The Entrepreneurial Process

BUSM 4399
Semester 3, 2016
Information Sheet for Final Examination

EXAMINATION DETAILS:

Reading time: 15 minutes

Writing time: 2 hours

Duration: 2 hours 15 minutes including reading time

Value: 50% of your overall mark

Exam Syllabus: Chapter 1, 2, 4, 5, 6, 8, 9, 10, 13, 14, and 16.

You will need to go through all of these chapters to be able to answer the short answer questions as
the different parts of each question will draw from various chapters.

Prescribed Text:

Frederick, H., OConnor, A., and Kuratko, D.F. (2016), Entrepreneurship: Theory, Process, Practice, 4 th
Edition, Cengage Learning.

For each chapter, refer to the lecture slides to select the contents from the chapter. Often the chapters
in the latest edition of the text book have more topics than what we discussed in the lecture.
Contents/Topics not included/discussed in the lecture slides are not part of your exam syllabus.
Attempt as many end of the chapter questions and case studies as possible from each chapter to
prepare for the exam.

You should use new terminologies from the 4 th edition when answering exam questions and include
additional points/contents relating to a theme that are now discussed in the 4 th edition.

In answering the questions, make sure the concepts are well defined and discussed with
appropriate language and grammar. You will also need to reflect on your own understanding of the
concepts and use relevant examples. Your answers should present clear understanding of subject
matter and appreciation of issues; well organised, formulated and sustained arguments with
adequate reference to relevant theoretical/foundational concepts.

Evidence of creative insight and originality in terms of comprehension, application, analysis and
evaluation of theory is critical if you aspire to perform well in the exam. You should also ensure that
you have answered all parts of the questions. All parts of the short answer questions will have equal
marks (5+5=10 marks). So you must allocate equal writing time and quality of content to each part
of the questions.

Students often provide answers that are purely descriptive with little, if any, analysis. Sometimes,
students simply mention theoretical terms but do not define or discuss them adequately to
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demonstrate clear comprehension of theory and ability to apply theory to practice. If your answers
range between minimal or inadequate comprehension and little or no application of theory to some
appreciation of subject matter and issues; however, the write-up is generally lacking in depth and
breadth and with gaps, your marks will range between fail to a mere pass.

ALLOWABLE MATERIALS AND INSTRUCTIONS TO CANDIDATES:

1. Write your full name and student number on each examination booklet together with the number
of examination books used. Students must not write during reading time.

2. This exam is worth 50% of your overall mark.

3. This exam contains - Six questions. Attempt ANY FIVE questions (5x10=50) and ALL two parts of
each question.

4. Each question will have two parts drawn from different chapters. Each of the parts will carry 5
marks (5+5=10 marks)

5. This is a closed book exam. Calculators or mobile phones are not allowed.

6. Write your answers in the examination booklet. Each answer should be no more than two pages.
Commence each question on a new page. Carry out the instructions on the front cover of the
examination booklet.

7. Do not remove this paper from the examination venue. Write your student number on the exam
paper and place this paper inside your booklet at the end of the examination.

Note: You must be a properly enrolled and timetabled student to be eligible to sit this examination
and to receive an official result.

Sample questions with answers

Part B

1. A. Discuss your understanding of entrepreneurial ethics, ethical dilemmas of entrepreneurs, and

morally questionable acts of entrepreneurs.
B. How would you distinguish between enterprising and entrepreneurial individuals?
(5+5=10 marks)

