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DEC 2014


BM 249 4A

Question 1
a) Compare and contrast the effectuation and causal process in how
entrepreneurs think.
Causal process
That starts with a desired outcome and focuses on the mean to
generate that outcome, professor Saras Sarasvathy has found that
entrepreneurs do not always think through a problem in a way that
starts with a desired outcome. For examples, imagine a chef assigned
the task of cooking dinner. The host or client pick out a menu in
advance, all the chef needs to do is list the ingredients needed, shop
for item, and then actually cook the meal.
Effectuation process
Processes that start with what one have (who they are, what that are,
what they know, and whom they know) and select select among
possible outcome. For examples, the host asks the chef to look through
the cupboard in the kitchen for possible ingredients and utensils and
then cook a meal. Here, the chef has to imagine possible menu based
on the given ingredients and utensils, select the menu, and then
prepare the meal.
b) Explain how personal background and characteristics can influence an
individual to act entrepreneurially.
Education is important in the upbringing of the entrepreneur. Its
important is reflected not only in the level of education obtained but
also the fact that it continues to play a major role in helping
entrepreneur cope with the problems they confront. For examples,
entrepreneur have a cited an educational need in the area of finance,
strategic planning, marketing and management. The ability to
communicate clearly with both the written and the spoken word is also
important in any entrepreneur activity.
The relationship of age the entrepreneurial career process also has
been carefully research. In evaluating these result, it is important to
differentiate between entrepreneurial age, the age of entrepreneur can
reflected in his or her experience. Most of the entrepreneurs initiate
their entrepreneurial career between the age of 22 and 45. There are

milestone age every five years 25,30,35,40 and 45 when an individual

is more inclined to start an entrepreneurial career.
Work history
Work history can influence the decision to launch a new
entrepreneurial venture, but it also plays a role in the growth and
eventual success of the new venture. Often motivates the launching of
a new venture, previous technical and industry experience is important
once the decision to launch has been made. Experience is the following
areas its particularly important financing, product or services
development, manufacturing, and the development of distribution
Question 2
a) Entrepreneurially and traditionally managed firm can be differentiated
by various conceptual dimensions. Choose any two (2) dimensions and
compare the difference between an entrepreneurial focus and a
traditional administrative focus for each dimension.
Management Structure and Reward Philosophy
An entrepreneurial orientation toward management structure is
organic. That is, the organizational structure has a few layers of
bureaucracy top management and the customer and typically has
entrepreneurially managed firm are able to capture and
communication more information form the external environment and
are sufficiently fluid to be able to take quick action based on the
In addition, entrepreneurially managed firms are more structured to
make use of both their internal network for examples through
communication channel at work. In the external information, with
buyers, suppliers and financial institution. In contrast, the traditionally
managed firm has a structure well suited for internal efficiencies for
allocation controlled resources. There is a formalized hirerarchy with
clear roles and responsibilities, highly routinized work, and layers of
middle management to manage employees use of the firms

The entrepreneurially managed firm is focused on pursuing opportunity

for new entry that represents new value for the firm. It is not surprising
then the entrepreneurially managed firms have an entrepreneurial
philosophy toward reward that compensates employees based on their
contribution toward the discovery and exploitation of opportunity.

b) Entrepreneurial strategy is a set of decision, actions and reaction the

generate and eventually exploit a new entry opportunity. Explain
briefly three stages of a new entry strategy.
The generation of the new entry opportunities
Resources as a source of competitive advantages
Creating a resources bundle that is valuable, rare and inimitable
1. Market knowledge
2. Technology knowledge
Assessing the attractiveness of a new entry opportunity
Information on a new entry
The exploitation of a new entry opportunity
A feedback loop of resources
Question 3
a) There are several trends that entrepreneurs can observe when
searching for opportunities. Identify and briefly discuss five (5) trends
that can provide opportunities.
Green trend
While todays consumers are very conscious about spending habits, an
increasing numbers are willing to pay more for green products. Water
is one of this green trend that provides opportunities, particularly in
the area of irrigation, such as reclamation program for golf courses and
parks, smart irrigation system, and consulting firms that increase
water-use efficiency.
Clean-Energy Trend
Many feel that the power of the 21 century will come from solar, wind,
and geothermal sources. A significant factor that will accelerate this
movement from coal being the power in the 19 century and oil in the
20 century is when the solar cost of electricity either from cost
reductions and efficiency in the solar conversion.

