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Title: Enterprenuership and communication
Description: CPA SECTION 1 NOTES ON ENTREPRENEURSHIP AND COMMUNICATION
Description: CPA SECTION 1 NOTES ON ENTREPRENEURSHIP AND COMMUNICATION
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Entrepreneurship and
Communication
STUDY TEXT
ii
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Copyr i ght
ALL RIGHTS RESERVED
...
ISBN NO: 9966-760-23-7
© 2009 Strathmore University Press
First Published 2009
Strathmore University Press
P
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Box 59857, 00200,
Nairobi, Kenya
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iii
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v
CHAPTER ONE
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3
CHAPTER TWO
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BUSINESS OPPORTUNITIES
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39
BUSINESS PLAN DEVELOPMENT
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PART B
CHAPTER FIVE
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99
CHAPTER SIX
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125
CHAPTER SEVEN
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145
CHAPTER EIGHT
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179
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199
REFERENCES
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239
INDEX
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69
T E X T
ENTERPRISE DEVELOPMENT AND AWARENESS
...
It is the process of devising a new process that will make production
more efficient
...
The basic concepts from this chapter will provide the
required information and prepare one for the challenges that lie ahead
...
It essentially has the money
making connotation as commonly understood by many
...
It entails coming up with an idea that no one else has thought of and capitalizing
on it to set up an enterprise
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T E X T
INTRODUCTION
4
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
1
...
1
...
The needs of the
country cannot be feasibly catered for by the state on its own
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The role of the individual is what we are
going to look at in the following sections
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Mostly it will involve the production of goods and services
...
There are risks involved in this process and they all have to
be assumed
...
Who is an entrepreneur?
An entrepreneur is someone who devises a new way of looking at things and producing output
out of the new concept
...
He is one
who will take the risk of the success or failure of the new venture and will also stand in to reap
the rewards
...
The fear of failing always looms but driven by ambition
and the desire to succeed, the entrepreneur sees his project to completion
...
1
...
Communication
achieves its objective when the parties involved understand each other
...
Communication is the process by which information is passed between individuals by means of
previously agreed symbols
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This involves:
••
••
••
••
••
••
••
Correct timing
Logical thinking
Fluent expression
Carefully reading and listening
Sensitivity to the circumstances
Choice of appropriate media, tone and style
Obtaining feedback to check the message has been understood
Information may be the main focus of the communication
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1
...
It is a two-way
interaction in which the entrepreneur, and whoever is being interacted with, is active participants
in the attempt to solve a problem through the use of language as the proper channel of
communication
In any business enterprise, the entrepreneur will need to be confident and develop a level of
expertise in the skills of speaking, listening, and at times writing to customers workmates and
supervisors
...
He/she may also need to devise
graphs and charts, using graphic illustrations to explain information
...
The entrepreneur will thus need to arm him/herself
with the skills to use these tools to communicate with all the stake holders in his business
...
When conflicts arise, they need to
be solved through conscious and effective communication
...
T E X T
To initiate some action
To make his needs understood
To share ideas, attitudes and beliefs perhaps persuading others to embrace them
To establish and maintain links with other people, possibly to entertain them
STUD Y
••
••
••
••
6
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
1
...
The business, if run well can enable him meet his personal needs
STUD Y
T E X T
Self employment is a concept that has arisen as a result of entrepreneurship
...
The entrepreneur becomes self
employed when he begins to derive his livelihood from his business venture
...
This success can be
trickled down, not just to himself, but also to the business and others who are job seekers
...
An entrepreneur can make huge gains if his business is a success
...
This may even lead to bankruptcy
...
1
...
Losses can be in the following forms
• Burglary
• Fire
2
...
This option will dilute the ownership therefore
it is a step that should be taken with a lot of caution
...
Investing in extra security in the event that the business deals in valuable products
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Securing the services of a risk assessment expert
...
The entrepreneur puts himself in a safe position both for his business and himself if he does any
one of the above
...
On the other hand the business venture can be a huge success if well managed
...
This becomes a success story especially
in the current economy where many young people are losing out in the job industry even with the
relevant qualifications
...
It is important to point out that the entrepreneur needs to be prudent when appropriating the
rewards of his investments, for instance some of the profits should be ploughed back into the
business
...
Through proper
planning and due diligence, the entrepreneur can device several ways through which he can
plough back his interests in an attempt to multiply future rewards
...
Opening up new branches in other locations
2
...
Hiring professionals to manage various aspects of the venture
4
...
This move also
creates jobs for other people and in this way, the entrepreneur also thinks about the society his
business serves
...
A business that
is constantly growing and re-investing its interests needs to ensure that the sensitive aspects
of the venture such as finance and customer needs are well managed
...
Here, he could hire accountants, IT specialists, a sales and marketing team et cetera
...
Addition of more capital is a sure way of expanding more so if the capital will lead to efficient
ways of doing business
...
The entrepreneur can thus direct some of his
expansion efforts in this area so as to keep up with the competitors
...
3 Types of Entrepreneurs
Fast forward: The entrepreneur, regardless of type will need to develop certain fundamental
traits that will see him through the tough times that all businesses go through
There are several categories in which entrepreneurs can be classified:
1
...
This is similar to the role played by lawyers, accountants, and financial
advisers
...
With the resources generated from the first project, the entrepreneur can
then start working on a new brand or improve the current brand
...
STUD Y
T E X T
8
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
2
...
A fee is charged per event or based on the attendance of the
event
...
3
...
4
...
5
...
They find demand in sales, marketing, writing, training or a
variety of information services
...
Entertainer/Host: These are people who thrive on being with other people
...
They may even be entertainers, actors, musicians, or singers
...
V program
...
Investor/Owner: If one has money to invest he/she can put the capital to work for him/
her by investing in stocks, real estate or businesses
...
Seller: This covers salespeople and brokers, from real estate to insurance to art
...
9
...
As an entrepreneur, one may want to explore
entrepreneurial opportunities areas such as software development, engineering or
technology
...
3
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These can be grouped into three categories;
••
••
••
Personal traits
Technical traits
Business Management traits
Personal Traits
Being open minded
...
The entrepreneur should
create a working atmosphere that nurtures and appreciates new ideas
...
He should assess
why his ideas didn’t work or why he lost a particular customer etc
...
INTRODUCTION
9
Perseverance
The entrepreneur should understand that great businesses take time to establish
...
He should persevere till he starts
breaking even at least
...
Other personal attributes that will go towards making a good entrepreneur include;
••
••
••
••
Being disciplined
Being a risk taker
Being persistent
Being a visionary
Technical Traits
Create systems and adapt them as necessary
As the company grows, it may become more difficult to manage and keep track of things
...
This will help to create a smooth workflow and allow the
entrepreneur to keep track of things a little easier
...
Other qualities that are important under this category include;
••
••
••
Being a team player
Network building
Possessing good communication skills
Business Management traits:
Common Courtesy
...
Clients should be able to at least contact the business via email and a land line
number
...
If he will not be in the office,
to check email for most of the day, he should set an auto-responder that lets people know when
he will be checking his email and possibly include his cell phone number as well
...
Clients don’t need to hear
the intricate details of the entrepreneur’s personal life
...
But by far the most
important factor about being professional is being consistently professional
...
Although an email address that reflects his business
domain name looks a lot more professional, any email address will do if you he is just starting
out
...
Planning and Research
The entrepreneur should do a thorough ground work before embarking on his venture
...
Poorly
planned businesses collapse before starting and lack of proper research kills the growth of the
firm
...
Protecting the Business
STUD Y
T E X T
The entrepreneur should insure his equipment and computers as well as anything else that could
be detrimental to his business if it were stolen, destroyed or lost
...
He should get trademarks and copyrights to protect any
business ideas or concepts that are uniquely his
...
If the entrepreneur’s budget allows, he should consult a
professional marketing firm or start off with the basics and try to get his business as much
exposure as possible through various platforms such as; a website, e-newsletter, business cards,
a company brochure, vehicle branding and possibly an advert in an industry magazine
...
3
...
The challenges that entrepreneurs face may be looked at from five categories;
a ) External Factors
Some events in the economy of a country may well be beyond the control of the entrepreneur
...
The
economic cycles of recession, Boom, Depression and recovery may find the business in any
stage of its own cycle
...
g
...
The going may be tough
such that he may even be tempted to close the business
...
If this does not happen, he risks losing a lot of money
...
He may not have a fall back
plan if the business collapses, hence loss of career
Psychic risk
The entrepreneur may have to give up his social life for a while till the business stabilizes
...
A business may start off well as a result of a favorable economic climate and availability of funds
...
However, if the entrepreneur does not have sufficient skills to see the
business through this success in a consistent manner, he stands to lead the business towards
incurring loses and not meeting its obligations on time
...
However,
if these people are not trustworthy, he stands to lose a lot of money through embezzlement or
pilferage of stocks
...
e) Poor Business Ethics
The lack of proper business grooming could lead to unfair business practices by the entrepreneur
...
The entrepreneur could find himself in conflict
with the law and may get sued by his business associates
...
STUD Y
c) Lack of skills and experience
T E X T
The collapse of the business could lead to psychological problems such as depression and/or
low self esteem
...
12
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
1
...
He needs to play an active role in society
STUD Y
T E X T
Entrepreneurs play a vital role in today’s economy
...
Most of them get through the tough times and their businesses become
success stories
...
However, there are factors that may be beyond his control, but if he can get around these,
one way or the other, he only has himself to convince that the business can actually develop
...
It would be the
entrepreneur’s hope that the period of boom finds his business just picking up so that he can be
taken by the wave of growth and prosperity that will be represented by most commercial activities
during these times
...
If the economy shrinks, this will have an
impact as well on the business
...
In both situations, whether the business is growing
or not, the entrepreneur will need to identify ways the business can contribute to the economy
which supports him
...
Any other requirements that do not lead to this may not be in his priority list
...
The basic role
of entrepreneurs in an economy is described below;
Offering employment opportunities
The entrepreneur becomes a job creator if his business is growing and at the same time hiring
personnel to assist in the management and running of the firm
...
He will need to get assistance from other
people
...
