BUSN3003– Session 3, 2021 Instructions: Section A (30 marks) requires you to answer three questions in this section. There are four questions to choose from, so you do have a choice as to which three...

BUSN3003– Session 3, 2021
Instructions:
Section A (30 marks) requires you to answer three questions in this section. There are four questions to choose from, so you do have a choice as to which three questions you choose to attempt. Section A questions are worth 10 marks each.
Section B (10 marks) is based on a case study and all questions are compulsory. Each question in Section B is worth 5 marks.
Whilst no particular writing style is required, please endeavor to answer each question succinctly, whilst explaining your reasonings in full i.e., bullet point answers are not acceptable.
Candidates should allocate their own time, bearing in mind the mark allocation per question.
Section A. (30 marks in total)
Answer THREE of the following four questions in Section A (10 marks each).
Question 1 (10 marks)
What are some of the critical risk's entrepreneurs should consider before going global?
There are various risks taken by the entrepreneurs when they go for international business. The main risks which arise when the business goes global is the exchange rate risk and the political risks. Due to these risks, it becomes difficult of the organizations to generate consistent revenue and profitability in the future (Brain Beers; 2021). International entrepreneurship is a blend of innovative, proactive and risk-taking attitudes of the entrepreneurs (McDougall and Oviatt; 2000, p. 903). Further, one of the international entrepreneurial cultures is the international risk-taking attitude of the entrepreneurs. It is a part of personal financial risk (Dimitratos and Plakoyiannaki (2003, p. 200). The foreign exchange risk arises when there is a fluctuation in the investment value. This generally happens due to changes in the alterations in the exchange rate. This usually happens when the domestic currency appreciates leading to a decline in the foreign currency. This results in a reduced returns from the foreign currency after it is exchanged with the domestic currency. It is due to the volatile nature of the exchange risk it becomes difficult for the entrepreneurs to protect the company against such risks. Also, this risk injures the sales and revenue generating capacity of the company. Suppose, a US car manufacturing company generates most of their earnings from its Japanese business. If there is a depreciation in the Japanese Yen against the US dollars, the amount received from the yen-denominated profits from the Japanese facility declines resulting in fewer yields. Further, the foreign exchange risk impacts the business which imports and exports their products, supplies and services. Secondly, there is risk of cultural barriers. It is the cultural variances which can help to determine if the business will be a success or a failure. If the company is unable to achieve the desired business objectives or target then it can be assumed that the product and services of the businesses are unable to add value to the international market. Therefore, it is essential for the entrepreneurs to understand the culture before going international (Brain Abner; 2015). Thirdly, it’s the political risks which can have an impact on the business. Hence, it is the duty of the entrepreneur to evaluate the political situation before going global. Political risks usually arises when there are unexpected changes or modification in the government policies. This negatively impacts the business operations and profitability of the foreign company. Due to the changes in the policies, there can be changes in the trade policies resulting in trade barriers for the company and preventing them from serving the international trade. It can happen that these risks are ignored by the entrepreneurs. In such cases entrepreneurs are being protected by their ignorance and are able to act more confidently ((Sarasvathy; 2001). The role played by the entrepreneurs for risk management are emerging and are considered to be more risk avoidant (Miner and Raju; 2004, p. 3). Finally, it’s the legal and regulatory barriers while conducting business in international market which is the fourth risk and must be considered by the entrepreneurs. It is essential for the entrepreneurs to seek advice from experienced counsel for international trading by recognizing the various hazards which may impact the business in operating lawfully.
Question 2 (10 marks) 650 words
What are the different sources of financial capital available to entrepreneurs? Discuss the advantages and disadvantages of each.
The entrepreneurs reports that there has been improvement in the credit conditions in the recent years yet the access to finance is a huge problem for the entrepreneurs (OECD 2019). The different sources of financial capital available to the entrepreneurs are as follows:
Personal savings: This is the first type of finance provided by the entrepreneurs for commencement of the business operations. This is the most common source of capital in the form of personal savings for the entrepreneurs. The major advantage of personal savings is that it can be used by the entrepreneurs at any point of time. The main disadvantage of this source of finance is that it does not always covers the entire entrepreneur’s expenditure and needs to be used with other sources of finances. The additional finances are mostly provided by the stakeholders who also shares their ideas along with providing finances (Block et al. 2018).
Patient capital: This is the type of capital which is loaned by the entrepreneur from the spouse, friends and family members. Thus, these finances can be repaid at a later point of time as and when the profitability of the business increases. The major disadvantage of this source of finance is that it results in a business relationship and may lead to various constraints among the friends and family members if the money is not repaid on demand. Further, the entrepreneur needs to be aware of the amount of money available with the friends and family during the time of borrowing.
Angel Investing: Angel investing is a popular source of finance among the entrepreneurs. It provides huge amount of money to the entrepreneurs which helps them to commence the business. Angels are actually bug business units which provides funds to the entrepreneurs in exchange of stock of the business. The major disadvantage of this fund is that the entrepreneurs need to repay the funds with interest to the angel investors.
Venture capital: Venture capital is another source of finance for the entrepreneurs. It is almost similar to the angel investing. These funds usually come from the private investors or the investing firm. The venture capitalists usually invest less compared...