PAST YEAR QUESTIONDEC 2014

MOHAMAD HANIFF BIN MAT RANI2014155811BM 249 4A

Question 1

a) Compare and contrast the effectuation and causal process in how entrepreneurs think.

Causal process That starts with a desired outcome and focuses on the mean to generate that outcome, professor Saras Sarasvathy has found that entrepreneurs do not always think through a problem in a way that starts with a desired outcome. For examples, imagine a chef assigned the task of cooking dinner. The host or client pick out a menu in advance, all the chef needs to do is list the ingredients needed, shop for item, and then actually cook the meal.

Effectuation process Processes that start with what one have (who they are, what that are, what they know, and whom they know) and select select among possible outcome. For examples, the host asks the chef to look through the cupboard in the kitchen for possible ingredients and utensils and then cook a meal. Here, the chef has to imagine possible menu based on the given ingredients and utensils, select the menu, and then prepare the meal.

b) Explain how personal background and characteristics can influence an individual to act entrepreneurially.

Education Education is important in the upbringing of the entrepreneur. It’s important is reflected not only in the level of education obtained but also the fact that it continues to play a major role in helping entrepreneur cope with the problems they confront. For examples, entrepreneur have a cited an educational need in the area of finance, strategic planning, marketing and management. The ability to communicate clearly with both the written and the spoken word is also important in any entrepreneur activity.

Age The relationship of age the entrepreneurial career process also has been carefully research. In evaluating these result, it is important to differentiate between entrepreneurial age, the age of entrepreneur can reflected in his or her experience. Most of the entrepreneurs initiate their entrepreneurial career between the age of 22 and 45. There are milestone age every five years 25,30,35,40 and 45 when an individual is more inclined to start an entrepreneurial career.

Work history Work history can influence the decision to launch a new entrepreneurial venture, but it also plays a role in the growth and eventual success of the new venture. Often motivates the launching of a new venture, previous technical and industry experience is important once the decision to launch has been made. Experience is the following areas its particularly important financing, product or services development, manufacturing, and the development of distribution channels.

Question 2

a) Entrepreneurially and traditionally managed firm can be differentiated by various conceptual dimensions. Choose any two (2) dimensions and compare the difference between an entrepreneurial focus and a traditional administrative focus for each dimension.

Management Structure and Reward PhilosophyAn entrepreneurial orientation toward management structure is organic. That is, the organizational structure has a few layers of bureaucracy top management and the customer and typically has multiple informal communication channels. In this way entrepreneurially managed firm are able to capture and communication more information form the external environment and are sufficiently “fluid” to be able to take quick action based on the information.

In addition, entrepreneurially managed firms are more structured to make use of both their internal network for examples through communication channel at work. In the external information, with buyers, suppliers and financial institution. In contrast, the traditionally managed firm has a structure well suited for internal efficiencies for allocation controlled resources. There is a formalized hirerarchy with clear roles and responsibilities, highly routinized work, and layers of middle management to “manage” employees use of the firm’s resources.

The entrepreneurially managed firm is focused on pursuing opportunity for new entry that represents new value for the firm. It is not surprising then the entrepreneurially managed firms have an entrepreneurial philosophy toward reward that compensates employees based on their contribution toward the discovery and exploitation of opportunity.

b) Entrepreneurial strategy is a set of decision, actions and reaction the generate and eventually exploit a new entry opportunity. Explain briefly three stages of a new entry strategy.

The generation of the new entry opportunities Resources as a source of competitive advantagesCreating a resources bundle that is valuable, rare and inimitable 1. Market knowledge 2. Technology knowledgeAssessing the attractiveness of a new entry opportunity Information on a new entry

The exploitation of a new entry opportunity A feedback loop of resources

Question 3

a) There are several trends that entrepreneurs can observe when searching for opportunities. Identify and briefly discuss five (5) trends that can provide opportunities.

