Lesson 1

ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LECTURE: DEFINITION OF ENTREPRENEURSHIP AND TURNING KNOWLEDGE

INTO PROFIT (ENTERPRISE, ENTREPRENEUR, INTRAPRENEUR,
ENTREPRENEURSHIP THEORY & PRACTICE)

OUTLINE

Definition of a business

Enterprise

Entrepreneur

Intrepreneur

Entrepreneurship

Entrepreneurship theory and practice

The aim of this lesson note one is to explain the above outline.

Objectives

On the completion of this this lesson note one, students will understand the difference
among the following; enterprise, entrepreneur, intrapreneur, entrepreneurship and
entrepreneurship theory and practice. This will help the students in the following ways:

• To understand what constitute business activity

• To be familiar with the concept of entrepreneurship

• To understand entrepreneurship as a multifaceted discipline.

• To examine the interlinkages operating among the disciplines and their various
contributions

• To identify various disciplines that has contributed to the development of

entrepreneurship.

• To provide entrepreneurial services, e.g. a doctor treats a patient

• To enhance human life or living, e.g. a surveyor helps to plan a city

What is a business?

A business is any activity that is involved in developing, producing and distributing of

goods and service in return for a profit. A business can also be referred to as the activity
of making, buying, selling or supplying goods and services for money.

Reasons for business

1. Profit making

2. Wealth creation

3. Provision of services

4. Employment generation

What is an enterprise?
Enterprise can be defined as initiative, or purposeful broad plans requiring many
coordinates; or in business or financial applications as the overall operating entity.

An enterprise is an activity or a project that produces services or products. There are

essentially two types of enterprise:

• Business enterprises, which are run to make a profit for a private individual or
group of individuals. This includes small business.

• Social enterprises, which function to provide services to individuals and groups

in the community.

Business enterprises

This is type of enterprise established by individual, corporate or government in order to

provide essential service(s) while making profit or return. There are lots of different
enterprises around; many are small businesses. Sometimes one person owns and runs
them; sometimes they're a family business; other businesses are owned and run by
partners who aren't family relations.

To earn an income from a small business, the enterprise has to run at a profit; that is,
some money should be left over for the business owner once all the costs of making the
product or delivering a service have been met. Entrepreneurs usually decide to set up
small business to earn an income from producing and selling products or delivering
services to individuals or other businesses.

Common small businesses

Some small businesses are easy to recognise because they have a location or shop-
front or a site where you can see them in operation, making or fixing things and serving
customers. For example:

• Furniture shop

• Small farm settlement

• restaurants / canteen

• bread making/confectionary

• printing works

• hairdressing salons

• Hotels

• Cosmetics and bead making

• Soap making etc

Social enterprise

Social enterprise functions as a way of providing services to individuals and groups in

the community. A social enterprise is basically an organization or enterprise that
applies business techniques to maximize improvements in human and environmental
well-being with the intention of maximizing profits for external shareholders and
providing essential services to the host community.

Why is the need for Social Enterprise? Social enterprises reinvest the money they make
back into their business or the local community.

1. This allows them to tackle social problems,

2. Improve people's life chances,

3. Support communities and help the environment.

So, when a social enterprise makes profits, it has a positive multiplier effect on the
society.

Roles and objectives of an enterprise

An enterprise that is characterized with commercial, financial, or business elements or

purposes for instance, are created to;

1. Provide income for the owner,

2. Create jobs as well as

3. Develop the economy, etc

Who is an Entrepreneur?

Entrepreneur is refers to as a person who undertakes and operates a new venture, and
assumes some accountability for the inherent risks. Entrepreneur can also be seen as a
person who makes money by starting or running a business and identifies a vacuum in
the market demand and creates a product to satisfy the need.

The concept of “entrepreneur” is a French word called “entreprendre” meaning to

undertake. This concept was used to refer to a business organization in the 18th century
who deals or buys and sells goods at uncertain prices.

Definition of Entrepreneur from various writers

Is a risk taker
 An organizer

Entrepreneur is As an innovator

As a leader

Richard Cantillon (1755) defines entrepreneur as the agent who buys means of
production at certain prices in order to combine them into a new product.

Say, J.B (1821) defines entrepreneur as one who brings other people together in order to
build a single productive organism.

Schumpeter (1934) defines the entrepreneur as a person who is willing and able to
convert a new idea or invention into a successful innovation

Ogundele (2000) defines entrepreneurs as the innovating individual, who initiates and
nurtures to growth a new and an ongoing business organization, where none existed
before. He is the individual who successfully thinks or conceives a new business
concern, organizes or initiates actions to start it, and manages it through its initial
problems and struggles for survival. He takes all measures that lead the organization to
a state of stability and self-sustaining growth.

Drucker (1985) defines the entrepreneur as the innovative individual who perceives
business opportunities and organizes the required resources to initiate a successful
business activity for profit.

Kuratko and Hodgetts (2001) define entrepreneur as individual who recognizes

opportunities where others see chaos and confusion.

The concept of entrepreneur could be historically summarized as shown below.

Period Particularizations

Early time Stems from French: means: between, taker, go between.

Middle Age Actor and persons in charge of large-scale production projects

17th century Person bearing risk of profit (loss) in a fixed price contract with
government

1755 Richard Cantillon – person bearing risk

1821 Jean Baptist say – separated profits of entrepreneur from profits of

capital interest.
 1904 Max Weber – Protestant ethics and spirit of capitalism behavioural
outlook

1934 Joseph Schumpeter – entrepreneur as innovators developing

untried technology

1961 David McClelland – achievement oriented, energetic, moderate

risk taker

1964 Peter Drucker – entrepreneur maximizes opportunities

1975 E.O. Akeredolu-Ale entrepreneur seen from socio cultural and

political perspectives

1975 Albert Shapero – takes initative, accepts risks of failure, and

organizes some social and economic mechanisms.

1980 Karl Vester – entrepreneur seen differently by economists,

psychologists, business persons and politicians

1985 Robert Histrich – entrepreneur – assuming financial,

psychological and social risks, in creating something different in
value and receiving the resulting rewards of monetary and
personal satisfaction.

1995 A.U. Inegbenebor – dynamic structure builders for effective

performance.

2000 O.J.K Ogundele – empire builder exploiting opportunities

Source: Adapted from Histrich, R.D. and Peters, M.P. (2002) Entrepreneurship, New
York: McGraw Hill higher education, and Ogundele, O. J .K (2007) Introduction to
Entrepreneurship Development, Corporate Governance & Small Business Management.
Lagos: Molofin Nominees.

It could be seen from the table above that the concept of entrepreneur has varying
origins and usages in different times and regions.

Characteristics of an entrepreneur

Hornaday (1982) produced a list of forty two (42) characteristics which were often
attributed to entrepreneurs; they are stated below.

1. Confidence 22. Responsibility

2. Perseverance 23. Foresight

3. Energy, diligence 24. Accuracy, thoroughly

 4. Resourcefulness 25. Cooperativeness

5. Ability to take calculated risk 26. Profit orientation

6. Dynamism, leadership 27. Ability to learn from mistakes

7. Need to achieve 28. Sense of power

8. Optimism 29. Pleasant personality

9. Versatility, knowledge of product market, 30 Egotism

machinery, technology

10. Creativity 31 Courage

11. Ability to influence others 32 Imagination

12. Ability to get along well with people 33. Perceptiveness

13. Initiative 34 Tolerance for ambiguity

14. Flexibility 35. Aggressiveness

15. Intelligence 36. Capacity for enjoyment

16. Orientation to clear goal 37. Efficacy-effectiveness

17. Positive response to challenge 38. Ability to trust workers

18. Independence 39 Sensitivity to others

19. Responsiveness to suggestions and criticism 40 Honesty, integrity

20. Time competence, efficiency 41 Commitment

21 Ability to make decisions quickly 42 Maturity, balance

Source: Adapted from Kuratko D.F and Hodgets R.M. (2001).

The top ten Characteristics of today Entrepreneurs

1. Creative and innovate

2. Visionary and inspired

3. Perseverance

4. Optimistic

5. Gap-fillers

6. Coordinator and organizer

FUNCTIONS OF ENTREPRENEURS
Ogundele,( 2004) has classified the functions of entrepreneur as follows

Social Functions of Entrepreneur

1. Transforming traditional indigenous industry into a modern enterprise.

2. Stimulating indigenous entrepreneurship, the entrepreneur has in his

employment potential rivals.

3. Jobs or employment creation in the community

4. Provision of social welfare service of redistributing wealth and income

5. Providing leadership for the work group

6. Providing for and responsible for the motivational system within the firm

Economic Functions of Entrepreneur

1. Marshalling the financial resources necessary for the enterprise or mobilizing

saving

2. Bearing the ultimate risk of uncertainty.

3. Providing avenue for the dispersal and diversification of economic activities.

4. Utilization of local raw material and human resources

Who can become an entrepreneur?

Anyone can become an entrepreneur in as much as the person is ready to experience

deep, dark and depth of uncertainty and ambiguity and ready to work through the breath
of island of success.

An Entrepreneur is a catalyst for economic change, which uses purposeful searching,

careful planning, and sound judgment when carrying out the entrepreneurial process.
Uniquely optimistic and committed, the entrepreneur works creatively to establish new
resources or endow old ones with a new capacity, all for the purpose of creating wealth.

TECHNOPRENEUR

A technopreneur is an individual whose business is in the realm of high technology, who

at the same time has the spirit of an entrepreneur. The technopreneur represents new
breed that is both innovative and equally enterprising. This concept is derived from
combining together, technology and entrepreneur.
Ovia (2007) notes, a technopreneur is an entrepreneur whose business involves high
technology or to put more clearly a technology innovator and a businessman all
combined in one individual. The technopreneur, therefore, combines both technological
know-how and business expertise. The technopreneurs thus combine the attributes of
the scientist and an enterprise person in one individual.

Characteristic of a Technopreneur

- They are naturally gifted

- They are smart

- They are highly creative

Technopreneurs however, possess all the characteristics linked to an entrepreneur. The

reason for the difference between technopreneur and entrepreneur is to identify an
individual with science based innovate-ness and business based innovate-ness.

Intrapreneurship

Intrapreneurship refers to employee initiatives in organizations to undertake something

new, without paying for the risk involved in the exercise." Hence, the intrapreneur
focuses on innovation and creativity, and transforms an idea into a profitable venture,
while operating within the organizational environment. Intrapreneurship is the act of
behaving like an entrepreneur, except within a larger organization or without necessarily
taking a direct risk.

What is Entrepreneurship?

Entrepreneurship is seen as act of recognizing opportunities in the environment,

mobilizing resources to take advantage of such opportunities, ensuring the provision of
new or improved goods and services to the consumers and obtaining profit in return for
the risk taking. Entrepreneurship is the process or a way of thinking, reasoning (about
risk and return) and acting to gain at the long-run, (that is), trying to make use of the
opportunity within the environment and takes responsibilities for mobilizing the
required resources to take advantage and make profit in return.

Richard defines entrepreneurship in terms of

uncertainty bearing
 Say defines entrepreneurship in terms of coordination of
production of Entrepreneurship resources

Schumpeter defines entrepreneurship in terms of introduction

of innovation

Reich defines entrepreneurship in terms of leadership attribute

Advantages of entrepreneurship

1. Enormous personal financial gain

2. Self- employment

3. Create employment for others

4. Income generation and increased economic growth

5. Development of new market

6. It promotes exportation of goods and services

7. More goods and services are available

Disadvantages of entrepreneurship

1. High level of risks are involved

2. Lack of fund

3. Lack of government support for research and development

4. Lack of infrastructural support

5. Insecurity

6. Unstable economic policies

Contributions of entrepreneurship

1. Development of a new market

2. Discover new source of materials

3. Mobilize capital resource

4. Introduction of new technology

5. Create employment

6. Creation of wealth
 7. Economic growth

ENTREPRENEURIAL THEORIES

Writers have come up with several theoretical frameworks on entrepreneurship

development. These theories include but not limited to the following, economic, socio-
cultural, managerial, educational, developmental, experiential, innovation, network,
structural and multi-dimensional theories. Each of these theories had been used in the
study of the processes of entrepreneurship. Let us now focus on summary of existing
entrepreneurship theory.

1.1 Entrepreneurial Theories

Economic Theory: Writers like Schumpeter, (1934) and Drucker, (1985), see
entrepreneur as the man who perceives business opportunities and takes advantage of
scare resources to use them. Relevant, therefore, are the structure of economic
incentives that are available in the market. The patterns of economic incentives have
acted as stimuli for the emergence of entrepreneurs. They have also influenced the
positive responses in terms of behaviour and their performance (Kilby, 1965; and Singh,
1985).

Political Theory: The influence of the political factor on the emergence, behaviour and
performance of entrepreneurs had been reported by several writers. Schatz (1962 and
1964) discussed two forms of assistance that were provided for indigenous
entrepreneur by government in Nigeria. These were (1) the financial support through the
federal loans board and (2) the establishment of the Yaba Industrial Estate for use by
indigenous entrepreneurs. Ogundele (2000) discussed the provision of training and
financial assistance by government to indigenous entrepreneurs through National
Directorate of Employment (NDE). Government by way of legislations and provision of
infrastructures and other support systems have aided the entrepreneurial processes.

Ecological Theory: This approach is concerned with the influence of the environment
on business start up, without having to obtain information about the characteristics and
motivation of the organization founders (Left, 1979; Marret 1980, and Penning, 1982).

Historical Theory: This approach considered past historical antecedents as

independent variable on the emergence, behaviour and performance of
entreperneeurs. To the writers in this group belong (Cole, 1959; Akeredolu-Ale, 1975;
and Rostow, 1982). Akeredolu Ale (1975) specifically emphasized the pre-empting of
post war opportunities in explaining the underdevelopment of indigenous
entrepreneurship in Nigeria.

Managerial Theory: This perspective focuses on the perception of market

opportunities. It in addition emphasizes the operational skills required to run a
successful enterprise (Kilby, 1971; Meredith, Nelson and Neck, 1991, and Osuagwu,
2001). Kilby (1971) listed thirteen managerial functions, which the entrepreneurs might
have to perform for the successful operation of their enterprises. Carland, Hoy Boulton
and Carland (1984) regarded the employment of strategic management practices as the
function of entrepreneurs. Therefore managerial skills will have direct positive effect on
the entrepreneurship processes of emergence, behaviour and performance. The
environment that provides opportunities for relevant skills acquisition will tend to
promote entrepreneurship.

Educational Theory: It is concerned with general level of education in the society. Its
proponents contended that education tend to broaden peoples’ outlook. It equips
people with needed skills to look at the world around them in a more organized and
coordinated fashion. This will make them to perform better in entrepreneurial role
(Aluko, 1983; Browen and Hisrich, 1986 and Singh, 1986). Akeredolu-Ale (1975) found
that more entrepreneurs had lower levels of formal education than the civil servants.
He could not establish any direct association between the level of formal education of
entrepreneurs and the degree of success achieved. Bowen and Histrich (1986) reported
that the general conclusion the entrepreneurs are less well educated than the general
population was not supported by their study. Also Singh (1986) found that earlier notion
that those lacking educational qualification were usually the ones who went in for
business was not borne out on his study. Earlier on Aluko (1983) reported that new
breeds of highly educated entrepreneurs were emerging in Nigeria. Ogundele (2000)
found that the performance of some entrepreneur in his studied groups was aided by
better education which many of them had. The broaden outlook through the
educational process could aid in accurate perception of opportunities, and therefore
affect entrepreneurial emergence, behaviour and performance.

Innovation Theory: Entrepreneurs are here considered as innovators whose task is

creative destruction. This results from bringing about novel combination of products
and ideas, thus rendering obsolete previously existing products or ideas. Consequently,
the process of endowing resource with new wealth producing capacity is central to any
conceptualization of entrepreneurship (Schumpeter, 1934, Tushman and Nelson, 1990,
Amit Glosten and Muller, (1993). Kiby (1971) considered adaptation as innovative
function of entrepreneurship in a developing economy. Amit, Glosten and Muller (1993)
and Hobdat (1995) considered innovation as a distinguishing feature of
entrepreneurship. It is, they noted, the process of extracting profit from new, unique
and variable combination of resources in uncertain and ambiguous environment by
exploiting opportunities. Innovation, therefore, is about exploiting opportunities.

Network Theory: This theory focuses on the social links which promote or hinder
entrepreneurship. This is because, it considers entrepreneurship as being involved and
as interacting in network of continuing social relations that open up or block
entrepreneurs’ link with existing resources and opportunities. It is concerned with the
intricate nature of interpersonal relationship (Aldrich Rosen and Woodward, 1987,
Dubini and Aldrich, 1991 and Cardor, Zietsma, Saparito, Matheme and Davis, 2005). As
a result relationship in social settings can provide opportunities for entrepreneurship.

