FEDERAL URDU UNIVERSITY OF ARTS, SCIENCE AND
TECHNOLOGY, ISLAMABAD
DEPARTMENT OF COMMERCE
MID-TERM EXAM BS COMMERCE-5th
SEMESTER Spring-2021
Subject: Entrepreneurship Total Marks: 30
Time Allowed: 6 Hours Exam Date: 28-05-2021 (Friday)
Google Class Room Code: fi6wq4m Email: [email protected]
Q.No. 1 2 3 4 5 6 7 8 9 10 Marks Obtained/total Marks
Marks Obtained
Total Marks in Words:
Name of the Teacher: Ms Hajira Danial
Who taught the course: Signature of Teacher/ Examiner:
To be filled by Student
Student’s Name: Father’s Name: Student’s MIS ID:
Enrollment No: Class Section: Session Evening
Student’s Email: WhatsApp No.
Answer the following questions. (5*4=20)
Q1: How do social entrepreneurs differ from traditional entrepreneurs?
Q2: What can business owners do to maintain high ethical standards in their companies?
Q3: How can entrepreneurs achieve unity through diversity? Explain in your own words.
Q4: Briefly explain the possible ways and techniques of improving one’s creativity in business.
Bark & Co.
Can a subscription service aimed at dog owners grow fast enough to satisfy the demands of
the venture capital companies that have invested in it?
After Matt Meeker, Henrik Werdelin, and Carly Strife met through mutual friends, the trio
decided to launch a business together. They noticed that consumer spending on pets in the
United States had grown by 33 percent between 2006 and 2011 to $51 billion, two-thirds of
which owners spent on dogs. The entrepreneurs also saw the success that Birchbox, a company
that sells cosmetic and beauty supplies through a subscription model, had achieved and began
soliciting valuable advice from that company’s cofounders about their business model. In 2011,
while still working in their day jobs, Meeker, Werdelin, and Strife used their own money and
investments from family members and friends to launch Bark & Co., a business that for about
$20 per month ships boxes of dog treats and toys to subscribers. In their first month, the trio
shipped 94 boxes to friends and acquaintances who had signed up. To differentiate their
company’s products, the entrepreneurs scoured Etsy, The Grommet, and trade shows, looking
for items that pet owners could not find at large chains such as PetSmart and PetCo. Each box
follows a theme. For instance, one April, the BarkBox included baseball-shaped cookies and
toys that resembled baseball caps and bats. The boxes have a gross profit margin of about 36
percent of sales, and the company has shipped more than 4.5 million of them.
Sales began to grow, and in 2012, Meeker, Werdelin, and Strife landed $1.7 million in venture
capital; they received another $15 million from venture capital firms over the next two years.
Meeker says that with its blend of unique products, Bark & Co., which is based in New York City,
tapped into a large and growing segment of dog “parents” who treat their pets like children.
Today, pet industry sales are $70 billion per year, and Bark & Co. has extended its product
offerings beyond its original BarkBoxes to include BarkShop, an e-commerce site that allows
dog owners to purchase a variety of products without committing to a subscription. The
founders say that BarkShop has sold 25 million prod- ucts. Its BarkPost blog, filled with dog
news and feel-good stories, attracts 10 million unique visitors per month and is supported by
advertisers such as American Express, Procter & Gamble, Subaru, and others. BarkLive sponsors
events aimed at dogs and their owners, such as BarkFest, a day-long festival in cities across the
United States that features live music and fun events. The company’s product extensions carry
gross profit margins that average 50 percent of sales, but 75 percent of Bark & Co.’s revenue
still comes from its BarkBox subscriptions.
Bark & Co.’s annual sales have doubled in each of the last two years and now total $100 million.
The company employs 150 people but owns no warehouses, choosing instead to outsource the
packing and shipping of its BarkBoxes. Although Bark & Co.’s subscription business is profitable,
the company as a whole is not yet profitable but is cash-flow positive. The company has built its
customer base primarily through social media, landing 1.2 million Instagram followers and 2.1
million Facebook likes.
In 2016, Bark & Co. raised an additional $60 million in funding from venture capital companies,
including August Capital and Resolute Ventures, to fuel its growth. Competitors, including
PetGiftBox and PawPack, have entered the market, but Bark & Co. remains the dominant player
in the industry segment. The entrepreneurs recognize the importance of constant innovation
and have created BarkBeta, a team that is charged with developing new business ideas for the
company. BarkBeta’s budget is 1 percent of the company’s revenue. Several of the company’s
innovations have failed, including BarkCam, a mobile app designed to connect people with
rescue dogs, and BarkCare, an in-home concierge veterinary service launched in New York City
and San Fran- cisco. Bark & Co. currently is exploring BarkAir, a chartered jet service that allows
people and their dogs to fly together in comfort and style, and an Ancestry.com-style DNA test
for dogs (“Any wolf in your genes?”). The company also is test- ing “pup-up” retail stores that
will allow dogs, each equipped with RFID technology and unaccompanied by their owners, in
shifts of five to enter the store and “shop” for their favorite toys and treats while their owners
watch.
Meeker, Werdelin, and Strife are feeling pressure from the company’s venture capital investors.
Because of the risks associated with their investments in young companies, venture capital
firms expect to receive returns of at least five times their original investments. For the venture
capital firms that in- vested in Bark & Co. to get back five times what they invested, the
company will have to grow to an estimated $500 million in sales within the next three or four
years. Meeker says that the founders’ goal is to give the investors a return of 100 times their
investment by becoming the next “Disney for dogs.” The question is: Can the entrepreneurs
produce those challenging results, and, if so, how do they do it?
Questions (3.5+3.5+3=10 marks)
1. Notice that several of Bark & Co.’s ideas for new businesses have failed. Is this unusual?
Why is it important for businesses to continue to innovate, even when their founders
know that many of the innovations will fail? What steps can Meeker, Werdelin, and
Strife take to encourage creativity in their company?
2. Explain the advantages and disadvantages of using venture capital to finance a
company’s growth.
3. Because of the risks associated with their investments, venture capital firms, which
become part owners of the companies in which they invest, demand big returns within
relatively short time frames. What impact do these expectations have on business
founders such as Meeker, Werdelin, and Strife? Do investors’ expectations affect
entrepreneurs’ decisions about their businesses? Explain.
