TITLE: ENTREPRENEURSHIP

SECTION A (50 MARKS) There are FIVE (5) question in this section. Answer all questions. 1. Briefly explain 5 (FIVE) myths about entrepreneurs. Justify each of your answer. (5 Marks) 2. Briefly describe and explain 10 (TEN) personal entrepreneurial competencies that a successful entrepreneur should possess. Justify each of your answer. (10 Marks) 3. In your own opinion, what are the effects of entrepreneurship to the economy in Malaysia and around the world. Give your answer in FIVE (5) points. (10 Marks) 4. Assuming that you want to start a business. a) What would be the business that you want to venture in? Give 6 (SIX) reasons to support your answer. (6 Marks) b) Based on your answer in question 4(a), explain 5 (FIVE) marketing strategies that you would apply to your business. (10 Marks) (Total: 16 Marks) 5. There are THREE (3) approaches that entrepreneurs can use to identify which new venture they can choose to pursue. Once an entrepreneur understands the importance of each approach, he or she will be much more likely to look for opportunities and ideas that fit in each profile. List down the THREE (3) approaches to identify an opportunity and give an example for each. (9 Marks)SECTIGN B [30 MARKS] There are TWO [2] cases in this section. Answer ALL questions. CASE 1 EDMPAN'I": Farmers Business Network Business Idea: Develop a 24houraday, convenient, on demand ice vending destination offering fresh, clean ice It a competitive price. Pitch: Think about the ekperisnoe of buying ice. You go to a supermarket or a convenience store. reach into a freezer compartment, and pull out a bag of ice that is partially stuck to other bags. You then bring the bag home and slam it on the counter several times to break the pieces of ice apart. If you are lucky, you don't think about how the ice was made. It's normally made at a central location. bagged, loaded on a truck. and carried into the store on a cart. The bags have tiny holes which allow them to \"breathe". Unfortunately, the holes can also allow germs and other contaminants to be transferred to the ice. This is the ice that you put in the glasses of your family members and guests. IceEiom offers an alternative that's a game-changer. It is a franchise organization that manufactures state-of-the-art. 24H. ondemand ice and water vending machines. The machines come in several sizes, and they dispense ltered water and both bagged and straight-to-the- cooler ice. The largest machine, the ice House, can dispense more than tacos pounds of ice a day, which is equivalent to six hundred Ell-pound bags. It normally sits in a parking lot. and takes up the Space of about two parking places. The ice is produced fresh using municipalu supplied water that is ltered on site. The company's proprietary system, which is protected by the five US. patents, can be monitored and controlled by franchisees remotely via a computer or smart phone. Ice is made continuously throughout the day and is stored in sanitary internal bins. As a result, it is always fresh and clean. No one touches the ice other than the buyer. IceBorn began franchising in May Ed'lE. Depending on the iceBorn model, the initial investment ranges from $21095 in $213.5D. The initial franchise tee is $1,D to $5,DDD, with a 6 percent ongoing royalty and a '1 percent advertisement royalty fee. For veterans. the initial franchisee fee is cut half and the rstyear royalties are waived. lceBorn has over 2,500 units located across the United States, the Caribbean. and parts of South America. IceEiorn is looking for additional franchisees to install its machines in a well-trafficked areas. Ice is a $4 billion-peryear industry. In just 1D years, the ice vending business has captured 4 percent of the market, and it is expected by some industry experts to increase by 3 percent to 5 percent each year for the next td years. lceBorn feels that it Is perfectly positioned to capture the lions share of the growth. Source: Adapted from Entrepreneurship: Successfuify Launching New 1ventures. Pearson Education ears. 1] Suppose that you are a potential investor. and you were approached by Farmers Business Network, what are the questions that you would ask to the firm's founders before making your funding decision? {E- Mari-ts] 2} If you have to make your decision on just the information provided in the pitch and on the company's website, would you fund this firm? l|.I'ifhy or why not? [4 Marks} (Total: 1d Marks] CASE 2 What Move Loot Learned the Hard Way about the Economics of a Business Move Loot was started by Jenny Morrtll. Eiii Bobbitt. Ryan Smith. and Ehruti Shah. The founders participated in the prestigious "r' Combinator Accelerator program in the Silicon 1v'alley. The business idea was to make the process of