Other posts may not
be relevant during the early stages of the business’ growth
...
INTRODUCTION
13
Paying Taxes
The entrepreneur’s firm whether registered as a company or not still has a legal requirement
to pay its taxes and to furnish the tax authority with the relevant paper work
...
An entrepreneur running a public limited company has
the responsibility of ensuring corporate taxes are paid each year and in compliance with the
Companies Act and any other legislation
...
The various forms of taxes are a source
of revenue for the government
Social responsibility
Cartels are formed by firms with the same business objectives
...
This helps the many small individual firms that perhaps could not have had
the same bargaining power as they do when in a cartel
...
The smaller firms
eventually grow and play important roles in the economy as well
...
Regular contributions to
community projects will put the business in the good books of the community
...
The good will of the business stands to improve and
this ensures support not only from regular customers but also the local authorities
...
The entrepreneur needs communication facilities to facilitate
his business operations
...
This makes it possible for him to meet his personal financial
obligations from the rewards of his firm
...
He needs to be professional in his dealings with customers,
persevering as the firm grows, be a good planner e
...
c
There are many challenges both internal and external that an entrepreneur will need to overcome
for his business to grow
...
They contribute both in large and small scale to
the growth of industries in the country and should therefore not be ignored by the government
...
••
••
••
Define Entrepreneurship
Define communication
Describe the relationship between entrepreneurship and communication
2
...
Explain some of the challenges that face an entrepreneur in his quest to establish a successful
business
...
Examine three ways through which the economy benefits from the growth of small
businesses
INTRODUCTION
15
ANSWERS TO QUIZ
1
...
It is the process of devising a new process that will make production
more efficient
...
It is
the process of giving, receiving or exchanging information, opinions or ideas by writing,
speech or visual means, so that the material communicated is completely understood
by everyone concerned
...
The entrepreneur will need communication tools to pass on his ideas to the people he
works with and to his business associates
...
He should be Professional in his dealings
He should have a knack for Planning and Research
He should be open minded, ready to listen to Others
Persevering
3
...
Examples include;
• Fluctuating interest rates
• Labor regulations against the business
• Supply interruptions
Internal – These are personal to the entrepreneur and within his control
...
•
•
•
•
Employment opportunities
Revenue to the Government
Social Responsibility
Formation of Cartels
STUD Y
•
•
•
•
•
T E X T
2
...
e
...
EXAM CONTEXT
This area has not yet been examined under the new KASNEB syllabus
INDUSTRY CONTEXT
There a growing need for business entrepreneurs to be aware of the opportunities that exist in the
market
...
A
trade that does not conform to the entrepreneur’s abilities would lead to an unnecessary wastage
of resources
...
It’s a chance that an entrepreneurs utilizes after a thorough research through
which he can manifest his ideas
...
There are advantages and disadvantages
that come along with any kind of business opportunity
...
This knowledge is crucial to the future of his
business
...
This can be achieved through Networking
T E X T
INTRODUCTION
22
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
2
...
Entrepreneurship is a thought process
...
This requires that the entrepreneur brainstorms on the areas he is best suited
...
In this case, he will therefore consider also what is out there and can be used
...
A business opportunity, also involves the sale or lease of any product, service, equipment, etc
...
This involves no effort on the part of
the buyer to come up with a new idea, product or process
...
The seller of a business opportunity declares that he will assist the buyer in finding a suitable
location or provide the product to the purchaser-licensee
...
2
...
1 Entrepreneurial Process
A business opportunity thus requires that the entrepreneur follows the following process;
1
...
Assess his surrounding
3
...
4
...
5
...
6
...
Identification of strengths
The entrepreneur needs to assess himself first before embarking on a business venture
...
BUSINESS OPPORTUNITIES
23
One major disappointment that befalls many entrepreneurs is the realization that an idea that
once promised so much reward and fulfillment doesn’t bear the results that were expected
...
A strength can be a talent that has been in a person since earlier days and has always manifested
itself over time even in very subtle ways
...
2
...
The world economic climate has an effect on the local economy and this will
need to be studied in detail by the entrepreneur
...
These form the foundation of a stable society that will
support his business in future
...
This involves analyzing the latest
technologies that are in use in most businesses that he may find lucrative to engage in
...
3
...
This will happen as a result of serious study and analysis
...
Many renowned entrepreneurs such as Steve Wozniak of Apple Inc
...
This of course among other outcomes made many people become more
efficient and productive in their work places
...
Selection of Gaps to be filled
The loopholes may be very many but the entrepreneur needs to identify only those that bear a
correlation with his strengths as identified earlier on
...
This will ensure that the entrepreneur
does not engage in a venture that may take all his resources and be a disappointment as a result
of poor correlation between his strengths and the gaps identified
...
This is important since the result of his
study will act as a personal bench mark for him to know how far he can go in an attempt to bring
in some thing new
...
For a comprehensive analysis, the entrepreneur will need to go far back, may be five years
...
Certain events may
have short term implications and some may have long term implications, so the entrepreneur
needs to look at all these in perspective
...
This entails learning the economic trends of his surrounding and trying to project the outcome
of certain events
...
This will overwhelm him and will be a sign that the first stage of this process was
not done thoroughly enough
...
5
...
Any
business venture has pitfalls which if not well planned for, can ruin it
...
t
...
He may
mitigate against these risks, for instance, by insuring the business against losses that may result
from these events
...
Lay out an execution Plan
STUD Y
T E X T
The Entrepreneur should put all his ideas and plans in writing
...
The business
plan acts as a reference whenever he needs to communicate with thirds parties in convincing
them, for instance to invest
...
1
...
And sometimes, you should consider creating business
opportunities instead of waiting for them to come knocking at your door
...
Careful choice of an opportunity
is important
...
Also, he
should be sure that the product or service satisfy needs and not wants because the former is for
keeps while the latter simply come and go
...
These business opportunities represent lower risks and
consequently lower rewards as well compared to those associated with creating a completely
new product
...
These business opportunities
definitely exist, but the process of discovering them is almost akin to creating a new product to
satisfy an unwanted need
...
One good example for this
is how a Philippine company was able to make use of coconut husks – which was once the
least useful of all parts of the coconut tree – by grinding and turning them into a concrete mixing
compound
...
And in the world of business, there are twice
as many business opportunities available just as long as the entrepreneur opens his mind with
others of like thinking
...
This involves the selling of another company's products through a distribution system of racks
in a variety of stores that are serviced by the rack jobber
...
The parent company obtains a number of locations in which the
racks are placed on a consignment basis
...
The agent presents the
store manager with a copy of the inventory control sheet which indicates how much merchandise
was sold, and then the distributor is paid by the store or location which has the rack-less the
store's commission
...
This is very similar to rack jobbing
...
The
vending machine operator must pay the location owner a percentage based on sales
...
If the locations are spread far apart, you waste time and traveling expenses
servicing them
...
This is quite similar to a distributor but while a distributor may sell to a number of dealers, a dealer
will usually sell only to a retailer or the consumer
...
T E X T
This refers to an independent agent that has entered into an agreement to offer and sell the
product of another but is not entitled to use the manufacturer's trade name as part of its trade
name
...
Under this type of arrangement, the licensee obtains the right to use the seller's trade name as
well as specific methods, equipment, technology or products
...
Network marketing
...
As a
network marketing agent, the entrepreneur will sell products through his own network of friends,
neighbors, co-workers and so on
...
Cooperatives
...
STUD Y
T E X T
2
...
3 Franchise Vs Business Opportunity ventures
A franchise is a venture where a sponsor identifies someone with an idea or a proposal and
decides to fund his project and give it the financial boost it needs to start off
...
The
person sponsoring the franchise is called the franchisor and the one being sponsored is called
the franchisee
...
As a rule of thumb, apart from financial support, a franchisee receives more support from the
parent company; he gets to use the trademark name, and is more stringently controlled by the
franchisor
...
As we've previously noted, there are numerous forms of business opportunity ventures
...
These business opportunities
provide everything one could possibly need to start a business
...
Unlike a package-format franchise, however, these types of business opportunity ventures aren't
trademarked outlets for the parent company
...
Many times the only binding requirement between the
seller and the buyer is that inventory be purchased solely through the parent company
...
BUSINESS OPPORTUNITIES
27
Buying a Franchise
A potential investor could simply buy off a company that he sees has potential for growth instead
of opening a new one to rival it
...
He only needs to have a good bargaining power to establish
himself as a potential buyer
...
In this case the idea of acquiring the franchise makes up for the lack of innovation that
may be crippling him
2
...
2
...
These vary from state to state
...
When choosing a business opportunity, an entrepreneur should keep in mind that if he buys an
opportunity from a company with a sizable number of outlets that's been in business for at least
three years, he'll pay more for this established concept than he would for a newer one
...
An entrepreneur could evaluate the 'right' business opportunity using the following guidelines
...
1
...
Here, the entrepreneur will assess his areas of interests and make a decision as to what exactly
he would want to do with his talents
...
STUD Y
In the preceding section, we outlined numerous things an entrepreneur should do to ensure that
he/she chooses a venture that will be appropriate for him/her personally, and will represent a
sound investment
...
The following are some strategies entrepreneurs should use to protect themselves from making
wrong decisions on business opportunity ventures
...
28
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
2
...
If the entrepreneur is introducing something new into the market that is unknown to the general
public, he should muster all his efforts to enthusiastically convince his potential customers of the
need for the product or service he is bringing into the market
...
3
...
This will enable him convince his customers and potential investors
...
If the licensor-seller has organized all the operating knowledge into a standard operating manual,
he should look with favor upon this business opportunity
...
Making a market evaluation of the product or service to be offered
...
He should consider whether there is a need for this type of item, and what is its potential in
relation to competition
...
Finding out how many entrepreneurs have been in the business successfully for a
respectable period of time
...
The entrepreneur should carry out a research to see how many successful
businessmen have made it in that line of business he has decided to undertake and how many
have failed for various reasons
...
6
...
If running a particular line of business requires training, the entrepreneur should consider
attending a course that will enable him have the relevant skills required for the business he has
chosen
...
