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BS 209 ENTREPRENEURSHIP DEVELOPMENT SKILLS
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Question 1
You have conducted a study of Africa’s richest entrepreneurial leaders and innovators.
(a) Identify and discuss any six key themes that constitute the core attributes of acquirable
attitudes and behaviours of these most successful entrepreneurs. (10Marks)
✔ Goal oriented
✔ Commited to do the business
✔ Thrive on uncertainities
✔ Initially creativy
✔ Willing to listen and learn
✔ Willing to take risk
(b) In the context of your reply in 3(a) above discuss the myth that ‘entrepreneurs are born’.
✔ Entrepreneurs are Made
✔ If entrepreneurship comes from an interaction of heredity and environment, how much
of it do you think is truly genetic?
Let me use a metaphor. Short people don't make it often in the NBA, just like certain kinds
of genetically hard-wired individuals don't make it as entrepreneurs, and others do. In
reading the genetic literature, we found that up to 60 percent of critical personality
characteristics are heritable. Significant portions of personality traits critical to
entrepreneurs, like the willingness to take risks and the ability to tolerate ambiguity and
uncertainty, are heritable.
QUESTION 2
A business plan is often regarded as an important selling document to employees, potential
investors and bankers as each stakeholder is more interested in their stake in the new business
venture. The issues which bankers look for in a business plan are different from the interests
of equity investors and employees. Discuss.
Business plans presented to bankers:
➔ Purpose of borrowing
➔ Amount and timing of funds required
➔ Other sources of finance that together with debt will ensure the business is fully funded until
it starts climbing out of the J-curve
➔ Details of security to be offered, including valuation of assets and personal guarantees
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➔ Schedules for the repayment of the loan and interest payments which should be supported by
realistic cash flow and profit projections
➔ Computation of benchmark ratios such as: debt Equity rations, interest cover
➔ Sensitivities, including the impact of changes in interest rates and key assumptions to which
the business plan is sensitive
Business Plans Present ed to Providers of Equity:
➔ Structure of the Proposed Equity deal and the resulting ownership structure of the business.
➔ Amount of equity being offered and the price
➔ What the funds will be used for
➔ Commitment from the management team in terms of their own investment in the business,
as other equity investors will feel more confident if managers of the business are risking
their own capital.
➔ Exit strategies and potential exit dates
➔ Any fees associated with arranging and executing the deal
➔ Any restrictions placed on the business by shareholders
➔ The expected role of shareholders in terms of decision making and whether they will have a
seat on the board.
QUESTION 3
According to the Theory and Practice of Innovation by Peter F. Drucker (1985), innovation
impulses for entrepreneurs emerge from a number of subtle sources.
(a) Delineate these sources of innovation impulses and analyse them within their two broad
environmental contexts that are most relevant for entrepreneurial opportunity identification
(5 Marks)
➔ INTERNAL
1. The unexpected events - success, failure, or event
2. The incongruity or contradiction - reality as it actually is,
assumed to be, and ought to be
3. Innovation based on process need
➔ EXTERNAL
4. Changes in industry structure or market structure that
catch everyone unawares-
5. Demographic changes (population changes)
6. Changes in world view - perception, mood, and meaning
7. New knowledge, both scientific or nonscientific
(b) Conduct a separate analysis of any five sources of innovation impulses, for each has its own
distinct characteristics (15 Marks)
NB USE ANY OF THE ABOVE AND EXPLAIN IT IN DETAIL
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QUESTION 4
The saying that; “two dogs don’t make a lion” amply captures the post-merger business failures in
Zimbabwe. Discuss this statement with the aid of any four real-life classic examples of underlying
reasons of post-merger corporate failures
➔ Failing to adapt to changes in the environmental
Reasons for failing to adapt include:
•complacency
•poor corporate governance
•opportunities for innovation and diversification
•lack of an enabling political environment.
