Entrepreneurship _ Innovation by stariya

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									                                    Entrepreneurship & Innovation
                                        (Subject Code- DM 502)
                            Trimester -V, End-Term Examination, January 201
                                       PGDM II, (Batch 2008-2010)
                                                Paper I

Duration: 3 hrs.                                                                                  Total Marks: 60


Answer in total 6 questions from Sections A & B as indicated and the case study in Section-C, which is compulsory.

                                                    Section-A
Answer any three questions out of four given below of 5 marks each.

1.   What is Innovation?
     Enumerate the various types of innovations.
     Who are the key players in innovation in an organization?
                                                                                                                     5
2.   What is Entrepreneurship?
     What are the traits of an Entrepreneur?
     What is {he role played by entrepreneurship in promoting Economic growth?
                                                                                                                     5
3.   Describe various types of 'Start-ups'.
     Distinguish between Entrepreneurship & Entrepreneurship.
     What is 'Widow of Opportunity'?
                                                                                                                     5
4.   What are the legal issues to be considered in a 'Start-up'?
     How do 'intellectual Property Rights (IPRs)' & 'Product Safety & Liability' impact on a
     'Start-up'.
                                                                                                                     5
                                                     Section-B
Answer any three questions of 10 marks each.

5.   What are the 3 - crucial elements to be considered for Entrepreneurship to succeed? Describe the 7- domain
     model of Prof John Mullins to measure the Attractiveness of an Opportunity.
                                                                                                                    10

6.   What is fee purpose of a 'Business Flan' for a new venture? What all information does it contain? Give the
     outline of a good business plan.
                                                                                                                    10
7.   Based on Product / or market what are the growth strategies which can be followed by a
     new venture?
     What challenges a new venture has to face in case it follows 'Diversification strategies'?
                                                                                                                    10
8.   Write short notes on any four:
                  a) Sources of financing for a new venture?
                  b) Different stages of business development funding?
                  c) 'First movers' advantage / disadvantages.
                  d) Implications of Finn's Growth to the Entrepreneur
                  e) SIDBI
                                                                                                                    10
                                                    Section-C

Attempt the case study, which is compulsory, for 15 marks.


9.   Answer the questions listed below for the attached case study of ‘Turner Test Prep Co.’
                 a) How to improve marketing & gain market share?
                 b) Should she format the course differently?
                 c) How to reach break-even point & get into profit?
                                                                                                                    15
                                            CASES FOR PART

CASE 1A
TURNER TEST PREP CO.


INTRODUCTON
In the Spring of 2003, Jessica Turner felt that she had come to a crossroads with her business. As the founder
and CEO of Turner Test Prep, a California company specializing in preparing people for the Certified Public
Accountant (CPA) exam, she felt that she was not achieving market share and growing in the right direction.
After three years of providing prep classes to both students and professionals, Turner had about 10 percent of
the market and was facing fierce competition from her primary rival, National Testing Services. Uncertain with
which growth direction to take, Jessica contemplated several options.

BACKGROUND
Jessica Turner started Turner Test Prep in the summer of 1997 after graduating from Case Western Reserve
University's Weatherhead School of Management with a master's degree in accounting. She passed the
CPA exam and began applying to Big ix accounting firms. Frustrated after receiving several rejections,
Jessica began to consider other employment options. Her undergraduate degree was in business, and
after graduation, Jessica worked for several years in the business office of a small test prep company
based in San Francisco. The company prepared students who wanted, to take primarily the SAT, GRE,
GMAT, MCAT, and LSAT. Although her job was to manage the company's business affairs, she also
began teaching math to students several nights a week. Jessica received training from the company in
teaching basic testing skills, and she applied those skills toward teaching the math portion of the exams.
She received positive feedback from her students as a conscientious and innovative teacher.

