EBM N4 November 2016 | Paper 1

November 2016 | Paper 1

Entrepreneurship and Business Management N4

QUESTION 1.1

Name any FOUR characteristics of successful entrepreneurs.

Confident
A successful entrepreneur believes in the business idea and is willing to act on it. Confidence helps the entrepreneur make decisions, face risk, and present the business positively to others.

Responsible
A responsible entrepreneur accepts accountability for the business and its results. This matters because the owner must take ownership of both success and failure.

Organiser
An organiser plans tasks, manages resources, and keeps business activities in order. Good organisation helps the business run smoothly and efficiently.

Energetic
An energetic entrepreneur has the drive and stamina to keep working toward goals. Energy is important because business requires effort, persistence, and daily involvement.

Achiever
An achiever is strongly focused on results and progress. This quality pushes the entrepreneur to set goals and keep improving the business.

Moderate
A moderate entrepreneur shows balance and self-control. This helps prevent reckless decisions and supports sound business judgment.

QUESTION 1.2

Name TWO types of data.

Primary data
Primary data is original information collected directly from the source for a specific purpose. It is useful because it is fresh and closely linked to the exact business problem.

Secondary data
Secondary data is information that already exists and is collected from previous sources such as reports, books, or research. It saves time and cost, but may not fit the business need as closely as primary data.

QUESTION 1.3

List FIVE idea-generation techniques.

Reverse method
This method looks at the problem from the opposite direction. It helps entrepreneurs challenge normal thinking and discover unusual solutions.

Attribute analysis
Attribute analysis breaks a product or idea into features so that each part can be examined and improved. It is useful when refining an existing product or service.

Problem redefinition
Problem redefinition means restating the problem in a different way. This often helps the entrepreneur see the real issue more clearly and find a better solution.

Forced connection
Forced connection links two ideas that do not normally go together. This encourages original thinking and can lead to new business ideas.

Mind mapping
Mind mapping places one central idea in the middle and connects related ideas around it. It helps the entrepreneur organise thoughts and generate more ideas.

Brainstorming
Brainstorming allows many ideas to be generated freely before judging them. It helps increase creativity and creates a wider range of possible solutions.

Metaphorical analogy
This method uses comparison to another idea or situation to inspire thinking. It helps entrepreneurs see business problems from a fresh angle.

QUESTION 1.4

State the purpose of each of the following parts in a business plan:

1.4.1 Executive summary

An executive summary is an interesting and comprehensive overview of the proposed business plan. It gives the reader a short but clear summary of the whole business idea.

1.4.2 Marketing feasibility study

A marketing feasibility study shows whether there is a real market for the product or service. It usually includes the target market, market research, competitors, and the promotional approach.

1.4.3 Conclusion

The conclusion sums up why the entrepreneur believes the business plan will succeed. It also explains why other people should have confidence in the business venture.

1.4.4 Financial feasibility study

A financial feasibility study contains the financial details of the proposed business. It helps determine whether the business is likely to make a profit and includes areas such as costing, pricing, break-even point, and cash flow.

1.4.5 Appendix

The appendix contains supporting documentation for the business plan. This may include legal documents, contracts, reference letters, or other important evidence that supports the plan.

QUESTION 2

Indicate whether the following statements are TRUE or FALSE. Choose the answer and write only ‘true’ or ‘false’ next to the question number (2.1–2.10).

2.1 The marketing mix consists of price, place, product and promotion.

True
This is correct because the marketing mix is built around the four Ps: product, price, place, and promotion. These are the main elements used to market a product or service.

2.2 Personal funds are a form of borrowed finance.

False
Personal funds come from the owner’s own money, not from borrowing. Borrowed finance must be repaid, while personal funds are the entrepreneur’s own contribution.

2.3 The mark-up policy is a component of marketing.

False
Mark-up policy is mainly a pricing decision. It is not the full concept of marketing itself, but only one part linked to price.

2.4 A benefit tells the customer something about the product whereas a feature tells the customer how the product/service can make his/her life better.

False
The statement is reversed. A feature describes something about the product, while a benefit explains how that product improves the customer’s life or solves a problem.

2.5 A competitive advantage is when you make your product or service more attractive to customers than that of your competitors.

True
This is correct because competitive advantage means giving customers a stronger reason to choose your business over competitors. It is what makes the business stand out.

2.6 During the ‘follow-up’-step of the selling process, a salesperson follows up to make sure that the customer is still happy with his/her purchase.

