TEP234F_2022_ENTREPRENEURSHIP AND SMALL BUSINESS_E

A UNIVERSITY OF TORONTO FACULTY OF APPLIED SCIENCE & ENGINEERING FINAL EXAMINATION: December 15, 2022, 9:30 am - 12:00 noon DURATION: 2.5 hours Faculty-Wide program TEP234H1 - ENTREPRENEURSHIP AND SMALL BUSINESS Calculator Type: 1 Exam Type: X Examiner: J. C. Paradi CANDIDATES MAY BRING TO THE EXAMINATION AND USE ANY BOOKS, NOTES OR OTHER PRINTED OR WRITTEN MATERIAL, AND ANY TYPE OF CALCULATOR MAYBE USED. NO LAPTOP COMPUTERS. CELL PHONES. OR ANYTHING THAT CAN COMMUNICATE WITH OTHERS OR THE INTERNET ARE PERMITTED!! Max Score Q1 6 Q2 9 Q3 8 Q4 6 Q5 8 Q6 7 Q7 9 Q8 9 Q9 8 QIO 12 Qll 9 Q12 9 Total 100 There are 12 questions in this examination and you must complete all of them. The exam looks very long, but it is not . IF YOU DON'T WRITE VOLUMES of prose. If you know your material, it is a breeze! Keep the answers crisp and to the point. The questions are designed to test your understanding of the principles taught, not your ability to turn out volumes of prose. READ the exam instructions on the next page. Page 1 of 12

EXAM INSTRUCTIONS 1. Write your Department's code (ECE, MIE etc.) on the LEFT upper corner of the first examination book 2. Start each question (but not sub questions), on a separate page. 3. All questions can be answered in point form or in one or two sentences, as applicable, and therefore do not require verbose text 4. READ THE QUESTIONS CAREFULLY before starting to answer them!! The'eXaminafioiTi^baseclionlhe case^t the'end'd^f tfi^exam (pages'6-8)7plus some independ^f ” items. You have had the case before the exam date, so you should know what it is about You may re-read it to remind yourself of the details. YOU CAN KEEP THE EXAMINATION PAPER AND DATASHEET Page 2 of 12

>s (8) Question 3. Intellectual Property (brief answers only!!) Start this question on a new page!! A) The proprietary (not allowed for others to duplicate) aspects of the business Gino and Nadiya has chosen are very important to the short and long term successes to them; list as many patentable opportunities the partners have in Meat Inc. as you can and briefly explain them. (4 marks) b) Can anything be Copyrighted in this case? How do you copyright something? (2 marks) c) How long does a Copyright last (for example: Patents last for 20 years)? (2 marks) (6) Question 4 - Franchising - (All answers to be brief!!) Start this question on a new page!! a) Why is Franchising a significant part of retailing all over the World? Give the main reasons for why a Franchisor would franchise their business. (3 marks) b) Is there an opportunity for the Meats Inc. partners to Franchise all or part of their business? Support your arguments well as either YES or NO will be acceptable if properly defended. (3 marks) (8) Question 5 - Legal issues Gust a few sentences!!) Start this question on a new page!! (a) What form of legal organisation should the partners look to for their future plans? (4 Marks) (b) Would it make sense to form a Joint Venture with some other firm (remember, they are exporting more and more of their products to the U.S.)? Explain why or why not. both answers are valid and the quality of the explanations will earn the marks! (4 Marks) Question 6 - Business Plan & Investors - (All answers are to be brief, no more than a few sentences!!) Start this question on a new page!! The Business Plan is arguably a "must" for businesses of any size in today's business environment. A successful firm will have mastered the tools and practices required for a competent BP. a) Although Gino and Nadiya's firm is not a shareholder company (yet), what information are their future shareholders will be entitled to from the company when they hold shares in? (3 marks) (7) b) Why is the Executive Summary the single most important part of the Business Plan? (2 marks) c) Explain what the "hockey stick" earnings curve is and why are investors concerned about it? (2 marks) Page 4 of 1,2

(9) Question 7 - Innovation- (All answers are to be brief, no more than a few sentences!!) Start this question on a new page!! a) These co-founders are innovative people They already innovated several products. Specifically, they invented the partially cooked pork ribs. Which one, or more, of the 8 innovation triggers was in play when they did this? (3 marks) b) What was the great consumer draw in the cooked ribs product? Why would the export market be a better one as compared to Canadian markets? (3 marks) c) Do you think they could protect this new Intellectual Property somehow? (3 marks) (9) Question 8 - issues worm tmnKing'^aDout - ( aii answer^ "dre td'bd bribt,''no more tnan a rew sentences!!) Start this question on a new page!! a) They started out as a retail store when they bought the business. But now, they have developed a B2B side as well with the customized hamburgers and the cooked ribs. What would you do to grow the business in the future? Briefly explain your decision. (3 marks) b) The case did not talk much about licensing issues (from Government). What issues could you think of that they would have to address? (3 marks) c) If they were to expand their export business, which of the best 3 (three) from the following list of issues would apply to them if they asked: "What ’ s in it for us?" would best fit as answers (3 marks) - just list the numbers: 1. Higher profits are available. 2. Lower unit production costs due to increased volume 3. Balanced production schedule, smooth out seasonal fluctuations in business. 4. Create new markets and gain repeat orders 5. Less reliance on the cyclical Canadian economy 6. Increased productivity, larger volumes, better utilisation of employee and machine resources 7. Increase their competitiveness in Canadian markets, as they learn while exporting. 8. Potential tax advantages 9. Opportunity to extend product life cycles. 10. Usually much higher sales prices are possible Page 5 of 12