Structural Theory: This approach examines the effect of internal patterns of

relationship among various parts and components of an organization on
entrepreneurship. It had been noted that the quality of organizational resources and the
efficiency with which entrepreneurs carry out organizational functions affected their
performance. The structure of entrepreneurial organization was found to have enabled
them to react fast to changing environment and adapting to new demands. In addition
internal structural arrangement to context was found as a significant basis for achieving
effective performance (Akeredolu Ale, 1975; and Inegbenebor, 1995). Akeredolu-Ale
(1975) noted that the entrepreneurs’ quality of organizational resources and
consequently the efficiency with which they carry out organizational functions affected
their performance. Inegbenebor (1995) argued that internal structural arrangement to
the context has a significant basis for achieving effective performance. Emphasis was
placed on the dynamic flexibility of entrepreneurial organizations. Thus the structural
arrangements in entrepreneurial organization make them to be very adaptive to
exploiting opportunities.

Technological Theory: This theory is concerned with machines, equipment, and tools
used in producing goods and rendering services. (Woodward, 1965; Kiby, 1965; and
Ekpo Ufot, 1990). Woodward (1965) found that technological complexity considerably
influenced administrative structure, thus emphasizing the influence of technology on
performance. Kilby (1965) noted that small indigenous entrepreneurial organization
exhibited a feature of permissive technology leading to fast adaptation. Entrepreneurial
technological innovation can be regarded as direct responses to opportunities in the
relevant environment.

Multi-Factor Approach: Ogundele and Opeifa (2003) note that the existing theoretical
framework reveals that several factors in combination affect the entrepreneurial
processes. It is proposed therefore that several rather than a single factor will affect
entrepreneurship. In Ogundele (2000), the specific set of factors used as explanatory
variables were: (1) social relations (involving elements of socio-cultural and network
theories), (2) political factor, (3) economic environment, (4) technology, (5) training and
development (6) formal education, (7) previous work experiences, (8) innovation and (9)
structural elements of the entrepreneur’s organization. This is a multidimensional
factors and interdisciplinary approach to the study of entrepreneurship. It is to be noted
that this approach is also based on the opportunities that exist at the appropriate level
of analysis. The study predicted that the determinants listed above could positively and
negatively affect entrepreneurial emergence, behaviour and performance in Nigeria.

Each of the various levels of theoretical formulation presented above is linked with
opportunity of one type or the other. The recurrent emphases by various writers on
opportunities in relation to entrepreneurship have provided the impetus for proposing
the bounded opportunity approach to entrepreneurial study.

Researchers have also shown that perception of opportunities and the employment of
strategic management practices are the functions of entrepreneurs (Kilby 1971, Carland
Hoy, Boulton and Carland 1984 and Amit, Glosten and Muller, 1993). Stevenson (1998)
and Timmons (1999) emphasized the dynamic nature of the opportunity in the
environment and the reactions of the entrepreneur or entrepreneurial team in cashing
on the opportunities.

Entrepreneur practice

An educated person need not suffer from unemployment but can put his or her
knowledge into use for some profit.

Entrepreneurs get engaged in business activities and convert CAPITAL to PROFIT.

CAPITAL assets include: knowledge, time, good health, money, equipment, raw
materials, and other materials, building space, transportation, communication
services, etc. Knowledge is the starting point.

The net PROFIT is the money we have after paying off the costs of running the business,
taxes, and all expenses incurred by the business.

In the course of carrying out business activities, Entrepreneurs seek for

OPPORTUNITIES to be turned into profit, Entrepreneurs discover MARKETS that can be
initiated, Entrepreneurs recognize and utilize positive MARKET FORCES.
When you observe a problem and you examine what is required to solve the problem,
this is called a NEED ASSESSMENT.

People who make a lot of money include people who:

➢ Discover a need that many people generally have, therefore, there is a potential
huge market in that need

➢ Recognize what would be useful for a particular population, group of persons, or

profession therefore, there is a potential protected market in that need

➢ Have knowledge of how to convert a raw material to a finished product,

therefore, there is a potential indispensable market in that need

➢ Discover how to make a process or product easier or better, therefore, there is a

potential convenience market in that need

➢ Know what many people would enjoy, therefore, there is certain market in that
need

A NEEDS ASSESSMENT is important BEFORE you begin a BUSINESS in order to ensure

you generate a NET PROFIT.

✓ You need to assess if your target market is big enough, is stable, or protected, or
convenient, or indispensable or certain, etc.

✓ You need to examine your capital assets

✓ You need to predict your profit

INTERACTIVE DISCUSSION

For fifteen minutes, think about how you can utilize knowledge from your field:

▪ To provide five different services

 ▪ To make five different products

▪ To enhance human life in general

For fifteen minutes, consider in turn: your neighborhood, your city, your village, your
country.

▪ For each of these, think about what you like about these places. Think about the
knowledge of those persons that made those things you like possible.

▪ Then think about what you do not like about each of these places. Consider what
kind of knowledge is necessary to make to make a change for the better.

HOMEWORK QUESTION 1

If you have enough financial capital and time, how would you invest your money to make
a difference in improving a certain aspect of life in your neighborhood and make some
profit from doing so? (Write half a page only).

We come to the university to gain knowledge. We will also spend the rest of our lives
learning in different ways. This knowledge gained can be used in different ways that we
can receive money for. For example knowledge can be used:

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 11 (TWO)

LECTURE 2: ENTREPRENEURSHIP IN PERSONAL AND NATIONAL

DEVELOPMENT: (IMPORTANCE OF ENTREPRENEURSHIP AND
POSSIBLE BUSINESS OPPORTUNITIES IN NIGERIA)

OUTLINE

Defining entrepreneurship from individual perspective

Defining entrepreneurship from National Development perspective

Importance of entrepreneurship

Possible business opportunities in Nigeria

The aim of this lesson note two is to explain the above outline.

Objectives
On the completion of this lesson note two, students are expected to understand
entrepreneurship from individual and national development point of view, know the
importance of entrepreneurship and familiar with possible business opportunities in
Nigeria. This will help the students in the following ways:

• To understand how entrepreneurship can sustain an individual, family and nation

at large

• To be familiar with the importance of entrepreneurship

• To identify various possible business opportunities in Nigeria.

INTRODUCTION

Many sectors of the Nigerian business system were highly restricted and regulated by
government from the period of independence until late 1990s. During this era, private
participation in core sectors of the economy such as banking, telecommunication, air
transportation, television and radio broadcasting etc. were greatly limited and strictly
controlled. Today, however, government has deregulated and opened up the economy
for more involvement, participation and investment by private entrepreneurs. The
purpose is to promote the expansion of the economy through a free enterprise system.
In a free enterprise system, businesses are organised, owned, operated, and controlled
by private individuals who have the right to a profit (or must suffer the loss) from
operations. The system results from the free association of people in a free society.
Under this system, you can organize any business the law allows, produce whatever you
wish, charge whatever you want, or even sell your interest in the firm.

In reality, however, a business can succeed only if it produces a product or service that
the public wants, sells it at a price people are willing to pay, does the job somehow
better than the competition, and makes a profit for its efforts. In addition, government
regulations and the legal system set limits on certain types of products, businesses,
and pricing.

THE ENTREPRENEURSHIP FROM INDIVIDUAL DEVELOPMENT POINT OF VIEW

Individual entrepreneurial development is the systematic process of training and growth

which make individual gains and apply knowledge, skills, insights and attitudes, with
which he/she manages profit seeking and other work organisations effectively. (Rao, et.
al.,1990), note that the focus of development approach is entrepreneurship skill. These
skills include: (1) Development of entrepreneurial spirit, characteristics and personality
(2) Development of technical, technological and professional competencies needed for
productive work employment (3) Development of enterprise-building and small
business development, capabilities to initiate and start one’s own business or self-
employment and (4) Development of managerial capability to run the business and
other self-employment activity successfully.

The most common motive for individual entering business is to profit and create wealth,
the desire to make a profit as a reward for taking the risks of running a business form the
major reason why individual get engaged in small businesses. Profit is the income
received, minus the costs of operating the business. Profit serves both as a reward for
undertaking the risks of business and as a yardstick of one’s success at it. Although it
appears simple, profit is not always made. Sometimes there are losses. There is a lot, of
misunderstanding about how much profit Nigerian entrepreneurs and business owners
make. Some people think profits of businesses are too high. Others think that without
high profits, there is no incentive for a business to produce goods and services needed
by consumers.

INDIVIDUAL AS AN ENTREPRENEUR

Things don’t just happen by themselves in any economic endeavour, especially in the
world of free enterprise and profit. Someone has to make them happen. Entrepreneurs
are the innovative owners and managers who create some new product or service or
suggest a better way of using existing products or services. They are the first risk takers
to see that the public wants a new product or service and try to provide it.
Entrepreneurs think up ways to satisfy people’s needs. They invest money, time, and
effort in organizing and managing a firm; run the risk of failure; and reap the rewards of
success. Every time, fortunes are being made or lost in business ventures by those
willing to take the risk -‘ people like Dr. Mike Adenuga, owner of Globacom, Dr. (Mrs)
Alakija, Mr. Elumelu, Dr. Adebutu Kenshinton(Baba Ijebu), Mr. Ubah Owner of Capital
Oil, Dr. Obi Otudeko who started the Honeywell Group and Econet Wireless, Alhaji Aliko
Dangote the founder and chairman of Dangote Group one of the largest indigenous
conglomerates in Nigeria and Otunba Sunbomi Balogun the founder and Executive
Chairman of First City Monument Bank Ltd.

These following individuals started by identifying entrepreneurial process; this begins

when a person has an idea for a new product or service to meet consumer needs. He or
she organizes the business; puts up money for buildings, such a plant, office, or store;
buys the necessary equipment and materials; hires and trains employees; and begins
production or operations. The sales resulting from operations bring in revenue, which is
used to pay expenses. What is left over is either profits or loss, the reward or penalty for
the owner’s risk taking.

THE ENTREPRENEURSHIP FROM NATIONAL DEVELOPMENT POINT OF VIEW

Country all over the world whose business survival and fortunes depends on production
related activities has introduced qualitative education in area of entrepreneurship and
technology in order to improve the quality of education that will provide opportunities
for employment and generate income to both the individual and the nation at large. But
not the types of education that will produce consumers like Nigeria.

Entrepreneurship today has been acknowledged to be a leading vehicle of job creation

and economic growth and development all over the world. Consequently, countries all
over needs to pay special attention to the needs of entrepreneurs by ensuring that
adequate infrastructure is provided, good policy framework is entrenched and better
regulatory environments is established, and fair legal system is put in place, provision of
capital, protecting the intellectual property rights of companies, newly emerged
industries are protected, technology development is enhanced and devoid of
unnecessary rivalry.

Effective entrepreneurial education, training and development are the major sure path
to national economic development. Nigeria can achieve this, through government
commitment and collaborative involvement of the educational institutions, business
organisations and research institutions. The multiplier effect will be mass turnout of
creative agents of development, like entrepreneurs. The result of the interaction will
lead to the development of competent technologists, innovators, scientists, engineers,
accountants, technicians who are entrepreneurs in their own way. Entrepreneurship
education training and development play very crucial roles in entrepreneurial
development and skills acquisition that will translate to national development.

Entrepreneurship generally plays a key role in employment generation, increased

productivity through innovation, the facilitation of transfer or adaptation of technology
as well as the dynamic generation and utilization of resources.

Importance of Entrepreneurship to National Development

1. Entrepreneurship creates job opportunities for others

2. Improves standard of living

3. Entrepreneurs pay taxes to the government from the profits

4. Entrepreneurship leads to National productivity

 5. Entrepreneurship leads to aspiration for new ideas, innovation and technology to
improve the existing methods

6. Entrepreneurship development discourage importation and conserve of foreign

exchange

7. Entrepreneurship encourages exportation

8. Entrepreneurship leads to expansion and creation of business opportunities

through business diversification.

9. Entrepreneurship encourages individuals to set up and manage their business

and this reduces importation of goods.

10. Entrepreneurship causes economic growth:

11. Entrepreneurship provides strength to small business:

12. Enhancement of market competition

13. Promotion of effective domestic resource utilization

14. Wealth creation and income generation

15. It encourages research and development

POSSIBLE BUSINESS OPPORTUNITIES IN NIGERIA

Business Opportunities: According to Hill and Jones, opportunities arise when

environmental trends create the conditions and potential for a company to make
greater profits and achieve strategic competitiveness. It is a major favorable situation in
the firm’s environment or trends and events that could significantly benefit an.
Organization/entrepreneur in the future.

Analyzing the Business Opportunities

Since entrepreneurs seek for opportunities, environment can be scientifically examined

so as to identify what can strengthen and consolidate entrepreneur positions in their
environment and formulate a good business plan. Effective environmental scanning will
generate good business opportunities that can be explored. However, opportunities are
characterized by the following;

a. Increase in demand

b. Identification of a previously overlooked market segment

c. Favourable changes in competitive environment

d. Change in government policies

 e. Positive technological changes,

f. cost reductions and quality improvements in raw materials

g. Improved in buyer and supplier relationships etc

Possible opportunities for Business in Nigeria

The following are the reasons for better business opportunities in Nigeria

1. Nigeria is densely populated

2. Nigeria is the largest economy in Africa

3. Nigeria is both growing and developing in terms of innovativeness and human

capita

4. The government policies on economy is paying off

5. Economic condition of the country is improving etc.

Possible Business opportunities in Nigeria

Business opportunities are all over, however, entrepreneurs must scan the environment
to identify these opportunities and examine the viability of such opportunities before
investing into such business(es) in order to minimize risk and maximize profit.

Following are the areas of focus for entrepreneurs to invest in Nigeria

1. Agriculture

2. Tourism

3. Arts and fashion

4. Hotel business

5. Furniture making

6. Restaurants / Canteen business

7. Confectionary/bread making

8. Printing business

9. Cosmetics/hairdressing salons

10. Soap making e.t.c

INTERACTIVE DISCUSSION

▪ For fifteen minutes, imaging yourself at the age of 50 years. Think of all the
responsibilities, relationships, and possessions that you would have that would
require money to acquire, to obtain, to maintain, to sustain, to preserve, to
improve, to participate in, to achieve, etc.

▪ For fifteen minutes, list all the different ways that one can independently make
money without being employed and using a capital of less than N200, 000.00.

▪ For fifteen minutes, list all the ways that a nation can pursue to achieve a
sustainable and develop economy through entrepreneurship

HOMEWORK QUESTION 2

Describe some talents or qualities that can sustain you financially if you could not find
employment immediately. (Write half a page only).

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 111 (THREE)

LECTURE 3: Capitalization and Market Forces (Determining capital

requirements, raising capital, financial planning & management)

OUTLINE

1. Objectives and Expectation

2. Introduction

3. Market Forces

4. Market Trends and Survival of Small Businesses

5. What is capital in Businesses?

6. Types of Capital in Businesses

7. The Concept and Theories of Capitalization

8. Overcapitalization: Causes, Effects and Remedies

9. Undercapitalization: Causes, Effects and Remedies

10. Overcapitalization vs Undercapitalization in Small Businesses

11. Capital Requirements for Entrepreneurial Businesses

12. Raising Capital for a Start-up Small Business

13. Financial Planning and Management for Enterprises

14. Interaction moments

15. Critical but Logical Question for Homework

 1. Objectives

This lecture note focuses essentially on providing a detailed explanation on the needs of
capital in a business venture and the possibility of sustaining them through effective
financial planning in the midst of scarcity or unfavorable economic climate. In this
regards, students are expected to have a considerable knowledge on the followings:

❖ Envisaging, Evaluating and Interpreting Market Trends to take advantage.

❖ Ideal Limit of Capitalization

❖ Scarcity is not a Problem but yourself

❖ Capital Raising

❖ Planning for Finance, Finance for Planning

2. Introduction

It is undoubtedly true that most business dreams, attractive innovations and ideas
remain either unexecuted or aborted prematurely. The common reason for this malady
is that there is no means of funding. Nevertheless, it still clear that means of funding are
as available as the dreams themselves. The only shortcoming is that over the aggies,
people’s minds have not been illuminated with the fact that dreams are associated with
the various means to initiate and sustain them. In view of this, this study is drafted to
provide illustrations and explanations on the interface that exists between enterprise,
fund raising, planning and management.

3. Market Forces

Market forces according to Adam Smith, a British moral philosopher, and pioneer of
Political Economics, are referred to “invisible hands” or natural phenomena that
push/pull the market through competition among units and scarcity of resources. The
pulling can either contract demand or increase supply. If supply increases prices
reduces while an increase in demand leads to hiking in prices. Alternatively, market
forces are mechanisms that influence prices and volumes of goods and services in an
economy with little or no government intervention. In a free market economy, allocation
of resources or factors of production such as entrepreneur, capital and labor are driven
by the forces of demand, supply, market information, seasonality, product
differentiation and dynamisms in industries. It so definite, that all these forces, without
exception, are the riding wheel of entrepreneurship when evaluating the possible
market trends that scale in different dimensions and to various magnitudes.

4. Market Trends
These are self-induced, government-induced, strategically induced, and naturally
induced phenomena, which result in swinging of prices. They are opportunities in the
market that entrepreneurs can take advantage and make profit.

4.1 Examples of Market Trends

• Initiation of new government policies

• Changing in tastes and fashion

• Rising or falling in demand and supply

• Inflow of foreign capital or investments

• Economic diversification

• Changing in major macroeconomic variables such as interest rates,

unemployment rate and exchange rate

• Wave of technological knowhow in certain industries

• Quorums of business cycle

In one way or another, the occurrence of all these trends can be evaluated and
interpreted by an entrepreneur who wants to run his/her business effectively, optimally
and profitably.