Answer Guide

Q. 1 A Entrepreneurial ethics:
Although there appears to be an ever-present lack of clarity and direction in ethics, ethics will
continue to be a major issue for entrepreneurs in the new century. Ethics is a set of principles
prescribing a behavioural code that explains right and wrong; it also may outline moral duty and
obligations. Entrepreneurs face many ethical decisions, especially during the early stages of their new
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ventures. Some arrive at the greed is good conclusion, while others consider the ethical
consequences of their behaviours. Two examples of ethical entrepreneurs are Social Entrepreneurs
and Ecopreneurs. Social entrepreneurs have a great many of the same characteristics as business
entrepreneurs, but their underlying motivations are different. Social entrepreneurs are interested in
the creation of social capital. Social enterprise is the term used for a market-based venture addressing
social aims. There are a variety of business models that social entrepreneurs can adopt. An
ecopreneur combines the unrelenting drive and imagination of the entrepreneur with the stewardship
of a conservator. They are leveraging the fact that an environmentally friendly approach can translate
into a higher bottom line.
Ethical dilemmas of entrepreneurs:
Todays entrepreneurs are faced with a unique challenge of ethical leadership in the opportunity they
have to exert ethical influence on their ventures. Decisions may be legal without being ethical and vice
versa. As a result, entrepreneurs can make four types of decisions: legal and ethical, legal and
unethical, illegal and ethical, and illegal and unethical. Entrepreneurs commonly rationalise their
choices when making decisions that border on the unethical.
It is also important for entrepreneurs to realise that many decisions are complex and that it can be
difficult to deal with all of a decisions ethical considerations. Some of them may be overlooked and
some may be sidestepped because the economic cost is too high. In the final analysis, ethics are
sometimes judgement calls and what is unethical to one entrepreneur is viewed as ethical to another.
Morally questionable acts:
Certainly one of the most morally questionable acts is environmental crime, which is a deliberate or
careless act that harms the environment. It might be illegal fishing, logging and trading of timber,
polluting or illegally trading wildlife. Other examples of morally questionable acts are:
1. Tour operators bringing tourists to certain shops where sales people charge higher prices than
other shops and later profits are shared between the operators and the shop owners
2. (More examples on pages 128-129)
Q 1. B
Enterprising means marked by imagination, initiative and readiness to undertake new
projects
Anyone can be enterprising, there are entrepreneurs inside and outside of organisations, in
profit or not-for-profit enterprises and in business or non-business activities
Entrepreneurial means willing to take risks in order to create value
Entrepreneurship has a business connotation

Briefly discuss these points and provide examples.

2. A. Why do entrepreneurs need to understand the concepts market segmentation and

consumer behaviour? Discuss with examples how consumers can be different in terms of these
two variables.
B. Does disadvantage lead to entrepreneurial opportunity?

(5+5=10 marks)

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Answer Guide
Q. 2 A
Entrepreneurs must have a clear understanding of their specific market segment or the niche market
they are going to serve, and how consumers within that segment makes purchase decisions, in order
to be successful in their business. Understanding market segmentation and consumer behaviour are
critical to developing the marketing concept for the business.
A Marketing philosophy
i Production-driven: belief that by just making the product available people will buy it
ii Sales-driven: reliant on personal selling and advertising to drive sales
iii Consumer-driven: develop products and services that match consumers needs
B Market segmentation: identifying a specific set of characteristics that differentiates one group
of customers from others
C Consumer behaviour: is defined by the many types and patterns of consumer characteristics.
Entrepreneurs are most interested about which customers are more likely to buy new products;
consumers can be divided into groups of innovators, early adopters, early majority, late majority,
laggards, based upon their willingness to try something new.
Students must provide specific examples. (Refer to Table 10.3 and 10.4 for examples)

Q. 2 B
Entrepreneurship and disadvantaged groups
Factors leading to disadvantage (discuss them briefly):
a Social and individual
b Geographic
c Community
d Cultural
e Economic
f Political and structural
g Organisational
B Social marginality theory, by Shapero, views the entrepreneur as a displaced person. This
theory and others suggest that the disadvantages that beset a particular group of people encourage
entrepreneurs to rise out and start ventures to overcome their position. Provide example.
Examples from the text include:
Survival entrepreneurs in North Korea
Gay entrepreneurs in Nepal
Reindeerpreneurs of Eastern Siberia
Tourism entrepreneurs in Kerala
Dhivehis of the Maldives

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But students can use other credible examples of disadvantaged entrepreneurs also.
Indigenous entrepreneurs:
Indigenous: cultural groups who have a historical continuity with a region before its colonisation, and
who have maintained part of their distinct linguistic, cultural and social/organisational characteristics.
For example, the indigenous entrepreneurs in Australia, They are often economically disadvantaged.

