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MODULE 1: ESSENTIALS OF BUSINESS OWNERSHIP

Case Study 1: Moving Forward Together

The Felix family moved from Grenada to Tacarigua, Trinidad in the year 2005. They strongly
desired to be successful in this new land so that they can help their struggling relatives in
Grenada. The father of the family wanted his children to be independent, educated and
successful. He researched possible business structures for an import and export dry foods
business. The Ministry of Legal Affairs in Trinidad and Tobago, provided information on the
legal and regulatory framework for various structures.
Mr. Felix met with his family members to discuss the possible alternatives available to them.
They also considered whether to include two close friends in the business since they showed a
great interest in working with the family. They considered whether to form a partnership or a
private company. They also considered the challenges to be faced by including friends in the
venture.

1 (a) Compare the characteristics of the legal business structures being considered by the Felix
family, a partnership structure versus a private company, using the following criteria:
Formation and incorporation
Funding
Liability
Accounting

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 [8 marks]

1 (b) Outline TWO aspects of the legal and regulatory framework that the family must consider
in this proceeding with the venture.

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[4 marks]

1 (c) What is corporate social responsibility and how can the Felix family demonstrate this
when operating a venture.

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 [3 marks]
Total 15 marks

Case Study 2: To Franchise or NOT to Franchise

Mrs. Bakar is 47 years old and recently left a high paying job in the tourism industry. She was
looking for a change and a chance to use her business and interpersonal skills gained from years
in the tourism sector. She decided to research the “franchise” opportunities in Trinidad and
Tobago. Opportunities existed with foreign franchises e.g. SUBWAY, as well as, local franchises
e.g. Rituals. New franchise offers e.g. Auntie Anne’s and Starbucks also exist.

2 (a) Explain the term “franchise”.

A franchise is the license to make or sell a product under certain conditions granted by the owner of these

rights. So, a franchise is the right to produce a licensed product by the owner of the license. In this

contact, the franchisee pays the franchisor for the right to use the licensed material.

[3 marks]

2 (b) Outline TWO support mechanisms franchisors offer to franchisees.

[4 marks]

2 (c) Outline TWO advantages and TWO disadvantages Mrs. Bakar might face in a franchise

Advantages:

1. Franchises often have an established reputation and image, proven management and work

practices, access to national advertising and ongoing support.

2. You don't necessarily need business experience to run a franchise. Franchisors usually provide the

training you need to operate their business model.

Disadvantages:

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 1. Bad performances by other franchisees may affect your franchise's reputation.

2. Franchise agreements dictate how you run the business, so there may be little room for creativity.

[8 marks]
Total 15 marks

MODULE 2: NEW VENTURE PLANNING AND CREATION

Case Study 3: No Severance for ME!
After the closure of Caroni (1975) Ltd in Trinidad, Mr. Usine was left unemployed and without a
severance benefit to act as a buffer. He decided to open a small fruits and vegetable mini mart
from his home. He lived in a housing development where people usually had to travel out of the
area to purchase such food items. Mr. Usine approached NEDCO, a venture funding institution
in Trinidad and Tobago. The institution required a business plan. He also sought information
from another lending institution who required a business model to accompany the business
plan.

3 (a) Based on the case above, explain Mr. Usine’s “value proposition” in his business model.

[3 marks]

3 (b) State what is meant by a “business plan”.

A detailed description of a new or existing business, including the companies strategy,
aims and objectives, marketing & financial plan.

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 [2 marks]

3 (c) Identify FOUR key areas of a business plan the Mr. Usine must attend to.

FINANCIAL PLAN: This section covers the financing and cash flow requirements implicit in
other areas of the business plan. It contains projections of income, expenses, and cash
flow, as well as descriptions of budgeting and financial controls.

SALES AND MARKETING PLAN: The marketing plan delineates the methods and activities
that will be employed to reach the company's revenue goals. This section describes the
company's customer base, products or services, and marketing and sales programs.

EXECUTIVE SUMMARY This is usually a two-to five-page summary of the entire business
plan. It is an important part of the plan, in that it is designed to capture the reader's
attention and create an interest in the company. It usually includes the company's mission
statement and summarizes its competitive advantages, sales and profit projections,
financial requirements, plans to repay lenders or investors, and the amount of financing
requested.