Financial strength and strong credit behind the business opportunity
Where the entrepreneur is running the business under a parent company, he should find out
whether the licensor-seller will provide an escrow agreement to deliver a building, equipment,
leasehold improvements, inventory, etc
...
He should check out
the bank references given by the licensor-seller and discuss the company's financial strength
with the appropriate managers
...
Visit the headquarters of the licensor-seller
...
He should visit the original prototype of the business being sold and evaluate other outlets
...
BUSINESS OPPORTUNITIES
29
9
...
Where the entrepreneur is buying a license, he should make sure his lawyer is present
...
At the very least, the lawyer
should go over the contract to purchase the business opportunity and advise the entrepreneur as
to whether or not he should sign it in its present condition
...
10
...
The entrepreneur should find out what the company's profit ratio to sales is
...
In other words
he should consider whether he can make more in another type of business
...
11
...
1
...
A well thought out business opportunity, be it the entrepreneur's own brilliant idea, a franchise
or a license to operate under a parent company's name will prove less costly as the foundation
will have been laid and room for backing out will be available before the entrepreneur commits
himself entirely
...
2
...
This follows a thoroughly executed research into the requirements of
running the business, risks involved, personal strengths and weaknesses that the entrepreneur
may have to deal with
3
...
The entrepreneur will be marketing himself following preliminary
studies into the customer pattern; their likes and dislikes regarding the product
...
High level of competence
In any new business, a lot of time and money are consumed during the learning period
...
STUD Y
2
...
2 Benefits of a well structured Business Opportunity
T E X T
If the entrepreneur is taking on a franchise, he should find out whether the parent company is a
new firm with little expertise and experience or whether it is an older firm whose regular products
have satisfied customers for years
...
Better financing options
...
The entrepreneur will have
prepared a business plan which he will use to secure funds from investors
...
6
...
Most small businesspeople don't spend sufficient money on advertising
...
A proper way of promoting the products of a
business is through advertising carried out extensively following a market analysis into the trends
and consumer patterns
...
Purchasing power
...
STUD Y
T E X T
2
...
3 Consequences of a poorly structured Business Opportunity
There will be consequences where the entrepreneur does not take his time in selecting a good
business opportunity
...
Some of the effects of not having a well
structured plan include;
1
...
He
is the inventor who can make the business opportunity take off into a strong business
2
...
Lack of financial support
...
The
entrepreneur will convince banks and other lenders of funds to support his business if he has a well
prepared business plan
...
4
...
The entrepreneur may be restricted to selling only the manufacturer's merchandise
...
If he does buy from other sources, it will be very hard to hide
...
Any irregularities will be spotted at these times
...
BUSINESS OPPORTUNITIES
31
5
...
Another pitfall is the possibility of the parent company overextending itself and going bankrupt
...
The entrepreneur should carefully investigate any business opportunity he is considering
...
He should have a lawyer
look over any agreement drafted by the parent company and make sure he receives a disclosure
statement
...
He should not be hurried to sign the
deal
...
2
...
This information helps
the entrepreneur understand his environment better
...
The networks can be a source of sustainable competitive
advantage as well as a means of procuring other resources that can be a source of competitive
advantage
...
The aim is to exchange
business ideas, information and support
...
3
...
The
reasons are varied and each entrepreneur needs to find a partner who shares his vision, one
who will compliment his business needs and objectives
...
Networking is one way through which this can be achieved
...
Networks can be divided into two main categories, informal and formal networks;
T E X T
Fast forward: Entrepreneurs of like minds need forums where they can share common interests
and open room for business associations
32
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Internal Motivations
A cost cutting strategy may be reason enough to venture into networking whereby the production
process avoids wasteful duplication of resources, utilizes by-products and processes, and may
even allow the partners to share brands and distribution channels
...
These relationships can help
a firm emulate innovative managerial practices, superior management systems and improved
communication patterns
...
For instance a set of firms is more likely to be
able to influence the structure of the industry’s evolution than a single firm
...
This will ensure customer loyalty as the venture
expands its capacity to serve
...
Economies of scale play a major role in getting better deals
...
It could also be a room for a venture to set a toehold in a market that is not completely ready for
the product or service in the offing, a product or service that needs long term credibility
...
The firms come together to promote
their own values and social agendas
...
The network is a loose collection of entrepreneurs, social activists, corporate executives and
philanthropists
...
BUSINESS OPPORTUNITIES
33
2
...
2 Types of Networks
Personal Networks
These are formal firm to firm relationships
...
Each of these parties has a role to play in the open system under which the entrepreneur
runs his operations
...
These networks contain more diversity that personal networks and
consequently, more information
...
There is also more uncertainty and less
predictability in these relationships
...
This forms many indirect associations but
in the end only acts to make the extended network even larger
...
Examples of
relationships that exist in this category are the cartels of firms that combine resources to benefit
from economies of scales, such as bookshops importing books in bulk from abroad
...
It serves as an information network that enables the firms
to secure information about capabilities and competencies that are regarded as necessary but
not sufficient for success
...
It is regulated by by-laws that control the activities
...
They are loosely
coupled, voluntary and have a low task structure
...
Examples of this kind of network are firms that belong
to an association that protects their interests, e
...
publishers belonging to the Kenya Publishers
Association
STUD Y
Extended Networks
T E X T
This is an informal network that consists of all the direct face to face contacts that the entrepreneur
has
...
In this kind of network, the entrepreneur can easily develop trust with the other parties since
these are people who can vouch for him as a result of knowing him very well
...
Trust can replace any contract that may need to
be signed and save the need to incur unnecessary costs
...
Their consistent behavior enables
the entrepreneur to have a mental map of the personal network – to know who will be where
and when
...
Personal networks have strong ties
...
Strong ties
are especially important in the early stages of business formation particularly in financing and
securing the initial resources for new venture creations
...
34
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Organic Networks
STUD Y
T E X T
This is an indirect relationship between non – competing organizations
...
These relationships are not task-oriented and may consist of strong ties linkages such as friends
and close associates or weak ties links
...
Examples include distributor, rack jobber, joint venture
...
Among the things he should bear in mind include, ensuring there is a
proper legal structure in place, he has sufficient funds to start up, he needs to know his
competition very well
...
He should understand
the advantages and disadvantages of both options
...
Networks can either be formal or informal
...
CHAPTER QUIZ
1
...
List 5 examples of business opportunities
3
...
List 4 advantages and 3 disadvantages of a business opportunity as opposed to a
franchise
5
...
STUD Y
••
T E X T
Business opportunities offer entrepreneurs a chance to showcase their skills and what new ideas
they are bringing on board to an already existing industry
...
e
...
This can either be a formal or informal arrangement
2
...
Rack – Jobbing
•
•
•
He should ensure he has proper legal representation
...
Contact competitors
Check the credit of the seller
3
...
Advantages
• Requires a lower initial fee than a franchise
...
• Intensive training programs
...
• Purchasing power
...
• Lack of ongoing support
...
5
...
Formal Networks
These are more organized forms of associations where the entrepreneur goes into a
joint venture with other entrepreneur for mutual business benefit
...
(10 Marks)
Question Three
(a) What is networking and how is it important in today’s economy?
(b) What are the motivations to networking?
(c) Identify the various types of networking
(4 Marks)
(8 Marks)
(8 Marks)
STUD Y
(a) Identify 6 guidelines the entrepreneur can use in choosing a business opportunity
(12 Marks)
(b) What would drive an entrepreneur towards using his own idea to establish his business as
opposed to buying a business opportunity or a franchise?
(8 Marks)
T E X T
Question Two
STUD Y
T E X T
38
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
ENTERPRISE DEVELOPMENT AND AWARENESS
39
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
CHAPTER ONE
THREE
ENTERPRISE DEVELOPMENT
AND AWARENESS
STUD Y
T E X T
40
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
ENTERPRISE DEVELOPMENT AND AWARENESS
41
CHAPTER THREE
ENTERPRISE DEVELOPMENT AND
AWARENESS
OBJECTIVES
By the end of this chapter, a student is expected to;
••
••
••
••
••
Know what an enterprise is
...
The early stages of any business are very
important
...
Many factors
can be attributed to the success or failure of the business at this stage
...
There are advantages
and disadvantages of various forms of business enterprises as we shall see
...
Finally, the various motivational theories as put forward by the renowned
schools of thoughts will be discussed at length
...
This will have a bearing on how his business launches itself in an already
established environment
...
3
...
Their establishment and
growth is therefore important as they enter the industry
...
1
...
A successful enterprise requires a lot of effort and boldness at the initial set up
...
1
...
They are programs that are dedicated
to unlocking the enormous potential of enterprises to create decent, long-lasting jobs
...
A good development
program in any economy seeks to enhance the positive interaction that exists between the
improved competencies of managers, basic workers' rights and productivity
...
An
increase in their number can provide decent employment to the many people around the world
now toiling under poor working conditions and trapped in poverty
...
Young people after graduating from universities and colleges need an avenue to demonstrate
their knowledge and skills in a productive manner
...
The government should play a role in ensuring a stable political,
social and economic environment that will ensure the smooth start of the enterprises
...
This acts to ensure that resources
are optimally utilized
...
Small enterprises tend to be more effective in the utilization of local resources using simple and
affordable technology
...
In addition, development of small enterprises facilitates distribution of economic
activities within the economy and thus fosters equitable income distribution
...
Also, small enterprises are
better positioned to satisfy limited demands brought about by small and localized markets due
to their lower overheads and fixed costs
...
Fast forward: The entrepreneur should learn the growth cycle of the industry and use this as a
basis to regulate the growth of his own business
A business’s success is also often governed by the success of the industry in which the
entrepreneur has decided that the business will settle
...
As the entrepreneur plans for the future of the business, he needs to bear in mind that certain
things may be beyond his control while others he may be in a position to control
...
Industries are born, just like people
...
The power of growth
of an industry is very important to an entrepreneur since it has a lot of impact on the success
of the business
...
For instance, the entrepreneur has no control over the
country’s currency and so if its value falls, this may have negative impact on the tourism sector
...
Research shows that most firms do well in industries that are just starting
...
