1

ETR 300 (ENTREPRENEURSHIP)

SECTION A (Multiple Choice Questions) (40 Marks) Answer ALL
questions.

1. A company that pursues a cost-based pricing strategy will adopt one of
the following:-

A. Setting price of a product based on the total cost of the product plus
a standard mark-up
B. Setting price based on customers perception of the value of the
product
C. Setting price based on competitors prices
D. All of the above
E. None of the above

2. An organizational chart should indicate the following, EXCEPT:

A. Designations that exist in the organization
B. The line of authority and responsibility
C. The hierarchy in the organization
D. The span of control
E. The delegation of tasks

3. Which of the following statements is FALSE regarding the process of
identifying, evaluating and selecting business idea?

A. Social problems can be a source of business idea
B. Business ideas should conform to the existing rules and
regulations
C. Business risks have to be considered in screening a business
idea
D. Business idea can be generated through the process of lateral
thinking
E. Business idea should not be free from any element of monopoly

4. The following factors need to be considered before making the
purchase of machinery and equipment, EXCEPT:

A. price
B. suppliers reputation
C. brand name and physical features
D. availability of spare parts
E. after sales service offered

2
5. The following benefits are examples of non-monetary fringe benefits,
EXCEPT:

A. Accommodation facilities
B. Recreation club membership
C. Performance bonus
D. Annual vacation
E. Medical coverage

6. The following statements are true for private limited companies,
EXCEPT:

A. Memorandum of Association outlines the power and limitation of
the company
B. Articles of Association defines the internal procedures of the
company
C. A company should register with the Finance Ministry before its
registration can be approved by the Registrar of Company
D. The maximum number of shareholders should be limited to 50 at
any given time
E. A company is prohibited to offer or to sell its shares to the public

7. Yummy Bakery will start operations within the same area as the
following bakeries and expects to capture a 18% market share. If the
market shares for the other bakeries are given as follows, determine the
expected market share (RM) for Yummy Bakery.


Name Market Share (%) Market Share
(%)
Suria Bakery 50% 600,000
Mama Bakery 30% 360,000
Sedap Cake & Pastry 20% 240,000
Total 100% 1,200,000


A. RM210,000
B. RM218,000
C. RM216,000
D. RM220,000
E. RM984,000




3

8. Manpower planning is particularly important when:

I. Hiring an employee
II. Selecting an employee
III. Retaining an employee
IV. Renovating the office
V. Preparing the office layout

A. I only
B. IV only
C. V only
D. IV and V
E. I, II and III

9. Following are the forms of business support system existing in
Malaysia, EXCEPT:

A. Marketing of products and services
B. Infrastructure
C. Financial help
D. Securing labour force
E. Research and development

10. Following are the prime reasons for preparing a business plan,
EXCEPT:

A. gives opportunity for the entrepreneur to objectively, critically and
practically evaluates a business proposal
B. to study and evaluate the viability of the proposed project before it
is implemented
C. to ensure the proposed project is devoid of all problems
D. to instill confidence to potential financiers for the purpose of
securing finance
E. to prioritize the limited resources and to distribute it accordingly

11. The following factors need to be considered before choosing the best
location, EXCEPT:

A. distance from the supply of materials
B. availability of public transport
C. distance from target market
D. near to supply of labor force
E. price and condition of land usage

4
12. Which of the following statements is not true about operations
management?

A. Business input refers to all resources required to produce a
particular output
B. Operations management is the process of marshalling resources
through a transformation process to produce output
C. As input transformed into output, it acquires added value
D. Business output can be categorised into either products or services
E. The transformation process refers to the activities of converting
output into input

13. In general, the degree of risk facing an entrepreneur depends upon the
following factors:

i. the barrier to entry (ease or difficulty) into a particular business
ii. the accessibility to funds
iii. the relative size of capital to be invested
iv. the bureaucratic process in attaining approval to operate a
business
v. the relative profit margin that can be generated from the proposed
business

A. i, ii and iii
B. ii, iii and iv
C. i, iii and v
D. i and iii
E. i, ii, iii, iv and v

14. Which of the following statements is INCORRECT regarding the
business licensing procedures and laws in the country?

A. A business licence is required for all types of businesses except
those whose paid-up capital is less than RM100,000
B. The wholesale licence is the licence to sell in large quantities to
retailers operating in particular business area
C. Sales tax is charged on imported products and the licence can be
applied from the Royal Custom and Excise Department in the
respective states
D. Application for food manufacturing licence can be made through
District Health Officer or Local Council
E. Excise licence can be applied from the Royal Custom and Excise
Department

