Indian Institute of Foreign Trade, New Delhi

Executive Post Graduate Diploma in International Business – Hybrid (2019 - 20 Batch)

Course Name: Entrepreneurship
End Term Examination
Duration: 1 ½ Hours for End Term Exam + 40 minutes for Quiz Max. Marks: 20+20 = 40
Marks Instructions
Part 1: Multiple Choice Questions. Answer all questions. All questions carry equal marks.
Part 2: Descriptive Questions, which has two parts Section A & B.
Section A with four questions, answer any two questions. All questions carry equal marks.
Section B. Case study analysis answers all the questions given below the case study. All
questions carry equal marks.
Part 2: Section A
Instructions: There are four questions, answer any two questions. All questions carry equal
marks. 2X4=8 Marks
Q1. The following are some hypothetical statements pertaining to customer needs. Identify the
solutions to fulfill these needs by recognizing an opportunity behind each situation.

a. A going out of business signboard placed in a local store.

b. 10 new working couples with young children in the age group of three to eight years have
just shifted to your locality
c. 4,000 students in a residential college not liking their mess food
d. A campus wherein in faculty members are not finding gardeners to maintain their garden.

Q2. In general, it is said that Indian companies do not grow to a macro size mainly because of the
excessive obsession of the promoters to retain control over the company. Do you agree or disagree
with this statement? Explain giving examples.

Q3. Various studies show that the chances of the failure of a business are far higher than the
chances of success. Still, entrepreneurs plunge into the realm undertaking business. What are the
reasons that result in the failure of a business and how can they be overcome? Explain by citing
concrete examples.

Q4. ‘Many research studies have failed to understand consumer needs, despite the best of their
abilities’. This statement creates a fundamental doubt about the value of undertaking marketing
research. Explain the implications of this statement for an entrepreneur who is interested in taking
up a detailed marketing research for their product before deciding to take it up or otherwise.

Part 2: Section B
Instructions: Read the Case study carefully and answers all the questions given below the
case study. All questions carry equal marks.
Case let No. 1 Looking for Capital

When Joyce and Phil Abrams opened their bookstore one year ago, they estimated it would task
them six months to break even. Because they had gone into the venture with enough capital to keep
them afloat for nine months, they were sure they would need no outside financing. However, sales
have been slower than anticipated, and most of their funds now have been used to purchase
inventory or meet monthly expenses. On the other hand, the store is doing better each month, and
the Abramses are convinced they will be able to turn a profit within six months.

At present, Joyce and Phil want to secure additional financing. Specifically, they would like to raise
$100,000 to expand their product line. The store currently focuses most heavily on how to do it
books and is developing a loyal customer following. However, this market is not large enough to
carry the business. The Abramses feel that if they expand into an additional market such as
cookbooks, they can develop two market segments that when combined would prove profitable.
Joyce is convinced that cookbooks are an important niche, and she has saved a number of clippings
from national newspapers and magazines reporting that people who buy cookbooks tend to spend
more money per month on these purchases than does the average book buyer. Additionally,
customer loyalty among this group tends to be very high.

The Abramses own their entire inventory, which has a retail market value of $280,000. The
merchandise cost them $140,000. They also have at a local bank a line of credit of $10,000, of which
they have used $4,000. Most of their monthly expenses are covered out of the initial capital with
which they started the business ($180,000 in all). However, they will be out of money in three
months if they are not able to get additional funding.

The owners have considered investigating several sources. The two primary ones are a loan from
their bank and a private stock offering to investors. They know nothing about how to raise money,
and these are only general ideas they have been discussing with each other. However, they do have
a meeting scheduled with their accountant, a friend, who they hope can advise them on how to raise
more capital. For the moment, the Abramses are focusing on writing a business plan that spills out of
their short business history and objectives and explain how much money they would like to raise and
where it would be invested. They hope to have the plan completed before the end of the week and
take it with them to the accountant. The biggest problem they are having in writing the plan is that
they are unsure of how to direct their presentation. Should they aim it at a banker or a venture
capitalist? After their meeting with the accountant, they plan to refine the plan and direct it toward
the appropriate source.

Questions 3X2= 6 Marks

B.1. 1. Would a commercial banker be willing to lend money to the Abramses? How much? On what
do you base your answer?
B.1.2. Would this venture have any appeal for a venture capitalist? Why or why not?
B.1.3. If you were advising the Abramses, how would you recommend they seek additional capital?
Briefly explain.

Case let No. 2 The Incomplete Plan

When Joan Boothe drew up her business plan, she was certain it would help her get ventures capital.
Joan is in the throes of putting together a monthly magazine directed toward executive women in
the workplace. The objective of the periodical is to provide information that is useful to women who
are pursuing careers. The first issue is scheduled to go to press in 90 days. Some of the articles
included in this are “Managing Your Time for Fun and Profit”, “What You Need to Know about
Dressing for Success”, and “Money Management: Do it Like the Experts”. Another Section, titled
“Women in News”, devoted to successful women at work. Other features include a question and
answer section that responds to letters and inquiries from readers (the first issue’s question were
submitted by a group of women executives, each of whom had been asked to help get the column
started by sending in a question) ; a stock market section that reviews industries or companies and
points out the benefits and risks associated with investing in them; and a column on the state of the
economy and the developments or trends expected during the next 12 months.

Joan’s business plan consists of six parts: a summary, a business description, a manufacturing
segment, a management segment, a milestone schedule segment, and an appendix. When it was
returned to her by a venture capital firm, the rejection letter said: “without a marketing segment,
attention to critical risks, a financial segment, this plan is incomplete and cannot be favorably
reviewed by us. If you would provide us with this additional information and submit the rewritten
plan within the next 60 days, we will be happy to review the plan and give you our opinion within
working days”.

Questions 3X2= 6 Marks

B.2.1. What should Joan put in the marketing segment? What types of information will she need?
B.2.2. What key areas does Joan have to address for the critical-risks assessment segment? Discuss
two of these.
B.2.3. What suggestions would you make to Joan regarding the kinds of information to include in the
financial segment? Be as specific as possible.
-------------------------------------- Best wishes -----------------------------------