a. Mr.

Maneno Makali is an entrepreneur operating chain of supermarkets under the

business name COMRADES MWANANCHI STORES. His business has now grown to
several branches operating in Nakuru, Gachororo (Juja), Thika, Naivasha, Kakamega,
among other branches.
A. Explain ONE theory of entrepreneurship that can explain the above entrepreneur (3
marks).
Entrepreneurial Behavior:
i) Economic factors
The theory explains entrepreneurial behavior as influenced by economic factors through which.
a) It is possible to introduce new methods
b) It is possible to find new sources of materials
c) It is possible to open new markets
The economic prospective is important since they create enabling environment for the
entrepreneur to combine the factors of production..

Jean Baptiste
Entrepreneurs coordinate and combine the factors of production
Jean described the entrepreneur as a rare phenomenon who is able to coordinate and combine the
factors of production. He places emphasis on the variety of markers and inputs which the
entrepreneur has to deal with “successfully” in effect, the entrepreneur is expected to “perceive
and realize potential arbitrage” in addition to taking risks associated with uncertainty. According
to say, the entrepreneur must surmount abundant obstacles, suppress anxieties, repair misfortunes
and devise expedients. As a result, the entrepreneur accommodates the unexpected and overcome
problems successfully in dealing both the input and consumer market.
A possible conclusion from this contention is that the entrepreneur is a locator of resources in the
adjustment process during equilibrium and towards equilibrium.

B. Describe at least FOUR possible entrepreneurial character traits that Mr. Maneno Makali
may have enabled him to successfully manage his business (4 marks).
a. Persuasion
 Convinces people to buy the products or service
 Convinces people on providing funds
 Asserts own competence reliability and the company product.
b. Efficiency orientation by;
 Finding ways of doing things faster and cost effectively
 Uses information to improve efficiency.
 Express concern on costs improvements

c. Systematic planning
 By developing and using logical plans to meet goals
 Breaking tasks down to sub-tasks
 Developing plans which anticipate obstacles
 Evaluates alternatives
 Takes logical and systematic approach to activities
 Identifies new and potential unique ideas to reach goals
 Switches to alternative strategies to reach goals.

d. Commitment to work contract by

 Placing the highest priority on getting the job completed.
 Accepts full responsibility for problems that may arise in getting the job done
 Expresses concern on customers satisfaction.
e. Information and property seeking
 Takes action on his own to get information to help reach business objectives
 Does personal research on how to provide a product or service
 Consultation of experts on business and technical advice
 Asks questions to clarify information
 Undertakes market research analysis and investigation.
C. Explain FOUR importance of Entrepreneurship activities carried out by Mr. Maneno
Makali to the Kenyan economy. (4 marks)

a. Products and Services

The fundamental economic function of business is to make and distribute the products
and services that people want. Business entrepreneurs fulfill the role both to discover
consumer demands and to do whatever is required to satisfy them

b. Employment
Business ventures are the major providers of “real” jobs – i.e. employment for people
who need and want to work. The level of gainful employment is crucial to a nation’s
well-being.

c. Income
Through its employment creation, business provides an income base to its stakeholders in
terms of salaries, wages, profits and taxes where the task of business to enable the
earning of wages, salaries and profits is of crucial importance in order to pay taxes and to
provide disposable income to finance consumer spending and savings (investment
capital).

d. Taxes
Without taxes on the incomes of individuals and businesses, social institutions and
services cannot be afforded.

e. Disposable Income
Disposable income refers to income after taxes available for spending on consumer
goods, or for savings.
f. Discuss FOUR characteristics of a good business idea (4 marks).
i. Easy to manage and involve minimal risk.
ii. Does not require excessive capital investments
iii. Offers a good return on capital
iv. The idea has scope for growth, expansion and diversification
v. Not against expectation of the society
vi. Has a readily available market
vii. Easy to exit when necessary.
g. Outline FIVE ways of carrying out Screening of Business Ideas (5 marks)

a) Personal Evaluation
It entails evaluating the following:
i) The objective for going to business
ii) Personal interests
iii) The degree of commitment to the business or others e.g. family.

a. Personal Skills
The self SWOT analysis aims at analyzing the following in an organization:
 Strengths - Relates to the internal capacity of self or organization
These are positive internal conditions such as:
o Distinctive competence
o Adequate finances.

Identification of strengths in an organization helps us identify the following:

i) Distinctive competence
ii) Adequate finances
iii) Access to economies of scale
iv) Good innovation ability
v) Proven management

 Weaknesses - Are subjective

Identification of weaknesses in an organization helps us identify the following:
 i)Lack of key skill
ii) Internal operations problems
iii) Low morale
iv) Poor track records
v) Weak internal image

 Opportunities - Relates to the external environment to self or organization

Identification of opportunities in an organization helps us identify the following:
i) Potential customers
ii) Potential goodwill
iii) Health
iv) A favorable social activity or amenity

 Threats - Are objective

Identification of threats in an organization helps us identify the following:
i) strong competitions
ii) Adverse government policies
iii) Political instability

b) Market evaluations
The aim is to create assurance of adequate market
The main components include:
i) Consumer demand analysis
ii) Product price and placements
iii) No. of competitors in markets.
c) An analysis of availability of raw materials in terms of
i) Adequacy
ii) Reliability
iii) Price
d) Analysis of providing technology in terms of
i) Appropriateness
ii) Affordability
e) An analysis of skills available
f) Analysis of the government policies

h. Assess FOUR importance of screening stage in development and selection of business ideas.
(4 marks).
 In order to develop a strategic profile.
 To provide a framework to assess the current and future plans
 To act as a control technique when conducted periodically
 To get realization (reality) on the activities
 The SWOT components
Strengths – these are positive internal conditions such as
 Distinctive competence
 Adequate finances.

i. Define the term ‘Business Incubation’ (2 marks)

Business incubation is the process of nurturing small and start – up initiatives or business to
relative maturity to become self-sustaining business, healthy and wealth-generating entities.

The failure rate of any start-up business stands at 90% globally.

j. Explore any FOUR means of generating business ideas that an entrepreneur can use before
initiating any enterprise. (4 marks)

Identifying a Need
A need can be an opportunity and indeed a consumer buys to satisfy need. Abraham Maslow in
his humanistic hierarchy of needs, physical needs to very high personalized needs.
Therefore, identifying an unidentified or unserved need is a sure way of generating business
ideas.
Brain Storming
This is a process of detaching analysis of an idea from the actual ideas.
The idea may or may not be related to a given product. In brainstorming even silly and stupid
ideas may be generated.

Building on One’s Skill, Hobbies or Interests

Business ideas can be generated through
 personal interests and hobbies
 Copying or improving somebody’s ideas. (skills)
Sporting a Market Niche
Entrepreneurs usually look for gaps in the growing markets, identifying market sections which
are not being utilized.

Listening to what People say.

These are people who simply say or speak their needs e.g. if these good bus services

Attribute listening

This method of generating business ideas is based on changing the way one looks at something
in order to find a new use for it. It attempts to answer the question – what we do with this
product.

Gaining from Waste

What would appear waste can be used- say recycles to create a new opportunity.