ENTREPRENEURSHIP AND SELF EMPLOYMENT QUESTION AND ANSWERS

ENTREPRENEURSHIP AND SELF EMPLOYMENT

QUESTION ONE

Entrepreneurs are faced with challenges of cultural diversity in their businesses.

  • Recognition

You must recognize that people have differences, be it physical, generational or cultural, and, you cannot pretend that these barriers have been broken down. Instead, celebrate the differences among your employees, and encourage them to let their individualities show example, don’t hesitate to ask someone from another culture about their culture’s etiquette practices, their knowledge could prove useful to your business. Do not pigeonhole your employees. An employee’s worth comes from more than his ethnicity

  • Fairness

Acting fairly and acting uniformly are different, and only one enables you to successfully deal with diversity in your workplace. Don’t be fooled into, thinking that by treating everyone exactly the same, you are demonstrating a fair attitude and respecting diversity, Instead, treat people fairly and respect the differences that make them who they are. For example, don’t schedule a mandatory meeting that falls on a religious holiday – it demonstrates insentity and may breed resentment and foster feelings of being left out in any employees unable to attend.

  • Focus on Yourself

Diversity is an issue that you must manage in the workplace and it starts with managing your own attitude and behavior. For example, examine your behavior in job interviews. When an applicant of a certain ethnicity or gender comes in, do you make assumptions that he must prove or disprove during the interview? How do you respond to different styles of communication? Self awareness is key to developing a Sate, fair workplace for a diverse group of employees

  • Employee Assessments

Managers conduct employee reviews and assessments from time to time. When preparing these reviews, they must also examine the employees’ attitudes, particularly how they work others. If you notice that an employee only delegates tasks to people of a certain race or if an employee discounts the ideas of people below or above a certain age, it is your responsibility to address the issue. Identify issues among your employees and bring them up when assessing their performance

  • Encourage interaction

When you identify diversity related Issues in the workplace, discuss them with your employees in a non non-frontationai manner. For example, encourage employees to work with, others of different backgrounds or generations. Initiating these types of interactions encourages your employees to learn more about communication styles, talents, and goals- their own and those of their co-workers.

 

  • Discuss four ways that could be used to overcome challenges of cultural diversity in business.

QUESTION TWO

Explain five myths on entrepreneurship

The Risk-Taking Myth

“Most successful entrepreneurs take wild, uncalculated risks- in starting their companies.”

Risk is an intrinsic part, of any business venture. It is only later on the development of the company, when the business has created some real value, that entrepreneurs risk losing it all if they are to continue growing.

The High-Tech Invention myth:

“Most successful entrepreneurs start their companies with, a breakthrough invention—usually technological in nature.”

Having a breakthrough invention, a unique product or a radically new process is not a necessary element at the beginning of most successful growth companies.

The Expert Myth:

’ “Most successful entrepreneurs have strong track records and years of experience in their industries.”

While founders of successful companies may become knowledgeable and prominent in their field later on, early-stage growth companies, are just as likely to be started by relative .’ amateurs with little .background experience in the field.

The Strategic Vision Myth:

“Most successful entrepreneurs have a well considered business plan and have researched if and developed their ideas before taking action.”

Strategic planning and            research are in fact hallmarks of the later stages of development, rather than a necessary initial ingredient. For many startups, extensive research and .planning are often both unnecessary and financially impossible. At this early stage, adaptiveness is much more important than a thorough, rationalized decision making process;

The Venture Cap ital Myth:

“Most successful entrepreneurs start their companies with millions in venture capital to develop their idea, buy supplies,- and hire employees.”

Venture capital is dominant in some industry sectors-biotech, some high-tech startups, internet- where capital requirements force companies to skip the early growth stages. But it or any other type of formal financial support-is surprisingly uncommon among most successful entrepreneurial growth companies at their early stages of development.

 

QUESTION THREE

 

Discuss five roles of entrepreneurship in economic development

  • Employment Job creation

Entrepreneurs contribute to creation of employment opportunities for citizens. They start a business and employ themselves first then expand the same business to absorb more citizens as employees.

  • Improved quality of life/standard

Entrepreneurs are creative and highly innovative. They are able to design goods and services that fit customer specifications. They continually improve on the same in order to meet changing customer needs.  They also provide income to citizens in form of salaries and. wages the citizens can therefore afford goods and services.

  • Add to National Income

Entrepreneurs generate a lot of income from their businesses locally and overseas. The amount of money generated can be used for more investment or to provide citizens with goods and services

  • Even distribution of income

Entrepreneurs spread out to all parts of a nation because it is the business opportunities; that guide them where to invest. In the process they open up in accessible areas for envelopment.

The presence of entrepreneurs in different parts may mean more income, better infrastructure and higher quality of life for the local community.

  • Bring new technology in production

Through their creativity and innovation entrepreneurs device different methods of production and provision of services. They are quick to adopt new and efficient operation methods. To survive in a competitive market, they may continuously engage in research on ways to improve production and ensure customer service and profitability.

  • Increase investment

Entrepreneurs are investors and may increase the number of investments in a nation. In so doing, they create more wealth in a nation investment may suggest ability to meet basic needs and save the surplus for investment.