5
15. The steps in preparing the sales forecast in the correct order are as
follows:

i. estimate the market share
ii. identify competitors
iii. determine the market size
iv. forecast sale
v. identify the target market
A. i, ii, iii, v, iv
B. ii, iii, iv, i, v
C. iii, ii, i, v, iv
D. iv, ii, iii, i, v
E. v, iii, ii, i, iv

16. What is the main factor that causes entrepreneurs to register their
business as a private limited company rather than as sole proprietorship
or partnership?

A. Has a registered address
B. Capital contribution is not limited
C. Shareholders are not limited
D. Liabilities are limited
E. Has to conform to the Companies Act, 1965

17. The term Entrepreneurial Competencies refers to:

A. the key characteristics that successful entrepreneur should
possess in order to perform entrepreneurial functions effectively
B. the process that leads to the setting-up of a business entity
C. the step-by-step plans to achieve business goals
D. the entrepreneurs skills in identifying new and potentially unique
ideas to achieve their goals
E. the entrepreneurs ability to persuade of influence others for
mobilizing resources, obtaining inputs, organizing production and
selling their products or services










6


18. In Malaysia, the Ministry of International Trade and Industry defines
small and medium industries (SMIs) as companies with:

A. Full-time employees of not exceeding 150 and annual sales of not
exceeding RM25 million
B. Full-time employees of not exceeding 50 and annual sales of not
exceeding RM10 million
C. Full-time employees of not exceeding 150 and annual sales of not
exceeding RM10 million
D. Full-time employees of not exceeding 50 and 150 and annual
sales of between RM10 and RM25 million
E. None of the above

19. Which of the following statements is FALSE about a private limited
company?

A. The company exists as a separate legal entity from the owner
B. The company is not allowed to offer its share to the public
C. The liability of the shareholders are not limited to the amount of
shares subscribed
D. The company is required to appoint a company secretary
E. The company can own properties and can initiate legal
proceedings against others


20. Good Muslim entrepreneurs during the Prophet Muhammad S.A.W
reign shared some common exemplary conducts. Which of the
statements below is NOT TRUE of that conduct?

A. Practice moderate way of life
B. Profit is made to accumulate wealth
C. Posses leadership qualities in all aspects
D. Avoid using influence for self interest
E. Business is secondary if they are needed for other forms of jihad









7



SECTION B (True/False Questions) (30 Marks)
Answer ALL questions.

1. Entrepreneurship involves the process of starting a business but not
the process of diversifying a business.
2. Privatisation policy introduced by the Malaysian government can be
viewed as business opportunities.
3. Job specification outlines the designation and responsibilities of an
employee.
4. Business support system refers to the assistance and service
provided by the government agencies alone.
5. Every form of business formation in this country must appoint a
company secretary as stipulated in Section 139 of the Companies
Act 1965.
6. The management functions are essentially the same in small and
large companies.
7. Market segmentation is a technique used to identify competitors that
offer product or service in the same market.
8. Formulation of companys policy is not considered as part of
planning activities in a small business.
9. Marketing concept is geared towards satisfying customers needs
and wants as well as contributing towards making profit for the
business.
10. Employers contribution to Employees Provident Fund (EPF) is not
mandatory for all businesses registered or incorporated in Malaysia.
11. Faridah calculated the productivity index of her garment factory and
found out that the index is 2. She concluded that her factorys
transformation process is not efficient because the index is more
than one.
12. A business mission is a comprehensive document that helps the
entrepreneur to analyze the market and plan the business strategy.
13. It is not necessary for an established company to carry out any
promotional activities because it is already well known in the market.
8


14. Market share is the total potential purchase of the target market.
15. Promotion is an ingredient used to inform and persuade the market
where it includes advertising, publicity, personal selling and sales
promotion.
16. A sole proprietorship business has to comply with more legal and
statutory requirements than a private limited company.
17. One of the aspects in material requirement planning is to estimate
the quantity needed based on sales forecast.
18. Overdraft is a facility provided which enables entrepreneur to
withdraw money in excess of the exact balance from their savings
account.
19. The purpose of Social Security Act 1969 is to provide additional
profit to the employees upon retirement.
20. The planned distribution system should take into consideration
factors such as the distributors capability, market coverage,
salesmans credibility and credible network.




