2 Business Life cycles and How to Manage
Growth
T E X T
Through business networks, partnerships and subcontracting relationships, small enterprises
have great potential to complement large industries requirements
...
Barriers that exist
in established industries are fewer in an emerging industry and the firm is thus able to set its own
bench marks as it tries to do what few have tried to do before
...
High level of innovation
Because he wants to create a name for the business, the entrepreneur with a clear vision for
his business is in a good position to try and invest more on research and development as he is
convinced that what he is doing will yield good returns
...
STUD Y
T E X T
3
...
1 The phases in the growth of a firm
If not well managed, the growth of a business can have serious repercussions
...
Every entrepreneur wants to see his business grow
...
The growth rate will also give an impression of how the firm’s product or service
is meeting customers’ demands
...
The growth of a firm is likely to take
the following stages in its life;
Pre – Start Phase
This is the preliminary stage for the business
...
He will carry out due diligence to
ensure he has taken all important factors into account before setting off the business
...
He may for instance require the
services of a legal representative to acquire land
...
If he will hire personnel to assist in running the business, he
should ensure that he has sufficient funds to pay them for at least 6 months
...
Start - up Stage
At this stage, the entrepreneur has already set the business up
...
The entrepreneur
realizes that he may need to make adjustments in order to survive
...
t
...
It is at this stage that he will realize there is need to gain a
competitive edge in order to make more sales
...
The signs that these requirements are necessary will be felt by the growing need
to meet the increasing and dynamic needs of the customers
...
2
...
This entails doing a
research into the economic variables that are likely to play a major role in the future of the firm
...
A strategy follows the research and ground work and is based on the idea that has been
determined to be the driver of the business venture
...
The entrepreneur will need to see whether there have been other
products and services that have been or are still there in the industry
Identify a specific customer need that has been ignored
Even where similar products or services have existed in the industry, the entrepreneur may
identify a specific need that has not been fully met
...
The entrepreneur thus needs
to ensure that the business opportunity he has before him has a road map charted in advance
and based on due diligence
...
The entrepreneur needs to be aware of the possible outcomes
...
At
this stage, the entrepreneur is more concerned about corporate governance issues and how this
impacts on customer needs
...
t
...
The entrepreneur will have his
sights on a higher level of competition with other firms that belong to a higher circle, hence he
see the need of turning the business into a public limited company in order to compete as such
levels
46
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Consider the added value to the customer
The entrepreneur will also need to assess whether the customer will experience an added value
by using the new product
...
Assess the company image enhancement as a result of the new product
The entrepreneur will also be looking at the interest of the firm
...
The business strategy can be looked at in the following
ways;
Market Penetration
Here, the entrepreneur is asking himself, ‘How can I take up a bigger share of the market?’ He
will have to think of ways through which he can establish his presence and exert himself through
his product or service
...
This in itself is a strategy and the entrepreneur will need to devise ways of achieving this
...
t
...
This will be realized through increased revenues
and a larger client base
...
The success or failure
of this move will depend on how much due diligence the entrepreneur will have done
...
Product/ Service diversification
This strategy will mitigate against the risk of losing market share when the product reaches the
final stage of its life cycle
...
Through product diversification, the entrepreneur
will ensure that even though the product is squeezed out of the market as a result of fierce
competition, others will still come up to replace it in terms of market share
...
He should
choose a product or a service that can be used instead of the mainstream product or service
...
3 Limitations of Enterprise Development
Fast forward: There are inherent limitations in setting up a small business which the entrepreneur
should be well aware of
...
This would mean that the small firms are not protected in the harsh markets
and the law does not complement their activities
...
The high cost of compliance to regulations may discourage
potential entrepreneurs from formally setting up their businesses, while driving some existing
enterprises out of business and those working for them into unemployment
Poor business development services
Lack of training may be a setback in the industry for the small businesses
...
The entrepreneurs lacking in skills need to be imparted with knowledge that
will set them at par with the other accomplished businesses, giving them a chance to provide
healthy competition
Poor entrepreneurial Culture
It has become a trend for most school leavers to look for employment
...
Most of these
young people find it a big struggle that is laden with disappointments
...
Those
that manage get the support of strategic investors and managers who mobilize resources on their
behalf
...
STUD Y
This could be a drawback in the sense that the entrepreneur may not have access to facilities
that will enable him pursue the objectives of his business on a larger scale
...
At the same time some
of these institutions may require the businesses to pay high interest rates for loans acquired
T E X T
Undeveloped infrastructure
48
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
3
...
The Government has a huge role to play in creating a conducive environment for the growth and
development of enterprises
...
On this note, it is imperative that supportive institutions
and structures are set up for this
...
STUD Y
T E X T
Policy Formulation
The Government through an Act of Parliament stands in a very strategic position in directing
the growth of small businesses
...
This should be done
while putting the interest of the small business owners first
...
Supporting N
...
Os
In recent years, the country has witnessed the mushrooming of Non- Government Organizations
that are doing a commendable job in promoting entrepreneurial initiatives
...
However, most of the institutions supporting small businesses are rather weak,
fragmented, concentrated in urban areas and uncoordinated
...
This is where the government comes
in with its wealth of influence
...
He needs all the support
he can get from other entrepreneurs and strategic investors looking for franchises
...
This is clearly
demonstrated by the chain of supply of goods and services between firms in an industry and
even between industries
...
Entrepreneurs also benefit through access to information on financial assistance, materials and
suppliers, pricing, training, workshops sub-contracting opportunities and potential joint venture
...
Unfortunately this is not the case
and any change doesn’t seem forthcoming
...
The government can ally fears of political interference in small enterprise
development by setting aside an organ that will strictly concern itself with these matters, while
ensuring little or no political interference in small enterprise development
Economic Stability
The government can regulate the economic down turns in the country through the fiscal policies
that are enacted and revised from time to time
...
T E X T
3
...
1 Starting a business
STUD Y
3
...
Ignorance of the law can be very detrimental to the survival of the firm
and could prove costly in the end
...
If he neglects these legal steps, he will find that maintaining the business
down the road becomes much more difficult, and in some cases, impossible
...
The emphasis on this section is to bring out the salient legal aspects that
affect the running of a business and what the entrepreneur needs to know
...
Laws that can affect the business
By looking at the legal documents which are usually available for all to see, the entrepreneur
will be in a position to assess the effect of each law that is relevant to his kind of business
venture
...
The entrepreneur should assess how the Government will tax him and his business under the
various forms of business ownership
...
It may work in his favor in subsequent
periods
...
Laws concerning capitalization
The firm cannot survive as a business without proper capitalization, and this will include both
matters of equity and debt
...
Before
the entrepreneur even thinks about starting the business, he’ll need to have a good relationship
with his bank or an established financial institution
...
3
...
It is extremely important, and often neglected when starting a business, but this
can actually make or break the entrepreneur during those crucial first years when the business is
trying to be established and grow
...
The kind of legal entity will also determine the tax
strategy that the government applies to the business
...
STUD Y
T E X T
4
...
For a contract to be valid, an offer must be made and accepted
...
The best way the entrepreneur can avoid a dispute or potential litigation, however,
is to prepare a solid agreement in which he is confident he has negotiated the best terms for his
business
...
5
...
These include;
Owner's Capital
This is often the only source of capital available for the sole trader starting in business
...
This type of capital though, when invested is often quickly turned into
long term, fixed assets, which cannot be readily converted into cash
...
For many
small businesses the owner may already have all his or her capital invested, or may not be
willing to risk further investment, so this may not be the most likely source of funding for cash
flow problems
...
This is the most basic
source of funds for any company and hopefully the method that brings in the most money
...
This can be done privately through bank loans,
or it can be done publicly through a debt issue
...
Issue of Shares
A company can generate money by selling part of itself in the form of shares to investors, which
is known as equity funding
...
The drawback is that further profits are divided among all the shareholders
Bank Loan
This is lending by a bank to a business
...
g
...
10,000 for a fixed period
of time, e
...
3 years
...
Again the bank will only lend if the
business is credit worthy, and it may require security
...
g
...
If the loan is not repaid, then the bank can take possession of the asset and sell the
asset to get its money back
...
But if a loan is obtained, then this frees up
other capital held by the business, which can then be used for other purposes
...
Think, of, someone setting up business as a Parcel Delivery Service, he could
lease the van he needs from a leasing company
...
50,000, which is very useful if he does not wish to spend Ksh
...
This
will free up capital, which can now be used for other purposes
...
In the example
above, if the van had been purchased, the flow of cash out of the business would have been Ksh
800,000, but by leasing the flow out of the business over the first year would be Ksh 600,000,
leaving a possible Ksh 200,000 for other assets and investment in the business
...
A business becomes overdrawn when it withdraws more
money out of its account than there is in it
...
This
is often a cheap way of borrowing money as once an overdraft has been agreed with the bank
the business can use as much as it needs at any time, up to the agreed overdraft limit
...
e
...
A bank
can demand the repayment of an overdraft at any time
...
Even so for short term
borrowing, an overdraft is often the ideal solution, and many businesses often have a rolling (on
going) overdraft agreement with the bank
...
g
...
T E X T
Overdraft
52
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
In an ideal world, a company would bring in all of its cash simply by selling goods and
services for a profit
...
For this reason, a time will eventually come
when the company will need to acquire funds from any of the above mentioned
...
For example, too much debt can get a company into trouble
...
3
...
3 Legal forms of ownership
If a person is considering starting a small business, he may be trying to sort out the different
types of businesses and wondering which type is best for him/ her
...
The various forms of business ownership are sole proprietorship, partnership and
corporation
...
It needs no charter, has few costs, and that person
gets to keep all the money to his/her self
...
A sole proprietor is fully
responsible for all debts and obligations related to his or her business
...
This is known as unlimited liability
...
It is an agreement in which two or more persons combine their resources in a business with a view
to making a profit
...
Partners share in the profits according to the terms of
the agreement
...
This is done in writing and signed off as agreed by all the partners and therefore it
becomes a partnership deed or agreement
...