  • Increase government revenue

Entrepreneurs contribute to government revenue through, various forms of taxes. The entrepreneur’s firm whether registered as a company or not still has a legal requirement to pay its taxes and to furnish the tax authority with the relevant paper Work, The entrepreneur running a sole business will need to submit all his income in a given fiscal year and the business income from his firm forms part of this. An entrepreneur running a public limited company has the responsibility of ensuring corporate taxes are paid each year and in compliance with the Companies Act and any other legislation. Other taxes that the entrepreneur should furnish the tax authorities are taxes on the sales of good to the final consumer, personal taxes on his employees and any other penalties associated with these ; taxes. The various forms of taxes are source revenue for the government.

  • Social responsibility

The entrepreneur should realize that his business will go a long way in getting public approval if it is seem to be doing something positive for the local community. Regular contributions to community projects will put the business in the good books of the community. This should be clearly highlighted in the company’s policy. The goodwill of the business stands to improve and this ensures support not only from regular customers but also the local authorities

  • Formation of cartels

Cartels are formed by firms with the same business objectives. Theirs is to establish favourable trade terms with suppliers so that when the goods reach the final consumer; sufficient margins have been made, this helps the many small individual firms that perhaps could not have had the same bargaining power as they do when in a cartel. in a way it  fortifies the relationships between the various businesses and contributes towards healthy competition. The smaller firms eventually .grow and play important roles in the economy as well.

 

QUESTION FOUR

 

  • Explain ten warning signs that would indicate the possibility of an entrepreneur becoming bankrupt

 

  • Delay to pay creditors on due time
  • Change in credit policy, from credit to cash on delivery.
  • Key personnel leave the company.
  • Selling fixed assets to pay creditors
  • Customers are given large discounts, to enhance payments because of poor cashflow
  • Contracts are accepted below standard amounts to generate cash.
  • Materials to meet orders are lacking
  • Payroll taxes are not paid. :
  • Customers’’ complaints regarding service and product quality increase.
  • Suppliers demand payment in cash.
  • Illustrate five strategies that an entrepreneur could adopt in order to survive bankruptcy
  • Sale of tangible assets to obtain cash to set off some of the outstanding debts
  • Negotiation With creditors and lenders to restructure their loans advanced to the enterprise.
  • Factor of debts to Factors to improve debt collection and hence cash flows within enterprise
  • Liquidation and thus closing down the operations of the enterprises
  • Appointing of a receiver to manage the enterprise and a possible turnaround

QUESTION FIVE

 

  • Explain the meaning of the term “entrepreneur”
  • Sale of tangible assets to obtain cash to set off some of the outstanding debts
  • Negotiation With creditors and lenders to restructure their loans advanced to the enterprise.
  • Factor of debts to Factors to improve debt collection and hence cash flows within enterprise
  • Liquidation and thus closing down the operations of the enterprises
  • Appointing of a receiver to manage the enterprise and a possible turnaround
  • Outline six sources of finance for a new business venture
  • Bank lending

Borrowings from banks are an important source of finance to companies. Bank lending is still mainly short term, although medium-term lending is quite common these days.

  • Leasing

A lease is an agreement between two parties, the “lessor” and the “lessee”. The lessor owns a capital asset, but allows the lessee to use it. The lessee makes payments under .the terms of the lease to the lessor, for a specified period of time.

  • Retained earnings

For any company, the amount of earnings retained within the business has a direct impact on the amount of dividends. Profit re-invested as retained earnings is profit that could have been paid as a dividend.

  • Ordinary (equity) shares

Ordinary shares are issued to the owners of a company.

  • Grants from private foundations and non-governmental organizations.. – Government funding especially for youth projects.
  • Personal savings, possibly from initial employment i.e if the business venture is a sole proprietorship or partnership
  • Identify six challenges faced by entrepreneurs

Under capitalization

Bank may not be willing to extend unsecured loans to companies due to the high risk involved.

Mismanagement

The entrepreneur will often employ people to assist him manage the operations of the firm. However, if these people are not trustworthy, he stands to lose a lot of money through embezzlement.

Competition

Error large established organizations that enjoy economies of scale.

Rules and regulations

Complex rules, regulations and procedures framed by the Government can pose a challenge to entrepreneurs

Lack of raw materials

Unreliable supply of raw materials cans hinder production process in a manufacturing firm.

Lack of skills and experience

If the entrepreneur does not have sufficient skills to manage his business then he stands risk of making losses

 

  • QUESTION SIX

Citing relevant examples, highlight four business opportunities that entrepreneurs could exploit arising from 2010 FIFA world cup to be held in South Africa

  • Sale of food and refreshments-to visiting and local fans
  • Offer tour guide services: Duet to the many visitors expected professional tour guides will be stretched and any’ local with good knowledge of the country and its tourist, attraction sites can get into an arrangement to show foreigners around.
  • Accommodation: Subletting extra rooms to visiting fans is an opportunity that could generate handsome returns at very little or no cost.
  • Transport services: Without too much capital outlay an entrepreneur can venture into the transport industry and mainly taxi and car hire to take advantage of the expected high transport demand.
  • Be an entertainer in the stadium and get paid for it by the managers e.g. shakira
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