9






SECTION D (Essay Questions)
(30 marks each)
Answer ONE (1) question only.

1. En. Taufik is preparing the marketing plan for his new stationeries and
printing service centre in Indah Jaya. His market survey shows that;
i). There are four other operators offering similar services around the
area. They have been in operation for more than 2 years. Each
operator is generating an average of RM10,500 sales per month.

ii). There are about 7,000 private college students studying at three
different colleges within close proximity to Indah Jaya. All these
colleges are operating on tri-semester system (3 semesters in a year).
About 30% of the students are patronizing the printing service centres
in Indah Jaya with an average spending of RM100 each per semester
on printing and stationeries.

En. Taufik has to develop his marketing strategy and forecast his sales
based on these limited information.

Questions:
a). Define sales forecast and list 3 factors that should be taken into
consideration by En. Taufik in preparing sales forecast.
(6 marks)

b). What is the difference between market size and market share?
(4 marks)

c). Assist En. Taufik to calculate the market size.
(5 marks)

d). Assuming there is no substantial difference in the demand within
the first three years of his operation. En. Taufik is targeting to capture
10% sales from the total market size in the first year, 15% in the second
year and 20% in the third year. Prepare his sales forecast schedule for
three years.
(7 marks)
e). List and briefly explain 4 important elements he should
incorporate in developing his marketing strategy.
10
(8 marks)



2. a). En. Razali is operating a plastic injection moulding factory.
Recently, En. Razali managed to secure a new contract to supply
75,000 units of plastic containers per month to Garuda Wholeseller Sdn
Bhd. He is planning to acquire additional automatic moulding machines
for this project. The vendor quoted that the machine is able to produce
150 units of containers per hour. En. Razali further estimates that each
machine will be operated for 8 hours per day. Assuming the factory is
operating on 25 working days per month, how many machines does he
need?
(5 marks)

b). Memorandum and Articles of Association is a mandatory pre-
incorporation document of a private limited company. State 5 of the
major components of the Memorandum of Association.
(15 marks)

c). List down and describe the four (4) criteria that need to be
considered in a good packaging strategy.
(10 marks)




4. a. List and define three (3) types of business entities commonly
formed by small businesses in
Malaysia. (3 marks)

b. Differentiate between the three business entities by explaining at
least two (2) advantages and disadvantages of each form of the
entities. (12 marks)

c. List five (5) characteristics of a small business. (5 marks)

d. Briefly explain the principles of Islamic Entrepreneurship. (10
marks)






11





ANSWER SCHEME

MULTIPLE CHOICE

1. A
2. E
3. E
4. C
5. C
6. C
7. C
8. E
9. D
10. C
11. C
12. E
13. C
14. A
15. E
16. D
17. A
18. A
19. C
20. B


TRUE/FALSE

1. F
2. T
3. F
4. F
5. F
6. T
7. F
8. F
9. T
10. F
11. F
12. F
13. F
14. T
15. T
16. F
17. T
18. F
19. F
20. T




12




ESSAY QUESTIONS

1. a). Sales forecast is the companys expected purchases from the identified target market. It is
normally stated within a specified time period such as monthly or annually.

In forecasting sales, En. Taufik should consider the following factors:

(i) Students awareness about the existence of his service centre
(ii) Seasonal factors; the academic calendar of the colleges
(iii) Characteristics of a stationeries and printing service business

b). The market size is the total potential purchase of the target market and normally stated in
terms of units or Ringgit, whereas market share is the percentage of potential market size captured
by the company after taking into consideration the competitors position in the same market.

c). Market size calculation:

(7000 students X 30%) X RM100 spending per student X 3 semesters in one year =
RM630,000 per year)

d) Sales forecast schedule


Year Target Sales
1 10% X RM630,000 = RM63,000
2 15%X RM630,000 = RM94,000
3 20% X RM630,000 = RM126,000


e). Four (4) important factors to be incorporated in developing his marketing strategies are:-

1. Product and Service Strategy
2. Place/Location strategy
3. Pricing Strategy
4. Promotion Strategy


2. a). Calculation on number of machines required

75,000/ (150 X 8hrs X 25 days) = 2.5
En. Razali needs at least 3 machines

b). 5 major components of the Memorandum of Association:-

1. the name of the company
2. the companys registered office
3. the objects of the company i.e. the nature of business intended to be carried on
4. that the liability of the members is limited
5. the amount of authorized share capital
6. the association/subscribers clause


(The student may choose any 5 of the above answers)
13




c). Four criteria that should be taken into consideration in developing good packaging strategy
are as follows:-

1. Product Safety
Packaging should ensure product safety during traveling, storing and display.

2. Easy to use
Good packaging should also ensure that a product is easy to use i.e. user friendly
product.

3. Product difference.
Packaging should distinguish a product from competitors product in terms of design
and shape. Good packaging should ensure customer could easily recognize the
product.