MANAGEMENT OF THE VENTURE: The quality of a company's management team can be

the most important aspect of a business plan. This section presents the strengths of the
company's management team by highlighting relevant experience, achievements, and
past performance. Key areas include management's ability to provide planning,
organizational skills, and leadership. This section also contains information about the
company's ownership and workforce.

[4 marks]

3 (d) Explain THREE benefits of creating a comprehensive business plan for a venture.

》enables management to think through the business in a logical and structured way and
to set out the stages in the achievement of the business objectives

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 》ensures that both the resources needed to carry out the strategy and the time when
they are required are identified.

》Allows all employees to be aware of the business's direction (assuming the key features
of the business plan are communicated to employees)

[6 marks]
Total 15 marks

Case Study 4: Crystal’s Cold Reality

Crystal inherited $10 000 from her uncle and wants to set up an ice-cream parlour in her home
village where there is a large population who enjoy having an afternoon ice-cream treat.
People usually have to travel to other areas to enjoy this sweet treat. Crystal plans to offer her
ice cream at the market price hoping that it will allow her to benefit from a high volume of
sales.
The reality is that Crystal’s inheritance is inadequate to start up the venture. Crystal has
approached a local commercial bank for the additional funds and she also goes to the Business
Trust for advice on financing for her business. The Business Trust informs her that she could
access finance through equity funding, debt financing and/or grants. One bank has requested
that Crystal prepare a business plan that should include a business model.

4 (a) Identify TWO reasons why a business model is important for Crystal.

[2 marks]

4 (b) Explain to Crystal TWO differences between ‘debt’ and ‘equity’ financing.

Equity refers to the Net Worth of the company. It is the source of permanent capital. It is the owner’s

funds which are divided into some shares. While, money raised by the company in the form of borrowed

capital is known as Debt. It represents that the company owes money towards another person or entity.

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 》Debt holders are the creditors whereas equity holders are the owners of the company.

》Debt can be in the form of term loans, debentures, and bonds, but Equity can be in the form of shares

and stock.

[4 marks]

4 (c) Explain TWO advantages of using equity financing which Crystal would enjoy.
Cash flow: Equity financing does not take funds out of the business. Debt loan repayments
take funds out of the company's cash flow, reducing the money needed to finance growth.
[6 marks]

4 (d) For EACH category in the table below, identify ONE example of a source that Crystal could
use to finance her business.

Category Example of Source

Equity funding

Debt financing

Grants

[3 marks]
Total 15 marks

MODULE 3: MANAGING, GROWING AND HARVESTING THE VENTURE

Case Study 5: E- Commerce for Good Health
Brenan. an entrepreneur, recently developed a medicinal ice pop geared toward curing young
children of the common flu symptoms. He was very passionate about the venture and its
success so far and he wanted to grow the business through e-commerce. He had a discussion
with a manager in his business. Brenan thought that the website would be easy to set up,
inexpensive and require no attention - and besides, everyone is shopping online these days. The

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 manager disagreed as he thought that more effort was required and while making money might
look easy, there were challenges with privacy and infrastructure.
Brenan learnt from him that for e-commerce to be successful, they would have to adopt
innovative strategies to attract and retain customers. Selling through their website would bring
some benefits, with the data mining opportunities being the most significant. He was happy
about the possibilities with e-commerce.

5 (a) Explain how data mining could benefit the entrepreneur.

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[2 marks]

5 (b) i Apart from data mining, list THREE other benefits of selling through a website.

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[3 marks]

5 (b) ii Explain THREE other benefits apart from data mining and those benefits listed in
(b) (i) above.

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[6 marks]

5 (c) Outline TWO innovative strategies that Brenan can use to attract and retain online
customers.

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[4 marks]
Total 15 marks

Case Study 6: Keys to success

Nisha attended a workshop on the venture life cycle, where the facilitator spoke about the
lessons learnt from running her business and what she did to ensure it did not fail over the life
cycle. She spoke on the process of developing the idea, starting the venture and growing it until
it was mature and stabilised. More important, she highlighted the innovations he applied to
ensure that the business did not decline after maturity. She said that the internet had allowed

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 her to strengthen the business in the innovation phase by improving the overall speed and
flexibility.

6 (a) From the case, identify THREE stages of the venture life cycle.

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[3 marks]

6 (b) Explain TWO of the stages identified in (a) above.

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[6 marks]

6 (c) State THREE for the importance of venture valuation.

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[3 marks]

6 (d) Outline ONE method of venture valuation.

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[3 marks]
Total 15 marks

END OF EXAM

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