Organic-Orientation Trend
That is increasing significant, particularly in the food sector, which has
been accelerated by the shrinking price gap between organic and
nonorganic foods. The sales growth in all organic foods including meat,
dairy, fruits, vegetables ans snack foods average 25 percents per year.
Economic Trend
The impact of the credit crunch, bank failures, and the housing slide
and foreclosures has forced consumers to be much more careful in
their spending. This increase in more frugal spending provides
significant opportunities in such areas as garden products, business
coaching, discount retailing, credit and debit management and so on.
Social Trend
Evident throughout the world with more networking events and
opportunity occurring each week. These include facebook, myspace,
and many others social networks as well as social networking for
b) Briefly explain two (2) factors that differentiate an opportunity
assessment plan from a business plan.
The first major section develops the production/service idea, analyze
the competitive products and companies, and identifies the uniqueness
of the idea in term of its unique selling proposition.
A description of the products or services
The market need for the products or services
The specific aspect of the products or services
The second major section
On the markets its size, trends, characteristic, and growth rate
The market need filled
The social condition underlining this market need
The growth rate of the market
c) Identify two (2) general business licenses that need to obtained by
entrepreneurs to allow the business to operation legally in Malaysia.
General Business Premise & Signboard Licenses
A business in Malaysia needs to obtain a business premise license in
order to begin operations in a particular location and legally erect a
signboard for the business premise. Both licenses can be applied for

from the relevant local authorities (e.g. Majlis Bandaraya Shah Alam;
Dewan Bandaraya Kuala Lumpur)
Premise license applications often need to be accompanied by the
premise Certificate of Fitness document, Fire Department support letter
agreement.Signboard license application need to be accompanied by
photographs of the proposed location of the signboard and samples of
the signboard design and colors
Special Business Licenses
Some categories of businesses require special licenses to enable them
to carry out a specific business operation. Businesses involved with
manufacturing, construction and wholesale are among the businesses
requiring special licenses
Question 4
a) Briefly discuss option available to entrepreneurs in selling a venture.
Sole Proprietorship
The most basic business entity in terms of ease of registration and
relatively simple business structure and management requirements
and Sole proprietorship allows only one person to be registered as the
legal owner. This single owner is also considered the manager for the
overall business and is often referred to as the owner-manager. The
size and scope of business is often relatively small and as such the
owner-manager may run the business activity by himself or with the
help of not more than 5 full time workers.
The sole ownership entitles the owner-manager to all profits earned by
the business. On the other hand the owner-manager has to also bear
the entire business risk and unlimited liabilities. Unlimited liability
implies that personal assets can be seized to settled outstanding
business debts. Death of the sole owner will result in termination of the
This business form involves two or more partners in a single business
concern. The maximum number of partners allowed is 20 persons.
Professional business (e.g. legal firms, architect firms or accounting
firms) are allowed to have up to 50 partners. Like the sole
proprietorship, a partnership also allows the owners (partners) to