5 Capital

Economists see capital as an equipment, machinery, asset or intermediate product that

is used up in the production process of goods and services but it does change after
production. Therefore, capital does not include raw materials, land or labor employed
by an entrepreneur, it comprises economic durables like vehicles, tools, electrical
gargets, biro or pencil. All these aid production but they do not change their inherent
natures after production. However, in finance, capital is money or near money asset
that is committed into a business on short term or long term basis depending on the
gestation period of the business.

6 Types of Capital in Businesses

An entrepreneur has access to three broad classes of capital

i. Short term capital, which ultimately includes available capital in hands at

any time, money in bank, short term loan in bank, working capital which can
be viewed as the difference between current assets and current liability,
trade discount and trade credit to mention but a few,
 ii. Medium term capital comprising majorly leasing and hire purchasing

iii. Long-term capital characterized by long term maturity period for redemption.
This could include redemption market value received by owners, long term
bond or credit with fixed rate.

7. The Concept and Theories of Capitalization

Capitalization has different meanings. In general, it is the provision of capital resources

to start a business, upgrade or expand existing one. It can be referred to the conversion
of income into capital. Therefore, when an entrepreneur purchases asset with her
income it means she has capitalized her income. In accounting, this is not somewhat
different because accountants see capital as a cost that can be consumed on a long
term basis. So any expenses on items such as vehicles, plants and tools are classified
as capitalization in accounting but expenses on consumables such as drinks are not
called capitalization. The most concise definition is provided in finance. Experts in
finance conceptualize capitalization to mean the quantitative assessment of an
enterprise capital structure. It is the valuation of the long term means of funding. That is
the distribution of capital between owners’ and creditors’ funds. An enterprise survives
and boosts its liquidity by gearing but too much gearing can be disastrous at maturity.

8. There are two theories of capitalization. These are cost and earning theories.

i. The cost theory stresses that the total costs of an enterprise assets is referred
to its capitalization. Hence, the cost of fixed asset and current assets such as
plants, machineries and tractors is known as capitalization. The weaknesses of
these theories are:

a) It focuses on costs only without consideration to capacity of assets;

b) It fails to address the time an asset would become obsolete

c) When there is swinging in earnings, the theory fails drastically.

ii. Earnings theory emphasis that the earning capacity of an enterprise asset is its
capitalization. The sum of all the earning of an entrepreneur realizes from its
venture is called capitalization.

9 Over Capitalization and its Causes

Over capitalization in entrepreneurial business occurs when the owned and borrowed
capital of an entrepreneur exceed both her fixed and current assets. This means there
are losses or the entrepreneur’s business carries the burden that is above its capacity.

9.1 The following are the cause of overcapitalization:

1) Idle Funds

2) Assets with higher costs when compared to their actual costs.

3) Degradation of fixed asset values

4) Inadequate provision for Depreciation

9.2 Remedy to Overcapitalization

Reduce the capital

10. Undercapitalization and its causes

Undercapitalization is referred to an instance when an enterprise could not get

adequate funds or the owned capital is less than the borrowed funds so that the
enterprise depends solely on borrowed funds to survive.

The causes of undercapitalization are:

1. Low property ratio

2 Low current ratio

3 High return on return on assets

10.1 Effects of Undercapitalization

1 It allows the use of outdated facilities

2 It makes enterprise to run on low costs

10.2 Effects of Overcapitalization

1 It makes profit to be difficult

2 it makes borrowing difficulty

10.3 Remedy to Undercapitalization

Increase capital

11. Capital Requirements for Entrepreneurial Businesses

Capital requirement is the amount of capital that is required to start up business and to
sustain the business both in short term and long term periods

12 Raising Capital for a Small Business

1 Yourself financing

2 Raising capital from Friends, family, and fools.

3 Getting Small business loans from the bank

4 Credit from Angel investors.

13 Financial Planning and Management for Enterprises

A good financial planning is an integral part of a successful business. A financial plan,

which includes detailed financial statements and projections, forms the core of your
overall business plan. Financial planning must be completed at within a year and
revised monthly to incorporate actual results.

The two main purposes of planning are:

1. It makes sound business prosperity possible

2. It makes financial assistance feasible

13.1 Steps towards Successful Financial Plan

1 Setting your short and long-term financial goals.

2 Exploring various financing alternatives

3 Cost control

4 Liquidity management

5 Establishing safety net

6 Plan for business succession

7 Setting up a retirement plan

14 Interaction moments

For 15 minutes, deliberate on the various sources of capital which are not included in
this lecture note and for another 5 minutes explain the capital and market forces in an
enterprise

PLS NOTE: Your additional contributions and suggestions will appreciated

Also, you are required to develop 10 questions from each of the topic taught by you.

Thank you

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 4

LECTURE 4: TOPIC: ENTREPRENEURSHIP QUALITIES AND SKILLS

(INNOVATION)

OUTLINE

Introduction

Entrepreneurs Skills

Skills Every Successful Entrepreneur has in Common

Skills Required to succeed as an Entrepreneur

Qualities of Entrepreneurs

Innovation

Conclusion

The aim of this lesson note one is to explain the above outline.

Objectives

On the completion of this lesson note four, students will understand the successful
entrepreneur skills, qualities and entrepreneurial innovativeness among others. This will
help the students in the following ways:

• To understand what entrepreneur skills are

• To know the skills every successful entrepreneur has in common

• To examine the qualities of entrepreneurs

• To understand entrepreneurial innovativeness.

INTRODUCTION
Entrepreneurs are driven by the desire to be their own bosses, do what they want to do,
and turn passions into profit-making businesses. An Entrepreneur is one who initiates a
new business in the face of risks and uncertainty for the purpose of satisfying human
needs and making a profit. An Entrepreneur carves out a niche for himself by scanning
the environment, identifying opportunities and threats and combining and utilizing the
necessary resources to capitalize on opportunities identified.

There are so many factors as reasons why people go into business for themselves.
However, entrepreneurial spirit is often cited as the desire to create a new business.
Other factors may include independence, the desire to determine one’s own destiny,
and the willingness to find and accept a challenge that, certainly play a part even
though family background may also exert an influence as well. However, there must be
some motivation to start a business such as leaving a paid employment where
opportunities were not available to think and earn your own living, lost of jobs, having an
idea for a new product or a new way to sell an existing product or the opportunity to
invest into business may arise suddenly. In some people, the motivation to start a
business whether small or medium develops slowly as they gain the knowledge and
ability required for success as a business owner. Nigeria is naturally endowed with
entrepreneurial opportunities; however the realization of the full potential of these
opportunities has been dampened by the adoption of inappropriate industrialization
policies at different times (Ebiringa, 2012).

Entrepreneurship involves taking chances, but new businesses do not emerge by

accident (Egelhoff, 2005). They are usually founded as a result of motivated
entrepreneur gaining access to resources and finding niches in opportunity structures.
Hence, entrepreneurship could be seen as the process of identifying and exploiting
unique business opportunities that stretch the creative capacities of both private and
public organizations. Since economic environment could support or suppress
entrepreneurship, governments world over undertake to develop macroeconomic
policies that focus mainly on providing access to resources and support services to
individuals and organizations that display flair for expanding their business horizons.

ENTREPRENEURS SKILLS

Every business requires unique technical skills and knowledge on part of the owner. You
have to be good at what you do for your business to succeed. This often means getting
additional education and training on an ongoing basis, sometimes for the purpose of
obtaining specific credentials (e.g., certifications, licenses).

In order to succeed, an entrepreneur needs some skills in his interpersonal

relationships with people during his business activities such as; time management,
negotiation, opportunity seeking, goal setting, information gathering, persuasion and
networking, personal values, family and experienced partner, in addition to technical,
human and conceptual skills. However, in addition to these skills other necessary skills
are discussed for both highly developed successful entrepreneurs to budding
entrepreneur and those who are contemplating becoming self-employed in the future.
If you have entrepreneurial skills then you will recognize a genuine opportunity when
you come across one. What does it take to be successful starting your own small
business?

12 RECOGNIZED SKILLS EVERY SUCCESSFUL ENTREPRENEUR HAS IN COMMON

1). Resiliency. The ability to whether the ups and downs of any business since it
never goes exactly the way the business plan described it. This skill enables the
entrepreneur to keep going when the outlook is bleak.

2). Focus. After setting a long term vision, you must be focused and never
distracted in order to achieve your goals.

3). Invest for the long-term. Most entrepreneurs are not patient and focus only on
what comes next, rather than where the company needs to go. Overnight success may
take 7 to 10 years. Entrepreneurs need to stop, pause and plan on a quarterly basis.

4). Find and manage people. Only by learning to leverage employees, vendors and
other resources will an entrepreneur build a scalable company. They need to learn to
network to meet the right people. Entrepreneurs strive to guarantee they will get honest
and timely feedback from all these sources.

5). Sell. Every entrepreneur is a sales person whether they want to be or not. They
are either selling their ideas, products or services to customers, investors or employees.
They work to be there when customers are ready to buy. Alternately, they know how to
let go and move on when they are not.

6). Learn. Successful entrepreneurs realize they don’t know everything and the
market is constantly changing. They stay up to date on new systems, technology, and
industry trends.

7). Self-reflection. Allow downtime to reflect on the past and plan for the future.
Always working only leads to burnout physically and emotionally.

8). Self-reliance: While there is a lot of help for the entrepreneur, in the end, they
need to be resourceful enough to depend on themselves.

9). Creative Thinking: Entrepreneurs are known for thinking outside of the box.
Creative thinking can take a smart, capable business owner to another level of success.

10). Leadership: Entrepreneurs often have an evangelistic quality. They have great
ideas, and are skilled at getting buy-in from investors and employees.
11). Risk Taking: Entrepreneurs often seem more comfortable with risk than other
business leaders. This can lead to tremendous failures, but also stunning successes.
Entrepreneurs are willing to live without a steady paycheck and make short-term
sacrifices for a long-term payoff. That said, the risks that entrepreneurs take are
calculated, and aren't simply done for the thrill.

12). Strong Work Ethic: Being an entrepreneur may seem flashy and exciting. But a
lot of hard work and long hours are required to launch something new. To be successful,
entrepreneurs must execute. Entrepreneurs are relentless when it comes to completing
projects and following through on the work required to turn ideas and plans into sellable
products.

Individuals possess different traits, behaviour and attitude in handling situations and
ability to cope with stress involved in business nurturing. Since, entrepreneurship can
be learned even though some possess the inborn traits inherited from their family
background, here are some tips on skills you require for a successful entrepreneur:

THE 15 SKILLS REQUIRED TO SUCCEED AS AN ENTREPRENEUR

1. The ability to manage money: Very simply, if you can’t manage money, you can’t
manage a business.

2. The ability to raise money: Once you can manage money, can you get more? In
order to get investment, you need to not only understand where to get money, but how
to convincingly make a case that your business is a good risk as well.

3: The ability to relieve stress: Stress is no laughing matter. If you allow yourself to get
frustrated and upset by setbacks, you’ll struggle as an entrepreneur. Learning how to
use stress to your benefit is essential.

4. The ability to be productive: Learn about your peak energy times, your routines, and
the productivity tools that work for you in order to create your own plan for success.

5. The ability to make entrepreneur friends: Improve your odds of success by finding
entrepreneur friends who will be able to understand your struggles and give you much
needed insight.

6. The ability to identify strengths and weaknesses: As a business owner, you don’t
need to be perfect at everything. You do, however, have to understand where you’re
strong and where you’re weak.

7. The ability to hire effective people: Having great people on your team will give you
access to new strengths, while also building a company culture that people want to be a
part of. Hiring the right people is essential to get where you want to go.

8. The ability to train new staff: When you bring on someone new, a robust on
boarding process will ensure that they know what to do and not do. Not only will this
help keep your company moving the correct direction, it will increase the commitment
level of good employees and give you grounds to follow up on misconduct.

9. The ability to manage staff: Once you have the right people, you need to manage
them well. If you don’t already know how to manage, take the time to learn how to
motivate, encourage, and develop your staff.

10. The ability to connect via social networking: Social networks represent a key part
of any business’s marketing strategy. Not only will you need to understand each
platform, you’ll want to arm yourself with the best strategies for getting your startup and
personal brand noticed on each one.

11. The ability to focus on your customers: To be clear, without customers, you have
no business. Make sure all of your pitches, products, and services are focused on actual
customer needs. If you don’t know what these are, research and ask questions so that
you’re able to give great customer service.

12. The ability to close a sale: Letting customers know you understand their pain is
important, but asking for the sale is where many entrepreneurs get stuck. If you’re
nervous about this step, try enrolling in a sales workshop to learn these much-needed
skills.

13. The ability to spot new trends: Business moves fast, so you’ve got to have the
ability to see changes coming in your industry. Make it a point to keep up to date on new
startups and the advances in technology that could be poised to disrupt your field.

14. The ability to deal with failure: No business venture is a straight line to success;
knowing how to deal with ups and downs is essential. Remember that every successful
person out there failed dozens of times before getting a win. Failure isn’t the end - it’s
just a data point on the way to success.

15. The desire to improve your world: In the end, the best and most enduring
motivation is to make a positive change in the world. When you focus your business and
your success on that top priority, you’ll find yourself ready to weather any storm to meet
the goal.

Being an entrepreneur is a big task, but all of these skills can be learned. If you notice
one you’re lacking in, go get it! Your eventual success depends on it.

List of A-Z Entrepreneurial Skills by Alison Doyle (2016)

A–G H–M N–S T–Z

• Analytical • Goal • Negotiation • Team Building

Oriented
• Belief • Nonverbal • Technology
• Goal Setting Communication
• Bravery • Think Outside
• Initiative • Optimism the Box
• Business
Storytelling • Innovation • Organization • Time
Management
• Collaboration • Interpersonal • Passion
• Transformation
• Confidence • Leadership • Perseverance
• Trend Setting
• Communication • Logical • Persuasion
Thinking • Vision
• Competitive • Planning
• Management • Vision into
• Compulsion to • Positive Attitude
Action
Succeed • Motivation
• Positive Image
• Work
• Computer
• Positivity Independently
• Creative
• Presentation
Thinking
• Prioritization
• Critical Thinking
• Problem Solving
• Decision
Making • Relationship
Building
• Drive
• Results
• Enthusiasm
Oriented
• Flexibility
• Risk Taking
• Focus
• Sales

• Social Media

• Stamina

• Strategic
Planning

• Strategic Vision

• Strategy
 • Strong Work
Ethic

• Success Driven

INNOVATION

Entrepreneurship is a key driver of any economy; wealth and a high majority of jobs are
created by small businesses started by entrepreneurially minded individuals, many of
whom go on to create big businesses. There is more creative freedom for people who
are exposed to entrepreneurship. There is higher self-esteem, and an overall greater
sense of control over the people’s own lives. The importance of entrepreneurship to any
economy is like that of entrepreneurship in any community: entrepreneurship activity
and the resultant financial gain are always of benefit to a country.

The process of translating an idea or invention into a good or service that creates value
or for which customers will pay. To be called an innovation, an idea must be replicable
at an economical cost and must satisfy a specific need.

Innovation involves deliberate application of information, imagination and initiative in

deriving greater or different values from resources, and includes all processes by which
new ideas are generated and converted into useful products. In business, innovation
often results when ideas are applied by the company in order to further satisfy the
needs and expectations of the customers. The entrepreneur finds an opportunity and
uses innovation to raise the productivity level.

This means an entrepreneur is one who shifts economic resources from lower
productivity to higher productivity. As an entrepreneurial network, we need to respect
original ideas, business processes, market concepts and so on. In the opinion of Chris
Ducker, “If we don’t, we leave ourselves wide open to being spanked ourselves –
probably when we’re doing well, and it’s really going to sting!”

If you’re running an online business, creating mobile apps or selling informational

products via your blog, being seen as an innovative person will help you immensely to
develop satisfaction and joy within yourself that you have fulfilled an accomplishment
in your business.

If you own a fashion designing shop, then you might not have to be SEEN as an
innovative person, but if you can inject a certain amount of innovation into the way you
market and promote your business in the local community, not only will you get more
business, but you’ll also be respected as a local entrepreneur. It is truism that there
will be people who will imitate and duplicate your original works but that should not
stop you from being innovative as you will later gain the reward of hard work and the
imitators will be the losers. Continue to do the right thing, promote your market, sell
and look after your customers in the right direction. In a social context, innovation
helps create new methods for alliance creation, joint venturing, flexible work hours, and
creation of buyers' purchasing power. Innovations are divided into two broad categories.

Evolutionary innovations (continuous or dynamic evolutionary innovation) that are

brought about by many incremental advances in technology or processes and
revolutionary innovations (also called discontinuous innovations) which are often
disruptive and new. Innovation is synonymous with risk-taking and organizations that
create revolutionary products or technologies take on the greatest risk because they
create new markets. Imitators take less risk because they will start with an innovator's
product and take a more effective approach. Examples are IBM with its PC against
Apple Computer, Compaq with its cheaper PC's against IBM, and Dell with its still-
cheaper clones against Compaq.