Salaries to be paid to any partners who will be involved in the active management of
the business
ENTERPRISE DEVELOPMENT AND AWARENESS
••
••
••
53
Any interest to be charged on drawings made by the partners
...
Procedures to be taken on the retirement or admission of a partner
Types of Partnership
General Partnership
All members share the management of the business and each is personally liable for all the
debts and obligations of the business
...
Limited Partnership
Some members are general partners who control and manage the business and may be entitled
to a greater share of the profits, while other partners are limited and contribute only capital,
take no part in control or management and are liable for debts to a specified extent only
...
Membership
A partnership has minimum membership of two (2) and a maximum of fifty (50) except for
professional firms (e
...
) lawyers, doctors, accountants etc
...
Corporation
A corporation is a legal entity that is separate from its owners, the shareholders
...
Directors,
officers and insiders can bear some liability for their involvement with the corporation
...
", "Incorporated", "Inc
...
Whatever the term, it must appear with the corporate name on all documents, stationery,
and so on, as it appears on the incorporation document
...
This attribute of legal personality
has received considerable judicial exposition in relation to registered companies and the overall
practical effects of the decided cases may be summarized as follows:
STUD Y
1
...
2
...
3
...
T E X T
Reasons for partnership
54
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
(i) Limited Liability
The debts of the corporation are its own and a member of manager of the corporation cannot
be sued on order to recover the debts
...
(ii) Perpetual Succession
The death of a member or members of the corporation does not result in the death of the
corporation
...
The corporation 'dies' only when its legal life is brought to an end by a legal
process known as liquidation
...
Consequently, a member cannot insure the property since he
does not have insurable interest therein
...
The law regards a corporation and its member as
separate persons for this purpose
...
A corporation may be brought into existence by
(a) Registration
(b) Statute
(c) Charter
Types of Corporations
There are four types of corporation which are recognized by the Kenya Law
...
If the person
ceases to occupy the office, he is succeeded by another person who will then discharge the
duties and exercise the powers of the office
...
Example are owning of property and limited liability
...
27(1) states that 'the Public Trustee shall be a corporation
ENTERPRISE DEVELOPMENT AND AWARENESS
55
sole by the name of Public Trustee'
...
Section 2(1) of the Permanent Secretary to the Treasury (Incorporation) Act states that
"the officer for the time being discharging the duties of the Permanent Secretary to the
Treasury of Kenya and his successors in office shall be a body corporate"
...
(b) Corporation Aggregate
This is a legal entity formed by at least two people and whose membership at any one time
legally consists of at least two people
...
490)
...
The company acquires legal personality from the date of its registration by the
registrar of
companies
...
16 (2) provides that “from the date
of incorporation
...
shall be a body corporate by the name contained in the
memorandum"
...
28 of the Co-operative Societies Act provides that "a society, on registration,
shall be a body corporate"
...
Section 3(3) of the Act states that "the corporation shall be a body corporate with perpetual
succession and a common seal"
...
Section
12 of the Act empowers the President of Kenya to grant a charter to any private university intended
to be set up in Kenya if, in his opinion, the grant of the charter to the Institution concerned may
be of benefit to the future development of university education in Kenya
...
Sole Proprietorship
Advantages
•• Ease of formation
•• Low start-up costs
•• Less administrative paperwork than some
other organizational structures (such as
incorporation)
•• Owner in direct control of decision making
•• Minimal working capital required
•• Tax advantages to owner
•• All profits to owner
Disadvantages
•• Unlimited liability
•• Difficulty raising capital
•• Lack of continuity in business
organization in the absence of the
owner
STUD Y
This is created by an Act of Parliament and comes into existence from the date of commencement
of the Act
...
T E X T
(c) Statutory Corporation
56
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
2
...
Corporation
Advantages
•• Limited liability
•• Specialized management
•• Ownership is transferable
•• Continuous existence
••
••
T E X T
3
...
4 Other Legal Aspects of forming a business
STUD Y
••
Separate legal entity
possible tax advantage (if you qualify for small
business tax rate)
easier to raise capital
Disadvantages
•• closely regulated
•• most expensive form to organize
•• charter restrictions
•• extensive
record
keeping
necessary
•• double taxation of dividends
Licenses, labor laws, Workman Compensation Act, Factory Act, health and safety
rules
For any business to operate in the country, the owner has to seek a license to operate the
business from the local authorities
...
The labor laws enacted by Acts of Parliament include among others; the Workman's Compensation,
and the Factory Act
...
The
entrepreneur should familiarize himself with these rules since he will have people working under
him, whose welfare he will have to protect
...
This should be placed in a public place in the workstations
...
ENTERPRISE DEVELOPMENT AND AWARENESS
57
Business contracts and tendering procedures
A business contract is a legally binding agreement between two parties for an exchange of goods
or services that are of value
...
By using a contract in business dealings the entrepreneur will ensure that all terms of trade
are adhered to
...
The entrepreneur
should be careful when signing contracts insofar as a broken contract could result in a lawsuit
or out-of-court settlement and the payment of damages caused by the breach
...
The tendering Process
Step 1: Identifying the need for the service
The need for the service will be triggered by one of the employees of the firm or by the entrepreneur
himself
...
Step 2: Short listing of possible service providers
Based on the need, the purchasing office or the entrepreneur will identify the possible third party
firms that can provide these services and get their quotations
Step 3: Selection
Based on pricing and other considerations such as efficiency of service, terms of payment,
quality of products e
...
c, the entrepreneur will select the quote from successful supplier and
communicate to him that he has been selected to supply the services or good
...
STUD Y
The process of tendering for these services will normally be given to the purchasing officer of the
company
...
The procedure to be used in tendering for services
includes;
T E X T
The tendering process refers to the procedure followed in procuring services from parties external
to the business in a transparent manner
...
These will be non – core activities such as security, transport, provision of stationery,
catering e
...
c
...
5
...
This can take any of the
following forms
...
These are explained briefly as follows;
Merger
In a merger, two companies cease to exist as separate entities and register a single entity where
both share a common stake
...
A new legal name will be identified that
takes into account the identity of the previous entities
...
STUD Y
Acquisition
Take over
In a takeover, the entrepreneur of a business will relinquish ownership of his firm to another,
usually larger company in exchange for a financial consideration
...
In this case, the entrepreneur is the
franchisee who operates under the franchiser's name
...
6 Motivational Theories of
Entrepreneurship
Fast forward: There are many reasons why an entrepreneur would think of starting his own
business
...
There are various theories that have been put forward by various scholars regarding
entrepreneurship development
...
ENTERPRISE DEVELOPMENT AND AWARENESS
59
The emergence of entrepreneurship has brought with it immense insights that we need to
appreciate
...
3
...
1 The Macro view Entrepreneurial Thought:
This point of view presents a number of schools of thought which suggest that a range of external
factors are the forces behind the entrepreneurial process
...
Environmental School of thought
2
...
Financial/Capital School of Thought- Capital
This school presents the view that the desire to become an entrepreneur is based on the capital
seeking process; that the entrepreneurial process is about making decisions involving finances
at every major point in the venture process i
...
a) Startup or acquisition venture stage:
In the beginning, the entrepreneur’s main concern is deciding on the major sources of
funds to give him a head start on the venture
...
The success or failure of this decision making process will lead him further
to make a decision as to whether to proceed or abandon the project
...
The decision to be
made here is whether to increase, maintain or reduce size of the business
...
Following this analysis, he may then consider options such as corporate buyout,
dissolution or succession
...
STUD Y
The proponents of this school of thought argue that entrepreneurial desires are molded by external
factors (which may be positive or negative) that affect a potential entrepreneur’s lifestyle
...
Freedom and support in
the work environment can also foster a manager’s desire to pursue an entrepreneurial career
...
Environmental School of thought-Support
60
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
3
...
Factors that may force one from pursuing other ends in life
include:
i) Political factors; these may include riots, wars e
...
c and may force one to move from
station to another
...
g
...
6
...
The following schools of thought comprise
this view point
...
The Entrepreneurial Trait School of thought
2
...
The Strategic Formulation School of thought
1
...
Those behind this school of thought, therefore
...
The four traits usually exhibited by successful entrepreneurs include:
i) Creativity,
ii) Determination,
iii) Achievement,
iv) Technical knowledge
...
The Venture Opportunity School of thought
This school of thought suggests that the ability to become an entrepreneur lies in being able to
search for idea sources, develop concepts, and implement venture opportunities
...
Opportunity
identification is thus the key force behind becoming an entrepreneur
3
...
The argument is that through strategic planning and formulation
an individual is able to develop an effective venture
...
7 Incentive for aspiring Entrepreneurs
Entrepreneurs would really do with a bit of encouragement for them to succeed in their businesses
...
The incentives
could come in a form that enables them to carry on their businesses with little interference
...
The incentives can come in any of the following ways
...
Competition may be there but with few barriers that could’ve been set up by the already existing
businesses, it becomes possible for the small firms to compete in a fair environment
...
This will act as an incentive for the new
entrants and will create a conducive environment for healthy competition
Linkages
The Government through the Ministry of Finance can set up forums where investors can meet
with the upcoming entrepreneurs and discuss business prospects where both parties can benefit
from each other
...
Low interest rates on loans
The Government could set up loan schemes through micro finance institutions where entrepreneurs
with a good business prospects can get boosts for their growing ventures in the form of low interest
loans
...
This will mean that they will not collect output tax on their products but the incentive
in itself will mean less administrative work
62
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
CHAPTER SUMMARY
The success or failure of a budding business depends a lot on the maturity or otherwise of
the industry in which it operates
...
Once on the inclined plane, the entrepreneur needs to know how to manage the growth of the
business
...
••
••
STUD Y
T E X T
••
••
••
There are limitations that are inherent on the growth of enterprises
...
g
...
The Government has a vital role to play in the growth of small enterprises
...
There are important factors that any businessman should bear in mind when starting
a business ranging from the legal form the business should take to ensuring there is
sufficient funds to support operations
...
Motivational theories explain why entrepreneurs decide to run their own independent
businesses
...
Entrepreneurial pursuit can be encouraged by the existence of incentives which could
be financial or non-financial
...