    Jessica felt that her experience as a teacher for the test prep company helped her when she began studying for
the CPA exam. She knew how to study efficiently, how to organize her notes, and how to practice for the
various sections. Jessica was one of the 25 percent of students who passed all sections of the CPA exam on the
first try.1

    When contemplating what to do next, Jessica was struck by the fact that so many of her colleagues were
unable to pass the exam. Convinced that she was not only skilled hi the accounting and finance principles but
also in knowing how to study effectively, she decided to start her own test prep business teaching specifically
to the CPA exam. She was confident that students and professionals wishing to become CPA's would benefit
from a full-service program that gave students full classes and individualized attention so that they could pass
the exam.

   Jessica returned to California, put together a business plan, and secured financing from a local venture capital
firm specializing in small start-ups. She decided to focus her business and marketing efforts in the San
Francisco Bay area. Based on her research and the Bay area's concentration of different types of businesses,
Jessica estimated that there was a market of about 1,000 students a year.

THE CPA EXAM
Although people with undergraduate or graduate degrees in accounting or business may do accounting work
for a company, becoming a CPA provides an additional certification that employers prefer. Becoming a CPA
can increase an account-ant's salary by 10 to 15 percent2 and is typically necessary to secure upper-level
positions. In order to be certified to become a CPA, people must fulfill the following requirements:

    •   Have a college or master's degree with 24 semester units dedicated to business-related subjects, and at
        least 24 credits in accounting (a minimum of three credits), auditing (a minimum of three credits),
        business law, finance, and tax subjects;
    •   Pass the CPA exam;
    •   Have two years of work experience with a bachelor's degree or one year of work experience with
        150 course credits.3

   The exam is offered two times a year, in May and November. It is a grueling two-day, 15-hour event
comprised of multiple choice, essay questions, and problem sets. The subjects tested are: Business Law and
Professional Responsibility, Auditing, Accounting and Reporting, and Financial Accounting and Reporting.
CPA EXAM PREP SERVICES

The CPA exam varies only slightly from state to state. In order to study for the exam, people typically purchase
books, software, or an online course to help them prepare. The materials usually provide an overview of the
tested material, study guides, and practice questions. The online tutorials often provide more practice questions
and give students timed exams so that they can simulate actual testing conditions. Due to the amount of
material covered on the exam as well as its level of difficulty, students are advised to give themselves four
months to study.

   In the San Francisco Bay area, several community colleges offer one-week review classes to help students
prepare. These classes give students a starting point, after which they could use supplemental materials to study
on their own.

NATIONAL TESTING SERVICES

National Testing Centers (NTC) is Turner's primary competition. NTC is a national test preparation company
that has been in existence since 1962. The company focuses on virtually every standardized test that is offered
and has programs for high school students taking the SAT, undergraduate students taking graduate school
entrance tests (such as the GMAT, LSAT, GRE, and MCAT), and graduate students taking certification tests
like the bar and CPA exams. In addition, the company has a program designed for international students taking
the Test of English as a Foreign Language (TOEFL) exam.

   NTC is a full-service program that offers a variety of options for students taking any of these exams. Most
courses offer the opportunity to have classroom lectures, home-study videotapes, books, software, online
tests, or a combination of any of these options.

   The CPA course does not offer live classroom sessions but gives students the option of books, software,
and online testing for one or all of the areas covered on the exam. Students also have a toll-free number
that they can call if they have questions as well as online chats with NTC instructors to answer questions.
NTC offers students a free repeat course if they do not pass the CPA exam and boasted a 75 percent pass rate.
The course is priced from $1,000 to $1,500, depending on which of the services the student chose. Many of
NTC's students are repeaters who initially chose to study on their own and use a book or software package.
Such students are dedicated to passing the second time they take the exam and want the structure that the
courses provide. NTC provides a study schedule, study techniques, and information about how to take the
exam that, it boasted, can not be found in any other course on the market.