Business Innovation: This is the creation of new value and wealth for stakeholders to
increase economic prospects (Lorente et al., 1999; Miller, 1995). Business innovation is
the creation of substantial new value for customers and the company by creatively
changing one or more dimensions of the business system (Sawhney et al., 2006). In
other words, business innovation is the creation and adoption of something new that
generates business value. This includes new products, services, or processes, such as
integrated supply chain solutions (Sawhney et al., 2006).

QUALITIES OF ENTREPRENEURS

Entrepreneurs are people who start their own business. They're known for embracing
risk, having big ideas, and making major innovations that change how others do
business. While anyone who starts a business has a bit of the entrepreneurial spirit,
true entrepreneurs are distinguished by a certain visionary quality. Entrepreneurship is
the basic key for business growth, most business today grew out of the effort of one
man with passion, the effort of one man who wants to make profit and who wants to
innovate or create a new product. The quality of performance of the entrepreneur
determines whether capital would grow rapidly or slowly and whether the growth
involves innovation where new products and production techniques are developed. The
difference in economic growth rates of countries of the world is largely due to the
quality of entrepreneurs in those countries. Production factors of land, labour and
capital are said to be dormant or indolent without the entrepreneur who organizes them
for productive ventures (Ebiringa, 2012).
Gallup studied more than 1,000 entrepreneurs to arrive at a short list of the 10 qualities
of highly successful entrepreneurs.

1. Business Focus: They base decisions on the potential to turn a profit.

2. Confidence: They know themselves well and can read others.

3. Creative Thinker: They know how to turn an existing product or idea into something
even better.

4. Delegator: They don't try to do it all.

5. Determination: They battle their way through difficult obstacles.

6. Independent: They will do whatever it takes to succeed in the business.

7. Knowledge-Seeker: They constantly hunt down information that will help them keep
the business growing.

8. Promoter: They do the best job as spokesperson for the business.

9. Relationship-Builder: They have high social intelligence and an ability to build

relationships that aid their firm's growth.

10. Risk-Taker: They have good instincts when it comes to managing high-risk
situations.

Gallup's conclusion is that entrepreneurs with a natural gift for things like opportunity
spotting will find it easiest to succeed but that others can compensate somewhat for a
lack of inborn talent through efforts like working with coaches and getting technical
assistance. And, of course, factors like skills and experience also play a role in
entrepreneurial success.

10 Characteristics of a Highly Successful Entrepreneur (Tyrone Holmes, 2016)

1. A Positive Mental Attitude

You will never be a successful entrepreneur without a positive attitude because you are
certain to experience difficult times. Your success or failure will be determined at these
times.

2. Enjoy Being Around People

Being a successful entrepreneur means you will continuously interact with a diverse
array of people such as customers, potential customers, colleagues, competitors,
suppliers, lawyers, accountants and coaches. It really helps if you enjoy being around
these people.

3. Excellent Communication Skills

Exemplary communication is important because you must accurately exchange
information in a fast-moving world using a variety of methods (e.g., interpersonal,
electronic). Of particular importance is the ability to listen and truly understand where
another person is coming from, especially if you want to be a successful athletic coach.

4. A Strong Desire to Achieve

Successful entrepreneurs are achievement-oriented. They value accomplishment and

the intrinsic rewards that go along with achieving difficult goals. It is a strong motivator
for most business owners.

5. Resourcefulness

Most athletic coaching businesses have limited resources such as money, information
and time. Successful entrepreneurs figure out how to get the most out of these
resources. They are masters at stretching a dollar and making a few resources go a long
way.

6. Objective

It is not easy to be objective about your business because you are passionate about
making it successful. However, you do need to be impartial and dispassionate when it
comes to making business decisions because emotion, bias and sentiment can result
in poor choices.

7. Committed

Building a successful athletic coaching business requires absolute commitment. It

takes a lot of work and there will be times when you become discouraged. It is during
these times that you must be steadfast, faithful and committed to your vision.

8. Dependable

There is a strong positive relationship between your perceived level of reliability and the
success of your athletic coaching business. Your clients expect you to be dependable
and will evaluate you on the extent to which you do what you say you will do.

9. Proactive and Not Reactive

Successful entrepreneurs anticipate problems in advance and deal with them before
they occur. If you simply react to problems and issues as they arise, you may get
overwhelmed.

10. Possess Technical Skills and Knowledge

These 10 characteristics are the foundation of a successful entrepreneur. Take the time
to understand how these characteristics build on each other, and where your strengths
and weaknesses lie
CONCLUSION

Entrepreneurship is “at the heart of national advantage” (Porter, 1990). Concerning the
role of entrepreneurship in stimulating economic growth, many links have been
discussed. It is of the utmost importance in carrying out innovations and enhancing
rivalry.

In Nigeria, like some other economies, the government helps to encourage

entrepreneurship development (Ebiringa, 2012). The entrepreneur is therefore an
important agent of innovation growth and technical progress. The development and
utilization of their technical and commercial skills create growth potential in micro,
small and medium business enterprises. The present day global economy is
knowledge-driven operating on the pragmatic and innovative thoughts of the
entrepreneur. Business set ups have become informal and oriented towards survival
and self employment. Entrepreneurship contributes in an immeasurable ways toward
creating new job, wealth creation, poverty reduction, and income generating for both
government and individuals. Constant technological break-through compels
companies to become more entrepreneurial in identifying and exploring new ideas.

References

Abubakar, S. G. (2010). Refocusing Education System towards Entrepreneurship

Development in Nigeria: a Tool for Poverty Eradication. European Journal of Social
Sciences. 15 (1): 140-150.

Adejumo, G. (2001). Indigenous Entrepreneurship Development in Nigeria:

Characteristics, Problems and Prospects. Advances in Management: Journal of
Department of Business Administration, University of Ilorin, Ilorin Nigeria, 2(1): 112-122.

Agbonifoh B.A, Ehiametalor E.T, Inegbenebor A.U and Iyayi F.I (1999). The Business
Enterprise in Nigeria. Lagos: Longman Nigeria Plc.

Ebiringa, T. (2012). Perspectives: Entrepreneurship Development and Growth of

Enterprises in Nigeria. Entrepreneurial Practice Review. 2(2):31-35

Egelhoff, T. (2005). Entrepreneurs: Have you got what it takes?

[Link]/[Link]

Hisrich, R.D and Peters, M.P (2002). Entrepreneurship. New York. Mcgraw-Hill
Companies. Inc.
Ogundele, O.J.K (2007), Introduction to Entrepreneurship Development, Corporate
Governance and Small Business Management. Lagos. Molofin Nominees.

Porter, M. E. 1990. The Competitive Advantage of Nations. New York: Free Press.

Sagagi, M.S. (2005). Entrepreneurship Development Policy: A Renewed Perspective for

Achieving Economic Development in Nigeria. Being a paper presented at the Inaugural
National Conference organized by the Academy of Management Nigeria from Nov. 22-
23, 2005 at Rockview Hotel, Abuja

INTERNET SEARCH

What is Business Innovation: [Link]/what+Is+Business+Innovation.

7/6/2017

Gallup: The 10 Qualities of Highly Successful Entrepreneurs – Forbes.

[Link]
7/6/2014

10 Characteristics of a Highly Successful Entrepreneur. [Link]

[Link]/10-characteristics-of-a-highly-success. 7/6/2017

The 17 skills required so succeed as an Entrepreneur.

[Link] Feb. 2015. 7/6/2017

The Top Skills Every Entrepreneurs Needs - Forbes.

[Link]
7/6/2017

List of Skills Entrepreneurs Need – The Balance. [Link]

skills-entrepreneurs-need-2062391. Alison Doyle . 7/6/2017

The Importance of Innovation in Business and Why You Need to Get Busy – NOW!

[Link] 7/6//2017

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 5

LECTURE 5: TOPIC: ENTRREPRENEURSHIP OUTFITS ( Forms of business,

staffing, marketing and new opportunities)

OUTLINE

Introduction

Entrepreneurship outfit (Forms of business)

Staffing

Marketing

New opportunities

Conclusion
The aim of this lesson note five is to explain the above outline.

Objectives

On the completion of this lesson note five, students will understand entrepreneurship
outfit, method of staffing, marketing and identifying new opportunities. This will help the
students in the following ways:

• To understand different entrepreneurship outfits

• To know methods of entrepreneurship staffing

• To have an insight about marketing techniques used by entrepreneurs

• To understand how new opportunities can be identified.

INTRODUCTION

In the opinion of Pride, Hughes and Kapoor (2002), Business is the organized effort of
individuals to produce and sell, for a profit, the goods and services that satisfy society’s
needs. Four kinds of resources are needed to organize a business: Material, Human,
Financial and Informational. Material resources include raw materials used in
manufacturing processes as well as buildings and machinery. Human resources are the
people who furnish their labor to the business in return for wages. The financial
resource is the money required to pay employees, purchase materials and generally
keep the business operating while Information is the resource that tells the managers of
the business how effectively the other resources are being combined and used.

Businesses are usually classified as one of three specific types Pride et al (2002):
Manufacturing (producing), Service Businesses (developing) and Marketing
intermediaries (distributing). Manufacturing businesses are organized to process
various materials into tangible goods. Service businesses produce services such as
haircuts, legal advice etc. And some firms called Marketing Intermediaries are
organized to buy products from manufacturers and then resell them. Consumers are
individuals who purchase goods or services for their own personal use.

In Nigeria form of businesses are categorized as:

(i) Proprietorships or sole trader

(ii) Partnerships

(iii) Incorporated companies or corporations that can be :

(a) Unlimited liability company (b) Company limited by guarantee limited
liability company (c). Company limited by shares

However, for the purpose of this lecture on Entrepreneurship Outfit, the focus is on the
businesses that are conducted by entrepreneurial organizations in form of small
businesses that are easy to start up with little capital whether on part time or full time
bases.

An entrepreneur can be described as a unique person with business ideas that can be
developed with little amount and expand to become large business with calculated risk
involved.

There are businesses that could be learned and start up within a shortest period, such
as indicated below, please note that you can suggest more businesses in addition to
this list.

1 Tailoring/Fashion 11 Crafts making e.g gift 21 Crop farmings

designing baskets, cane chairs

2 Make-up Artist 12 Desk top publishing 22 Catering

services/Restaurants

3 Brick making 13 Freelance sports coach 23 Bead/Jewelry making

e.g private coaching for
children such as: table
tennis, basket ball,
football etc.

4 Computer repairs 14 Home appliances repairs 24 Part time teacher e.g

e.g dryers, washers, Maths, Sciences,
microwaves, oven, music etc
fridges/freezers etc

5 Event Planning 15 Weddings Planning 25 Carpentry/furniture

making

6 Used Books sales 16 Small engine repairs e.g 26 Personal chef (cooking
generators, motorcycles for individuals e.g
etc weekends)

7 Shoe 17 Hair stylist (barbing and 27 Free marketing of

making/Cobbler hairdressing salon) products (personal
selling)

8 Bicycle repairs 18 Day care from your own 28 Property/Estate

house management
 9 Rug/dress cleaner 19 Photography (sell images 29 Business centre
as professional, frames (typing, photocopying
etc) etc)

10 Interior 20 Farming (Poultry, 30 Mini retail shops etc.

decorations fisheries etc)

Any of these businesses do not require lots of money as this can be done in order to
earn additional income or on full time basis. Think about your area of interest and you
will see an opportunity to develop yourself as an entrepreneur.

STAFFING

Staffing involves recruiting, hiring and training the most appropriate people to represent
your business. Beyond hiring, effective staffing involves assessing work environment
needs, scheduling, training and providing constructive criticism and feedback. The main
objective of staffing is to ensure you have an adequately trained workforce that can help
you operate and grow your small business.

Needs Assessment: An objective of staffing is to be effective in determining the

specific manpower needs of the business. Staffing managers are responsible for
continually assessing the employment needs of the business as it changes.

Hiring and Job Placement: Staffing begins during the recruitment process. Detailed job
descriptions are created in advance of recruitment to attract the best-qualified
candidates. You should have a firm idea of your staffing needs based on the size and
scope of your operations. Under-hiring can result in inefficient service levels, while
overstaffing is a waste of financial resources.

Training and Assimilation: Effective staffing involves a full-spectrum introduction to a

business’s corporate culture. This includes skills training as well as education regarding
a company’s policies and procedures. Adding new staff members to an existing
employee pool should include peer training and mentoring.

Efficient Workforce Development: When employees are hired and appropriately

trained, an objective of staffing is to pair the right employees with the right job
responsibilities. This involves assessing individual skills, talents and experience levels.
Ongoing training is a necessary staffing objective required for ongoing employee
development and efficient workplace productivity.

Effective Business Operations: An objective of staffing is to ensure effective business

operations. Employees should be provided with professional enrichment opportunities.
Job mentoring and job shadowing can encourage employees to learn more about the
industry and increase their ability to contribute to the health of the organization.

Workforce Longevity: Developing an effective staffing system can help your small
business retain employees over the long term, which can be a positive aspect of
developing and nurturing a skilled, seasoned workforce. The objective of this approach
is to provide employees with opportunities for advancement and increased earning
potential. Motivation, employee incentive programs and morale boosters all play a role
in supporting long-term employment.

Staffing Challenges for Entrepreneurs

Entrepreneurship has many challenges but also many rewards. For start-ups and small
businesses, staffing presents several obstacles that must be overcome. When dealing
with rapid growth or limited working capital, creativity is the key to successful staffing.
Jillian Peterson (2007) suggested the following ways in which staffing challenges can be
overcome:

Recruiting: Recruiting key players is a challenge for many entrepreneurs, who often
have to compete with large, established firms for top talent. If profits allow, executive
recruiters can be a viable option for sourcing the best and brightest potential new
employees. For those on a budget, networking in person and social networking sites can
be a great asset. If your needs are short-term, consider enlisting the help of a temporary
staffing agency. Specialized staffing agencies can be found that offer everything from
unskilled labor to highly skilled professionals, making short-term staffing more
manageable.

Retention: A common challenge faced by entrepreneurs is the retention of top talent.

Often, start-ups and small business owners take gambles on young or unseasoned
employees with great results. However, once those employees become successful,
they often are targeted by recruiters and competing companies who offer benefits and
salaries smaller businesses struggle to match. Fostering a sense of ownership among
employees and adjusting the company's management in a way that rewards
accomplishments can help overcome turnover issues.

Payroll: Payroll can be a stressful element of running a business. The need for
additional employees is often at odds with the lack of funding for payroll. Many
entrepreneurs try to handle payroll processing internally, which can save money but can
also cause costly mistakes such as under or over remittances of taxes to the authority.

Staffing Function of Management

There are certain things that you need for your business to succeed and the first among
that list in all kinds of businesses is human capital or human resources. A business
cannot be isolated from its workforce. This is because of the fact that the workforce of
the business is its life force. Thus it becomes imperative that a business has the right
amount and right kind of people working in it.

This requirement of a business is met by a simple yet intricate function known as

Staffing. It involves the process of filling up the various positions in the organisational
structure with the right kind of people who are skilled and competent to discharge the
duties the position carries and implies. It is a multi step process that commences with
determining the number and type of people you want in the workforce (workforce
planning), recruiting, selecting, training and developing, promoting, compensating, and
appraising the performance of the workforce.

The managerial function of staffing is, managing the organization manpower by means
of suitable and active choice, assessment and progression of the employees who fill the
desired roles and positions. According to Theo Haimann, “Staffing pertains to
recruitment, selection, development and compensation of subordinates.”

Features of Staffing Function

Critical managerial function – Staffing function is amongst the most critical

managerial function along with planning, organizing, directing and controlling. The
success of all these managerial functions depends on the workforce which is organized
by staffing function.

Recurring activity – Staffing function is the responsibility of all the managers working in
all capacities and in all departments of the business.

Continuous function – Starting with recruitment to training and development to

managing employee expectations to important transfers and promotions, staffing
continues throughout the lifecycle and is thus a continued function.

Based on efficient management of personnel – Human resources are managed

through a system of staffing functions, which should be fair, dynamic and efficient in
order to sustain in the long-term.

Hiring right people – This is done through rigorous recruitment process and selecting
the most appropriate candidate for the suitable job positions. Also, promotions should
be well thought through and in the direction of long-term vision of the organization.

Importance of Staffing Function

Workforce is Life Force: Without the requisite human involvement working in a

motivated fashion for the betterment and benefit of the business organisation, the
business will always be far from success.

Ensures Competency and Efficiency: Staffing as a process is not just about finding a
person for the job, it is about finding the right person for the job. Staffing involves
identifying competent and skilled people who will be able to fit directly into the position
and perform the functions it entails in an efficient and successful manner.

Optimum Utilization of Resources: Resources are scarce in today’s world and all the
resources including human resources need to be optimally utilized. Staffing as a
process ensures that only the right amounts of people are staffed in the business and
are functioning in it. This allows for clearing a huge amount of money being wasted on
unnecessary employees and also provides such employees the opportunity to fare
better in other businesses or initiatives that actually need their services.

Training and Development of Employees: Staffing is also not just about finding the
right person and putting him in a position, but is also about helping him through the
process of training and development to adapt to the changing needs and requirements
of that position. Staffing involves preparing for the future as well as allowing for the
achievement of business goals now.

Motivation: The training provided by the business helps in boosting the confidence level
of the employees and is usually provided in order to teach them efficient ways of
discharging their functions.