Green trend While today’s consumers are very conscious about spending habits, an increasing numbers are willing to pay more for green products. Water is one of this green trend that provides opportunities, particularly in the area of irrigation, such as reclamation program for golf courses and parks, smart irrigation system, and consulting firms that increase water-use efficiency.

Clean-Energy TrendMany feel that the power of the 21 century will come from solar, wind, and geothermal sources. A significant factor that will accelerate this movement from coal being the power in the 19 century and oil in the 20 century is when the solar cost of electricity either from cost reductions and efficiency in the solar conversion.

Organic-Orientation Trend That is increasing significant, particularly in the food sector, which has been accelerated by the shrinking price gap between organic and nonorganic foods. The sales growth in all organic foods including meat, dairy, fruits, vegetables ans snack foods average 25 percents per year.

Economic Trend The impact of the credit crunch, bank failures, and the housing slide and foreclosures has forced consumers to be much more careful in their spending. This increase in more frugal spending provides significant opportunities in such areas as garden products, business coaching, discount retailing, credit and debit management and so on.

Social Trend Evident throughout the world with more networking events and opportunity occurring each week. These include facebook, myspace, and many others social networks as well as social networking for business.

b) Briefly explain two (2) factors that differentiate an opportunity assessment plan from a business plan.The first major section develops the production/service idea, analyze the competitive products and companies, and identifies the uniqueness of the idea in term of its unique selling proposition.

A description of the products or services The market need for the products or services The specific aspect of the products or services

The second major sectionOn the markets its size, trends, characteristic, and growth rate

The market need filled The social condition underlining this market need The growth rate of the market

c) Identify two (2) general business licenses that need to obtained by entrepreneurs to allow the business to operation legally in Malaysia.

General Business Premise & Signboard LicensesA business in Malaysia needs to obtain a business premise license in order to begin operations in a particular location and legally erect a signboard for the business premise. Both licenses can be applied for from the relevant local authorities (e.g. Majlis Bandaraya Shah Alam; Dewan Bandaraya Kuala Lumpur)

Premise license applications often need to be accompanied by the premise Certificate of Fitness document, Fire Department support letter and premise rental agreement or a sales & purchase agreement.Signboard license application need to be accompanied by photographs of the proposed location of the signboard and samples of the signboard design and colors

Special Business LicensesSome categories of businesses require special licenses to enable them to carry out a specific business operation. Businesses involved with manufacturing, construction and wholesale are among the businesses requiring special licenses

Question 4

a) Briefly discuss option available to entrepreneurs in selling a venture.

Sole ProprietorshipThe most basic business entity in terms of ease of registration and relatively simple business structure and management requirements and Sole proprietorship allows only one person to be registered as the legal owner. This single owner is also considered the manager for the overall business and is often referred to as the owner-manager. The size and scope of business is often relatively small and as such the owner-manager may run the business activity by himself or with the help of not more than 5 full time workers.

The sole ownership entitles the owner-manager to all profits earned by the business. On the other hand the owner-manager has to also bear the entire business risk and unlimited liabilities. Unlimited liability implies that personal assets can be seized to settled outstanding business debts. Death of the sole owner will result in termination of the business.

Partnership This business form involves two or more partners in a single business concern. The maximum number of partners allowed is 20 persons. Professional business (e.g. legal firms, architect firms or accounting firms) are allowed to have up to 50 partners. Like the sole proprietorship, a partnership also allows the owners (partners) to manage freely with all profits being shared by the partners. Partners also bear unlimited liabilities that means their personal assets can be seized to settle business debts.

Partnerships are encouraged to have a Partnership Agreement outlining details of ownership, entitlement to profits and share of liabilities. Partnership Agreements are not required by law but are very useful in case of disputes between partners. Death or withdrawal of any of the partner may result in termination of the business unless stipulated otherwise in the Partnership Agreement.

Registered under the Company Act 1965 and is recognized by the affix ‘Sdn. Bhd.’ (Sendirian Berhad) behind the registered trade name Registration process is much more complex & costly. Registration has to be through a registered Company Secretary. Among the key documents that the Company Secretary must present for registration is the Memorandum of Association and the Articles of Association .The Memorandum of Association outlines how the money invested in the company is to be utilized while the Articles of Association focuses on the laws governing the internal management of the company.

