nAmiBIA UniVER SITY OF SCI EnCE AnD TECHnO LOGY

FACULTY OF MANAGEMENT SCIENCES

DEPARTMENT OF MANAGEMENT

QUALIFICATION: BACHELOR OF BUSINESSS

QUALIFICATION CODE: LEVEL: 7

BBAD/07BBMA

COURSE CODE: BEM 711S COURSE NAME: SMALL AND MEDIUM ENTERPRISE

MANAGEMENT

SESSION: JU NE 2017 PAPER: TH EORY

DURATION : 3 HOURS MARKS: 100

FIRST OPPORTUNITY EXAMINATION QUESTION PAPER

EXAMINER(S) D.J. Du Plessis

F. Van Wyk

MODERATOR: B Simasiku

INSTRUCTIONS 1. Answer ALL the questions.

2. Write clearly and neatly.

3. Number the answers clearly.

THIS QUESTION PAPER CONSISTS OF 7 PAGES (Including this front page)

SECTION A

Please choose the correct option and indicate your choice in the answer book. For example 1 D

QUESTION 1

1.1 A problem associated with family business is the following:

A. Only one in ten succeed into the third generation. B. Poor estate planning. C. Unwillingness to hand over to next generation. D. None ofthe above E. All of the above

1.2 Which of the following are duties of the franchisor?

i Disclosing the business system to the franchisee ii Advising the franchisee on matters relating to the establishment of the franc hi sed agreement iii Advising the franchisee on matters relating to the establishment of the franc hi sed business on the premises iv Conducting the franchised business strictly in accordance with the operations manual

A. I, 11, 11I

B. 11, 11I, IV

C. I, 11, IV

D. I, 111, lV

E. I-IV

1.3 A strategic characteristic of growing firms is

A. Differentiation. B. Flexibility and innovation. C. Market domination. D. AandC E. A, Band C

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1.4 Internal growth strategies can take one or more of the following forms:

A. An increase in market share. B. An increase in technology investment. C. Expansion of the building. D. An increase in staff. E. An increase in assets.

1.5 A venture refers to a business activity that a person enters into in order to earn an income for physical survival on a day-to-day basis.

A. Micro B. Small C. Medium D. Survivalist E. Lifestyle

1.6 Which one of the following is not a reason for the internationalisation of an enterprise's business?

A. Expansion of sales B. Resource acquisition C. Diversification D. Maximisation of competitive risk E. Saturated markets

1. 7 Which one of the following is not a risk of global strategies?

A. Business risk B. Inflation risk C. Financial risk D. Political risk E. Economic risk

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1.8 Which one of the following statements is an example of time-loss risk associated with an online purchase?

A. The website crashes while making the purchase.

B. The website does not send a confitmation of the purchase.

C. The customer does not receive the product purchased.

D. The product purchased does not meet the customer's expectations based on the information on the website.

E. None ofthe above

1.9 Which one of the following factors does not negatively influence a consumer's willingness to purchase a product in an online store?

A. Price. B. Distance to the nearest offline store. C. Delivery cost. D. None ofthe above. E. A and C

1.10 As a team player the intrapreneur

A. Gathers intelligence, assesses potential and evaluates key factors in the market. B. Plays a collaborative role with people from other specialty areas. C. Overcomes internal resistance and gains top management support. D. Provides motivation and impetus for getting projects off the ground. E.Reacts quickly to emerging developments and provides new direction necessary.

10x2=20

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SECTION B

QUESTION 2

300 Stores and GROWING ...

"Old fashioned" Fish and Chips was established by Founder and CEO Emilia De Sousa in 2002. In the decade to follow, this successful powerhouse of a franchise has grown to have over 300 stores across 10 regions in South Africa.

"Old Fashioned" Fish and Chips began as a standalone takeaway in Elma Park, Edenvale, where it first targeted consumers from a low LSM (Living Standard Measure). The brand, however, became so popular due to the superior quality food and friendly service, that it began attracting a much broader audience. Through this popularity, "Old Fashioned" Fish and Chips has truly been able to live up to its promise of bringing back the "old on the corner fish and chippie" that is known and loved by all South Africans.