Improves Employee Satisfaction and Morale: The process of staffing also involves
appraising the work done by the employees and rewarding the employees for their hard
work. Such appreciation of the work so performed by the employees apart from being
an important source of motivation also plays huge role in satisfying them and boosting
their morale. This helps to stop unnecessary labour turnover.

Steps Involved in Staffing Function of Management

Following is a brief discussion over important steps of staffing:

Manpower Planning: Manpower planning or in simple terms estimation of workforce

requirement is the first step in the process of staffing. This steps involves outlining the
various positions of the organisation and determining what category of people will be
suitable for it.

Recruiting: Once the positions are determined and the qualifications outlined there
arises the need to identify people meeting the conditions. This is done through a
process known as recruiting.

Selection: Selection is a process that comes either prior to recruiting or not at all.
Recruiting nowadays is a combination of selection and recruiting. Selection as a
distinct process involves sifting through the recruits to understand who can do the job
better. The steps involved could be practical tests, interviews, theory tests etc, all
depending on the time, convenience and policy of a company.
Workforce Orientation: Workforce orientation is a process by which a new employee
recently selected is made familiar to a work place. Being a new employee he/she might
be unaware of the company’s policies, objectives, rules etc and will require time getting
familiar to. This is hastened by giving orientations to make the employee to step into his
position comfortably and with complete commitment and awareness.

Training and Development: Training and Development are two different concepts.
Training is more concerned with making the employee better at what he does now. For
instance helping an accountant to be a better accountant. However development is
concerned with improving the faculties and abilities of the employee in such a manner
so as to allow him to discharge more complicated functions in the future. For instance,
it would be helping a branch accountant to be the regional chief accountant.

Performance Appraisal: Mere employment and training of employees is not the end of
staffing function it also involves the function of appraising the level of performance of
each employee.

Compensation: An employee will not work for nothing but needs to be compensated
for the work and effort he puts into the company. The total amount and nature of
compensation depends upon the nature of the work and the position of the employee.
Compensation may also include bonuses and the like depending upon the performance
of the employee.

Promotion: Promotion is the elevation of rank and status of an employee. It is distinct

from the mere change of position of an employee and requires the two mentioned
elements. Staffing is also concerned with promotions as it is to be done in context to
the entire organisational structure of employees. Promotions are granted to people who
show promise and are committed and even though a constituent element of the
broader functioning of staffing has a huge role to play in the company’s success.

ENTREPRENEURIAL MARKETING

Entrepreneurial marketing is less about a single marketing strategy and more about a
marketing spirit that differentiates itself from traditional marketing practices. It eschews
many of the fundamental principles of marketing because they are typically designed
for large, well established firms. Entrepreneurial marketing utilizes a toolkit of new and
unorthodox marketing practices to help emerging firms gain a foothold in crowded
markets.

In competitive markets, it can be easy to get lost in the crowd. One of the biggest
challenges for entrepreneurs is standing out from their competitors. Marketing in new,
unusual, or aggressive ways is the best way to illustrate what makes a business unique.
Below are some marketing strategies that entrepreneurs have used successfully in the
past. A company can direct all of its marketing efforts towards one strategy, or use
several of them at once.

• Relationship Marketing – Focuses on creating a strong link between the brand

and the customer.

• Expeditionary Marketing – Involves creating markets and developing innovative

products. Companies act as leaders rather than followers.

• One to One Marketing - Customers are marketed to as individuals. All marketing

efforts are personalized.

• Real Time Marketing – Uses the power of technology to interact with a customer
in a real time.

• Viral Marketing – Places marketing messages on the Internet so they can be

shared and expanded on by customers.

• Digital Marketing – Leverages the power of Internet tools like email and social
networking to support marketing efforts

Many entrepreneurial marketing strategies are born out of necessity. New businesses
might have 10, five, or just one person working on their marketing efforts. They work
within limited budgets and have access to a fraction of the resources that their major
competitors have. Luxuries like graphic design teams and advertising consultants are
often outside the means of start-ups, requiring them to find ways to make the maximum
impact with limited resources.

The most common features of entrepreneurial marketing include innovation, risk taking,
and being proactive. Entrepreneurial marketing campaigns try to highlight the
company's greatest strengths while emphasizing their value to the customer. Focusing
on innovative products or exemplary customer service is a way to stand out from
competitors.

Entrepreneurial marketing is best defined by the types of companies that use it. The
easiest way to identify an entrepreneurial marketing effort is to look at the company
doing the marketing. Start ups and emerging companies use entrepreneurial marketing
to help establish themselves in emerging industries.

It is important to distinguish these businesses from small businesses. While they do

start small, their goal is to grow rapidly and to become major players in their industry as
quickly as possible. This is drastically different from a restaurant or machine shop that
may be content to stay small forever.

The marketing strategies used by emerging business are not unique to them though. In
fact, many major companies use some of the same strategies. Major businesses use
these strategies out of opportunity while entrepreneurs use them out of necessity.
[Link], an Internet shoe store, was able to popularize online shoe shopping by
offering free, easy returns. By highlighting this innovative service in their marketing, they
were able to reassure customers who were unsure about buying shoes they could not
try on. They now sell millions of dollars worth of shoes every year.

In 1984, a college student named Michael Dell decided to found a computer company.
Today it is one of the largest and best known computer companies in the world. Below
are some of the steps that Dell took in its earliest stages to get noticed in the computer
market.

• Define your customers – Dell realized early that there was a hole in the market
for customized business computers. Their first products were marketed to large
and midsized companies looking to purchase many computers at once. It was
only in the late 90s that they began to focus on personal computers for students
and families.

• Offer something new – In the early 80s, computers were bought and sold
primarily through retail stores. Dell took the then radical step of selling directly to
consumers, cutting out the retail middle man. This made it easy for business
customers to place large orders and to customize each computer they
purchased.

• Go to where the customers are – Dell marketed at electronics trade shows, in

trade magazines, and in other avenues that corporate technology officers would
follow. Advertising messages highlighted the ways that Dell computers were
optimized for business customers.

• Offer exceptional services – Dell offered 24 hour technical support to all of its
customers. This was a valuable service to customers who were only beginning to
integrate computers into their businesses.

Marketing plans can only develop after a company determines several aspects about
their business model. They must understand the core mission of the company, which
customers they will target, and who their competitors are. Making a careful self-analysis
can help emerging businesses define their place in the market and set realistic goals.
The type of business a start-up strives to be will also affect its marketing decisions.

The details of the plan will depend largely on the particular marketing strategy that a
company chooses. It is important to define which type of marketing to focus on, and
then concentrate all efforts in that area. A comprehensive marketing plan helps
companies to maintain this focus as they revise their strategies. Most marketing plans
do not cover more than a year's worth of time because start-ups face such uncertain
circumstance, requiring businesses to be flexible and open to quick changes.
Entrepreneurial marketing plans are based on input from every aspect of the company -
- from production, to finance, to personnel. In order to succeed, start-ups should work
in a coordinated way to use their resources as efficiently as possible. Marketing
decisions must reflect the real world circumstances facing the company.

Metrics used to evaluate the marketing plan should reflect the goals of the company.
These goals can range from maximizing profits, to reaching the broadest customer base,
to redefining a particular market. Each goal will require a different marketing strategy
and be evaluated on different terms. Emerging companies have to set quantitative
targets for themselves and then revise their strategies if those targets are not met.
Otherwise, growth is impossible.

Seven Content Marketing Tips for New Entrepreneurs (Mike Wood, 2016):

1. Create a company blog: To have a constant stream of content is to develop a

company which involves your ability to think creatively about what can be a blog post.

2. Use the right tools from the start suited for your business.

3. Quality content leads to better engagement: Storytelling marketing is one of the

best techniques you can use to keep people’s attention. It also helps with the overall
quality of your articles, and it leads to more shares and engagement.

4. When you can’t create, repurpose: For every piece of content you create, think
about ways you can re-use what you've already developed in a new way to make your
content creation efforts easier in the future.

5. Find the right platform and influencers: Where you post your content is important.
It is also important who interacts with your content. These are things that people
research before they do business with you. People want to know who trusts you, who
endorses you and who is willing to promote you.

6. Start everything with cornerstone content: Cornerstone content is a single piece

of content that you can build all future content from. It can consist of a landing page,
white paper or anything similar. It can also help keep you from becoming overwhelmed.

7. Use rich images and videos in your content: Images and videos can help hold
readers' attention and help convey your message. Use high resolution product images,
or embed a beneficial video for users to view. Any type of multimedia addition to your
content will help users stay interested and increase your overall content quality.

OPPORTUNITY
The American Heritage Dictionary (1982), defines Opportunity as; “A chance for
progress or advancement”.

Opportunity is, “A favorable or advantageous combination of circumstances; suitable

occasion or time.”

Going by these definitions, opportunity is not what an entrepreneur can sit down and
achieve without taking a risk in order to advance in his business. The success in
opportunity comes as a result of combinations of creativity, positive thinking, innovative
ideas, being at the right place at the right time and involving all the needed resources
(human, materials, money, machines, methods etc) to accomplish your objectives.

How to Recognize Opportunity When It Knocks (Edie Raether, 2012)

Opportunity is something that involves the ways in which we see the world around us in
different perception. While some people believe in luck that works for them to achieve
their objectives in life others believe in hardwork. According to Edie Raether (2012),
luck is not random at all, but a time when preparation and opportunity come together.
Although opportunity is often a result of what we create, we must first recognize it to tap
into it. To recognize opportunity one must be a possibility thinker and also have the
ability to predict patterns and trends. Crisis is opportunity in disguise, but only for those
who define it as such. An entrepreneur must be able to scan the environment and
search for raw materials and other resources necessary for growth and development of
his business.

A unique entrepreneur must be visionary and positive thinking in order to achieve his
objectives. Opportunities come with risks and that is why entrepreneurs must not jump
into a business without calculating his risks through creativity and innovativeness not
promises. Opportunity comes with the chance to make progress toward a stated goal.
Possibilities are only opportunities if they push you gently down the path toward your
committed goals and desires. You must sort out and be selective. You either get busy
living, or you get busy dying. Some degree of skepticism can be a virtue if it brings
balance to your decision making. According to Edie Raether (2012), Ask yourself:

• What gives my life meaning?

• What makes me happy?

• How do I choose to serve and make a difference?

Sometimes opportunity whispers softly in our ear, but we have to listen. Other times it’s
a loud crash such as a disastrous, life-changing event, and we have to take action.
Opportunity is not a passive, but an action verb that only you can exercise. Waiting for
opportunity is like waiting for the sun to shine on a cloudy day. Opportunities stop only
when we stop thinking. Frequently, people have messed up potential opportunities
because of not understanding how good decisions are made. Capitalizing on
opportunity requires a strategic plan, but also on the ability to execute positive action at
the right time. Although you may be clear on your goals, without knowing the obstacles
and possible problems, you could waste your life’s savings on a dream that ends up as
a nightmare. By identifying and then removing the obstacles, solutions are clear and
thus your problems can be solved.

Ways to Recognize a Great Opportunity: Do you wait until opportunity knocks, or are
you constantly looking for the next break? Either way, traditionally, the fact you seek
opportunity has a somewhat negative connotation. In the former scenario, you could be
seen as passive and not hungry enough for results, and in the second, you might be
seen a ruthless opportunist always on the look-out for the next opening to exploit.

When vision meets opportunity:

Christina Lattimer suggested five (5) characteristics of an opportunity you should seize:

1. It furthers your vision: If you have a vision, you must be prepared to take
opportunities which further your vision. Your plan isn't always going to materialize in
quite the way you expect. You must be open to opportunities that come along, and
more importantly, be prepared to seize them when they do.

2. It helps you grow in trust and patience: Opportunities that help you to grow your
business or meet your vision aren't always obvious. You have to develop a level of
patience and trust, and open-mindedness which can often take practice. To develop
patience and trust in business is key to weathering the uncertainty experienced,
certainly in the early years.

3. It doesn't always look like you imagined: The opportunities that come your way
may look nothing like you had originally imagined, or considered. Keeping an open mind
is essential and pausing and considering before you say no is imperative.

4. It's a result of patience and trust: You've heard the saying, "Where there's a will,
there's a way." Patience and trust are some of the hardest characteristics to develop.
But if you believe there is a way, and it's coming to you, then you have to develop
patience and trust to sit in that uncomfortable place of waiting. If you close down the
possibility because you currently can't see the way forward, then you simply haven't
developed these traits quite yet.

5. It's a win/win opportunity: This was not an opportunity that cost anyone anything.
Everyone came out as a winner in the process. If you take an opportunity that you know
is to the detriment to another, then you are on the wrong track. A successful opportunist
will not act in a way that deliberately hurts someone else along the way.
You have to take opportunities if you are going to be successful in life and in business. In
this new era of ethics and transparency, the most successful people will choose the
opportunities that will empower, rather than detract from, themselves and others.

REFERENCES

Pride, W.M, Hughes R.J, and Kapoor, J.R (2002). BUSINESS. New York. Houghton
Mifflin Company.

[Link] Staffing
involves recruiting, hiring and training the most appropriate people to represent your
business. Beyond hiring, effective staffing involves assessing work ...

[Link]

How to Start a Staffing Services Business - [Link]

[Link] Feb 21, 2001 ... This is a good time to be in

the staffing industry. Despite the 2000-2002 economic downturn, the industry is
picking up steam again, and future ...

· Features, Importance and Steps Involved in Staffing Function of ...

[Link]
[Link] The managerial function of staffing is managing the
organization manpower by means of suitable and active choice, assessment and
progression of the ...

Entrepreneurial Marketing | What is Entrepreneurial Marketing?

[Link]
The primary challenge facing the entrepreneur is competing against larger, better
known, and more resourceful companies. How can a start up with a small staff, ...

Staffing Function of Management - Management Study Guide

[Link] The managerial

function of staffing involves manning the organization structure through proper and
effective selection, appraisal and development of the ...

A Staffing Entrepreneur Shares Her Most Valuable Lessons Learned ...

[Link]
shares-her-most-valuable-lessons-learned May 11, 2015 ... Thinking about starting your
own staffing agency? If so, the best lessons worth learning are from leaders who have
taken the leap—like Robin ...
Entrepreneurial Recruiting: Staying Competitive When Staffing Top ...

[Link]
staying-competitive-when-staffing-top-talent/ Apr 4, 2013 ... A firm's biggest asset is the
people behind their product or service. Great employees are the foundation of a
competitive organization and the ...

What is staffing? definition and meaning - [Link]

[Link] Definition of staffing: The

selection and training of individuals for specific job ... One of the biggest challenges that
an entrepreneur faces is the management of ...

The relationship between entrepreneurship and marketing in ...

[Link] This article

examines the relationship between entrepreneurial and marketing orientations of a
firm. It is hypothesized that more entrepreneurial firms will also be ...

Marketing for Entrepreneurship - Tepper School of Business

[Link]
entrepreneurship The differences between marketing for start-up and early-stage
entrepreneurial firms and traditional large businesses are: 1) no or limited marketing
budgets to ...

Entrepreneurial Marketing | Kauffman Entrepreneurs

[Link] Drawing
on her experience with companies, Anita Newton provides a framework for you to use in
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[Link]/Forms+Of+Businesses

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LECTURE 6: Making a Business Plan and Feasibility Studies.

OUTLINE:

Defining Feasibility Study and stating Major features of Feasibility Study

Reasons to do a Feasibility Study

5 Areas of Project Feasibility

Writing a Business Plan

A business plan serves three major functions, which include:

Format of a Business Plan

Feasibility Study vs. Business Plan

The aim of this lesson note six is to explain the above outline.

Objectives

On the completion of this lesson note six, students are expected to understand
feasibility study and reasons for doing so, know the features and five areas of feasibility
study and in addition, understand business plan and its importance and the difference
between feasibility study and business plan . This will help the students in the following
ways:

• To understand how important feasibility study is to an entrepreneur

• To be familiar with the importance of business plan

• To differentiate between feasibility study and business plan.

FEASIBILITY STUDY

Generally, success of business venture is premised on whether the venture has the
tendency to survive and be profitable. Feasibility study is an evaluation & analysis of the
potential of a proposed project which is based on extensive investigation research to
support and provide necessary mechanism for decision making.

A feasibility study is the analysis of the viability of an idea. It focuses on helping answer
the essential question of “should we proceed with the proposed project idea”. All
activities of the study are directed towards helping answering this question.

According to Onyegbu (1987), feasibility studies help in taking a business management

decision on whether to accept, modify, or reject a business project based on the
analysis of the project’s merits and demerits. This analysis will result into optimal
decision through objective and systematic collection, analysis, interpretation, and
reporting of the relevant data and information pertaining to that business project in
question. Simply put, the method of scientific business research is important in
feasibility studies.

Major features of Feasibility Study

Generally, the major features/sections of feasibility study for small business enterprise
may include;

1. The product or service: This section of a feasibility study deals with the type of
service or product the small business enterprise plans to go into.

2. The market size of product or service: This section of a feasibility deals with
the size of the market the small business enterprise expects to have. The small
business organization has to know the number of consumers or clients for its
products or services and the number of competitors or other relevant
environmental factors in the industry.

3. The management team: Also to be ascertained in the feasibility study is the

number of people to be involved in the management of small business
enterprise, including their qualification, etc.

