Question

Chapter Two Assignment

JANE’S EVALUATION

Paul Medwick is a commercial banker. In the past month, he has received loan applications from three entrepreneurs. All three have fledgling businesses with strong potential. However, Paul believes it is important to look at more than just the business itself; the individual also needs close scrutiny.

The three entrepreneurs are (1) Robin Wood, owner of a small delicatessen located in the heart of a thriving business district; (2) Richard Trumpe, owner of a ten-minute oilchange-and-lube operation; and (3) Phil Hartack, owner of a bookstore that specializes in best sellers and cookbooks. Paul has had the bank’s outside consultant, Professor Jane Jackson, interview each of the three entrepreneurs. Jane has done a lot of work with entrepreneurs and—after a couple hours of discussion—usually can evaluate a person’s entrepreneurial qualities. In the past, Jane has recommended 87 people for loans, and only two of these ventures have failed. This success rate is much higher than that for commercial loans in general.

Following is Jane’s evaluation of the three people she interviewed.

Characteristic	Robin Wood	Richard Trumpe	Phil Hartack
Perseverance	H	M	M
Drive to achieve	M	H	M
Initiative	M	H	M
Persistent problem-solving	M	M	H
Tolerance for ambiguity	L	M	H
Integrity and reliability	H	M	H
Tolerance for failure	H	H	H
Creativity and innovativeness	M	H	M
Self-confidence	H	H	H
Independence	H	H	H
H = High; M = Medium; L = Low.

QUESTIONS

1.      Which of the three applicants do you think comes closest to having the mind-set of an ideal entrepreneur? Why?

2.      To which applicant would you recommend that the bank lend money? (Assume that each has asked for a loan of $150,000.) Defend your answer.

3.      Can these three entrepreneurs do anything to improve their entrepreneurial profile and their chances for success? Be specific in your answer.

Answer 1

Question1:

To begin with, let us first only highlight the major differences between the 3 candidates

Based on the chart above we can see make the following inferences

First, we can discard Robin Wood as an Ideal candidate as he scores high only on 2 occasions as compared to other 2 candidates who score High on 3 and scores a low on “tolerance for Ambiguity”. Because Robin owns a food business he can come across ambiguous situations many times, such as running out of a product during service, confrontation with a client, overbookings and so on
Now between Richard and Phil, they have 3 H each and no L, so we need to deep dive into their respective businesses to have further Clarification
Richard Trumpe: Owns a mechanic shop for automobile with a specific function for an Oil change and lubrication. Richard makes a bold claim of 10 minute service time considering the fact that he needs to have a vast knowledge of different automobile models and their interior setup for an oil change and lubrication
Phil Hartack: Phil Hartack owns a bookstore which mostly sells best sellers and cookbooks, needless to say, Phil also needs to have a vast knowledge of different books and should be able to recommend customers various offerings
Based on the 2 businesses, which may be in different industries may face similar situations, and thus can be compared to the following lines

Both can have customers with specific issues which require instant problem solving
They need to be reliable in terms of knowledge
They should be able to handle ambiguity which may arise
Both need to be creative in their actions and offerings
Based on the facts, I would suggest that Phil Hartack is a better entrepreneur than all others

Phil has Problem-solving skills, which can be handy he has customer requests that need to be solved immediately, Richard on the other hand scores medium here even though, problem-solving should be his biggest strength in the service business
Phil has a high tolerance for Ambiguity which allows him to sustain in difficult situations longer than others to provide the best possible way out
Phil is also reliable which is a major plus in his business, considering the fact he may need to advise and recommend books to his customer based on their needs, this is another area, where Richard needed to score high because of his business model but he does not