"Old Fashioned" Fish and Chips gives the customer that true, original, delicious fish and chips taste experience that many imitators have tried to replicate but have been unable to do so successfully. This taste experience is able to be achieved with the welcoming service customers receive from the moment they walk into an "Old Fashioned" Fish and Chips store through to the quality product that is enjoyed. "Old Fashioned" Fish and Chips uses only the very best organically sourced products as well as a secret recipe in the batter that gives their fish that mouth-watering, unforgettable taste and that is unique to the "Old Fashioned" Fish and Chips brand. In order to give each and every customer the finest of fresh-cut chips, "Old Fashioned" Fish and Chips ensures that the whole of South Africa is scoured to find the best A Grade potatoes.

The brand operates on a strong family ethos which is one of the reasons why it has been so successful and will continue to be so in the future. "Old Fashioned" Fish and Chips has established itself as the fastest growing brand in South Africa. In 2011 alone, "Old Fashioned" Fish and Chips has much to be proud of with having opened over 100 stores, creating 6700 jobs, feeding over 40 million customers, selling 1050 tons of fish and 19 365 tons of potatoes, and proudly winning the RASA Franchise ofThe Year Award. With these accomplishments and many more under the brand ' s belt, "Old Fashioned" Fish and Chips has proven its success and set itself as the market leader in its category.

"Old Fashioned" Fish and Chips' aggressive growth rate has only served to increase the future growth goals of the brand. One of these being a global ambition to open stores internationally. Based on the brand's inspiring performance to date, this traditional family-run franchise cetiainly has the right recipe for success.

(Supplied by "Old Fashioned" Fish and Chips as published in "Succeed" January 2012)

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2.1 "One of the main aspects ensuring the survival of a family business is succession".( Nieman and Niewenhuizen, 20 15). Outline the obstacles to succession. Refer to Namibian examples to substantiate your answer. (12)

2.2 Kentucky Fried Chicken (KFC) is a well-known franchising brand in Namibia. Argue the case for and against franchising from the viewpoint of the franchisor. (10)

QUESTION3

3.1 Consider the following figures from the Adjusted Statement of Financial Position and

Condensed Statement of Comprehensive Income of Candice Esterhuizen CC, an SME from

Dorado Park, Windhoek, m order to answer questions (a) to (g) below:

Capital Accumulated profits Long term loan

Additional information 1 The salary forego : N$ 650 000 2 Risky investment: 35% 3 Growth wanted: 55%

N$

1 500 000 800 000 300 000

Year 2017 2016 2015 Net Profits 950 000 650 000 580 000

Calculate the following: (a) Adjustable Tangible Net Worth (b) Opportunity Cost (c) Growth Rate% ofNet Profit (d) Estimated Net Earnings for the next year (e) Extra Earning Power (f) Goodwill (g) Value ofthe Business

2014 550 000

(20)

3.2 Outline three (3) non-quantitative factors as stated by (Longenecker et all, (2003) that can influence the final selling price of a business venture. (6)

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QUESTION 4

Start Something That Matters: This Successful Entrepreneur Did Just That!

Adelaide Potgieter is not a conformist. She started Mad Advertising (which has since become just one company in the Mad World Group) because she looked at an industry in dire need of energy and a different way of doing things. She wanted to shake things up. For her, real wealth isn't the money in her business or her bank account; it's the fact that she did something about her irritation with a stagnant industry and started something that matters. Today, what was once a one-woman-show is now a 50+ mad team of talented and passionate people who aren't afraid to be themselves.

"Growth is written into the culture of a business enterprise as the hallmark of success".

4.1 Outline the growth stages a business venture may go through. Explain the possibility of harvesting during each stage, of growth the entrepreneur can expect. (10)

4.2 Which factors are of utmost imp01iance to consider during the growth of an enterprise? Discuss. (8)

QUESTION 5

Ce1iain principles govern the success of a harvest strategy. To uphold these principles will ensure a more fruitful harvest. Outline and discuss seven (7) of these principles. (14)

END OF EXAMINATION QUESTION PAPER

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