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BM/OCT 2007/ETR300

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: : : :

FUNDAMENTALS OF ENTREPRENEURSHIP ETR300 OCTOBER 2007 2 HOURS

INSTRUCTIONS TO CANDIDATES 1. This question paper consists of four (4) parts : PART A (20 Questions) PART B (20 Questions) PART C (3 Questions) PART D (2 Questions)

2.

Answer ALL questions from PARTS A, B, and C. Answer one (1) question only from PART D. i) ii) iii) Answer PART A in the Objective Answer Sheet. Answer PART B in the True/False Answer Sheet Answer PART C and D in the Answer Booklet. Start each answer on a new page.

3.

Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: i) ii) iii) iv) the Question Paper an Answer Booklet - provided by the Faculty an Objective Answer Sheet - provided by the Faculty a True/False Answer Sheet - provided by the Faculty

4.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 9 printed pages Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

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PART A 1. The economist who defined "entrepreneur" as a person who invests, transforms and makes profit is: A. B. C. D. E. 2. Joseph Schumpeter Adam Smith Jean Babtiste Say Carl Menger Richard Cantillon

"Entrepreneur confronts problem directly with others". Which of the following entrepreneurial competencies best describes the statement. A. B. C. D. E. Assertiveness Persistence Persuasion Problem solving Efficiency orientation

3.

Which of the following statements best describe entrepreneurs? A. B. C. D. E. Entrepreneurs are seen as agents of change. Entrepreneurs are persistent, committed, and self-confident. Entrepreneurs are individuals who actively form or lead their own businesses and nurture them for growth and prosperity. Entrepreneurs are seldom satisfied with successfully exploiting one opportunity. All of the above

Which of the following statements are TRUE? A. Business opportunities exist when there are needs and wants for a particular product or service. B. A change in the composition of the population and an increase in disposable income can create business opportunities. C. Changes in the tastes and preferences of consumers will result in the creation of business opportunities. D. The most important step in selecting a business opportunity is the preparation of a business plan. E. All of the above are true. Which of the following is NOT a step in the process of identifying, evaluating and selecting business opportunities? A. B. C. D. E. Identifying the needs and wants of customers Scanning the environment Screening of business opportunities Selecting business opportunities Registration of business

5.

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6.

Which of the following questions provide appropriate guidelines to determine whether a business opportunity exist in the market? A. B. C. D. E. Does your product or service fulfill the needs and preferences of the customers? Does your product or service help solve the customers' problems? How much does it cost to produce your product or service? How much does it cost to market your product or service? Questions A, and B provide appropriate guidelines.

7.

Which of the following items is/are important in preparing a business plan? A. B. C. D. E. Overview of business purpose and highlight of important components of the plan. Highlight of the business partners' credibility and their ability to manage the business. Nature of the industry, including economic trends, important legal or regulatory issues, and potential risks. Amount of funds needed to run the business, amount available, and amount requested from new sources. All of the above are important.

Which of the following statements is/are true about a business plan? A. B. C. D. E. A business plan can be used to convince potential employees of the attractiveness of working for the business. A business plan can be used as a basis for determining the financial viability of the new business. A business plan can be used as a communication tool to convince potential investors of the viability of the new venture. A business plan can be used as a guideline for managing the business. All of the above are true.

9.

Which of the following statements is NOT true about a sole proprietorship? A. B. C. D. E. A sole proprietorship is easy to manage compared to other forms of businesses. The owner enjoys a greater degree of flexibility compared to other form of business. A sole proprietorship is formed under the Companies Act 1965. The owner pays income tax based on his total individual income. All of the above are not true.

10.

Which of the following statements is NOT true about a partnership? A. B. C. D. E. A partnership is incorporated under the Partnership Act 1961. A partnership is carried out by two or more persons. The liabilities of the partners are unlimited. If any of the partners dies or is declared bankrupt, the partnership is automatically dissolved, unless there is an agreement otherwise. If the partners do not have a partnership agreement, the profits or losses of the business must be shared equally.

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11.

The memorandum of association for a private limited company must include all of the following, EXCEPT: A. B. C. D. E. Name of the company. Registered office address. Authorised capital of the company. Responsibilities and powers of the Board of Directors of the company. A statement that acknowledges the intention of the founder of the company and agreement to take the number of shares promised.

12.

"To ensure effectiveness and efficiency of operations" is an example of: A. B. C. D. E. Vision Mission Objective Values None of the above

13.

The following are common characteristics of a small business, EXCEPT: A. B. C. D. E. Privately owned by individual or partners. The business is managed and operated by the owner(s). Due to its size, the business is not flexible to changes in the environment. The organization structure is often flat and informal. The business often has limited resources.

14.

