Question

Read the following case study carefully and answer the question that follows it
QUESTION 1
Takyiwaa, Salamatu and Adade are Undergraduate Students from the University of Professional
Studies who studied Management of Small and Medium Enterprise. After their National Service
they decided to start a Restaurant Business. The overarching purpose for opening a Restaurant, was
to be the second to none producers of Quality service in the Restaurant Business in Accra and
respect for the customer. Starting a business of like nature is time consuming and full of uncertainty
in view of the risk involved. Takyiwaa, Salamatu and Adade have been in the same class since Level
100 and they have the belief that, the future of the business they are about to start, its success and
failure is within their control and that external influence has a very little control.
They had a meeting and agreed that it is important to systematically gather information and
analyze these information concerning other Restaurants Business trends and activities within Accra,
in order to further their Objective. They successfully carried out the project and were able to
analyze the information from the field. The unresolved issue was where to locate the Restaurant and
how the design should look like because this to a large extent will impact the Performance of their
Restaurant Business. Thankfully after several deliberations and considerations of certain factors it
was generally agreed that the Restaurant be located around Rawlings Circle.
These young Graduates are aware of the fact that potential customers are not homogenous because
they have different needs, wants, taste, income level and characteristics. One way by which they can
get larger share of the market in the next three to five years is to concentrate more on Students and
satisfy their needs, wants, interest and specification of Packaging. Sales will also increase all things
being equal if their price offer is the lowest possible (within the restaurant business) in the next
three to five years. They agreed to make offer the lowest possible price to increase sales volume in
the next three to five years.
Additionally, these young Graduates are very confident that they have something to offer in the
Restaurant Business for that matter they are ready to go all out to do what the big guys failed to do
in the Restaurant Business over the years. They resolve to make their Restaurant very clean,
comfortable seats to suit customers, high food quality, treat customers with dignity and respect,
timely service, have a well trained staff and most importantly putting the customer first. These
students with their knowledge and competencies in the Management of Small and Medium
enterprises are very much aware that their ability to successfully compete in the Restaurant
Business in the Short, Medium and Long term to a large extent depend on the factors stated above.
They approached a financial institution for a support to enable them start their business operation
without a delay. The credit officer of the financial institution requested that they furnish them with
a written document describing the direction the business is taking, what its goals are, where it wants
to be and how it is going to get there, is a fundamental perquisite that is to be satisfied before the
loan is granted.
Additionally, the financial institution agreed to introduce their restaurant business to a company
that helps new and startup business to develop by providing service such as management training
and office space. The financial institution in a letter to these young Graduates who intend to start
the Restaurant business agreed to provide them with a loan facility to the tune of fifty thousand
Ghana cedis (GH 50000) at the rate of one percent (1%) interest per annum. These young
Graduates in their letter of response, have also agreed in principle to all the conditions attached to
the loan facility.
To ensure prudent management of the business financial position for development, growth,
sustenance and realisation of its profit motives in the short-long term through the deployment of
sound financial practices such as effective record-keeping, frequent inventory taking, monitoring of
cash coming into and out of the Business, other relevant accounting control measures and strategic
sourcing and disbursement of funds will be strictly adhered to.
From the Case study read above identify the sentence(s) or phrase(s) that indicate each of the
concept below and explain them:
a) Mission Statement
b) Competitive Intelligence
c) Cost Leadership Strategy
d) Focus Strategy
e) Key Factors for Success (KFS)
f) Business incubator
g) Business Plan
h) Internal locus of control
i) Debt Financing
j) Cash Flow Statement

Answer 1

a) Mission Statement

Sentence(s) or phrase(s) that indicate the concept

The overarching purpose for opening a Restaurant was
to be the second to none producers of Quality service in the Restaurant Business in Accra and
respect for the customer.

Explanation:

The Mission Statement of any organisation is a brief statement of why an organisation exists and its objectives.

