MNE3701
EXAM PACK
,MNE3701 –Entrepreneurship & Small Business management
Question 1&2 Overlaps
Explain the five steps in the Risk Management process (5)
1. Identify risks
• Analysis of financial statements and firms operations, policy checklists…
2. Evaluate risks in terms of size and probability
• critical, important and unimportant
3. Select methods to manage risk
• risk control: risk avoidance – choosing not to engage in activities risk reduction –
lessening the severity of losses
• risk financing: risk transfer – insurance or contractual agreements
• risk retention – financing loss by itself
4. Implement decision
• purchasing insurance or setting funds aside
5. Evaluate and review
• new risks arise and old ones disappear
Discuss the steps in the Marketing research process (10)
1. Identifying the information need
• venture’s informational needs to be correct and in detail, then marketing research
will produce meaningful results
• ex. target market? Willing to pay? Disposable income? Geographic info? Quality?
2. Searching for secondary data
• Secondary research is less expensive than primary research.
• sources: Stats SA, Bureau for Marketing Research(Unisa), search engines
• Shortcomings: outdated, may not fit requirements, credibility of sources.
3. Collecting primary data
• Collected by means of observational and questioning methods.
• important considerations: - differences between observational and questioning
method
• the high value of personal observation in small business
• considerations in questionnaire design:
o observation has 3 benefits – provides useful info, economical, avoids
potential bias
o surveys and experimentation are both examples of questioning methods
o four types of surveys – mail, telephone, personal interview or e-mail
o a questionnaire is the basic instrument for guiding the researcher and
respondent
4. Interpreting the data gathered
• data must be transformed into usable information to make sound business decisions
• Specialised computer programs are designed to summarise large quantities of data.
,Describe the approach that serves as guidelines in determining a promotional budget (4)
Allocating a percentage of sales
o Allocating a percentage of sales to promotion (ex. 30% of turnover)
o Disadvantage – when sales decline, less money is spent on promotion, which does not solve
the problem.
Deciding how much can be spared
o Spending whatever is left over on promotion after paying all expenses.
o Disadvantage – it ignores promotional goals, because different approaches to promotion are
required.
Spending as much as one’s competitors
o Business hopes to reach same customers by duplicating competitors promotional efforts
o Disadvantage – may result in copying of competitors mistakes
Determining what it will take to do the job
o Based on proper market analysis and all the alternatives available as promotional channels
o Preferred approach to promotional expenditure.
o Disadvantage – very time consuming and requires a greater understanding.
Explain the five key factors that must be considered when choosing the location of a business (10)
1. Customer accessibility
• Retail outlets and service firms are businesses that must be located to make access
easy.
2. Business environment conditions
• Weather, competition, crime, legal requirements and tax structures.
3. Resource availability
• Proximity(nearness) to raw materials, suitability of labour supply, availability of
transport
4. Entrepreneur’s personal preferences
• Choice of local site or location offering unique lifestyle advantage
5. Site availability and costs
• Either close to the customer (retail) or the supplier (supplier of intermediate goods)
• leasing a site is advisable because a large cash outlay is avoided and thus reduces
risk
, Discuss the eight psychological and sociological influences on consumers and their relevance on
consumer behaviour (8)
Four psychological influences:
1. Needs
o Starting point for all behaviour
o Basic needs
▪ physiological(hunger), social(what you wear), psychological(what you think),
spiritual(emotion)
2. Perceptions
o Processes that give meaning to the stimuli confronting customers
o Perceptual categorisation
▪ grouping similar things, to manage huge quantities of incoming stimuli
3. Motivations
o Intrinsic/extrinsic force that organises and give direction to the tension caused by
unsatisfied needs
o Unsatisfied needs create tension within an individual and is then motivated to reduce
the tension
4. Attitudes
o an enduring opinion based on knowledge, feeling and behavioural tendencies
o an attitude may act as an obstacle in bringing a customer to a product
Variables that influence customer on a social level:
1. Culture
o The social heritage of humanity and is reflected in behavioural patterns and values
o cultural norms create product-related acceptable behaviours that influence what
customers buy
o ignoring cultural beliefs and customs may be offensive
2. Social class
o divisions within a society with different levels of social prestige
o Determined by following factors: occupation, possessions, income level/source of
income, education.