3. A. Is bootstrapping a successful pathway to business start-up and why? To what extent is it

feasible in Singapore?
B. What are the four major models of entrepreneurial opportunity? Explain and give an example
of each.
(5+5=10 marks)
Answer Guide
Q. 3 A
Bootstrapping enables entrepreneurs to operate their startup companies with minimal infusions of
cash from others, postpone raising capital from outsides sources, and maintain 100 percent ownership
of their companies. After capital has been raised from friends, family, or angels bootstrapping is the
technique entrepreneurs use to "extend the runway." That is, to postpone raising additional capital
until key milestones can be met. Meeting milestones demonstrates the viability of the company,
increases the valuation of the company when raising money, and allows the entrepreneur to maximize
personal ownership in the company.
Bootstrapping
Highly creative acquisition and use of resources
Bootstrapping means starting a new business without startup finance
Probably the best method to get an entrepreneurial firm operating and wellpositioned to
seek debt financing from banks or equity finance from outside investors at a later time
Relies greatly on networks, trust, cooperation and wise use of the firms existing resources,
rather than going into debt or giving away equity
Some Bootstrapping ideas:
Customerfunded R&D
Deals with service providers at belowcompetitive rates
Buy used equipment instead of new
Borrow equipment from other businesses for shortterm projects
Use interest on overdue payments from customers
Cease business relations with customers who frequently pay late
Employ relatives or friends at nonmarket salaries
Withhold entrepreneurs salary payment
Deliberately delay payment to suppliers
Barter underused products or services with other firms

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Q. 3 B
A. The competition model of opportunity
Cantillon's entrepreneur identified opportunities where demand was sufficiently high to be able to
obtain a high selling price for goods or services while simultaneously being aware of opportunities to
obtain supply of goods and services (or the inputs to the goods and services) at low buying prices. This
form of trading opportunity is called arbitrage.
Finding market discrepancies often provides opportunities in highly competitive and mature markets.
See Figure 6.2
Cantillons entrepreneur and arbitrage create growth in an economy by increasing the number of firms
and expanding the market. Of course, there are also losses in the market when the new opportunities
replace existing firms or drive them out of business.
B. The Innovation model of opportunity
This entrepreneur is proactive in the economy as the firm introduces new goods and services that
disrupt existing markets and create new ones. This model of opportunity essentially introduces a new
supply and demand dynamic into the market place and disrupts the equilibrium of the static market
system.
The entrepreneur in this case creates a demand for the new good or service and attracts the attention
of customers by educating them and enticing a move away from the existing market to create a new
platform for economic growth. See Figure 6.3
Schumpeters entrepreneur introduces new goods or services into the economy that provide growth
potential.
C. The alertness model of opportunity
This model assumes that opportunities are 'out there', already in existence and waiting to be
discovered. The entrepreneur is the one who recognises them due to superior levels of knowledge
about one of or a combination of the market, industry, technology or networks. The entrepreneur has
the advantage of seeing things differently and acting upon unique insight grounded in superior
knowledge. See Figure 6.4
D. The social need model of opportunity
In recent decades we have seen a huge increase in innovations created by social ventures. More than
inventing new types of production to make markets more efficient or exploiting new markets to
increase market effectiveness, social innovation seeks to satisfy needs not satisfied by the market or in
other words, social innovation expands market utility.

Please note that the above answers are just an outline of the nature of the theoretical content
required to get a decent score in the exam. You need to be precise and analytical in your answers.
The theoretical underpinnings of a concept must be clearly defined and discussed. It is also
important to make sure that the grammatical constructions of the sentences are correct and there
are no spelling errors in your writing.

Good Luck!