21 company.
4 private company.

21 Identify the correct sequence of steps in the negotiation process when

purchasing a business.

a the buyer’s due-diligence investigation

b drawing up of purchase agreement by the parties concerned
c identification and approach of the business for sale
d signing of non-disclosure document that ensures secrecy of the
negotiations
e making a transition to being a successful business owner
f closure of the deal by the buyer and seller by signing necessary
documents
g signing of a letter of intent by the buyer

1 acedfgb
2 cabfdge
3 ecbagfd
4 cdgabfe

22 Which one of the following amalgamations is an example of horizontal

integration?

1 an abattoir purchasing a number of butcheries

2 a motor manufacturer purchasing a shoe factory
3 a tyre manufacturing company purchasing a tyre fitment
enterprise
4 a national bookseller purchasing a number of small independent
bookstores
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23 Which one of the following statements best describes acquisition as

an external growth method?

1 The venture expands without having to invest in a manufacturing

plant.
2 The manufacturer grants a second party the right to sell the
manufacturer’s product within a given period.
3 An existing business is purchased and is completely absorbed
so that it no longer exists.
4 An entrepreneur is given an opportunity to expand his/her
business by expanding the distribution channel of the venture.

24 The _____ was a document developed to protect franchisees from

harmful business practices by the franchisor.

a disclosure document
b consumer code for franchise
c franchise contract
d FASA code of ethics

1 ab
2 bc
3 bd
4 ac

25 In terms of the levels of failure in a business, which of the following

phrases best describes a venture that falls into the category of “venture
in trouble or difficulty”?

1 gross margin decrease

2 net margin decrease
3 decline in sales and market share
4 negative cash flow

26 Matabane wishes to open a takeaway business at the Maponya

shopping mall. Which of the following factors should Matabane
consider regarding this location for his business?

1 feet count; parking and security

2 zoning ordinances; security and parking
3 zoning ordinances; feet count and attitude of centre
management
4 location within the centre; maintenance and zoning restrictions
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27 John should use the fundamentals of management to start and run his
business effectively.

These fundamentals include ______

1 human resource management, planning and products and

services management.
2 leading, control and decision making.
3 physical resources management, leadership and control.
4 planning, organising, leading and control .

28 At which stage of the intrapreneurial process does the intrapreneur

conceive a business vision and turn it into a business reality?

1 choosing an idea
2 planning the business
3 identifying sponsors
4 generating ideas

29 Which of the following statements about intrapreneurship is incorrect?

1 Intrapreneurial efforts must be directed towards the aims,

purpose, values and strategies of the business.
2 All stages of the intrapreneurial process must be managed and
linked effectively.
3 Intrapreneurial plans are often understood and should be
revealed to people who don’t need to see them.
4 Intrapreneurs, sponsors and team members all need to play
their parts at the right time and in the right combination.

30 Mary has a hairdressing salon at the nearby shopping complex. She

approaches you for advice on how she can improve the profit of her
business.

Which of the following are effective ways of improving profit?

a Increase the selling price.

b Decrease the sales volume.
c Decrease fixed costs.
d Increase the cost price.

1 ab
2 ac
3 bc
4 cd
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SECTION B

Answer two (2) questions from section B. Question 1 is compulsory.

and then you have a choice between questions 2 and 3. Please write
the numbers of the questions answered on the cover of your answer
book.

QUESTION 1 (Compulsory)

Read the case study and answer the questions that follow.

From a position of relative obscurity at the SA Bank, Bongani Khosa

launched a string of major banking innovations, including consumer
certificates of deposit and simplified current accounts. He also played a major
role in the establishment of master charge by using a “loophole” that makes
intrapreneuring in service organisations simpler than intrapreneuring new
manufactured products. As the cost of developing a new service can be
relatively low, Bongani was able to launch many of his innovations before
management even became aware of them. And when they did, he was able
to show them successes rather than just ideas; this meant that it was too late
for them to raise any objections.

As the director of market research, Bongani was not satisfied simply to

identify customer needs and then tell others about them, hoping that
someone would then develop the new services to meet the needs he had
identified. As a true intrapreneur, he took responsibility for the entire effort,
from beginning to end, working to invent the services and to make them
happen. After a few years at the bank, Bongani became frustrated with the
internal politics, so he decided to resign and start a manufacturing business
for which he had identified a need.
Adapted from: Nieman N, Hough J and Niewuwenhuizen C. 2003. Entrepreneurship: A South African Perspective.
p359

1.1 Identify five (5) differences between an entrepreneur and an

intrapreneur. (5)

1.2 Before Bongani starts his new business, he will have to consider
where to locate it. Explain to him any six (6) factors that he should
consider in the physical establishment of a business. (6)

1.3 List the entrepreneurial success factors that Bongani displays in the
case study and provide reasons for your answer. Your reasoning
should relate to information in the case study. (9)

[20]
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Answer any ONE of the following two questions (EITHER question 2 OR

question 3).

QUESTION 2

2.1 One of the major challenges facing SMMEs is the lack of sustainable
markets for their products and services.

Discuss factors that can help in overcoming the above problems. (5)

2.2 Briefly discuss criteria for identifying and developing a business that is
suitable for franchising. (8)

2.3 Discuss the key factors to consider during the growth stages of a
business. (7)

[20]

QUESTION 3

Read the case study below and answer the questions that follow.

Borrowing to grow at Andrews Enterprise

Revenues and gross profit for the Andrews Enterprise have been much lower
this year than in the past two years. John Kemper, a loan officer for First
National Bank, has worked with the Andrews accounts for many years now.
Yesterday, Michael Andrews, the senior member of the family management
team, met with Kemper to discuss a loan for expanding manufacturing
facilities and an increase in the current line of credit. Kemper asked Michael
about his long-range plans for the business and was given a sketchy two-year
financial projection. When Kemper asked about management’s capability to
reverse the declining gross profit trends, Michael confidently pointed out that
he had brought all of his four children into management positions.

Kemper knows the two older children fairly well. The oldest child, a daughter,
while very bright, has always given her husband and children first priority. The
second child, a son, seems uncommitted to managing anything except the
amount of beer he consumes at a local pub. Earlier today, Kemper called
Michael to tell him that while the bank is going to continue its current loans, it
is unwilling to grant additional credit at this time. Michael became enraged
and threatened to move his entire banking business to a competitor. After
fuming for several hours, he called a meeting of the family management team
to consider their alternatives.
Adapted from: Poza, E.J. 2007.Family Business. P172
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3.1 Should Michael seek venture capital funding for his expansion plans,
he would have to know what venture capitalists look for when analysing
a business opportunity. Explain what features venture capitalists would
consider attractive in a business opportunity. (4)

3.2 As a business advisor, you are required to assist Michael to draw up a

business plan for the expansion of the existing business. You
understand that the business plan will include the conventional aspects
of any business. Explain to Michael what specific aspects he should be
careful to include in a business plan aimed at expanding the business.
(6)

3.3 Explain the five (5) critical steps that will help the family business with
succession should Michael Andrews consider retiring from the
business. (10)

[20]

TOTAL: 70

©
UNISA 2009