buying or selling secondhand furniture seamless and fun. Instead of placing an ad on Graigsiist and hoping that the person that buys your furniture can pay in cash and has a truck to take it away. Move Loot's solution was to take the furniture off your hands. professionally photograph it. advertise it for sale. store it. and deliver it once the sale is complete. Move Loot would make money by taking a 5D percent commission on the sale. The secondhand furniture market in the United States is worth about $3 billion per year. Move Loot launched in October 24313 and got off to a fast start. It started in San Francisco. Early on. Move Loot grew by more than 25 percent per week. Unfortunately. in midEti'ld Move Loot shut down. While the company's founders have not weighed in on why Move Loot failed. a look at the economics of the business provides clues as to potential trouble spots. Move Loot had two revenue drivers a 50 percent commission on each item sold and a delivery charge for items under $5DD. 0n the expense side. Move Loot had to do sufficient marketing to get people to sell secondhand furniture through its service and to attract people to buy secondhand furniture through its service. Like all "two-sided" markets. the service wouldn't work unless there was a large enough critical mass on both sides of the equation. |[Since Move Loot got a client who wanted to sell a piece of secondhand furniture through its service. think of what it had to do to earn a commission. 1. Send a driver. a truck. and a crew to a customer's house. 2. Pick up the piece of furniture and transport it to a storage facility. 3. Photograph the item. write a description. and list it for sale on its website. 4 Screen offers for the item. If a buyer didn't like the price. he or she could submit a lower bid. 5. Store the item until it sells. Er. Collect the money once it sells. 7' Deliver the item to the customer's house. a Pay the original owner of the item. That's a lot of work to earn a commission on a secondhand piece of furniture. [in top of that. if an item didn't sell. unlike a furniture store. Move Loot couldn't discount it until it sold the furniture belonged to the client. It gave the buyer El} days for an item to sell. If it didn't sell the buyers could pay to get the furniture returned to them. donate it to charity. or request more time. Move Loot essentially had both high xed costs and high variable costs. its xed costs consisted of its trucks. routing system. storage facilities. and equipment. such as the cameras needed to photograph the secondhand furniture and the servers to support its website. When it closed. it had expanded to several cities beyond San Francisco. Its variable costs consisted of truck drivers. dispatchers. the employees who moved the fumiture. the storage facility employees. the employees who managed the sales. and the costs of running the storage facilities. All-in-all. this is a lot of overhead for what was essentially a secondhand online fumiture store. Move Loot most likely was caught in a situation where it had narrow margins. high fir-red costs. high variable costs. and some inventory that didn't move quickly. This is a hard combination to make work. the "economics of the business" just weren't good. In the months prior to closing. Move Loot iterated its business modei more than once. In November 2D15. it broadened its marketplace so that other stores. like a local antique shop. could post their items on Move Loot's website. In March 2016. it switched to a modei where anyone could upload their own photos to the site, and then Move Loot would take care on only the pick-up and delivery part. Neither these moves were able to save the company. The Move Loot story is a good reminder that the fundamental "economics of the business" is an important part of a start-up's business plan. Source: Adapted from Entrepreneurship - Successfully Launching New Ventures, Pearson Education 2019. Once a piece of secondhand furniture was listed on Move Loot's website, if a customer didn't like the price, he or she could offer a lower amount. Move Loot's 50 percent commission was based on the final selling price. This must have made it difficult for Move Loot to forecast both its gross margin and its contribution margin on individual sales. 1) In your opinion, do you believe this was a problem for Move Loot? (6 marks) 2) In your opinion, do you believe Move Loot's business model was doable? (4 Marks) 3) In your judgement, were the "economics of the business" seem reasonable for Move Loot from the beginning? (2 Marks) 4) How could Move Loot establish its business in a manner that the economics of the business made more sense? (3 Marks) 5) What can all start-up founders learn from the Move Loot case? (5 Marks) (Total: 20 Marks)