The sentence suggests that the mission statement of the Restaurant Business is to provide quality services and respect the customers.

b) Competitive Intelligence

Sentence(s) or phrase(s) that indicate the concept

They had a meeting and agreed that it is important to systematically gather information and
analyze these information concerning other Restaurants Business trends and activities within Accra,
in order to further their Objective. They successfully carried out the project and were able to
analyze the information from the field

Explanation:

Competitive Intelligence is the collection of data and information regarding the field of business and it’s to gain a competitive edge. The sentence quoted above clearly suggests that the team analyzed the collected data and information to develop effective and efficient business practices.

c) Cost Leadership Strategy

Sentence(s) or phrase(s) that indicate the concept

Sales will also increase all things
being equal if their price offer is the lowest possible (within the restaurant business) in the next
three to five years. They agreed to make offer the lowest possible price to increase sales volume in
the next three to five years.

Explanation:

Cost leadership strategy is a strategy to gain more customers by offering the lowest price possible when compared to the competitors. From the above sentence it’s pretty clear that the team surely is adopting cost leadership strategy to improve sales.

d) Focus Strategy

Sentence(s) or phrase(s) that indicate the concept

One way by which they can
get larger share of the market in the next three to five years is to concentrate more on Students and
satisfy their needs, wants, interest and specification of Packaging.

Explaination:

Focus strategy means focusing most of your resources on a particular segment of the market. Here the business idea is mainly concentrated on students and it’s their needs and wants that the team gives superior importance to.

e) Key Factors for Success (KFS)

Sentence(s) or phrase(s) that indicate the concept

They resolve to make their Restaurant very clean,
comfortable seats to suit customers, high food quality, treat customers with dignity and respect,
timely service, have a well trained staff and most importantly putting the customer first.

Explaination:

The key factors for success are those factors that are crucial for the achievement of the missions or objectives of a business. Here - by making their Restaurant very clean, making
comfortable seats to suit customers, providing high food quality, treating customers with dignity and respect, providing timely service, having a well trained staff and most importantly putting the customer first - are considered to be the important factors that the team is going to focus on in order to achieve its mission.

f) Business incubator

Sentence(s) or phrase(s) that indicate the concept

Financial institution agreed to introduce their restaurant business to a company
that helps new and start-up business to develop by providing service such as management training
and office space.

Explanation:

Business incubators are institutions that help new businesses to develop by providing services like management training and office spaces. In the case study the financial institution is introducing the team to an incubator.

g) Business Plan

The credit officer of the financial institution requested that they furnish them with
a written document describing the direction the business is taking, what its goals are, where it wants
to be and how it is going to get there is a fundamental perquisite that is to be satisfied before the
loan is granted.

Explaination:

A written document describing the direction the business is taking, what its goals are, where it wants to be and how it is going to get there is a business plan. The credit officer of the financial institution is asking the team to provide one.

h) Internal locus of control

Sentence(s) or phrase(s) that indicate the concept

Additionally, these young Graduates are very confident that they have something to offer in the
Restaurant Business for that matter they are ready to go all out to do what the big guys failed to do in the Restaurant Business over the years. They resolve to make their Restaurant very clean, comfortable seats to suit customers, high food quality, treat customers with dignity and respect, timely service, have a well trained staff and most importantly putting the customer first. These students with their knowledge and competencies in the Management of Small and Medium enterprises are very much aware that their ability to successfully compete in the Restaurant Business in the Short, Medium and Long term to a large extent depends on the factors stated above.

Explanation:

When the success or failure of the business is mainly dependent on internal factors then internal locus of control is exercised. Here the students are mostly basing the success of their idea on internal factors so they are basically exercising internal locus of control.

i) Debt Financing

Sentence(s) or phrase(s) that indicate the concept

The financial institution in a letter to these young Graduates who intend to start
the Restaurant business agreed to provide them with a loan facility to the tune of fifty thousand
Ghana cedi (GH 50000) at the rate of one percent (1%) interest per annum.

Explanation:

Borrowing money to be paid back at a future date with interest is called debt financing. Here the young Graduates who intend to start the Restaurant business are using debt financing.

j) Cash Flow Statement

Sentence(s) or phrase(s) that indicate the concept

Monitoring of cash coming into and out of the Business

Explanation:

The statement showing cash inflows and outflows of a business entity for the year is called Cash Flow Statement. The quoted text suggests that along with other financial records the team is planning to make a cash flow statement too.