Define the term “enterprise”
2
...
List and briefly explain the various phases in the growth of a business
4
...
Give 4 ways through which the Government can promote enterprise development?
6
...
Briefly explain two schools of thoughts that try to explain the theory behind entrepreneurs
...
How best can entrepreneurs be encouraged to pursue venture opportunities?
ENTERPRISE DEVELOPMENT AND AWARENESS
63
ANSWERS TO THE QUIZ
1
...
••
••
••
Ease of entry
Less competition
High level of innovation
Early Growth Phase
During this phase, the business will experience rapid growth as customer needs become the
main focus for the entrepreneur
...
Later growth phase
This is the phase that determines whether the business has managed to meet its long term
objectives and a period to assess how successful the short term objectives have been met
...
4
...
STUD Y
Start - up Stage
At this stage, the entrepreneur has already set the business up
...
The
entrepreneur realizes that he may need to make adjustments in order to survive
...
Pre – Start Phase
This is the preliminary stage for the business
...
He will carry out due
diligence to ensure he has taken all important factors into account before setting off the
business
...
••
••
••
7
...
Institutions and societal values grouped together form an
environmental framework that strongly influences the development of entrepreneurs
...
The Entrepreneurial Trait School of thought
By examining the characteristics of successful people, it has been found that they exhibit
similar characteristics
...
•• Few barriers to entry
...
•• Tax Incentives; This will mean higher net profits
...
•• Linkages; This will create a forum for exchanging valuable information
...
ENTERPRISE DEVELOPMENT AND AWARENESS
65
EXAM QUESTIONS
Question One
Clearly elaborate on what role the Government can play to resuscitate the declining state of
enterprise development in the economy
(20 Marks)
Question Two
a)What do you understand by the term ‘Motivational theories of entrepreneurship?
(5 Marks)
b) Proponents of various schools of thought on the motivational theory of entrepreneurship have
come up with various arguments to explain why an entrepreneur would go into business
...
(15 Marks)
MINI CASE STUDY
The following case illustrates how a university community took advantage of the resources
available to set up a small enterprise
...
Read it carefully and discuss the questions that follow;
Kenyatta University
The School of Agriculture and Enterprise Development at Kenyatta University came into
existence in 2007
...
The current activities include getting its programmes approved in readiness
for the first batch of students expected in August and September 2008
...
STUD Y
Question Three
T E X T
John Kamau has won Kshs
...
He has decided to open a hotel
at the city center selling fast foods
...
T E X T
67
STUD Y
ENTERPRISE DEVELOPMENT AND AWARENESS
STUD Y
T E X T
68
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
BUSINESS PLAN DEVELOPMENT
69
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
CHAPTER ONE
FOUR
BUSINESS PLAN
DEVELOPMENT
STUD Y
T E X T
70
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
BUSINESS PLAN DEVELOPMENT
71
CHAPTER FOUR
BUSINESS PLAN DEVELOPMENT
OBJECTIVES
By the end of this chapter, you are expected to;
••
••
••
••
Know what a business plan is
...
Acquire the relevant skills on how to prepare a good business plan
...
It is a document that outlines all the steps that the
business intends to follow to achieve the objectives or goals that have been set
...
For these applications to be convincing,
the entrepreneur should be able to convince the institution that his venture is viable
...
A well prepared business
plan is what sells the business not only to interested stake holders outside the business, but also
to internal stakeholders including the entrepreneur himself
...
The entrepreneur should
convince himself that he is in the right business
...
The level
of importance given to business plan preparation is more important than the attention given to
the actual operations of the business
...
1 Definition of a business plan
A business plan is a detailed account of the conversion of the entrepreneur’s ideas and vision
into a real, functioning business
...
It’s a written document that describes all the
steps that the entrepreneur plans to carry out in opening and operating a successful business
...
It is also in the business plan that the entrepreneur identifies who he will
be working with
...
Once all this has been written, the entrepreneur
will also need to come up with a convincing financial plan, that is, a budget of how the business
intends to use the funds and most importantly how the investment will yield returns
STUD Y
T E X T
4
...
To be successful, every business will need to have a business plan
...
This will enable him share
his ideas with the people who will have an influence in his business
...
He has to own it and not delegate the process to some
one else
...
It doesn't matter if he is using the business plan to seek financial
resources or to evaluate future growth, define a mission, or provide guidance for running the
business; he is the one who knows the most about the business
...
Only he can come up with the financial data, the purpose of his business,
the key employees, and management styles to mention a few items
...
If he needs further help in
one area, then he may seek the assistance of the consultant
...
The importance
of planning should never be overlooked
...
He must also have the foresight to plan for future expansion
...
Taking time
to create an extensive business plan provides him with insight into his business
...
BUSINESS PLAN DEVELOPMENT
73
A business plan is very specific to each particular business
...
To complete an effective
business plan the entrepreneur must dedicate time to complete the plan
...
The finished project is an operating tool to help manage his
business and enable him to achieve greater success
...
A well-prepared
business plan will demonstrate that the entrepreneur knows the business and that he has thought
through its development in terms of products, management, finances, and most importantly,
markets and competition
...
The significance of having a business plan can be summarized as follows:
Financing from financial institutions
An entrepreneur will need to secure funds for his business
...
This has become
the main reasons why most business prepare business plan
...
Without a business plan, an
entrepreneur will find it very hard to acquire business loans
...
He lays out in writing what his vision for the business is
...
They need to be achievable as unachievable targets may make the
business plan lose credibility
...
If not, then he will have sufficient basis to manage the growth of the
business to direct it towards the right direction
STUD Y
A business plan helps the entrepreneur appreciate the business needs of his venture beforehand
...
The
business plan will help in strategy and policy formulation
...
This is important because he
will need to convince many people that the venture will in fact work
...
The plan could be short term or long term
...
T E X T
Better understanding of the business
74
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
A tool for planning and guidance
A business plan in itself is a planning tool
...
The entrepreneur has set out what he needs to
achieve within a give time frame so he will set out all these in the business plan
...
A business
plan will act as a learning tool for them
...
The business plan thus also acts as a source of guidance where
the way forwards seems unclear
...
By taking
an objective look at the business the entrepreneur can identify areas of weakness and strength
...
The business plan is only useful if used well
...
Failure is often attributed to a lack of planning
...
A comprehensive, well constructed business plan can prevent a business from
a downward spiral as failure to plan can mean plan to fail
STUD Y
T E X T
Highlight risks involved
The risks involved in the business are perhaps something that the entrepreneur may not want to
dwell upon too much
...
These could be financial,
operational or control risks
...
Once an informed reader looks at the plan with all these
risks highlighted, he may find it a more realistic proposal and be willing to invest
...
It defines the purpose, the
competition, management and personnel
...
The roles and responsibilities of the operational and management staff
will also be clearly defined
...
Reference Tool
A well prepared business plan offers a benchmark against which actual performance can be
measured and reviewed
...
The plan provides an ideal setup
...
At all times the entrepreneur should keep his business at par with his targets as well as with
what the competitors are aiming at and even further
...
This enhances
the planning process and improves the business plan
...
This may be done even once the
business is up and running
...
3 Components of a business plan
Fast forward: A business plan will reflect the vision of the business
...
There is no standard approach in preparing a business plan
...
All the variations however have the
same basic elements
...
A brief description of the business background and purpose
2
...
Products and services that will be offered
4
...
Executive Summary
2
...
An
idea must have been triggered by the need to fill a gap that he had identified
...
This will also give a first impression to the investors or lenders who can then either give it thumbs
up or tread cautiously
...
This is what
will give the investors a clearer understanding of the overall picture of the proposed business
...
If this section flops, then no matter how well
written the other sections of the plan are, chances are high the reader will not be motivated to
read ahead
...
Most of the times, a business plan will be used to raise start up capital
...
The objective has to be very clear to whoever
is intended to be the final reader
...
Business plans are used to attract capital
...
Banks and other lenders or investors may require a copy of each year’s annual plan
...
The most important thing for the entrepreneur to bear in mind is keeping the primary objective of
and the primary audience for the plan clear
...
If the
plan will help manage the business, this is the primary objective and insiders are the primary
audience
...
However, it is important to explain this section in layman's
terms to avoid confusion
...
It is important to discuss the competitive advantage the product or service has over the competition
...
Any barriers that that the entrepreneur has faced in bringing the product to market, such as
government regulations, competing products, high product development costs, the need for
manufacturing materials, etc
...
If he finds a competitor is struggling,
he needs to know why, so he doesn’t make the same mistake
...
He will also want to assess the need for another competitor
offering the same product or service in the market
...
In this section he will need to do
an in-depth analysis of the competitive advantages and weaknesses of his firm
...
This section is important, especially if the company is a start-up, because the entrepreneur
will, typically, be competing with established companies that have inherent advantages such
as financial strength, name recognition, and established distribution channels
...
The Market
Investors look for management teams with a thorough knowledge of their target market
...
If he
has existing customers, he should provide an analysis of who his customers are, their purchasing
habits, their buying cycle
...
If a business has no customers, there is no
business
...
Include supporting documentation
...
STUD Y
1
...
Where are they located? What are their revenues?
How long have they been in business?
2
...
3
...
How do the entrepreneur’s operations differ from his competition? What do they do
well? Where is there room for improvement?
5
...
How is their business doing? Is it growing? Is it scaling back?
7
...
Are there certain areas of the business where the competition surpasses him? If so,
what are those areas and how do you plan on compensating?
Analyzing competitors should be an ongoing practice
...
T E X T
Specific areas to address in this section are:
78
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
••
••
••
••
••
A projection of the percentage of the market that will be captured
...
Potential investors will look at this
section carefully to make sure there is a viable method to reach the target market identified at a
price point that makes sense
...
If their strategy is working, he should consider adopting a similar plan
...
The most effective marketing
strategies typically integrate multiple mediums or promotional strategies to reach the market
...
If he has developed an advertising slogan or unique selling proposition he may mention it, but it
isn’t strictly necessary
...
The entrepreneur should explain how his choice of marketing vehicles will allow him to reach
his target market
...
