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. What are the support needs of small entrepreneurs? Critically evaluate the Indian environment in terms of adequacy of support infrastructure. What are the gaps that you perceive?

2. You are a small entrepreneur, planning to start a readymade garments unit for producing good quality school uniforms, How would you conduct your market demand analysis? What are the variables that you would need to evaluate for estimating your market demand?

3. (a) What are the sources of short term finance available to a small entrepreneur?

(b) Critically evaluate the role of SIDBI in respect of long term financing needs of small entrepreneurs.

4. What are the quality control mechanisms usually utilised by small enterprises? If you were an entrepreneur having an ancillary unit supplying auto parts to a large automobile manufacturer, what quality control measures would you select and why?

5. Amit Mitra is an entrepreneur, who is entering the stabilization phase after setting up his small-scale business of promoting software to institutions. What are the challegnges that he is likely to face in this phase? What are the strategies that you would suggest to help him overcome these challendes?

SECTION B

6. Read the case carefully and answer the questions at the end:

Anita Roddick, Founder of Body Shop

The Body, Shop International, named, Company of the Year at the 1987 Business Enterprise Awards has 300 branches in 31 countries around the world. It has created almost 300 new jobs --- and 98 per cent of its products are made in Britain. The inspiration for it all has been its livelier founder and managing director.

"Unemployable" is how Anita Roddick describes herself --- but as head of the largest British-owned retail chain overseas, she needn't worry. A former student teacher and United Nations employee in Geneva. She is now the supreme entrepreneur --- with a highly unorthodox view of what that means.

"I believe people are confusing entrepreneurship with opportunities," She said in a lecture at the City University Business School. "They measure success by the profit and lost sheet."

"In reality, entrepreneurship consists of three things: First the idea one wants to get across; second, oneself -- the person promoting it, third, the money that's necessary to make it happen. The third is the least important of all; the first is what matters --- the integrity of the idea. You just have to believe in what you're doing so strongly that it becomes a reality."

"Logically anybody who starts a small business with no money (As I did) can't succeed. But sometimes you do. Because you know if you don't succeed, you don't eat."

Anita Roddick started her first shop in Brighton 21 years ago , with a loan of 4,000 and some revolutionary ideas. She wanted to sell simple herbal and plant-based cosmetics, many of which she had seen used to great effect during her travels abroad. She intended to use the minimum amount of packaging and advertising; and she was determined to sell products that were developed with concern for the environment and were not tested on animals.

She now has a range of clear 300 products. The Body Shop still uses the cheapest bottles. "The Sunday Times called them unine sample bottles, and perhaps they are," Mrs. Roddick said, There are now five sizes of each product. "Because we had so few products at first, we originated the idea of five sizes; they can try the small one first, before splashing out on the more expensive sizes.

Today Body Shop is a franchise operation, each individual shop being "almost a licence to print money' in Mrs Roddick's words. The franchising came about almost by accident.

"All our unique' marketing features happened because we had no money. Because it cost 3,000 --- 4,000 to open up a shop about two decades ago, my husband Gordon and I dreamed up. What we called the 'self-financing' idea; we didn't even know the word 'franchising'. Now we have a network of marvelous franchisees."

She selects her franchisees with extreme care. She looks for franchisees who share her aims and ideals --- and insists that each should undertake some kind of community project.

"This is not only altruism --- it's survival. We have community projects, which are riveting. They range from running drug dependency groups and visiting elderly and handicapped people, to setting up street theatre. Most of our shops are run by women, who are enthusiastic about community work. And it's all done during working hours, not in their own time."

Anita Roddick has an enormous fund of ideas --- "drawers full of them," she says.

And she's an expect communicator. The Body Shop publishes a bi-monthly. "Talksheet" for all members of staff, which contains --- amongst others -- a swap-a-job feature; staff are encourage jobs for a few months, so a girl working in Bondi Beach can sample life in Aberdeen, and vice-versa.

Every month a video magazine. "Talk Shop" is produced by the Body Shop's own video and film Production Company, and distributed to the franchisees worldwide. If includes reports on the various community projects and on Mrs. Roddick's overseas trips; she travels for two months of every year, to find out how people in other cultures take care of their skin and hair, and to visit the various third world projects which produce products -- for example, cosmetic sponges --- for her shops.

There is also a series of leaflets published for individual customers and for schools, containing detailed product information and newsletters posted up in the ships. Customer's opinions are actively sought. "Can you imagine," said Anita Roddick, "that we are the only high street retailer which has suggestion boxes in its ships? Why spend billions of pounds on market research if you can do it yourself?"

She sees customer education as a major role. "We reckon that about 25 million people must pass our shops at one time or another, so we use our windows to promote environmental community issues. Every one of our shops is like a major poster site."

She is super-confident about the future, predicting "We will become a major communications company and within two years we plan to have a magazine."

"We think following the route of promoting health is vital for the cosmetic industry --- \it will not succeed by any other route. In the past it has often tried to create needs that don't really exist. We do things differently. It's so easy to break rules."

Her advice to young potential entrepreneurs is simple. 'Never stop annoying people, and never stop asking questions; it is knowledge that gives you strength."

Questions:

(a) Is Anita Raddick an entrepreneur? Explain your answer.
(b) Discuss the innovative ways adapted by Body Shop.
(c) Will this recipe for success work? Justify your answer.