   Many of NTC's students have also taken an NTC course for a previous entrance exam. NTC boasts a
higher overall pass rate for all its courses than any other test prep center in the country. People who had taken a
course for the GMAT and had passed, for example, felt. confident that they would be equally prepared for passing the
CPA exam. In a survey of undergraduate students who had taken NTC for the SAT, 85 percent said they would
take another NTC course to prepare them for a graduate school entrance exam.

THE TURNERTESTING ADVANTAGE

Despite NTC's success, Jessica knew that with a pass rate of only 25 percent for first-time takers, there was a
need to provide a comprehensive program to students so that they could pass on their first try. She devised a
full-service program that lasted for six weeks and was three to six hours per day. She worked with
accounting, finance, and law professors to design a curriculum to give students a comprehensive

    Approach to studying for the exam. She hired the professors to give three live, one-hour lectures per day, and
she caught the test-takings and organisation skills necessary to easily assimilate the mountains to information that
student needed to know. Jessica also provided audio types for students so that they could review the lectures at
home and suggested that they listen to them in theirs cars to maximize use of their time. The course also included
several timed mini testes for each topic and for practices essay questions, which Jessica and her professors
graded. The responses to essays included many comments and much feed back to give students guidance on areas
to improve

   Jessica also made herself completely available to her students. She felt that one-on-one attention was critical to
their success, and she held bi-weekly meetings with each student to gauge progress and answer questions. In
addition to the meetings, students could call Jessica or e-mail her with questions, and she promised to get back to
them within 24 hours.
   Jessica held two sessions a year in March and September, three months prior to the exams, allowing students
to continue to 'study on their own before the exams. She also made herself available to students after the course
to answer their questions and help them in any way. -she could. Pricing her course at $i,100 per student, .she
felt that she was providing her students with more of an advantage and better preparation than any of the NTC
options. She also offered a guarantee, allowing students to repeat file course If they did u6i. Pass-the exam.

   Jessica had taken a year to develop the materials and create a marketing plan for her company. She decided to
place ads in Bay area business schools to attract students contemplating taking the exam after-gradation. She also
created flyers to be placed in the schools and asked the school administrations if she could place them in student’
mailboxes. She introduced herself to local businesses and tried to alert them to her program so that up-and-
coming accountants would be encouraged to take her class if they warned lo take the CPA exam

   The first year that she ran the program she had 10 students. Despite the small class size, students felt that
they had been well prepared for the exam and appreciated the individual attention they received All students
passed the exam. The second course had 45 students. 70 percent of whom passed. The last session that she held had
15 students and 80 percent of those students passed. Jessica did not feel comfortable advertising her pass rate,
however,

                            Exhibit 1- Operating Costs for tuner testing services


                            Professor salaries (About
                                                                  $75 per hour
                            1,200 hours per Year)
                            Office space                       $2,000 per month
                            Utilities and insurance            $1,000 per month
                            Materials                           $600 per month
                            Printing                            $500 per month
                            Marketing                           $400 per month
                            Travel                              $200 per month

because many of her students had taken the CPA exam one or two times before and failed. She wasn't sure
whether they passed after taking her course because of the quality of the program or because they were bound
to pass it at some point.

SPRING 2003

By the spring of 2003, Jessica had finished teaching the course for the May exam and was looking forward to
the September class. Although she was pleased that the number of students in each session was rising, she
felt concerned that she was not making enough of an impact in the market. With only 10 percent of the market
tapped, Jessica wanted to know how to improve her marketing and gain market share. She also wondered if she
needed to format the course differently to attract students who did not want to attend live lectures. She had
initially believed that students would benefit from a structured program that kept them on track, but now she
was not so sure. Many times students did not come to class but opted to listen to the tapes at home. Finally,
Jessica realized that in her zeal to get her business up and running she had neglected to calculate her breakeven
point. How many students did Jessica need to break even, and at what point could she recognize a profit? She
realized that these were all critical questions that needed answers to ensure the future success of her business

								
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