manage freely with all profits being shared by the partners. Partners
also bear unlimited liabilities that means their personal assets can be
seized to settle business debts.
Partnerships are encouraged to have a Partnership Agreement
outlining details of ownership, entitlement to profits and share of
liabilities. Partnership Agreements are not required by law but are very
useful in case of disputes between partners. Death or withdrawal of
any of the partner may result in termination of the business unless
stipulated otherwise in the Partnership Agreement.
Registered under the Company Act 1965 and is recognized by the affix
Sdn. Bhd. (Sendirian Berhad) behind the registered trade name
Registration process is much more complex & costly. Registration has
to be through a registered Company Secretary. Among the key
documents that the Company Secretary must present for registration is
the Memorandum of Association and the Articles of Association .The
Memorandum of Association outlines how the money invested in the
company is to be utilized while the Articles of Association focuses on
the laws governing the internal management of the company.
Private Limited Company
The Private Limited Company can have up to 50 members or
shareholders. Control of day-to day operations is in the hands of a
management team that may or may not be major shareholders.
Shareholders can indirectly affect operation decisions through
representatives in a Board of Directors (BOD). A BOD consists of
representatives from the major shareholders, key members of the
management team and the Company Secretary. A key role of the BOD
is to ensure shareholders business interest and investments are
effectively represented in management direction and decisions.
A Private Limited Company registration renders the business as having
its own life separate from that of the life of the shareholders. As such
the company is a legal person able to bear its own liability arising
from the business operations. This means that the business assets can
be seized to settle outstanding debt or other legal claims. The
individual shareholder is liable only to the extend of his investment in
the company but his personal assets cannot be seized to settled
company debts or claims. Since the life of the company and the

shareholder is separate, the death or withdrawal of any shareholder

has no effect on the life of the business.
b) Diversification is a business growth strategy by offering new products
to new market, explain three (3) type of related diversification
Diversification strategies
Selling a new product to a new market
Backward integration:
A step back (up) in the value-added chain toward the raw materials,
which in this case mean that the manufacturer also becomes a raw
materials wholesaler. In essence the firm becomes its own supplier.
Forward integration:
A step forward (down) in the value-added chain toward the customers,
which in this case mean that the firm also becomes a finished goods
wholesaler. In essence the firm becomes its own buyer.
Horizontal integration:
Involves a different, but complementary, value-added chain. For
example a firm that manufacturer washing machines may go into the
manufacturer of detergent. These products are complementary in that
they need each other to work.
Question 5
a) Identify and compare any two (2) form of intellectual property
Intellectual Property Protection

There are primary to protect invention that represents a new way of
doing thing, the invention normally involve some level of technology
and can be in the form of a product or process. A registered patent
give exclusive right to the patent owner to make, use and sell the
patented product or process for up to 20 years and a patent owner can
still retain all right to the invention but license another party to use
the patent within certain agreed upon condition and stipulations.
The patent owner can also choose to sell the patent to another party
hence severing all right to the invention concerned. Patent right are
noted by the patent followed the patent registration numbers
because patent take time to register, companies can deter
infringements by displaying the words patent Pending or patent in

Progress . even so these deterrents have no legal impact until the

patent is fully registered and given a patent number.

Copyright are used to protect a wide range of original creative,
intellectual or artistic works or authorship. This can include original
works of art and literature, music composition, audio records,
drawings, sculptures, broadcasts films and computer program.
The idea behind the creative work is itself not protected and as such
some else can use the same idea but it must be in a significant on an
existing copyright. A copyright can exist for up to 50 years after the
death of the registered author. The symbol is university used to
denote a copyright.

b) Choose and explain any two sources of financing that an entrepreneur

can access.
I. Funds from Family & Friends
It is not uncommon for a new entrepreneur to rely on family and
friends to raise more initial capital for a business start-up. The
contribution from family and friends are often limited but is more easily
obtainable at the early stages of business start-up because they know
the entrepreneur and they want to support his undertaking especially
when they think the business has growth potential.
Friends and family capital contribution is likely to be in the form of
equity financing that gives them ownership in the business.

Venture Capital Financing

Venture capital can be broadly regarded as a pool of equity capital that
come from different individuals or groups of individuals who want to
invest in high growth businesses for high returns and Unlike angel
investors that invest their own funds, venture capitalists are
professional managers investing money from a pool of funds (equity
capital pool) parked under registered venture capital companies. While
venture capital funds are found in a diverse range of business sectors
they do tend to focus on high potential, innovation & technologycentered businesses such as ICT development business and
biotechnology companies.
Venture capital prefer to invest at early stage to full growth &
expansion stage of business growth. The amount of capital available
for investment can start at RM 1 million for early growth financing and
extend to RM20 million at later stages of growth financing