Promotional activities through printed media, broadcast media, and internet are commonly known as: A. B. C. D. E. Advertising Sales promotions Public relations Publicity Marketing strategy "marketing" section of a business plan includes: Organisation chart Job description of the administrative staff A description of the company's background Location of the business None of the above

15.

The A. B. C. D. E.

16.

Which of the following is NOT true about a process chart? A. B. C. D. E. The symbols used in the process chart can also be used to make a job activity chart. The process chart is a schematic representation of the step-by-step sequence that takes place in a production process. "Inspection" in a process chart is an activity that measures the standard of raw materials or finished products. The symbol i=z> indicates that the finished products are stored in a storage area. The first step in preparing a process chart is to identify all the activities involved to manufacture the product or deliver the service.
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17.

The following factors should be considered when designing a factory layout plan, EXCEPT: A. B. C. D. E. The plan is flexible so that it can meet future requirement. Movement of raw materials is minimized. Operation space is utilized efficiently. Maintenance work can be performed easily. All of the above factors should be considered.

18.

The financial statement which shows a firm's financial position in terms of assets, liability and equity is: A. B. C. D. E. Cash flow statement Balance sheet Income statement B and C only All of the above

19.

All of the following statements are true, EXCEPT: A. B. C. D. E. Elements of project cost should include provision for contingencies. Sources of finance refers to the sources of funds to finance a particular project. Sources of finance to fund the project cost may come from external and internal sources. One of the internal sources of finance for new venture is the entrepreneur's own capital. The total amount of external funds that has to be sourced should equal the total project implementation cost.

20.

Which of the following statements is/are FALSE? A. B. C. D. E. Imam Al-Qurthubi's formula for success include Jannah, Saadah, Qana'ah, Taufiq, and Tawakal. According to David McClelland, an entrepreneur is a person who acts as agent in transforming demand into supply. Malaysian Entrepreneurship Development Centre (MEDEC) is an agency which provides training and financial assistance for Bumiputera entrepreneurs. All business entities must produce Memorandum of Association before they can start operations. All of the above are false

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PARTB 1. According to Peter Drucker, entrepreneurship resources are assembled and used for exploitation of opportunities, not for managing problems. An entrepreneur is an individual who form and actively lead his/her own business. Entrepreneurial competencies include an entrepreneur's ability to use influence strategies. In Malaysia, small and medium enterprises are defined in terms of either the number of employees or the total sales generated in a year. A vision statement of a business organization is the statement of purpose or the reasons for existence of the organization. In Malaysia, small enterprises are registered under the Business Registration Act 1956. In a sole proprietorship, the liability of the owner is limited to the amount invested in the business, whereas in a partnership business, the liability is not limited. The affairs of a partnership are governed by the Memorandum and Article of Association. Cost-based pricing is based on the total cost of the product or service plus a standard mark-up. The efficiency of the transformation process is measured by the ratio of the total value of output to the total value of input. Labour, raw materials and capital are examples of business output that will give added value in the transformation process. The main purpose of material requirement planning is to ensure that the entrepreneur can sell the products at the right quantity, quality, time and cost. Based on the monthly sales forecast, the entrepreneur can determine the daily production capacity by dividing it by the number of working days per month. One of the reasons for preparing a financial plan is to ensure that the start-up capital is sufficient for the project to take off. Equity financing involves borrowing money from another person, a bank, or a financial institution and repaying it over time with interest. Machinery, equipment and computers are examples of capital expenditure.

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17.

Hire purchase is commonly used to finance working capital requirements of the business. The most common source of finance for a new venture is the entrepreneur's own capital contribution. Among the agencies involved in providing marketing assistance to entrepreneurs are MATRADE and FAMA. The Ministry of International Trade and Industry (MITI) is specifically set up by the government to manage, promote and monitor the growth of entrepreneurship in this country.

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PART C QUESTION 1 As a business counselor, you have been assigned to develop an administrative budget for a new company, Usaha Wang Sdn. Bhd. The director of the company has provided you with the following forecasted administrative expenditure: RM 12,000 10,000 3,000 1,000 8,500 per month 1,000 per month 300 per month

Furniture and fittings Office equipment Rental deposit Utilities deposit Administrative Salaries Office rental Water and electricity

Prepare the administrative budget according to the recommended format to incorporate all the expenses above. (5 marks) QUESTION 2 Give five (5) factors that should be considered by an entrepreneur when choosing a supplier of raw materials. (5 marks)

QUESTION 3 What are the steps that you can take to develop a workable and meaningful financial plan? (5 marks)

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PARTD QUESTION 1

State five (5) reasons why an entrepreneur may need to prepare a business plan. Identify and explain five (5) users/audience of a business plan. (25 marks) QUESTION 2 What is a pro forma cash flow statement? What does the statement show? Explain the items or elements that may be included in the pro forma cash flow statement. (25 marks)

END OF QUESTION PAPER

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