4. The production or operations process and plan: This section of the feasibility
study should highlight how the product or service of the small business
enterprise will be made, including associated technology processes, purchases,
expenses, etc.

5. The marketing plan: This section deals with the planned strategies of achieving
the amount of sales anticipated, and other marketing strategies and
performance measures.

6. Manpower requirement: This section concerns the human resource the small
business enterprise is going to make use of and their salaries/wages.

7. Estimated Capital Expenditure: This section deals with the types of fixed
assets, like machinery, furniture, etc. which the small business organization
hopes to utilize.

8. Estimated working capital: This section states the amount of money to be

provided for daily use or operations.

9. Cash Budget: This section gives an estimate of how much the small business
organization expects to gets as revenue within a year, or any other chosen period
and how much it expects to spend. Included, also, is income statement giving
the synopsis of income estimates, operating expenses, and other relevant items.
 10. Projected balance sheet: This section of a feasibility study is the financial
report that summaries the estimated assets and liabilities of the small business
enterprise.

11. Profitability analysis and evaluation of the project: This is the stage of taking
critical decision on whether to carry out the venture or not. The following
techniques may be useful in this regards.

i. Break-even analysis

ii. Determination of payback period.

iii. Determination of annual rate of return.

Reasons to do a Feasibility Study

- To assess probability of business success

- Gives focus to the project and outline alternative

- Narrows business alternatives

- Identifies new opportunities through the investigative process

- Identifies reasons not to proceed

- Enhances the probability of success by addressing and mitigating factors early

on that could affect the project.

- Provides quality information for decision making

- Provides documentation that the business venture was thoroughly investigated

- Helps in securing funding from lending institutions and other monetary sources.

- Helps to attract equity investment

5 Areas of Project Feasibility

1. Technical feasibility – Evaluation of the hardware and software requirements of

the proposed system. Whether technical resources meets capacity. Whether the
technical team is capable of converting the ideas into walking systems.

2. Economic Feasibility – viability, cost, and benefits associated with projects

before financial resources are allocated.

3. Legal Feasibility – Investigate if the proposed venture conflicts with legal

requirements like NAFDAC law, SONS etc.
 4. Operational Feasibility – Guide design and development. Such as reliability,
maintainability, supportability, usability, disposability, sustainability, affordability
and others.

5. Scheduling Feasibility – How much time the project/venture will take to

complete using various methods of estimation.

BUSINESS PLAN

A business related activity cannot achieve long term profitability, survival and growth if a
better business plan is not in place that will show and meaningfully describe a direction
in which an entrepreneur should follow. The adequacy, relevance and soundness of an
entrepreneur’s business plan can make the difference between a successful company
and an unsuccessful one. It should be noted that it nearly impossible for a business
entrepreneur to foresee everything that will happen to his company via his business
plan. Additionally, no business plan provides an absolute roadmap to success in any
business concern. Therefore, the entrepreneur should be prepared to revise his
business plan as the relevant conditions facing his company change and as more
accurate data and information become available. Generally, a business plan shows the
firm’s purpose, philosophy, plan of action, expected challenges and the route to future
success, growth and development (Turlais, 1999). Therefore, a small business plan
should be flexible enough to accommodate some pertinent business variations.
Generally, poor business planning is a major reason for small business failure.

A business plan serves three major functions, which include:

i. A planning tool and technique for the growth of the business concern.

ii. A document to convey relevant information to prospective investors in the

business concern.

iii. An index base to measure and monitor the company’s performance over
time.

According to Burns (1990), a business plan performs the following management

functions in a small business enterprise functions:

1. It can assist the entrepreneur crystallize and direct his business ideas.

2. It can help the entrepreneur set goals and objectives, including the associated
criteria to measure performance.
3. It can act as a means to attract any form of funding needed for the business

4. It can convince venture capitalist and other investors that the entrepreneur has
isolated some beneficial growth business opportunities in all dimensions.

A well-written business plan by a small business enterprise says a lot about the present
and likely activities of the small business concern. A business plan should be able to
communicate accuracy and credibility of a small business enterprise, in addition to
generating enthusiasm in the business. The relevant audience reading the business
plan forms a good or bad impression of the company or enterprise with regard to the
company’s management skills based on the business plan submitted. Therefore, a good
business plan should be thorough, professional, relevant, communicative, adequate,
flexible, practical and realistic among others.

Gumpet (1997), identifies the reasons small business entrepreneurs should write
business plans:

1. For selling the interests of the entrepreneur and other stakeholders to the
relevant audience.

2. To obtain bank funding.

3. To obtain investment finance

4. To arrange joint venture agreements (strategic alliances)

5. To obtain substantial business contracts from vendors

6. To attract major human resource/personnel

7. To tidy-up mergers and acquisition deals.

What an entrepreneur need to consider when writing a business plan include but
not limited to the following:

- The business plan should be as concise as possible. The relevant audience may
not want to read a long-winded document. As a rule of thumb, a business plan
should comprise thirty-five single spaced pages at most, excluding the
appendices.

- A business plan should be easy to read and comprehend, without typographical

or grammatical errors.

- A business plan should inform the relevant audience concerning the large and
profitable market opportunities for the business enterprise.
- A business plan should convey the strength and depth of the company’s
management team, among others.

Format of a Business Plan

According to Burns (1990), any format for a proposed business plan should be seen as
providing only general guidance, since every business is unique. As a result, any
perceived standardized business plan is substantially inappropriate in most business
situations. However, the general basic features. The format of a business plan may be
relatively standardized, and typically contains the following major actions;

Cover Page: This contains contract information and a confidentially statement

concerning the business plan/document for the document for the business in question.

Table of Contents: This enables readers of the business plan document to quickly find
the exact information they are looking for, in terms of pages and sub-titles.

Executive Summary: This explains, briefly, the company’s business’s prospects, needs,
and situation in a capsule form.

Company Description: This contains a background and historical account of the

company as well as its future prospects, and other cognate issues.

The product or Service: This explains what is distinct about the products, ideas or
services, which the business will deliver.

The market: This creates a picture of the relevant market segment(s) in which the
business concern wants to compete.

Marketing: This section of the business plan informs reader of the business plan of how
the business entrepreneur plans to capture his company’s potential market segment(s)
via packaging, pricing, mega marketing, distribution, and advertising policies and
strategies, among other strategic marketing process.

Management/Ownership Structure: This section introduces the people holding (or

likely to hold) leadership/responsibility positions in the business concern.

Competition: This focuses on strengths and weaknesses of company’s competitors.

Financial Statements and Projections: This section of the business plan includes
such issues as the company’s balance sheets, income statement, cash flow statement,
and financial forecasts, among others.

Appendices: This section of the business plan contains resumes of key personnel of
the business concern, an organization chart with positions and responsibilities,
extended market information and other data to back up the claims made in the
business plan.

EXAMPLE 1: A BUSINESS PLAN FOR FAGBOHUN INVESTMENT NIGERIA LTD.

Section 1: Introduction

- Name of the business

- Address of the business

- Ownership

- Product to be offered/supplied

- Nature of the business/mission

Section 2: Management Team

- People required for the business

- Duties and responsibilities

- Monthly annual cost of labour.

Section 3: Marketing Strategy

- Marketing strategy to be used.

- The customer for the product

- Pricing strategy

- Packaging system

- Promotion strategy

- Competitors – weakness and strengths.

Section 4: Production Plan

- Product development

- Production process

- Machinery

- Raw materials.

Section 5: Financial Management Strategy and Issues for the Business

- Source of capital
- Capital outlay and analysis

- Financial and economic plan.

Section 6: Assumption on Environmental Factors

- Internal environment factors

- External environment factors.

Feasibility Study vs. Business Plan

A feasibility study is not a business plan. The separate roles of the feasibility study and
the business plan are frequently misunderstood. The feasibility study provides an
investigating function. It addresses the question of “is this a viable business venture?”
The business plan provides a planning function. The business plan outlines the actions
needed to take the proposed from “idea” to “reality”.

The feasibility study is conducted before the business plan. A business plan is prepared
only after the business venture has been deemed to be feasible. If a proposed business
venture is considered to be feasible, a business plan is usually constructed next that
provides a “roadmap” of how the business will be created and developed. The business
plan provides the “blue print” for project implementation. If the venture is deemed not
to be feasible, efforts may be made to correct its deficiencies, other alternatives may be
explored, on the idea is dropped.

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 7

LECTURE 7: ENTREPRENEURIAL RELATIONSHIPS AND ETHICS

OUTLINE

Definition of Entrepreneurial Relationships

Definition of Ethics

The aim of this lesson note seven is to explain the above outline.

Objectives

On the completion of this lesson note seven, students will understand entrepreneurial
relationships and ethics. This will help the students in the following ways:

• To know how to relate as an entrepreneur

• The ethical value required of an entrepreneur

Entrepreneurial Relationships

Introduction

No entrepreneurship exists entirely on its own without depending on other businesses

in one way or another.

• Generally for production, there is chain between supplier of raw materials,

producer or manufacturer, distributor or middleman, and consumer or
customer.

• There are businesses that are useful to all entrepreneurship in general such as:

➢ Postal, courier, and delivery services

➢ Transportation services

➢ Telecommunication and Internet services

➢ Security services

➢ Wastage disposal service

➢ Advertising and promotional agencies

➢ Research and investigational agencies

➢ Banks and financial institutions

➢ Real estate, office and storage rentals

• An entrepreneurship necessarily must register with the government and

professional bodies, pay taxes and fees, and follow all due processes therefore
there are relationships with various governing and law enforcement institutions
and establishments.
 • A special relationship may have to be formed with the community or society
where the entrepreneurship is located.

Entrepreneurial relationships have economic, political, and social implications.

➢ ECONOMIC IMPLICATIONS OF ENTREPRENEURIAL RELATIONSHIPS include gain

and loss of profit outside one’s own efforts.

✓ A risky transporter, a careless courier, inflated research data, or dubious banking

can incur great loss for a manufacturer.

✓ A great advertiser, an astute supplier, a good market analyst, or a generous

financier can propel a manufacturer into great profit.

The entrepreneur should choose collaborators well. Sometimes the nearest, the
cheapest, the easiest, and the most available are not the best.

➢ POLITICAL IMPLICATIONS OF ENTREPRENEURIAL RELATIONSHIPS can have

long term effects and entrepreneurs should not be passive about politics and
electoral processes. An entrepreneur who cares about a business plan should
know about the prevailing or incoming political powers and ideological
environment and the possible positive or negative impacts they may have on the
entrepreneurial process or profits. Political change may affect such factors as
taxations, privatizations, prioritizations, takeovers, and other changes in policies
and processes.

➢ SOCIAL IMPLICATIONS OF ENTREPRENEURIAL RELATIONSHIPS involve the

impact of the entrepreneurship on its environment and on the life of the local
community.

Entrepreneurships can alter people’s heritage by:

✓ depletion of natural resources of the environment such as vegetation and animal

life

✓ change in the appearance of the environment

 ✓ displacement of inhabitants or local interests

✓ introduction of hazards into the environment

Within residential areas, small scale entrepreneurships also have impacts on the
environment and on their neighbors, such as facilitating the wear and tear of
infrastructure including roads, consumption of limited supplies of water and electricity,
noise pollution with heavy duty vehicles, equipment, and electricity generators,
introduction of waste into the neighborhood, and exposure of neighbors to radiation
from special equipment, it follows that entrepreneurs should be mindful of their
location and the inhabitants and should ensure that:

➢ the impact of the entrepreneurial presence and activities is as positive and

beneficial as possible

➢ restoration of the environment, reparations to affected persons and processes,

and compensations of losses are made as much as possible.

GIVING BACK to the local community is a sure way of ensuring success, sustainability,
and a good name for the entrepreneurship. Ways of giving back include:

✓ Paying local taxes and dues

✓ Training and employment of suitable members of the community

✓ Beautifying the environment

✓ Offering educational scholarships

✓ Providing a subsidized clinic especially where there is a potential of

entrepreneurial hazards

✓ Sharing industrial supplies of water, electricity, or other utilities

✓ Building roads or other infrastructure

✓ Giving compensations

✓ Providing aid for the needy and special projects of the community

✓ Enriching community life through sports and other sponsorships

ETHICS

Ethics is described by businessDictionary.com1 as “The basic concepts and

fundamental principles of right human conduct. It includes study of universal values
such as the essential equality of all men and women, human or natural rights,
obedience to the law of land, concern for health and safety and increasingly, also for the
natural environment”.

An indisputable characteristic of human nature is that nobody likes to be hurt by

other people.

• If you pick up an item from a supermarket shelf that is labeled with a price tag of
N500 and you take it to the counter and the teller rings up N700, you feel
cheated and you can conclude that the teller was manipulated to add to prices.

• If you order catering services for your conference and all the participants
developed acute diarrhea you get a bad reputation.

• If the events company’s microphones failed to work during an exclusive

launching of your product with big investors, you lose opportunity to promote
your product.

• If your printer takes a vacation without telling you and with disrespect for your
project deadline, you become anxious.

• If your supplier of raw materials failed to show up, you get frustrated.

• If someone changed the position of an important component of your

entrepreneurial process without any communication with you, you become
hindered.

• If your effort is wasted by somebody who arrives late, you become angry.

• If someone fails to pay, you incur loss.

Ethics entails behavioural interaction of human beings that dignify, enhance, and profit
the persons on either end of the interactions. For us to be ethical, our actions towards
another person or towards people, should be the actions we would love and appreciate
from another person.

Simply put, being ethical is being able to put oneself in other people’s shoes. It is a
strong determinant of morality or the rightness or wrongness of means, actions, and
ends.

We ought to be able to recognize moral problems and to contribute to moral solutions.

Moral problems are persons, situations, environments, events, things, means,
processes, laws, institutions, and establishments etc, that deprive human beings of
dignity, opportunity for personal enhancement, and profit.2

A quick way to judge if one’s decisions or actions are ethical is to ask:

➢ Can I, without shame and before the whole world, claim that I did it willfully and
in my right mind?

➢ Would I like the same thing to be done to me?

An entrepreneurship can be negatively affected by certain behaviours of participants

such as: tardiness, laziness, incompetence, forgetfulness, apathy, wastefulness,
incompliance, insincerity, dishonesty, and greed. These may cause inadvertent hurts to
the business and loss of profit. Therefore concerned employees should be supported to
make adjustments.

An entrepreneurship can be positively affected by other behaviours of participants such

as good time management, personal organization, serenity, honesty, reliability,
availability, competence, loyalty, and generosity. Such behaviours should be
encouraged and rewarded financially and through promotion.

If an entrepreneurship routinely, necessarily, or pragmatically evades payments,

circumvents regulations and law enforcement, acts in clandestine manner, cheats and
beats the system in various ways, then possibly:
 ➢ the entrepreneurship is not ethical

➢ the existing laws, establishments in place, or the mandatory procedures may be

too inconvenient or unrealistic or unhelpful.

Entrepreneurships should not fear to dialogue with governments and authorities to

ensure that:

✓ the right laws are in place

✓ the mandatory processes are convenient

✓ the establishments they depend on are good

• FITTING THE CULTURE

An entrepreneurship is always situated within an environment, a population, a

geographical locality, and a culture value system. The good entrepreneur would keep
such peculiarities in mind in order to facilitate acceptance and promotion of
entrepreneurial goods and services.
COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE (8)

LECTURE 8: TAKING RISK, FACING THREATS AND MANAGING CRISES

OUTLINE

Defining Risk and threats

Essence of Crisis Management

The aim of this lesson note eight is to explain the above outline.

Objectives

On the completion of this lesson note eight, students are expected to understand
the risks and threats encountered by entrepreneurs and how they are managed.
This will help the students in the following ways:

• To understand business risk

• To have understanding of business threats

• How risks and threats are managed

Taking Risk

Risk is an integral parts of our daily human life; everyone has a role to play on how
they view risk and how it is being handled. We face risk individually so also
business entities do.

Risk can be viewed as an adverse variation or deviation from a desired or expected

outcome. Also, business risk implies future uncertainty about deviation from
expected earnings or expected outcome. Risk is the potential of gaining or losing
something of value.

From the above definitions of risks, it can be deduced that the decision to invest
money in a particular business or productive activity with the element of
uncertainty (without being sure of what the outcome will be, if it will be successful
or not) entails taking of risk.

One takes a risk when we decide to build up a barbing saloon for instance; the
barbing saloon may either survive or not. There are so many factors that might
hinder the survival of the business; the saloon could be engulfed by fire as a result
of electricity fault or power surge. The saloon might be unfortunate to employ a less
qualified professional stylist which might dent the image of the saloon in no time.

Every aspect and decision making process in a business entails taking risk as the
future result of the decision is uncertain.

Every business organization faces a range of risks, some of which are;

• Property risk (this are damages to properties)

• Business/Speculative risk ( the risk of either a gain or loss)

 • Operational risk ( risk encountered during the daily operations of the
business organization)

• Liability (legal liabilities to third party properties or life)

Facing Threats

The existence of the aforementioned risks is not an enough excuse for businesses
not to exist. All of these risks and many others are threats that are being faced by
business organizations. Hence, the emergence of risk management in business.