•Communication breakdown
➔ Strategic drift
Strategic drift is a term devised by Johnson (1988) to describe as a warning to those who
champion the idea of strategy emerging as a series of logical, incremental steps. Johnson
argues that this limits the rate of change to the speed at which management might feel
comfortable, which has many advantages (particularly in implementation), but might be
inappropriate in periods when the environment moves very quickly. The rate of change in
the market place speeds up, and the firm's incrementalist approach is not enough to maintain
its advantage, and it is left behind.
Johnson's main argument is that the reasons for failing to increase the tempo of change are largely
cultural, rather than technical. I may want to add that this may be more to do with the management
basking in their comfort zone and are afraid of taking on additional challenges. I will talk of two
examples here. The first one is about one of my previous clients. During one of their business
strategy meeting, I suggested that they bid for the takeover of Lobels Bread Company. The answer
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was shocking. No we are a milk company. They did not see what I perceived to be a perfect match,
bread and milk and butter. Today the milk business as we all know has been seriously eroded.
The second example is for the Zimbabwe Sugar Refineries who prided themselves of manufacturing
white sugar only.
➔ The curse of the US dollar
One may ask why no so many companies folded during the dreaded hyper-inflationary period of
2008/2009 but now when the country is using a stable US dollar. A critical analysis on the 2008-9
periods, you will see that companies were increasing selling prices on a daily basis. Yes turnovers
were increasing while volumes were significantly declining. Come the US dollar, unfortunately
companies are not able to force prices up as they were used to do during the Zimbabwe dollar. An
analysis on volume growth between the Zimbabwe dollar era and the US dollar era, you will
discover that there is a declining trend. The focus on management was turnover growth driven by
price increase rather than volume growth. Zimbabwean management were thus caught in this
conundrum by the coming in of a stable pricing system.
So who is to blame for the collapse of the Zimbabwean companies? In conclusion, while I do agree
that as much as the sanctions and political environment have to a large extant contributed to the
failures, management foresight still played a major part. Inadequate corporate governance was and
is still the chief contributor. I am saying this since we still have shining stars in the country thriving
within the same environment, the likes of Delta, Econet, Barclays, CBZ to name but a few.
Question 5
(a) Discuss the ideology of design thinking and discuss the six (6) key practical steps which
entrepreneurs should follow in the implementation process of new product or service creation using
design thinking as an ideology. (10 Marks)
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Design thinking is an ideology supported by an accompanying process. A complete definition
requires an understanding of both.
Definition: The design thinking ideology asserts that a hands-on, user-centric approach to
problem solving can lead to innovation, and innovation can lead to differentiation and a
competitive advantage. This hands-on, user-centric approach is defined by the design
thinking process and comprises 6 distinct phases, as defined and illustrated below.
➔ Empathize: Conduct research in order to develop knowledge
about what your Users Do, Say, Think, and Feel.
➔ Define: Combine all your research and observe where your
users’ problems exist. In pinpointing your Users’ Needs, begin
to highlight opportunities for innovation.
➔ Ideate: Brainstorm a range of Crazy, Creative Ideas that
address the unmet user needs identified in the define phase.
➔ Prototype: Build Real, Tactile Representations for a subset
of your ideas.
➔ Test: Return to your Users for Feedback. Ask yourself ‘Does
this solution meet users’ needs?’
➔ Implement: Put the vision into effect. Ensure that your
solution is Materialized and Touches the lives of your end
users.
(b) Justify why academia and authorities should encourage Zimbabwean entrepreneurs to embrace
design thinking when considering a new way to think about product and service development. (10
Marks)
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Why — The Advantages
Why should we introduce a new way to think about product development? There are numerous
reasons to engage in design thinking, enough to merit a standalone article, but in summary, design
thinking achieves all these advantages at the same time:
➔It is a user-centered process that starts with user data, creates design artifacts that address real
and not imaginary user needs, and then tests those artifacts with real users.
➔It leverages collective expertise and establishes a shared language and buy-in amongst your team.
➔It encourages innovation by exploring multiple avenues for the same problem.
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