He should be sure that his advertising, publicity, and promotional programs sound realistic,
based upon his proposed marketing budget
...
If he is on a limited budget, it is
better to reach fewer, more likely prospects, more often, than too many people occasionally
...
For example, if his start-up company is planning
on selling products to other businesses in a highly competitive marketplace, his market entry
will be easier if he relies on wholesalers or commissioned sales representatives who already
have an established presence and reputation in the marketplace
...
The following are some promotional media options to consider:
••
••
••
TV
Radio
BUSINESS PLAN DEVELOPMENT
79
•• Web
•• Direct mail
•• Trade shows
•• Public relations
•• Promotional materials
•• Telephone sales
•• One-on-one sales
•• Strategic alliances
...
Investors look
favorably upon creative strategies that will put the product or service in front of potential
customers
...
Will he use mail order, do
personal delivery, hire sales reps, contract with distributors or resellers, etc
...
His financials should reflect his roll out plan
...
Does he have
current relationships or does he need to establish new ones? Who will you choose and why?
Operations is a catch-all term used to describe any important aspects of the business not
described elsewhere
...
For retail businesses, discuss
store operations
...
In addition to discussing areas that are critical to operations, the entrepreneur should briefly
summarize how major business functions will be carried out, and how certain functions may run
more effectively than those of his competitors
...
Management and staffing
For most investors the experience and quality of the management team is the most important
aspect they evaluate when investing in a company
...
In
essence, the entrepreneur’s plan must communicate management's capabilities in obtaining the
objectives outlined in the plan
...
If his team lacks in a critical area, he should identify how he plans on compensating for the void
...
STUD Y
Once the entrepreneur has had an opportunity to really sell his idea and get the attention of
potential investors, the next question on his mind should be how he will implement the idea
...
T E X T
Production Plan / Operations
80
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
STUD Y
T E X T
When preparing this section of the business plan he should address the following five areas:
1
...
Business background of the principals
b
...
Educational background (formal and informal)
d
...
Personal
financial
statement
with
supporting
documentation
2
...
Direct operational and managerial experience in this type of business
b
...
Duties and responsibilities:
a
...
Organizational chart with chain of command and listing of duties
c
...
Salaries and benefits:
a
...
Listing of bonuses in realistic terms
c
...
)
5
...
Insurance broker(s)
b
...
Accountant
d
...
Small Business Association
f
...
Chambers of Commerce
h
...
Board of Directors
j
...
Banker
The success of a business can often be measured by its employees
...
The entrepreneur must
therefore, carefully consider the following questions in completing this section of the business
plan:
1
...
What skills must employees have? What will their job descriptions be?
3
...
Will they be paid salaries or hourly wages?
5
...
Will he pay overtime?
BUSINESS PLAN DEVELOPMENT
81
Financial Data
At the heart of any business operation is the accounting system
...
At times there is a
tendency for the entrepreneur to do it himself
...
Leave it to the trained professional to help in the area of accounting
and legal matters
...
The entrepreneur needs to secure additional resources before starting
...
The forecasts demonstrate the need for funds and the future value of equity
investment or debt repayments
...
To
obtain capital from lending institutions he must demonstrate the need for the funding and his
ability to repay the loan
...
This is a period in which realistic
goals can be established and attained without much speculation
...
Projections and forecasts are an integral part of the financial portfolio
...
Honesty is the best policy! Over-optimism and
over-inflation can lead to failure
...
It should cover the
following points:
1
...
The entrepreneur should start with a brief overview of his business
strategy
...
2
...
In the next paragraph or two, he should explain why his strategy makes
sense or why his product or service has promise
...
Income Statement/ Statement of Comprehensive Income - also called the profit and
loss statement is used to indicate how well the company is managing its cash, by
subtracting disbursements from receipts
...
Cash flow
is critical to the survival of any business
...
All businesses
should perform this analysis without exceptions
...
STUD Y
••
82
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
3
...
Next, he should describe the stage his business is in
...
Staffing
...
5
...
If his plan is being developed to raise capital, he should be clear
about the amount of capital he is seeking and how he plans to use investor or lender
funding
...
Business organization
...
STUD Y
T E X T
The entrepreneur should ensure to keep his summary short and easy to understand
...
He should not try to summarize all of the different major
elements of his plan
...
Supporting Documentation
The entrepreneur must include any documents that lend support to statements made in the
body of his company's business plan
...
Note that this list is not complete and may vary depending on the stage of development of his
business
...
Resumes
2
...
Quotes or Estimates
4
...
Letters of Support from credible people who know you
6
...
Legal Documents relevant to the business
8
...
This plan sets out in specific terms what he
envisions for the firm (the goals) and how he intends to achieve those goals
...
A lot of thought and preparation
should be put into ensuring that a well balanced business plan is prepared that is
realistic and can convince any stakeholder of the business of what the business is all
about
...
This is for external and internal users
• To obtain financing
• To act as a management tool
There is no specific structure that a business plan should adopt
...
2
...
4
...
6
...
What is contained in an executive summary?
STUD Y
••
T E X T
CHAPTER SUMMARY
84
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
ANSWERS TO THE QUIZ
1
...
It is a document that outlines all the steps
that the entrepreneur intends to follow to achieve the objectives or goals he has already
envisioned for his business
...
A good business plan articulates the entrepreneur’s vision for his business
...
With the business plan, the entrepreneur has a road
map of how he will convert the visions he has to a profitable business
...
3
...
The basic components of a business plan include;
• A brief description of the business background and purpose
• Objectives;
• Products and services
• Competition
• Market analysis and marketing strategy
• Operations
• Management and staffing
• Financial Plan
• Additional sections
• Executive Summary
• Supporting documentation
5
...
The onus is on the entrepreneur to chart out a way forward for his
product to reach the intended customer and clearly set this procedure out in the business
plan Potential investors will look at this section carefully to make sure there is a viable
method to reach the target market identified at a price point that makes sense
...
•
•
•
•
•
Personal history of the person(s) to be hired:
Work experience
Duties and responsibilities to be assigned
Salaries and benefits
Resources available to his business
BUSINESS PLAN DEVELOPMENT
85
7
...
(10 Marks)
SAMPLE BUSINESS PLAN (ADAPTED)
SECTION ONE: THE BUSINESS PROFILE
Description of My Business
I plan to market a complete line of bathroom accessories including soap dishes, toothbrush
holders, coat hooks, and towel bars
...
Targeted Market and Customers
My customers will be discount department store chains with good credit ratings and reputations
for prompt-payment
...
Growth Trends In This Business
This information will need to be targeted to your own intended product
...
This segment will provide you and your backers with information
as to whether the market for your product is growing or shrinking
...
Discount chains
will be primarily interested in price
...
BUSINESS PLAN DEVELOPMENT
87
My ultimate goal is to build a line so unique and promote it so effectively that consumers
will be willing to pay a premium
...
My unique features will include: ________
...
The business relationships I have developed include vendors, discount
chain buyers and manufacturing resources
...
(List and explain in detail how they will help you)
...
I am the right person to pursue
this opportunity because: __________
...
Work Experience Related To My intended Business
My work experience has been as follows:
1995 – 1998 Position__________ at ________Co
...
Describe your work
Responsibilities in detail: ___________________________________
I have included a list of work references and character references as Exhibit A
I have personal contacts in Hong Kong and Singapore who are ready to assist in the
design, production, and packaging of the WIDGET line
...
Personal Background and Education Credentials
EDUCATION CREDENTIALS:
My education includes: _________grade School, graduation from __________ high
school (class of ____)
...
STUD Y
The People
T E X T
They are: ___________
...
) I have also taken the following courses and
seminars: My Own Business Internet Course, ____________, and ______________
...
I belong to the following professional and service organizations: National Association of
Importers, Rotary Club, etc
...
Following
are the tentative specifications and budget for this equipment
...
Enter a budget for all communications equipment
...
Enter a budget for all telephone equipment
...
Enter a budget for all computer equipment
...
Enter a budget for Internet access
...
It is my intention to grow Widget into a
large firm with international relationships
...
Also, since a properly run corporation
will afford me some limits of liability, I feel this is the right form of business for me
...
BUSINESS PLAN DEVELOPMENT
89
Professional Consultants
I feel it is important that my team of professional advisors be in place before I start in
business
...
My insurance policies
and limits of coverage are as follows:
Mr
...
SECTION FIVE: PREMISES
Location Criteria
During my start-up phase of approximately 6-12 months, I plan to operate out of my home office
...
My office criteria will include:
1
...
2
...
3
...
4
...
See Exhibit
"C"
...
Lawyer review of the lease
...
Use of the Lease Check-off list that is attached as an exhibit
...
City Hall: This could include the business license department, planning department,
building department, health department, etc
...
Norman Numbers, my accountant will give me advice on federal, state and local
reporting and licensing requirements
...
My lawyer, Suzie Catchum, will provide me with a checklist
T E X T
My Widget Corporation will require the following licenses
...
Future growth plans include warehousing of merchandise
...
Location studies will
include:
••
••
••
••
••
••
••
Space requirements
Future requirements
Site analysis study if needed (attach)
Demographic study if needed (attach)
Lease check-off list (attach)
Estimated occupancy cost as a % of sales
Zoning and use approvals
SECTION SIX: ACCOUNTING AND CASHFLOWS
Accounting
My knowledge of accounting is: ______
...
)
STUD Y
T E X T
My accountant: I plan to work with Norman Numbers
...
Method of accounting: I will use the accrual method of accounting since this is generally
required by the Internal Revenue Service for businesses dealing with manufacturing and
inventory
...
Tax issues: My accountant, Mr
...
My federal employer identification number (FEIN) is: ______________
...
Internal controls: Mr
...
Purchasing, capital acquisitions
and signing of checks will not be delegated
...
Mr
...
Bank account reconciliation: Bank accounts will be reconciled on a monthly basis
...
Included is a
schedule of equipment and fixtures needed that will appear on my balance sheet
...
BUSINESS PLAN DEVELOPMENT
91
Cash Flow Planning
Attached is an exhibit of my one-year cash flow analysis including estimated sales, all
costs and capital requirements
...
