TEST CODE 02260020

FORM TP 2019209 MAY/JUNE 2019

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN ADVANCED PROFICIENCY EXAMINATION®

ENTREPRENEURSHIP

ENTREPRENEURIAL PRACTICE

UNIT 2 – Paper 02

2 hours 45 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This paper consists of SIX mini-case scenarios, TWO from EACH module.

2. Answer ALL questions.

3. Write your answers in the spaces provided in this booklet.

4. Do NOT write in the margins.

5. If you need to rewrite any answer and there is not enough space to do so on the
original page, you must use the extra lined page(s) provided at the back of this
booklet. Remember to draw a line through your original answer.

6. If you use the extra page(s) you MUST write the question number clearly in
the box provided at the top of the extra page(s) and, where relevant, include
the question part beside the answer.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2018 Caribbean Examinations Council

All rights reserved.
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INSTRUCTION: Read EACH mini-case and answer the questions that follow.

MODULE 1: ESSENTIALS OF BUSINESS OWNERSHIP

Case 1: Choices

Itongo inherited a music business from his grandfather, who registered as a sole trader. Itongo, now the
owner, is thinking about which form of business will best suit his plans as he undertakes this new venture.
Being cognizant of his desire to create and innovate, Itongo wants to have complete control of the business
and its operations. He knew that a franchise was not a suitable option and was aware that other forms of
businesses could be explored. Given his need for more capital, he thought about converting the business
to a partnership with one of his colleagues who had access to capital.

1. (a) (i) Define the term ‘franchise’.

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[2 marks]

(ii) Explain why a franchise would NOT be a suitable option for Itongo.

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(b) Itongo recognizes that other types of ventures exist. He has also given consideration to
a limited liability company as well as a private company. Distinguish between a ‘limited
liability company’ and a ‘private company’.

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[6 marks]

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(c) Explain the term ‘partnership’ AND state ONE advantage that Itongo can gain from a
partnership.

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[4 marks]

Total 15 marks

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NOTHING HAS BEEN OMITTED.

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Case 2: Formal is Normal

Freida operates a cook shop in her community. As a principle, she provides breakfast and lunch to 15
senior citizens daily. She is having thoughts about expanding the business and recognizes that certain legal
and regulatory requirements for businesses are necessary. These requirements include registration of the
business, adhering to labour laws, tax obligations and health and safety standards. Freida wants to seek
advice on whether she should register the business as a non-governmental organization or a community-
based organization. As she embarks on expanding her venture, her intent is to make significant profit,
support the elderly and pay minimal taxes.

2. (a) From the case, identify THREE actions that are necessary for Freida to legally establish
her expanding business.

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[3 marks]

(b) Describe EACH of the following types of organizations to Freida.

(i) Sole trader ..............................................................................................................

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(ii) Community-based organization .............................................................................

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(iii) Non-governmental organization ............................................................................

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[9 marks]

(c) Explain why Freida’s actions of feeding the elderly, though informal, can be considered
a ‘social value’ created by the business.

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[3 marks]

Total 15 marks

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MODULE 2: NEW VENTURE PLANNING AND CREATION

Case 3: Get it Right

Michael made a decision to establish a food venture, but realized that the restaurant industry can be very
challenging. Given the number of competitors, it is important for him to have a robust marketing strategy,
in which he pays attention to the four P’s. He also needs to assess whether the venture would be financially
feasible before he makes an investment decision.

3. (a) List THREE of the components of the four P’s in marketing strategy, other than
promotion.

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[3 marks]

(b) Explain how market research can support the promotional strategy of the venture.

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(c) Describe THREE elements that are included in a financial feasibility analysis.

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[9 marks]

Total 15 marks

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Case 4: Fail to Plan – Plan to Fail

Askia wanted to establish a business but he was uncomfortable with the planning process. His sister Ikeela
indicated that a business plan provides a clear road map for implementing business ideas. Business plans
also provide information about the four main components of every venture. Askia was also encouraged to
pay attention to his finances, in particular the three main financial statements. Askia now seeks assistance,
which will guide him in developing a robust business plan.

4. (a) List the FOUR main components of operating a venture.

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[4 marks]

(b) Outline FOUR reasons why a business plan is considered the “road map” for a business.

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[8 marks]

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(c) Explain how the business plan assists an entrepreneur in making financial projections.

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[3 marks]

Total 15 marks

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MODULE 3: MANAGING AND GROWING THE VENTURE

Case 5: Millennial

Kaya, a young entrepreneur, who was born in 2008, decided to establish a youth fashion line called N’lighten
Youth Wear. Having discussed the idea with her parents, she decided that establishing an online storefront
would be a step in the right direction. Kaya would therefore have no need for the regular infrastructure
required to run a brick and mortar operation. With an online storefront, Kaya would be able to outsource
some of the processes, use offsite storage and distribution, share technology and other services and benefits.
This model of an online storefront suits her targeted customers who were born during the information age.

5. (a) State FOUR benefits to Kaya, other than tracking sales results, of using a website to
conduct her business.

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[4 marks]

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(b) Outline FOUR ways, other than outsourcing, in which e-commerce can improve the
viability of Kaya’s venture.

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[8 marks]

(c) Explain how e-commerce will allow Kaya to track sales results from the business.

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[3 marks]

Total 15 marks

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Case 6: Value your Ideas

Selas and her mother started a bed and breakfast business two years ago. With the increasing demand the
business has been experiencing, Selas wants to expand the business. She contemplates whether this is the
appropriate time to conduct a valuation on the business, given that it is in the third stage of the business
cycle. Selas makes the decision to conduct the valuation, since it would be beneficial to them as owners,
as well as to any other potential investors.

6. (a) Outline THREE reasons for conducting the valuation of a business.

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[6 marks]

(b) Name THREE stages of development in the business cycle.

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[3 marks]

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(c) Explain the third AND fifth stages in the business life cycle.

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[6 marks]

Total 15 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

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EXTRA SPACE

If you use this extra page, you MUST write the question number clearly in the box provided.

Question No.

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