Private Limited CompanyThe Private Limited Company can have up to 50 members or shareholders. Control of day-to day operations is in the hands of a management team that may or may not be major shareholders. Shareholders can indirectly affect operation decisions through representatives in a Board of Directors (BOD). A BOD consists of representatives from the major shareholders, key members of the management team and the Company Secretary. A key role of the BOD is to ensure shareholders business interest and investments are effectively represented in management direction and decisions.

A Private Limited Company registration renders the business as having its own ‘life’ separate from that of the life of the shareholders. As such the company is a legal ‘person’ able to bear its own liability arising from the business operations. This means that the business assets can be seized to settle outstanding debt or other legal claims. The individual shareholder is liable only to the extend of his investment in the company but his personal assets cannot be seized to settled company debts or claims. Since the life of the company and the shareholder is separate, the death or withdrawal of any shareholder has no effect on the life of the business.

b) Diversification is a business growth strategy by offering new products to new market, explain three (3) type of related diversification strategies.

Diversification strategiesSelling a new product to a new marketBackward integration:A step back (up) in the value-added chain toward the raw materials, which in this case mean that the manufacturer also becomes a raw materials wholesaler. In essence the firm becomes its own supplier. Forward integration:

A step forward (down) in the value-added chain toward the customers, which in this case mean that the firm also becomes a finished goods wholesaler. In essence the firm becomes its own buyer.Horizontal integration: Involves a different, but complementary, value-added chain. For example a firm that manufacturer washing machines may go into the manufacturer of detergent. These products are complementary in that they need each other to work.

Question 5

a) Identify and compare any two (2) form of intellectual property protection.

Intellectual Property Protection

I. Patent There are primary to protect invention that represents a new way of doing thing, the invention normally involve some level of technology and can be in the form of a product or process. A registered patent give exclusive right to the patent owner to make, use and sell the patented product or process for up to 20 years and a patent owner can still retain all right to the invention but license another party to use the patent within certain agreed upon condition and stipulations. The patent owner can also choose to sell the patent to another party hence severing all right to the invention concerned. Patent right are noted by the “patent” followed the patent registration numbers because patent take time to register, companies can deter infringements by displaying the words “patent Pending” or “patent in Progress” . even so these deterrents have no legal impact until the patent is fully registered and given a patent number.

II. CopyrightCopyright are used to protect a wide range of original creative, intellectual or artistic works or authorship. This can include original works of art and literature, music composition, audio records, drawings, sculptures, broadcasts films and computer program. The idea behind the creative work is itself not protected and as such some else can use the same idea but it must be in a significant on an existing copyright. A copyright can exist for up to 50 years after the death of the registered author. The symbol is © university used to denote a copyright.

b) Choose and explain any two sources of financing that an entrepreneur can access.

I. Funds from Family & Friends

It is not uncommon for a new entrepreneur to rely on family and friends to raise more initial capital for a business start-up. The contribution from family and friends are often limited but is more easily obtainable at the early stages of business start-up because they know the entrepreneur and they want to support his undertaking especially when they think the business has growth potential.Friends and family capital contribution is likely to be in the form of equity financing that gives them ownership in the business.

II. Venture Capital Financing Venture capital can be broadly regarded as a pool of equity capital that come from different individuals or groups of individuals who want to invest in high growth businesses for high returns and Unlike angel investors that invest their own funds, venture capitalists are professional managers investing money from a pool of funds (equity capital pool) parked under registered venture capital companies. While venture capital funds are found in a diverse range of business sectors they do tend to focus on high potential, innovation & technology-centered businesses such as ICT development business and biotechnology companies.

Venture capital prefer to invest at early stage to full growth & expansion stage of business growth. The amount of capital available for investment can start at RM 1 million for early growth financing and extend to RM20 million at later stages of growth financing