MS-93 Management of Small and New Enterprises Sample Paper
MBA - Master of Business Administration
Note: This paper consists of two Section A and B. Attempt any three questions from Section A each carrying 20 marks. Section B is compulsory and carries 40 marks.
1. (a) 'Entrepreneurs are born and not made.' Critically evaluate this statement.
(b) What do you understand by the term entrepreneurial competence? How, if at all can it be developed?
2. (a) What are the factors that influence the make or buy decision for a small entrepreneur?
(b) Assume that you are an entrepreneur planning to start up a full service upto auto repair and maintenance centre. What are the factors that you would need to consider before taking the location decision for your enterprise?
3. (a) What are the main sources of short term finance for a small entrepreneur? Briefly describe.
(b) Critically evaluate the organisational form of partnership vs a private commpnay for a small Entrepreneur intending to set up a readymade garment manufacturing unit. The entrepreneur in question in technically qualified but has limited financial resources.
4. (a) What are the work measurement techniques that can by used by a small entrepreneur?
(b) What are the production quality mechanisms that you will use, if you are producing processed food items for the export markets? Give reasons for your choice.
5. Why is the srtabilisation phase considered one of the most critical phases on the life of an enterprise? Outline the main challenges at this stage and suggest stratifies to overcome them.
SECTION B
6. Read the case given below and answer the questions at the end of the case.
Women's Apparel Shop
Urmila Mathur was very excited today. Six months back when her husband joined LML Ltd. As Vendor Development Manager, she shifted from Delhi to Lucknow. Urmila did her graduation in Fashion Technology and had worked as a merchandiser with a leading garment exporter and had been a visiting faculty at the National Institute of Fashion Technology.
After shifting to Lucknow, Urmilae spent first three months in arranging her house and setting down in the new city. For the last three months she had surveyed the city and had been an idea of opening a boutique in an up-market area. For the last three months, she had not been able to find a suitable location for her boutique. A few days back she was told by an agent that a womer's apparel shop in Hazratganj area was up for sale. She had visited the shop a couple of times and on each occasion. She did buy a dress for herself. She was impressed by its location and considered it very suitable for her boutique. She felt it was an ideal opportunity to buy this running garment shop and convert it into her dream boutique.
Urmila knew the garment business inside out. However, buying a business if a complex matter. Last night she discussed the matter with her husband. They listed the main problems in buying the business as --- evaluating the business, fixing the fair price the same and closing the deal in a safe, legal and equitable way. They decided to work on the project.
Mr. Lajwani, the owner of the women's apparel shop told Urmila that he was selling the unit as he wanted to help son who had set up a yarn mill at Kanpur and needed his assistance. Mr. Lalwani also told her that the business had provided his family as good living and he felt that with her knowledge and experience in fashion the business would make a good progress. He told her that he expected Rs. 22 lakhs for his business and gave her the largest financial statement of his business for review.
She had returned home very excited and was eagerly waiting for her husband to analyse the financial statements thereby evaluating the prospective business and fixing a price for the business to be bought.
Balance Sheet as on 31st March 2000| Assets | Liabilities | ||
| Fixed Assets | 3,52,000 | Owners Equity | 8,48,000 |
| Stocks | 11,36,000 | Accounts Payable | 3,36,000 |
| Other Liabilities | 3,04,000 | ||
| Total Assets | 14,88,000 | Total Liabilities | 14,88,000 |
Profit and loss Account for the tear 1999–2000
| Sales Income | 57,12,000 |
| Cost of Goods sold | 33,76,000 |
| Gross Profit | 23,36,000 |
| Expenses | 12,96,000 |
| Operating Profit | 10,40,000 |
She was of the opinion that a shop of the same size in any good market is going to cost her not less than Rs. 5-5 lakhs and she would have to spend at least Rs. 2.5 lakhs on the interiors. She had carefully examined the inventories, and had liked the range, not more than 5 per cent of the stocks were old or slow moving. Even these could be easily disposed in a sale at their cost price. The business was having an average growth rate of ten percent for the last three years and she was confident of achieving a growth rate of fifteen percent.
Questions
1. What information should Mrs. Mathur gather and analyse before raking the decision to buy this business?
2. What do you recommend as a fair price for Mrs Mathur to pay, in case she decides to buy the garment shop? Give reasons for your answer.