" TEP234 Exam Business Case, 2022 This is a case-based Exam!!! We had provided this case to you in advance so that you couid read it carefuHy and digest it Perhaps a short review wouid be usefu! before you start answering any questions! Meats Inc. - Case study for TEP234 exam - 2022 The beginning Gino DiSanctis's father worked as a butcher back in Italy and he and his family emigrated to Canada and settled in Toronto. He was a master butcher - and his customers loved him. Aside from the usual assortment of meat products, he also filled bespoke orders, so he provided what his customers wanted and innovated in the process of cutting meat. Gino's mother opened a butcher shop that they called the Meats of the North. The business grew and soon was substantial, although still a local butcher shop. Gino grew up in a butcher business that his parents ran. But he felt that he needed really advanced ideas and entered the UofT to study Food Engineering at the Department of Chemical Engineering and Applied Chemistry. There he met a classmate Nadiya Hawryluk when they were assigned to work on their capstone plant design course. They were both interested in business and took the two-part course TEP234 and TEP432 (which is a Winter course). As the students in TEP432 are required to write a Business Plan on some approved business idea, Gino had an idea about starting a meat processor company since his father was in the meat business already. He told Nadiya about his plans and she was enthusiastic about them. To cut the story short, after graduation, they both went to work for Meats of the North. After a few years Gino's father offered the two of them the opportunity to purchase the store as he and his wife were looking forward to retirement. Getting into business Soon they made a deal and Gino and Nadiya became 50%-50% business partners. They raised some money from the Canada Development Bank and Gino's father took back a mortgage on the business. But the butcher shop was a sole proprietorship. Gino made a note that this will have to be addressed. But the first thing they did was to rename the store to Meats Emporium. The shop produced steaks, hamburgers and a number of other meats, including chicken, lamb, pork products, veal and others. The shop also stocked condiments, sauces, pickles and other prepared items. They were inventive and started semi-prepared products such as aged beef, cooked ham, back bacon, hamburgers, meat balls, smoked turkey, chops, lamb and pork, ribs and riblets all kinds of chicken products, duck and goose and on a bespoke order even venison (deer meet) and wild boar. Gino and Nadiya agreed that they will have to focus on fewer products to gain efficiency. But for now, what they got was OK. Page 7 of 12

While they became accustomed to being businesspeople running their own shop, they began to put their scientific knowledge to work and analyzed all aspects of their business from manufacturing to logistics and especially what products they were making that could lead to substantial growth in the business. They had found that the hamburgers made according to Gino's mother's recipe were sought after and was about 50% of their business volume already and had a very good profit margin as well. But they also found that some of the products would not be appropriate for large volume sales, so they concentrated on the hamburgers for now. The business grew because they were able to get into the large box stores such as Costco, Loblaws, Metro and others where volume was important, they even signed up a new hamburger based franchising company which only had 10 stores but would likely grow substantially. Growth This was beginning to pay off and they expanded the hamburger business to include custom formulations (bespoke) for their different large customers to allow the clients to differentiate themselves from each other. In fact, they had variations of their products to size, weight, shape and taste. They were able to patent some of the manufacturing processes and trademarked several product names. One of the exciting things they discovered was their invention of partially cooked pork ribs would experience significant growth. This idea (and they tested it and worked fabulously well). The process was to cut the raw ribs into the right weight, add the secret sauce and then vacuum seal the package. Next, they cooked the package in hot water, when done, freeze it to be ready for shipment. The retail customer then would thaw the ribs and put them on a barbeque and in a short time they would have delicious, barbequed ribs, ready to eat. This product sold very well, and volumes grew. By now the company had a young salesman who thought that this product would sell very well in the south of the US where people tearbequed a lot. Nadiya approved and Gino also liked the idea. The test marketing went fabulously well with great promise so much so that they thought they would need to double the plant and dedicate almost all of the new extension to the plant to the ribs business. Gino spent most of his time building out this part of the business while Nadiya ran the shop and worked at growing the hamburger business. Things were working beyond their expectations. The partners had quite different personalities. It's a big reason why each has been so crucial to the success of the business. They don't think they would be in business if it wasn't for her and/or him. They had Page 8 of 12

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Financial Data for Meats Inc. - you can tear this off for easier reference Financial Data for Meats Inc. Accounts Payable 54,000 Accounts Receivable 115,000 Administration 160,000 Cash investment (GIC) at the bank 80,000 Bond sold to an investor 250,000 Buildings (net of depreciation) 150,000 Cash on hand 170,000 Commission Income 75,000 Common stock 620,000 Current Portion of LTD 177,000 Depreciation 125,000 Equipment (less depreciation) 680,000 Equipment loan payable 430,000 Finished goods in inventory 55,500 Income Tax rate 30% Interest expenses 35,000 Labour 532,000 Land 600,000 Licenses (Health & Food) 12,000 Long Term Loan 75,000 Maintenance and repairs 70,150 Marketing 160,000 Materials 1,250,000 Mortgage payable 130,000 Office equipment (net of depreciation) 35,000 Raw materials 18,500 Rent 144,000 Retained Earnings 180,000 Revenues from Sales 2,750,000 Utilities 180,000 Work in progress 12,000 Thanks for the opportunity to teach you this past term. I find it always a great way to learn from my students. It is fun for me and I work hard to make it fun for you too. So have a wonderful Christmas season and a fabulous 2023 Page 11 of 12