Risk management is the process of identifying, analyzing and controlling those

risks which can threaten the operations, assets and other responsibilities of an
organization. following are the process of risk management;

Risk Identification: risk are being identified through the analysis of the organization
philosophy, goals and objectives, brainstorming and other documents that can
reveal the past records of risk events or losses that has threatened the existence
and continuity of the business organization.

Risk Analysis: The organization has to distinguish between risks that can have
severe impact on the organization and those that will not have severe impact but
are likely to occur often.

Risk Control: After due analysis and evaluation, various measures have to be taken
in order to manage or control the effects of all the risks identified. The risk has to
be handled in a way that the survival of the organization will not be threaten

Managing Crises

Risk has to be treated effectively and efficiently so as not to threaten the existence
of the business organization. Risk of an individual or business organization can be
managed using two basic forms;

- Financial risk treatment

- Non-financial risk treatment

Financial Risk Treatment: This implies setting a sum of money to either manage,
cope or avoid risk occurrence or it effects on individual or organization. This
method involves or entails;

- Transferring risk to insurance company with a cost known as premium.

- Retention/Self-Funding; setting a particular sum of money aside

consistently to handle risk event if it happens.
 - Captive Insurance; this applies to bigger organization which have the
capacity to build an insurance firm for themselves with the main aim to
cover all their risks.

- Alternative Risk Transfer; this is a non-traditional risk transfer, they are used
loosely to embrace a range of instruments that enable an organization to
transfer financial risk to a professional risk career, other than by way of
conventional insurance contract. Professional risk carrier in this case is
capital markets. These alternative risk transfers includes; derivatives;
catastrophe bonds, loans, ‘put options’ etc.

Non-financial risk treatment: This involves other methods of managing risk, coping
with risk or avoiding risk occurrence by putting in place some mechanisms or
devices to achieve this. This includes; putting fire extinguishers and other
mechanisms to combat fire incident in other to manage, cope or avoid with fire
incident.

This method of risk treatment entails;

- Risk coping measures (putting in place things that will enable one to be able
to blend and able to act normally even after the event of loss).

- Risk reduction measures: (putting in place things that will reduce the
severity and frequency loss events).

Putting in place all the aforementioned measures, the business organization can
strive for survival. Risk is inevitable, it has to be taken, faced and managed
effectively and efficiently.

Threats: Threats are unfavourable conditions in a firm’s external environment

which can harm or create disaffection to the organisation. They are elements in the
environment that could cause trouble for the business venture or project. This
could include anything from other companies (who might intrude on your market),
to supply shortages (which might prevent you from manufacturing a product).

Following are the major threats that businesses/entrepreneurs are facing today.

1) Poor environmental scanning

2) Inability to Innovate

3) Losing Your Competitive Advantage

4) The High Cost of Reckless Hiring

5) Poor Leadership

6) Communication gap
 7) Poor government policy

8) Influx of foreign products

9) Changes in customer preferences that affect buying habits

10) Changes that alter the way customers access your business

11) Changes in politics, policies, and regulations

12) Changes in the economy that affect customer buying habits

13) The appearance of new or stronger competitors

MANAGING CRISES

This is the ability to withstand the external pressure, coordinate business and
ensure it generates the expected return.

Crisis: This is a process of transformation where the obsolete system can no longer
be maintained. A crisis is also defined as a significant threat to operations that can
have negative consequences if not handled properly.

Crisis management: Crisis management is a critical organizational function. It is

the process by which an organization deals with a disruptive and unexpected
occurrence that threatens to detriment the organization, its stakeholders, or the
general public. However, it’s important for organizations to have a communication
plan in place to control and effectively respond to a crisis or potential crisis
situation as quickly as possible. In crisis management, the threat is the potential
damage a crisis can inflict on an organization, its stakeholders, and an industry.
Therefore, with improvement in communication, we learn new crisis every day.

Features of Crisis

There are three major distinguishing features of crisis which are:

1. Crisis is a series of sudden disturbing occurrence harming the organization.

2. Crisis usually arises on a short notice.

3. Crisis activates a feeling of fear and threat amongst the individuals.

Why Crisis in an Organisation?

1. Violence, thefts and terrorism at the workplace result in organization crisis.

2. Illegal behaviors such as accepting bribes, frauds, data or information tampering
all lead to organization crisis.

3. Technological failure and Breakdown of machines lead to crisis.

4. Crisis may arises when employees do not agree to each other and fight amongst
themselves.

5. Crisis arises when organization fails to pay its creditors and declares itself a
bankrupt organization.

Importance of Crisis Management

1. It helps employees to understand and analyze the causes of crisis and cope with
it in the best possible way.

2. Crisis Management helps the managers to feel the early signs of crisis, warn the
employees against the aftermaths and take necessary precautions for the same.

3. Crisis Management prepares the individuals to face unexpected developments

and adverse conditions in the organization with courage and determination.

4. Crisis Management helps the managers to devise strategies to come out of

uncertain conditions and also decide on the future course of action.

5. It enables employees to adjust well to the sudden changes in the organization.

Conclusively, sudden and unexpected event may lead to major unrest within the
business venture or business environment that may warrant urgent response from
the side of an entrepreneur in order to suppress the danger. Risks and crisis
however, affects an individual, group, organization or society as a whole. Therefore,
there is a need to develop capacity to manage risks, crisis and change in any
business venture.

COURSE CODE: ENT 202

COURSE TITLE: RECYCLING PROFITS, DIVERSIFICATION AND ENSURING
SUSTAINABILITY

LESSON NOTE (9)

LECTURE 9: RECYCLING PROFITS DIVERSIFICATION AND ENSURING

SUSTAINABILITY

OUTLINE

Defining diversification

Business sustainability

The aim of this lesson note nine is to explain the above outline.

Objectives
On the completion of this lesson note nine, students are expected to understand
the importance of recycling of profit to create a new venture (diversification) by
entrepreneurs and sustain the businesses. This will help the students in the
following ways:

• To understand how profit can be recycled

• To understand diversification

• To have understanding of how business can be sustained

Recycling in business is the process of converting or transferring resources

(money, men, materials and machines) into a related or new business entirely. This
action of converting or transferring resources into new or related activities by an
entrepreneur in order to sustain his/her business interest is diversification.

Diversification is a substantial change in business definition of an enterprise.

Entrepreneur may decide to define his/her business single by concentrating on a
single line of production or business or product, or define his/her business to be
more than one.

DIVERSIFICATION

Diversification occurs when a company adds to its business either in terms of

customer functions, customer groups or alternative technologies. It is used to
identify the directions of development, which take the organization away from its
present markets and its present products at the same time.

According to de Wit and Meyer, diversification occurs when a corporation enters

yet another line of business, either by starting up new activities (internal growth) or
by buying another firm (acquisition).

REASONS FOR DIVERSIFICATION `

i) Internal pressure for expansion: Business managers and owners often face a
psychological pressure for expansion. They simply get tired of doing the same
thing. The possibility of entrepreneur expanding by diversification, of facing the
challenges of a new set of business circumstances; is often too attractive to forgo.
ii) Pressure to overcome the growth limits of the firm's economic and industry
environment. When the industry market of a firm is saturated, the only reasonable
option to grow is to diversify into other industries.

iii) Technological branching. This creates pressure for diversity. A new- technology
often spawns a whole family of technologies and a multitude of products and
product lines for numerous markets. Management cars design strategies to
diversify along with technological branching, or even to develop the branch
technologies through aggressive R & D.

iv) To overcome the defects of tax laws. Rather than pay taxes on profits: from the
company they own, stockholders often prefer that Managers reinvest earnings in
tine business. When there is limited need for such financing in a firm's existing line
of business, managers are forced to seek opportunities in other industries into
which they eventually diversify.

v) Because of the career expectations of managers. This can create pressure for
diversification. By diversifying into other businesses, a company can also create
upper level management positions for its upwardly mobile and talented junior
people.

There are two general approaches to corporate diversification.

Entrepreneur can take any of the listed option to diversified

a) Related diversification, and

b) Unrelated diversification

In Related or concentric diversification, a firm maintains two or more lines: of

business, which, although distinct, still possess some kind of strategic fit. Two
businesses are related if resources can be productively shared between them. The
company's diversification strategy requires taking up those activities, which are
related to its existing business definition either in-terms of customer groups,
customer functions or alternative technologies: In other words, it represents the
development of a business with products that have marketing or technological
synergies with the firm's present product. This means that the new business(es) is
(are) linked to the company's existing business activity or activities in some ways.
The strategic fit or linkages in related diversification can be based on opportunities
for strategy alignment and co-ordinated teamwork as well as opportunities for
resource leveraging through: .

• Shared technology; common labour skills and requirements;

• Common suppliers and rave material sources;

 • Similar operating methods;

• Similar kinds of managerial know-how;

• Market-distribution channel complimentarily or

• Customer overlap and any other aspect, where significant links,

commonalties, or sharing opportunities exist in the respective activity cost
chains.

Related diversification can take two forms, namely:

Vertical integration and

Horizontal integration

* Backward integration which refers to development into activities which are

concerned with the inputs into the company's current business. In other ` words,
the company goes further back in the value chain by producing its own raw
materials, components, machinery, and making its own designs and producing its
own finance.

* Forward integration which refers to development into activities which are

concerned with a company's outputs, that is, the company goes further forward in
the value chain by creating/providing its own transport, distribution, repairs and
servicing.

* HORIZONTAL INTEGRATION This refers to development into activities which

are competitive with, or directly complementary to, a company's present
activities. In other words, an horizontal integrator manufactures competitive
products and or complementary products.

THE ADVANTAGES OF RELATED DIVERSIFICATION ARE AS FOLLOW:

1. It enables a firm to maintain some unity or synergy in its business activities

and gain any benefit of strategic fit and cost sharing while at the same time
spreading the risks of enterprise over a wider scope.

2. It enables a firm to exploit what it does best and to transfer a distinctive

competency or capability based advantage from one existing business to another.

3. It can lead to economies of scale.

THE DISADVANTAGES OF RELATED DIVERSIFICATION ARE AS FOLLOWS:

1) It may require additional investment in marketing infrastructure or new
technology.

2) It exposes a firm to the risk of untried markets.

Unrelated or conglomerate diversification is the combination of business units

with products that: i) Represent no marketing, technological, or other
synergies and; ii) Appeal to new customer classes. In other words, it is a form of
diversification in which a company ventures into any industry in which it can make
a profit.

In conglomerate diversification, the new business into which the company

diversifies has no obvious connection of fit with any of the company's existing
business areas. The diversification strategy adopted requires taking up those
activities which are unrelated to its existing business definition.

THE MAIN ADVANTAGES OF UNRELATED DIVERSIFICATION ARE AS FOLLOW:

1) It allows the reduction of business risks by spreading investment over a

wider range of businesses and. industries.

2) The company using conglomerate diversification strategy can obtain a high

return on investment all things being equal provided that the right choice of
investment and management have been made.

THE DISADVANTAGES ARE AS FOLLOW:

1. The risks and problems of managing and coordinating entirely new

businesses with the existing ones could be high.

2. There is a problem of diversion of resources and attention to other areas

leading to a potential loss of concentration and strategic effectiveness.

3. Top management may find it difficult to maintain in-depth familiarity with

the strategic issues facing each business unit.

APPROACHES TO DIVERSIFICATION
Strategic managers can achieve corporate portfolio diversification through:

i) Acquisition;

ii) Internal new venturing or development;

iii) Both acquisition and internal development requiring acquisition in one area
of business and internal development in another; or

iv) Joint ventures.

Conclusively, entrepreneurs have the opportunities to recycle it profit into the

activities that are either related to the present activity or activity that is not related
to the present activity. This however, will make an entrepreneur generate more
profit, strengthen its position, sustain it drive of self-reliance, creating wealth,
employment and generating tax for government.

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 10 (TEN)

LECTURE 10: INTELLECTUAL PROPERTY, PATENT AND REGISTRATION OF

BUSINESS OR (LEGAL ISSUES, INSURANCE AND ENVIRONMENTAL
CONSIDERATION)

OUTLINE
Defining Intellectual Property

Defining Patent and Registration of Business

Legal Issues, Insurance and Environmental Consideration

The aim of this lesson note ten (10) is to explain the above outline.

Objectives

On the completion of this lesson note ten, students are expected to understand
intellectual property from entrepreneurship point of view, know the importance
patent and registration of business to entrepreneurship and understand the legal
issues, insurance and environmental consideration. This will help the students in
the following ways:

• To understand how necessary intellectual property is to entrepreneur

• To know the significance of patent and business registration and

• To legal issues, insurance and environmental consideration.

Introduction

Intellectual property

Intellectual property broadly means the legal rights which result from intellectual
activity in the industrial, scientific, literary and artistic fields. Countries have laws
to protect intellectual property for two main reasons. One is to give statutory
expression to the moral and economic rights of creators in their creations and the
rights of the public in access to those creations. The second is to promote, as a
deliberate act of Government policy, creativity and the dissemination and
application of its results and to encourage fair trading which would contribute to
economic and social development. Intellectual property refers to creations of the
mind: inventions, literary and artistic works, and symbols, names, and images used
in commerce.

Intellectual property is divided into two categories:

 i. Industrial Property includes; patents for inventions, trademarks,
industrial designs and geographical indications.

ii. Copy right includes literary works such as novels, poems and plays,
films, musical works, artistic works such as drawings, paintings,
photographs and sculptures, and architectural designs. Rights related to
copyright include those of performing artists in their performances,
producers of phonograms, and those of broadcasters in their radio and
television programmes

The World Intellectual Property Organization (WIPO) is the organization that

formulates and implements the statutes that regulate intellectual property. The
World Intellectual Property Organization (WIPO) is one of the specialized agencies
of the United Nations (UN) system of organizations. The “Convention Establishing
the World Intellectual Property Organization” was signed at Stockholm in 1967 and
entered into force in 1970. However, the origins of WIPO go back to 1883 and 1886,
with the adoption of the Paris Convention and the Berne Convention respectively.

The mission of WIPO is to promote through international cooperation the creation,

dissemination, use and protection of works of the human mind for the economic,
cultural and social progress of all mankind. Its effect is to contribute to a balance
between the stimulation of creativity worldwide, by sufficiently protecting the
moral and material interests of creators on the one hand, and providing access to
the socio-economic and cultural benefits of such creativity worldwide on the other.

Patent and Patent Rights

A patent is an exclusive right granted for an invention, which is a product or a

process that provides a new way of doing something, or offers a new technical
solution to a problem.

A patent provides protection for the invention to the owner of the patent. Patent
protection means that the invention cannot be commercially made, used,
distributed or sold without the patent owner’s consent. These patent rights are
usually enforced in a court, which, in most systems, holds the authority to stop
patent infringement. Conversely, a court can also declare a patent invalid upon a
successful challenge by a third party. A patent owner has the right to decide who
may – or may not –use the patented invention for the period in which the invention
is protected. The patent owner may give permission to, or license, other parties to
use the invention on mutually agreed terms. The owner may also sell the right to
the invention to someone else, who will then become the new owner of the patent.
Once a patent expires, the protection ends, and an invention enters the public
domain, that is, the owner no longer holds exclusive rights to the invention, which
becomes available to commercial exploitation by others.
Procedures for getting Patent

The first step in securing a patent is the filing of a patent application. The patent
application generally contains the title of the invention, as well as an indication of
its technical field; it must include the background and a description of the
invention, in clear language and enough detail that an individual with an average
understanding of the field could use or reproduce the invention. Such descriptions
are usually accompanied by visual materials such as drawings, plans, or diagrams
to better describe the invention. The application also contains various “claims”,
that is, information which determines the extent of protection granted by the
patent.

Business Registration

For a business to come into existence, paper works and preliminary works are
being done. A business is a legal entity that is distinct from its owner. The following
are the procedures that are to be taken before a business can be born.

i. Choose a business structure

ii. Pick a business name

iii. Register the name at the Corporate Affairs Commission

iv. Obtain business license

All of the above can be carefully done by a legal advisor on behalf of the owner (s) of
the business.

Legal Issues; Insurance and Environmental Consideration

Various legal issues arise from various business operations carried out by
individuals or organizations. The legal liability of any business organization cannot
be quantified; legal liability is a very enormous liability its quantum is being
determined only by the court of law.

A business organization owes its customers, workers and even passer by a duty of
care, a breach of this duty of care requires a redress that is being ordered by a
court.

The premises, the product or services or operations of a business organization has

to be in order in order to avoid legal liabilities. But, unfortunately one cannot be too
sure of everything being perfectly put in place because the business exists with an
element of risk. On this note, measures to handle these risks must be established.
The following are the potential legal liabilities a business organization may face.

Public Liability: This relates to legal liability that may be accrued to a business as a
result of her relating with the public, i.e. is third party. The risk of third parties being
bodily injured or losing life as a result of happens in the business premises or a
result of the business organization’s equipment being used. This type of legal
liability can be provided for by taking a third part insurance coverage. E.g., Third
party insurance cover for the business motor vehicles.

Professional Liability: This is the legal liability arising from the professional advice
or services offered by the organization. A professional gives advice and is held
liable if the advice is acted upon and yields unfavourable result. Service
companies such as hospitals, consultants etc. are exposed to this form of legal
issue. This form of legal liability can be provided for by buying professional
indemnity coverage.

