MNE2601-Introduction To Entrepreneurship And Small Business Management EXAM PACK LATEST UPDATED . Read the following case study and answer the questions that follow
Sakhepi Mighty Gwabeni, a law degree graduate from the University of South Africa,
opened a law firm in central Pretoria in 2008. He...
Read the following case study and answer the questions that follow
Sakhepi Mighty Gwabeni, a law degree graduate from the University of South Africa,
opened a law firm in central Pretoria in 2008. He graduated in 2006 and obtained
admission as an attorney. When he opened his law firm, he felt that he did not have
enough business experience, given that he was only admitted two years earlier and
thought that he had to gain at least five years of experience before opening his own
practice. Through reputation and professionalism Gwabeni Incorporated (GI) managed to
grow within a short space of time.
Sakhe had to quickly gather resources, such as office space and equipment, through the
help of family members. His start-up costs were in the region of R140 000; and he
acquired a loan of R80 000 from the National Youth Development Agency and used his
savings and some family contributions. Sakhe had to hit the ground running although he
felt that he was ill-prepared for the new challenge of having to compete with much more
experienced opponents and skeptical clients. Sakhe approached a long-time friend and
business associate, Lebogang, who was also an attorney, and other experienced
attorneys for assistance and advise. GI did well against all odds owing to the
determination of its founder and staff members.
Sakhe faces many challenges daily as many South Africans still prefer to be represented
by larger law firms. There are also difficulties when it comes to issues of late or non-
payment from clients, which affects the cashflow of the business. There are new
regulations which compel law firm directors, like Sakhe, to follow a compulsory practice
management course. Added to these requirements is the burden of adhering to laws
covering tax, labour, occupational health and safety as well as other related business
laws.
In 2013, GI entered the transport business because of a need to expand the business,
even though it was not their core business. GI entered the passenger transport sphere in
the Eastern Cape and began running three bus operations, one of which is subsidised by
the Eastern Cape road and Transport Department. The other one is as a result of a
scholar transport contract with the Education Department and is expected to grow in the
future. With an average turnover of R17 million per annum, GI employs a minimum of
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seven full-time employees. There are prospects for growths within the legal and transport
industries and even beyond.
Sakhe is a sports fanatic and loves his football, locally and internationally. He is currently
exploring ways in which GI can serve as a football player’s agency as this is fast becoming
a growing and lucrative line of business. Sakhe endeavoured to obtain FIFA accreditation
and has become a licensed agent for international players. He wrote a few FIFA exams
and still has a few more to complete. He hopes to venture into sports management; and
intends to establish a sports management company that will manage all the contracts of
its clients.
1. GI can be described as a … enterprise given its number of employees.
1 micro
2 very small
3 small
4 medium
2. Which type of competition did Sakhe describe as a challenge to his legal business?
1 direct
2 future
3 indirect
4 past
3. To enter the sports industry, Sakhe needs a … before he can be permitted to
operate.
1 patent
2 registered company
3 license
4 trademark
4. Sakhe engaged in … which involves interacting with others and establishing
partnerships.
1 sports management
2 transport
3 networking
4 legal contracts
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5. Sakhe obtained funding through his … and … which is referred to as
bootstrapping, where the source of finance is internal.
1 National Youth Development Agency and his family.
2 A loan from the bank and his savings.
3 Small Enterprise Finance Agency and family contributions.
4 Savings and family contributions.
6. The future success of a business is dependent on the ability of an entrepreneur to
forecast the need for capital. Was Sakhe able to forecast the need for capital for
his business?
1 No, because he had to take out a loan for the business.
2 Yes, because he knew how much he would need for start-up costs.
3 Yes, because his family members were willing to contribute.
4 No, because he had to use his savings to start the business.
7. One of the challenges Sakhe faces is that of cash flow due to late or non-payment
from clients. How could he possibly overcome this challenge?
1 Employ professional managers when needed.
2 Look for ways to cut costs.
3 Improve the competitive position of the business.
4 Prepare for potential cash problems with some savings.
8. The National Youth Development Agency where Sakhe got a loan provides …
1 grants of both financial and non-financial support to youth entrepreneurs.
2 non-financial business advisory services and technical support.
3 funding in the form of direct loans from R500 – R5 million for entrepreneurs.
4 capital-raising services to support them in the growth stage.
9. When Sakhe started a transport business, he used the … growth strategy which
involves a multiplication of income streams to maximise profitability.
1 expansion to other markets
2 diversification
3 use of technology
4 licensing
10. One of the challenges Sakhe faced was in the form of … which forms part of the
political environment and presents challenges to many small businesses in South
Africa.
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