o social class influences the type of product purchased and the actual purchasing
process
3. Reference groups
o group of individuals that influences purchasing behaviour of individuals
o examples – friends, family, classes at school, business associates
o reward power and coercive power – group’s ability to give and withhold rewards
(recognition and praise)
o referent power and expert power – exist because individual attaches great
importance to being like group
4. Opinion leaders
o group members with leadership and communication advantage in their fields
o they are normally visible, knowledgeable and exposed to the media
EXAM PACK
,MNE3701 –Entrepreneurship & Small Business management
Question 1&2 Overlaps
Explain the five steps in the Risk Management process (5)
1. Identify risks
• Analysis of financial statements and firms operations, policy checklists…
2. Evaluate risks in terms of size and probability
• critical, important and unimportant
3. Select methods to manage risk
• risk control: risk avoidance – choosing not to engage in activities risk reduction –
lessening the severity of losses
• risk financing: risk transfer – insurance or contractual agreements
• risk retention – financing loss by itself
4. Implement decision
• purchasing insurance or setting funds aside
5. Evaluate and review
• new risks arise and old ones disappear
Discuss the steps in the Marketing research process (10)
1. Identifying the information need
• venture’s informational needs to be correct and in detail, then marketing research
will produce meaningful results
• ex. target market? Willing to pay? Disposable income? Geographic info? Quality?
2. Searching for secondary data
• Secondary research is less expensive than primary research.
• sources: Stats SA, Bureau for Marketing Research(Unisa), search engines
• Shortcomings: outdated, may not fit requirements, credibility of sources.
3. Collecting primary data
• Collected by means of observational and questioning methods.
• important considerations: - differences between observational and questioning
method
• the high value of personal observation in small business
• considerations in questionnaire design:
o observation has 3 benefits – provides useful info, economical, avoids
potential bias
o surveys and experimentation are both examples of questioning methods
o four types of surveys – mail, telephone, personal interview or e-mail
o a questionnaire is the basic instrument for guiding the researcher and
respondent
4. Interpreting the data gathered
• data must be transformed into usable information to make sound business decisions
• Specialised computer programs are designed to summarise large quantities of data.
,Describe the approach that serves as guidelines in determining a promotional budget (4)
Allocating a percentage of sales
o Allocating a percentage of sales to promotion (ex. 30% of turnover)
o Disadvantage – when sales decline, less money is spent on promotion, which does not solve
the problem.
Deciding how much can be spared
o Spending whatever is left over on promotion after paying all expenses.
o Disadvantage – it ignores promotional goals, because different approaches to promotion are
required.
Spending as much as one’s competitors
o Business hopes to reach same customers by duplicating competitors promotional efforts
o Disadvantage – may result in copying of competitors mistakes
Determining what it will take to do the job
o Based on proper market analysis and all the alternatives available as promotional channels
o Preferred approach to promotional expenditure.
o Disadvantage – very time consuming and requires a greater understanding.
Explain the five key factors that must be considered when choosing the location of a business (10)
1. Customer accessibility
• Retail outlets and service firms are businesses that must be located to make access
easy.
2. Business environment conditions
• Weather, competition, crime, legal requirements and tax structures.
3. Resource availability
• Proximity(nearness) to raw materials, suitability of labour supply, availability of
transport
4. Entrepreneur’s personal preferences
• Choice of local site or location offering unique lifestyle advantage
5. Site availability and costs
• Either close to the customer (retail) or the supplier (supplier of intermediate goods)
• leasing a site is advisable because a large cash outlay is avoided and thus reduces
risk
, Discuss the eight psychological and sociological influences on consumers and their relevance on
consumer behaviour (8)
Four psychological influences:
1. Needs
o Starting point for all behaviour
o Basic needs
▪ physiological(hunger), social(what you wear), psychological(what you think),
spiritual(emotion)
2. Perceptions
o Processes that give meaning to the stimuli confronting customers
o Perceptual categorisation
▪ grouping similar things, to manage huge quantities of incoming stimuli
3. Motivations
o Intrinsic/extrinsic force that organises and give direction to the tension caused by
unsatisfied needs
o Unsatisfied needs create tension within an individual and is then motivated to reduce
the tension
4. Attitudes
o an enduring opinion based on knowledge, feeling and behavioural tendencies
o an attitude may act as an obstacle in bringing a customer to a product
Variables that influence customer on a social level:
1. Culture
o The social heritage of humanity and is reflected in behavioural patterns and values
o cultural norms create product-related acceptable behaviours that influence what
customers buy
o ignoring cultural beliefs and customs may be offensive
2. Social class
o divisions within a society with different levels of social prestige
o Determined by following factors: occupation, possessions, income level/source of
income, education.
o social class influences the type of product purchased and the actual purchasing
process
3. Reference groups
o group of individuals that influences purchasing behaviour of individuals
o examples – friends, family, classes at school, business associates
o reward power and coercive power – group’s ability to give and withhold rewards
(recognition and praise)
o referent power and expert power – exist because individual attaches great
importance to being like group
4. Opinion leaders
o group members with leadership and communication advantage in their fields
o they are normally visible, knowledgeable and exposed to the media