True
This is correct because follow-up happens after the sale. Its purpose is to check customer satisfaction and maintain a good relationship with the buyer.

2.7 Discount occurs when a product is sold at a high price.

False
A discount means the price is reduced, not increased. So a high price is the opposite of a discount.

2.8 A legal entity requirement is the way in which a business is registered in terms of tax authorities and law courts.

True
This is correct because a legal entity requirement relates to the formal registration and legal identity of the business. It determines how the business is recognised by law and tax authorities.

2.9 Shareholders get a dividend after the company announces it profits.

True
This is correct because dividends are payments made to shareholders from company profits when declared. Shareholders benefit from profits through dividends.

2.10 Choosing a supplier that practice sustainability is one of the important criteria when selecting a suitable supplier.

True
This is correct because sustainability is an important factor in supplier selection. A sustainable supplier is more likely to support responsible and reliable business practice over time.

QUESTION 1.6

Choose the answer to the questions below from the list of descriptions below.

List of descriptions
A Stock-and-supplier analysis
B Inventory system
C The statement that indicates your monthly cash flow
D A description of the securities for the capital requirements
E Your organisational structure of the business
F Description of your system for keeping documents
G The calculation that indicates how many units/services need to be traded in order to cover costs
H A statement highlighting your income and expenditure on a monthly basis

1.6.1 FOUR elements that you will find in the management plan

A Stock-and-supplier analysis
This belongs in the management plan because it explains how stock and suppliers will be handled in the operation of the business.

B Inventory system
This is part of the management plan because it shows how stock will be controlled, stored, and recorded in the business.

E Your organisational structure of the business
This belongs in the management plan because it shows how duties, positions, and responsibilities are arranged in the business.

F Description of your system for keeping documents
This is part of the management plan because it explains how business records and documents will be organised and controlled.

1.6.2 FOUR elements that you will find in the financial plan

C The statement that indicates your monthly cash flow
This belongs in the financial plan because it shows the movement of money into and out of the business each month.

D A description of the securities for the capital requirements
This is part of the financial plan because it explains the security or financial backing linked to the capital needed by the business.

G The calculation that indicates how many units/services need to be traded in order to cover costs
This belongs in the financial plan because it is the break-even calculation, which shows how many sales are needed before the business stops making a loss.

H A statement highlighting your income and expenditure on a monthly basis
This is part of the financial plan because it tracks the business’s monthly money received and money spent.

Correct letter groups
1.6.1 Management plan: A, B, E, F
1.6.2 Financial plan: C, D, G, H

QUESTION 1.7

Explain the following words:

1.7.1 Logo

A logo is the sign or symbol that identifies your business. It helps customers recognise the business quickly.

1.7.2 Marketing mix

Marketing mix is the policy about marketing your product, price, promotion and place. It explains the main elements used to market the business offering.

1.7.3 Break-even point

Break-even point is when your business is not making a profit or a loss. At this stage, total income equals total expenditure.

QUESTION 1.8

Name THREE sources of equity financing.

Personal finances
Personal finances are the owner’s own money invested in the business. This is equity because it comes from ownership, not borrowing.

Friends and relatives
Friends and relatives can provide capital to support the business. This is a source of equity when they contribute funds to help start or grow the enterprise.

Equity shares
Equity shares raise money by bringing investors into the business as owners. This is equity finance because the money is linked to ownership.

QUESTION 2

Indicate whether the following statements are TRUE or FALSE. Choose the answer and write only ‘true’ or ‘false’ next to the question number (2.1–2.6) in the ANSWER BOOK.

2.1 The trade journals are products for a specific industry or sectors.

False
This is false because trade journals are publications or information sources for a specific industry, not products themselves.

2.2 Unique selling proposition is the special selling feature or a special benefit of the product or service.

True
This is true because a unique selling proposition explains the special feature or benefit that makes the product or service stand out.

2.3 A slogan is a clever phrase or sentence that says something good about a product, service or business.

True
This is true because a slogan is meant to be a memorable phrase that creates a positive impression of the product, service, or business.

2.4 A legal entity requirement is the way your business is registered in terms of the tax authorities and law courts.

False
This statement is false according to the marking guideline for this paper, so learners must use the memo answer exactly for revision.

2.5 Shareholders get a dividend after the company announces its profits.

True
This is true because shareholders may receive dividends from company profits once they are declared.

2.6 People who owe you money are creditors.

False
This is false because people who owe the business money are debtors, not creditors. Creditors are the people or businesses that the business owes money to.