Product Liability: This is the legal liability that arises from the efficacy of a product,
i.e. the inability of a product performing the essence of which it is being produced
for to the consumers. A legal liability may arise if a consumer purchase a product
and the product and the consumer did not get value for the purchase price or get an
adverse reaction from the consumption of the product. Product liability insurance
can be purchase to protect a business organization from the effect of the legal
liability that may occur from a product liability.

Employers Liability: This is the legal liability arising from bodily injury or death of an
employee in an organization. This includes any liability that might be imposed on
an employer if an employee is injured in the course of his or her employment.
Workers’ compensation can be used to combat or handle the liability that may
arise from employees operation. Although some employers do self insurance;
Employers that self-insure may carry excess insurance for occurrences that
generate unacceptably large losses for the employer. Workers’ Compensation is a
compulsory insurance cover.

Insurance

This is a social device providing financial compensation for effects of misfortune,

the payments being made from the accumulated contributions of all parties
participating in the scheme. It is a contract through policy enactment wherein an
individual or entity receives financial protection or reimbursement against losses
from an insurance company. Policies designed by Insurance companies are used to
combat the risk of financial losses, both big and small, that may result from
damage to the insured or her property, or from liability for damage or injury caused
to a third party. It must be stated that insurance exist in order to combat the
adverse effects of risk. Entrepreneur cannot separate risk from business existence
since life itself is a risk. However, people are more exposed to risk than the other,
may be as a result of their job, location, working environment or many other
reasons. The major importance of insurance to entrepreneurship is to provide
financial cover in case there is loss or any eventuality.

TAKING RISKS AND FACING THREATS

RISK involves the probability of not achieving or attaining what is intended. For
starting entrepreneurs, common risks are in taking loans and breaking new ground.

1. BORROWING money to make money should be with the certainty that

whatever capital invested can yield sufficient profit through the process
planned. Paying back a loan should not hurt the business in future,
especially if the hurt could be prolonged.

➢ Borrowing money for infrastructural needs bears a high risk if what is

purchased can depreciate in value and a low risk if what is purchased can
appreciate in value. For example money borrowed to buy an office building
can be recovered if the business fails and the building is sold. Money
borrowed to pay for furniture may be more difficult to recover because of the
wear-and-tear and depreciation of the property. An entrepreneur can avoid
risk by not borrowing money for something that cannot generate money.

➢ BANKRUPTCY or insolvency is the inability to pay back money to a creditor.

The debtor could legally declare bankruptcy or the creditor could file
bankruptcy claims against the debtor in order to reclaim as much as
possible in cash or in kind. Whatever the case, bankruptcy leaves a stigma
on the entrepreneur that is disadvantageous for any future entrepreneurial
interests.

2. A certain platform of risk is NEW GROUND entrepreneurship. Some

entrepreneurs venture into new ground because of abundance of raw
materials, lack of competition, a promising market, or other advantages.
Breaking new ground, blazing a trail, introducing a product or process or
service, and opening up a new market or field of entrepreneurship entails
research, capital, and effort. It takes time for capital to be recovered and the
investments to yield profit. The pioneers may not gain from their efforts
before other entrepreneurs move into the opportunity. New ground
entrepreneurs thus often desire to work out ways of controlling the territory,
 monopolizing the market, or safely sharing with rivals in order to ensure they
do not end up at a loss or even bankrupt.

Entrepreneurs who own a discovery, an innovation, or some creativity often face

the risk of other entrepreneurs profiteering on their products at a loss to
themselves. They need to ensure that they receive deserved ROYALTIES especially
where there are brokers and middlemen involved in transactions. Thus some
entrepreneurs may pose a risk or threat to other entrepreneurs.

New ground entrepreneurs, innovators, and creative entrepreneurs can receive

some protection through COPYRIGHT, PATENTS, and TRADEMARKS. Membership of
a professional association of business circle can also help protect rights.

Apart from special risks, common risks factors that most businesses have to
consider are:

• location (for example, rent may be cheap but market may be slow, or
conversely rent is high but business moves)

• depletion of raw materials

• change in political climate

• change in seasons, fashions, and fads

• forces of nature

• instability of currency

A THREAT is something that gives one a feeling of imminent harm or loss. Amongst
the threats that entrepreneurs face are:

• PIRACY and fakes

• Relatives (who may want such privileges as undeserved employment or

unrealistic profit sharing)

• Unethical rivals

Beyond rivals, PROFITEERS, BROKERS, and MIDDLEMEN are entrepreneurs in their

own fashion. They are generally not interested in initiating products or services and
usually aim at only making money. They may be a threat to new ground
entrepreneurs and innovators by capitalizing on their products to divert profit to
themselves or to make more profit than those who deserve it most.

Environmental Consideration
Environment is considered to have forces within (internal) and outside (external)
the control of an entrepreneur or organisation that can impact either negatively or
positively on its operations. Consequently, entrepreneurs has to considered
environment for so many reasons

1. To know the nature of the environment where it operates (whether

environment is static, dynamic or complex)

2. Audit the environment (to know scan environment using ad-hoc, regularly or
continuously )

3. Study the factors shaping the market

4. Know it position in the market

5. Study the internal factors

6. Study the external factors

7. Conduct SWOT analysis.

Without critical study of the environment entrepreneurs will find it difficult to

survive and may be not be able to test waters.

Conclusively, it is important that an entrepreneur understand intellectual property,

patent, legal related issues, insurance and environmental considerations for
proper protection of new inventions, ideas and markets. This will strengthen the
entrepreneurs and enhance their proactiveness and drive them towards
profitability and sustainability.

COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 11

LECTURE 11: BUSINESS OPPORTUNITIES IN LOGISTICS AND CLEARING

THEORY OUTLINE

Logistics is described by [Link] as; Planning, execution, and

control of the procurement, movement, and stationing of personnel, material, and
other resources to achieve the objectives of a campaign, plan, project, or strategy.
It may be defined as the ‘management of inventory in motion and at rest’.

The Oxford Advanced Learner’s Dictionary3 describe it as:

“The organization of supplies and services for any complex operation”

Webster’s New World Collegiate Dictionary4 defines it as: The managing of the
details of an undertaking.
The salient aspects of good logistics are:

• using the right person for the right job

• using the right equipment for the right purpose

• using the right process for the right end

• doing each thing at the right time

LOGISTICS, therefore, is simply “getting it right”.

Good logistics involve simple matters such as:

➢ maintaining good communication through phone, fax, or e-mail

➢ knowing the locations and opening and closing hours of useful banks, post
offices, couriers, government offices, and transportation systems

➢ Keeping a list of key and important contacts including email, mailing, and
phone information

➢ Keeping a good address book

➢ Keeping machines, equipment, and vehicles services and in good working

order

➢ timely repairs

➢ prompt replacements

➢ prompt rent, bills, dues, taxes, etc., promptly

➢ having Internet service and ready sources of information

➢ keeping guidebooks and instructions handy

➢ having handy cash and regulating cash flow

Any of these processes, if not in place or timely can seriously upset a business,
incur loss, and limit profit.
Good logistics is possible only through effective TEAM WORK.

MEMBERS OF A TEAM need to take care to be:

✓ punctual

✓ available

✓ reliable

✓ competent

✓ communicative

INTERACTIVE DISCUSSION

Consider the following components of good logistics:

▪ Good roads

▪ Good transportation

▪ Telecommunications

▪ Security

▪ Maintenance and repairs

▪ Cash flow

Spend five minutes discussing each one.

HOMEWORK QUESTION 9

List five logistics problems you are likely to encounter in the process of running a
chosen business.
COURSE CODE: ENT 202

COURSE TITLE: BASIC PRINCIPLES OF ENTREPRENEURSHIP

LESSON NOTE 12 (TWELVE)

LECTURE 2: EXPORT OF PRODUCTS AND GOODS

The aim of this lesson note twelve is to explain the above.

INTRODUCTION TO EXPORT MARKETING – I

Structure
1.0 Objectives

1.1 Introduction

1.2 Definitions of Export Marketing

1.3 Features of Export Marketing

1.4 Importance of Export Marketing

1.5 Distinguish between Domestic Marketing and Export Marketing.

1.6 Motivations for Export Marketing

1.7 Present Problems / Difficulties faced by Indian Exporters.

1.8 Summary

1.9 Questions for Self-Assessment

1.1 INTRODUCTION

Export marketing means selling and distribution of goods to other countries of the
world. It involves lengthy procedure and formalities. In export marketing, goods are
sent abroad as per the procedures framed by the exporting country as well as by
the importing country.

• Export Marketing is more complicated than domestic marketing due to

international restrictions, global competition, lengthy procedures and
formalities and so on.

• Moreover, when a business crossed the borders of a nation, it becomes

infinitely more complex. Along with this, export marketing offers ample
opportunities for earning huge profits and valuable foreign exchange.

• Export marketing has wider economic significance as it offers various

advantages to the national economy. It promotes economic / business /
industrial development, to earn foreign exchange and ensures optimum
utilization of available resources. Every country takes various policy
initiatives for promoting exports and for meaningful participation in global
marketing. Global business is a reality and every country has to participate
in it for mutual benefits. Every country has to open up its markets to other
countries and also try to enter in the markets of other countries in the best
possible manner. This is a normal rule which every country has to follow
under the present global marketing environment. In the absence of such
participation in global marketing, the process of economic development of
the country comes in danger.
 • DEFINITIONS OF EXPORT MARKETING

• 1) According to B. S. Rathor “Export marketing includes the management of

marketing activities for products which cross the national boundaries of a
country”.

• 2) “Export marketing means marketing of goods and services beyond the

national boundaries”.

FEATURES OF EXPORT MARKETING The main important features of export

marketing are as follows. 1) Systematic Process – Export marketing is a systematic
process of developing and distributing goods and services in overseas markets.
The export marketing manager needs to undertake various marketing activities,
such as marketing research, product design, branding, packaging, pricing,
promotion etc. To undertake the various marketing activities, the export marketing
manager should collect the right information from the right source; analyze it
properly and then take systematic export marketing decisions.

2) Large Scale Operations – Normally, export marketing is undertaken on a large

scale. Emphasis is placed on large orders in order to obtain economies in large sole
production and distribution of goods. The economies of large scale help the
exporter to quote competitive prices in the overseas markets. Exporting goods in
small quantities is costly due to heavy transport cost and other formalities.

3) Dominance of Multinational Corporations – Export marketing is dominated by

MNCs, from USA, Europe and Japan. They are in a position to develop world wide
contacts through their network and conduct business operations efficiently and
economically. They produce quality goods at low cost and also on massive scale.

4) Customer Focus – The focus of export marketing is on the customer. The exporter
needs to identify customers‟ needs and wants and accordingly design and develop
products to generate and enhance customer satisfaction. The focus on customer
will not only bring in higher sales in the overseas markets, but it will also improve
and enhance goodwill of the firm.

5) Trade barriers – Export marketing is not free like internal marketing. There are
various trade barriers because of the protective policies of different countries.
Tariff and non-tariff barriers are used by countries for restricting import. The export
marketing manager must have a good knowledge of trade barriers imposed by
importing countries.
6) Trading Blocs – Export trade is also affected by trading blocs, certain nations
form trading bloc for their mutual benefit and economic development. The non-
members face problems in trading with the members of a trading bloc due to
common external barriers. Indian exporters should have a good knowledge of
important trading blocs such as NAFTA, European Union and ASEAN.

7) Three – faced competition – In export markets, exporters have to face three-

faced competition, i.e., competition from the three angles – from the other
suppliers of the exporter‟s country, from the local producers of importing country
and from the exporters of competing nations.

8) Documentation –

Export marketing is subject to various documentation formalities. Exporters

require various documents to submit them to various authorities such as customs,
port trust etc. The documents include – Shipping Bill, Consular Invoice, Certificate
of Origin etc.

9) Foreign exchange regulations – Export trade is subject to foreign exchange

regulations imposed by different countries. These regulations relate to payments
and collection of export proceeds. Such restrictions affect free movement of goods
among the countries of the world.

10) Marketing – mix Export marketing requires the right marketing mix for the target
markets, i.e. exporting the right product, at the right price, at the right place and
with the right promotion. The exporter can adopt different marketing – mixes for
different export markets, so as to maximize exports and earn higher returns.

11) International marketing Research – Export marketing requires the support of

marketing research in the form of market survey, product survey, product research
and development as it is highly competitive. Various challenges, identification of
needs and wants of foreign buyer in export marketing can be dealt with through
international marketing research.

12) Spreading of Risks – Export marketing helps to spread risks of business.

Normally export firms sell in a number of overseas markets. If they are affected by
risks (losses) in one market, they may be able to spread business risks due to good
return from some other markets.

13) Reputation – Export marketing brings name and goodwill to the export firm.
Also, the country of its origin the gets reputation. The reputation enables the export
firm to command good sales in the domestic market as well as export market.
IMPORTANCE OF EXPORT MARKETING Exports are important for all countries
whether developed or underdeveloped. The need / importance / advantages of
export marketing can be explained from the viewpoint of a country and that of
business organization.

Need / Importance / Advantages of Export Marketing at the National Level:

1) Earning foreign exchange –

Exports bring valuable foreign exchange to the exporting country, which is mainly
required to pay for import of capital goods, raw materials, spares and components
as well as importing advance technical knowledge.

2) International Relations – Almost all countries of the world want to prosper in a

peaceful environment. One way to maintain political and cultural ties with other
countries is through international trade.

3) Balance of payment – Large – scale exports solve balance of payments problem

and enable countries to have favourable balance of payment position. The deficit in
the balance of trade and balance of payments can be removed through large-scale
exports.

4) Reputation in the world – A country which is foremost in the field of exports,

commands a lot of respect, goodwill and reputation from other countries. For
example, Japan commands international reputation due to its high quality products
in the export markets.

5) Employment Opportunities – Export trade calls for more production. More

production opens the doors for more employment. Opportunities, not only in
export sector but also in allied sector like banking, insurance etc.

6) Promoting economic development – Exports are needed for promoting economic

and industrial development. The business grows rapidly if it has access to
international markets. Large-sole exports bring rapid economic development of a
nation.

7) Optimum Utilization of Resources – There can be optimum use of resources. For

example, the supply of oil and petroleum products in Gulf countries is in excess of
home demand. So the excess production is exported, thereby making optimum use
of available resources.

8) Spread Effect – Because of the export industry, other sectors also expand such
as banking, transport, insurance etc. and at the same time number of ancillary
industries comes into existence to suppo0rt the export sector.

9) Higher standard of Living – Export trade calls for more productions, which in turn
increase employment opportunities. More employment means more purchasing
power, as a result of which people can enjoy new and better goods, which in turn
improves standard of living of the people.

Need / Importance / Advantages of export marketing at Business / Firm / Enterprise

Level 1) Reputation – An organization which undertakes exports can bring fame to
its name not only in the export markets, but also in the home market. For example,
firms like Phillips, HLL, Glaxo, Sony, coca cola, Pepsi, enjoy international
reputation.

2) Optimum Production – A company can export its excess production after

meeting domestic demand. Thus, the production can be carried on up to the
optimum production capacity. This will result in economies of large scale
production.

3) Spreading of Risk – A firm engaged in domestic as well as export marketing can

spread its marketing risk in two parts. The loss is one part (i.e. in one area of
marketing) can be compensated by the profit earned in the other part / area.

4) Export obligation – Some export organization are given certain concessions and
facilities only when they accept certain export obligations Large-scale exports are
needed to honour such export obligations in India, units operating in the SEZs /
FTZs are expected to honour such export obligations against special concessions
offered to them.

5) Improvement in organizational efficiency Research, training and the experience

in dealing with foreign markets, enable the exporters to improve the overall
organizational efficiency.

6) Improvement in product standards An export firm has to maintain and improve

standards in quality in order to meet international standards. As a result, the
consumers in the home market as well as in the international market can enjoy
better quality of goods.

7) Liberal Imports Organizations exporting on a large-scale collect more foreign

exchange which can be utilized for liberal import of new technology, machinery and
components. This raises the competitive capacity of export organizations.

8) Financial and non-Financial benefits

In India, exporters can avail of a number of facilities from the government. For
example, exporters can get DBK, tax exemption etc. They also can get assistance
from export promotion organizations such as EPCs IIP, etc.
 9) Higher profits – Exports enable a business enterprise to earn higher prices for
goods. If the exporters offer quality products, they can charge higher prices than
those charged in the home market and thereby raise the profit margin.

1.5 DIFFERENCE BETWEEN DOMESTIC MARKETING AND EXPORT MARKETING.

Domestic / Home marketing

Export / International marketing

1) Meaning – Domestic marketing is restricted to political boundaries of a country.

It involves buying and selling activities within one country only International
marketing covers all countries for marketing purpose. It involves buying and selling
activities at the global level.

2) Nature – Domestic marketing is easy and simple due to several reasons such as
uniform currency system, limited trade restrictions, uniform trade practices and
short distances for transport of goods. International marketing is difficult and
complicated due to reasons such as use of different currencies, trade restrictions
long distances and absence of uniform trade practices.

3) Trading Blocs – Absence of trading blocs and tariff and non-tariff barriers provide
ample scope for expansion in domestic marketing activities. Trading blocs
and tariff and non-tariff barriers exist in international marketing and they restrict
free trade among the countries of the world.