IGCSE Enterprise: Specimen Questions with Answers 7 - 8 of 49

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Case Study -1

Starting a business in Haiti takes 12 procedures and more than three months. Formal registration of a company is so complicated that the process cannot be completed without using the services of third parties — lawyers and notaries. Company statutes are often drafted by an attorney, then need to be certified by a notary before being submitted for incorporation. The result is an additional cost burden for entrepreneurs trying to navigate the complex process to enter the formal sector. In New Zealand, by contrast, an entrepreneur can complete the entire process of company formation in just a few hours through a single online procedure. The burdensome nature of these entry regulations is surely one of many reasons underlying the fact that Haiti has far fewer registered companies relative to population size — only 4 per 100,000 people in 2012, compared with 1,020 per 100,000 people in New Zealand. Formalization has many benefits. Formally registered companies tend to have greater profits, investments, and productivity, while their employees benefit from social security and other legal protections. Yet, in many economies around the world, entrepreneurs continue to face excessively burdensome entry regulation. Formalizing a business may involve multiple interactions with government agencies and with third-party private professionals whose services are either required by law or desirable because of regulatory complexity.

Main Findings

  • Most of the cost of starting a business comes from the fees of third-party professionals such as lawyers and notaries.
  • Entrepreneurs use third-party services in business start-up mostly because the process is too complex.
  • Economies with greater third-party involvement in business incorporation tend to have more businesses operating in the informal sector. They also tend to have less accessible laws and regulations and less efficient systems of civil justice.
  • Notary services are used in business start-up in 76 of the 189 economies covered by Doing Business.
  • Latin America and the Caribbean has the largest share of economies where legal services are used in the start-up process.

Question 7 (6 of 12 Based on Passage)

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Short Answer▾

Starting a business in Haiti takes 12 procedures and more than three months.

What do you mean by SWOT analysis?

Explanation

The SWOT analysis helps an organization assess issues inside and outside the organization. The SWOT analysis, made up of an assessment of strength, weakness, opportunities, and threats. SWOT analysis determines what may assist the firm in accomplishing its objectives and what obstacles must be overcome or minimized to achieve desired results.

  • Strength and weakness are the factors which are internal to the company. These factors can be controlled and changed. Examples of strength and weakness are- deciding on team members, location of the firm, intellectual property rights and patents.
  • Opportunities and threats are the factors which are external to the company and are not in the control of the firm. Examples of Opportunities and threats are- obstacles to market and sell the product in the market, bad-debts, new competitors in the market, etc.

Question 8 (7 of 12 Based on Passage)

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Short Answer▾

Formalizing a business may involve multiple interactions with government agencies and with third-party private professionals. What are the essentials of starting a business?

Explanation

Starting of business requires various essentials like motivation, determination, and know-how.

Three Essentials for Starting up a Business Are

  • Identify business opportunity: Choosing the type of business to start can be a tedious task with multiple opportunities available. It is important to determine the skills and passions to choose a business of your type.
  • Build a business plan: A plan allows better understanding of the business and industry structure. It helps in gaining knowledge and understanding of the requirements of starting a business.
  • Find start-up capital: Investment is required in business whether big or small. Finding of start-up funds will be different for different business.
Three Essentials for Starting up a Business