4. Customer attraction.
A good packaging should also easily attract customers attention due to colour,
design, size, shape and component of the product.



4. a. Three types of business entities commonly formed by small businesses in
Malaysia are:

i. Sole proprietorship (1 mark)
ii. Partnership (1 mark)
iii. Private Limited Company (1 mark)

(The student may choose any 2 of the following answers)
b. TWO Advantages of a sole proprietorship:
(1 mark for each point)

Easy to set up and few formalities
Easier to manage the owner has full control over the business
The business is not required to disclose business information to the public
The owner keeps all the profit
Few legal requirements
(2marks)

TWO Disadvantages of a sole proprietorship:

Unlimited liability
Few or limited business resources
The owner has total responsibility for the business
The business is terminated upon the owners departure
(2 marks)

TWO Advantages of a partnership business:

Easy to set up and few formalities
14
The partners are not required to disclose business information to the public
More resources available through contribution from partners
Risk of losses in business are spread between partners
Better management through combination of knowledge, experience and
skills of partners (2 marks)

TWO Disadvantages of a partnership business:

Unlimited liability liabilities in business may affect personal assets of
partners
Each partner is liable for the liability of the business regardless of which
partner is at fault
Risk of personal clashes between partners
The partnership is terminated upon the departure or bankruptcy of any
partner, unless stated otherwise (2 marks)


TWO Advantages of a private limited company:

Limited liability: not affecting shareholders personal assets
Easier to transfer ownership through the transfer of shares
Interest of shareholders are protected by laws
Easier to generate business resources (i.e. financial assistance)
Continuity of the company: because life of the company is not affected by
the shareholders departure (2 marks)

TWO Disadvantages of a private limited company:

There are a lot of legal requirement and formalities to comply (i.e.
Companies Act 1965)
Cost of setting up a company is high
Must submit an audited account to the Registrar of Companies every year
Subject to pay a certain percentage of company tax
Must appoint a company secretary and auditors
The public may have access to the company audited financial report
(2 marks)

c. Five characteristics of a small business with explanation:

i. Owner-manager
ii. Limited resources
iii. Agile/vulnerable to changes
iv. Labor intensive than capital intensive
v. More time spent on operation than on planning (5 marks)


d. Islamic entrepreneurship dictates that the individual must be a religious person, then
a practitioner. A Muslim entrepreneur is expected to perform his duties as ibadah
and he/she is entrusted to play the role as a responsible leader (khalifah).



15



The ultimate objective is to acquire the blessing of Allah S.W.T., to perform an
obligatory duty (Fardhu Kifayah), with ubudiah (state of servitude before God) and
tauhid (oneness of God), risk taking become a guided endeavour and always be
humble and redha (contented with what God has given) and Muflih means to achieve
what is desired, happiness in both worlds, prosperity, free from worries, difficulties
or mental anguish.


Material wealth is never forbidden as long as the four principles are upheld; which
are:-
1. Ultimately, God owns them
2. Wealth created by God is plentiful and more than enough for
everyone
3. Wealth is created for man
4. Wealth is entrusted (amanah) to man

The pursuit of wealth must be accompanied by intention, means, management and
usage as stipulated by Islam.

The success formula of Muslim entrepreneurs as itemized by Al-Qurtubi;-
Halal (lawful livelihood)
Qanaah (be pleased with ones earnings)
Taufik (blessings of Allah in proportion to ones expectations)
Saadah (be happy) and
Jannah (heaven)

(Students can also relate the answer with other Islamic model of entrepreneurships
such as Imam Al-Ghazali 7 Steps of Success and Adnans Islamic Entrepreneurship
Model)

Islam propagates business activities, provides the infrastructures, outlines the rules
and procedures (Al-Quran & Hadiths) and God promise rewards.