My initial target mark-up will be _____%
...
He will help me set up a system of internal controls to make sure that
Widget Corporation will receive all of its’ income without any of it being siphoned off by
waste, fraud, dishonest employees or carelessness
...
These items include buying supplies, getting a computer, equipment and fixtures, tooling,
travel expenses and start-up overhead expenses
...
My sources of cash for starting my business are as follows
...
My sources of financing for starting my business are indicated in the following spreadsheet
...
My referrals include the following helpful contacts to lending institutions:
my accountant, the Small Business Administration, friends, relatives, etc
...
My presentation kit includes
this business plan, my personal financial statement and personal tax returns
...
I will furnish potential lenders a cash flow projection showing sources of
repayments and I will be conservative in my forecasts
...
Included in the internal
control policy will be the requirement that the only person authorized to sign purchase
orders, make capital acquisitions and sign checks will be I personally
...
I plan to build and install the www
...
com
website, which I have already registered
...
I plan to hire Mary Smith of Smith E-Commerce Consulting Company to
design, install and maintain this site
...
widgetcorp
...
The site will provide useful content including detailed information about all items in my
product line
...
I intend to use the site to generate client feedback to help improve every aspect of my
product line, operation and business procedures
...
This is based on a firm contract with Mary Smith of Smith E-Commerce
Consulting Company
...
E-Commerce Competition
The use of business-to-business e-commerce has become standard in my industry and
is an important marketing tool
...
I plan to keep abreast of the
website developments of my competitors and to constantly improve my site
...
In order to position myself to
investigate acquisitions intelligently, the following “due diligence” process will be adhered
to
...
Sellers records and verification of revenues
2
...
Cash deposit records
4
...
Financial comparisons of similar businesses
6
...
Method of purchase: stock, assets, etc
...
Obsolete merchandise?
Condition of receivables
Status of payables
Status of verified order backlog
Evaluation of customer relationships and goodwill
Evaluate government approvals and licenses
Status of pending litigation
Other ____________
SECTION TEN: MARKETING
Marketing Plan
I plan to focus all initial marketing efforts on establishing a beachhead at one large
discount department store chain
...
My complete line will be presented as a package including
display accessories that tie into the merchandising policies of each chain
...
I will be depending on the combination of fresh styling, quality and
price to break into this market
...
My customers
require personal visitation by the CEO’s of their vendors
...
Mid Range Plan (12 – 36 months): To establish brand recognition at the retail level, I
plan to budget ____% of my sales to joint advertising with my discount department store
customers
...
STUD Y
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
••
T E X T
Valuation analysis will include:
94
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Long Range Plan: I plan to aggressively build brand recognition and loyalty by budgeting
____% of sales, which will be allocated between space advertising in trade journals,
appropriate consumer magazines and joint advertising with my customers
...
As my business
expands, I intend to begin marketing to smaller retailers
...
To achieve these qualities I will look for the following characteristics in marketing
employees
...
Create job descriptions for everyone
...
Have written policies and procedures on handling customer complaints
...
I have included a list of all major
competitors in this business and a brief sketch including to whom they sell
...
How I Plan to Take Advantage of Competitors’ Weak Points
My biggest competitor is Colossal Plastics Company, which has a 20-year history of
success and has gained strong brand-recognition
...
They are also slow to make changes and
upgrades to their line of products
...
I intend to
continually introduce additions and refinements to the line
...
Operating with a very low overhead, I believe I can gain a foothold in this market
...
Adopted from www
...
org
T E X T
95
STUD Y
BUSINESS PLAN DEVELOPMENT
STUD Y
T E X T
96
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
EMERGING TRENDS IN ENTREPRENEURSHIP
97
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
CHAPTER ONE
FIVE
EMERGING TRENDS IN
ENTREPRENEURSHIP
STUD Y
T E X T
98
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
EMERGING TRENDS IN ENTREPRENEURSHIP
99
CHAPTER FIVE
EMERGING TRENDS IN ENTREPRENEURSHIP
OBJECTIVES
By the end of this chapter, you are expected to:
••
••
••
INTRODUCTION
An ethical approach to doing business has proved to play a vital role in shaping the growth
of a business and to building the profile of the entrepreneur
...
The entrepreneur cannot ignore this noble call from the public, who
constitute parties with a stake in the business
...
The
entrepreneur should keep abreast with technology that is being used by fellow entrepreneur in
other parts of the world
...
KEY TERMS
Ethics: A study of the moral issues and values that form the basis of human behavior in
society
...
It is the minimum level of ethical behavior that is the person/
organization attests to
Social Responsibility: Duty owed to society for any activity carried out within its precincts
...
Globalization: The process by which local, regional or national phenomena become integrated
on a global scale
...
Explain how the entrepreneur can apply the new business models to his advantage
STUD Y
••
100
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
EXAM CONTEXT
This area has not yet been tested under the new KASNEB syllabus
INDUSTRY CONTEXT
The entrepreneur cannot afford to ignore the realities affecting the economy and the steps he
should take to ensure the business is keeping abreast with the dynamism affecting the business
environment
...
STUD Y
T E X T
5
...
The entrepreneur will be forced to deal with ethical issues from time to time in his business
...
Ethics refers to a set of principles prescribing a behavioral code that explains what is good and
right or bad and wrong
...
(Koratko and Hodgetts, 2004),
Ethics is the study of moral issues and values
...
A person who behaves ethically is one who operates in an upright and honest manner
...
In some countries, the society may not look down
upon giving bribes in business, yet in others, this may be taken as a serious offense that warrants
law enforcement
...
1
...
It’s is a guideline to all the employees on how they should handle and report matters on moral
issues, especially where the customers are concerned
...
An individual may of course have his own code of ethics
...
Businesses, large and small are faced with every type of ethical questions that range from simple
to very complicated ones
...
He should
research on what organizations in his industry have as their code of ethics, or if at all they
value this aspect of business management
...
Consequently, the entrepreneur will need to devise a code that
he believes will serve the interests of his business well
...
It is something that he may consider
placing in the organization’s permanent file that may be accessed by all stake holders
...
An entrepreneur should simply concentrate on making profits and ensuring his
business grows steadily
...
Research shows that acting ethically actually does increase revenues
...
Suppliers will also
be more willing to transact with a business that has high moral values
...
Consumers will be willing to buy from a
business that places all the relevant information on the product label so that the customer knows
exactly what he is consuming
...
The entrepreneur will want to establish an ethical workplace for several reasons;
••
••
••
••
••
••
He wants to do the right thing and he wants to inspire his employees to do the same
...
Ethical behavior is good for business because it gains the trust of customers
Employees are more likely to act ethically if they see the business owner acting in an
ethical manner
...
This
however, is not the case
...
Businesses have
now realized that it pays to act ethically
...
1
...
1
...
Reviewing which values produce highly ethical and successful people or products
...
Composing a code of ethics for the business
...
Making sure there are no double standards and that management sets a good example
by following the same code of conduct the employees must follow
...
2 Social Responsibility
Fast forward: The entrepreneur, just like anyone else in the society has a role to play
...
In his business, the entrepreneur is not a single player
...
These are the stake holders in his business and the
manner in which he treats them has a lot of impact on the success or failure of the business
...
He should ensure that the business as an entity meets its end of the
bargain when it comes to fulfilling the promises and objectives it set out to achieve
...
It is an aspect of business management that
should not be ignored by the entrepreneur
...
These are the
stake holders whose influence on the business is most crucial
...
The customer deserves to know the truth at all times
regarding the product or service been provided
...
He can do this by providing all pertinent information regarding the use of the
product, the entrepreneur should ensure that this information is available to the customer, either
as a label or a separate brochure
...
Be objective about the product’s success
The entrepreneur should not exaggerate about the good points of the product or service
...
STUD Y
5
...
1 Responsibility to Customers
T E X T
Many firms have seen the importance of taking this aspect of business management seriously
in recent years
...
It is an area that is value-laden and controversial, where businesses have
to face diverse and even conflicting interests, requirements, recommendations and pressures
...
Firms that accept that the landscape for the social role of
business is changing confront a difficult series of operational challenges
...
They are keen to get reliable and balanced
guidelines on how to act
...
Part of the
consultants' role is to convince clients that social responsibility is becoming more and more an
important part of business fundamentals
...
Both facets require
consultants to first persuade, and then guide their clients into unmapped territory and untraditional
roles
...
Who then should the entrepreneur be responsible to? The following section examines the various
stakeholders;
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E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Be fair in handling disputes
Customer complaints will always be there in any kind of business
...
He should listen to all sides of the issue before deciding on his course
of action
...
5
...
2 Responsibility to Suppliers
The entrepreneur needs his suppliers so he can get a continuous supply of commodities for his
customers
...
Each supplier is a stake holder in the firm no matter what value their supplies are
in any given trade period
...
This applies whether it is a simple phone call or an actual visit to
or from their premises
...
This means that he
should not initiate deals that involve the concealment of information either to the authorities or
to any other third party
...
This will enable him create a good reputation and his
business associate will feel comfortable dealing with his business
...
He should not make last minute orders and expect the supplier to deliver in record
time
...
Orders should be made in good time and if there are possibilities of the need for emergency
supplies, this should be pre arranged between the entrepreneur and the supplier
...
A
consensus meeting should be arranged where the two parties, plus a mediator, if the need arises
can sit and iron out the differences amicably
...
Let the current supplier know the reason for change to another
It may turn out that a supplier for one reason or another is unable to meet the demands of the
entrepreneur
...
He may be forced to look for another supplier
who can meet his demand
...
This letter will be preceded, of course with prior communication
on the dissatisfaction of the entrepreneur with respect to services delivered by the supplier, in
which case the supplier will be given ample time to improve his quality of service
...
This means that they are valid returns and not part
of his old stock
...
2
...
Lenders will expect the entrepreneur to adhere to the credit period as outlined in the
credit policy
...
The entrepreneur should strive to stick to
the terms as much as possible and if there is a possibility of departing from the arrangement,
proper communication should be done and in good time
...
2
...
He has been entrusted with funds and
given the task of using them to yield the expected returns by investing properly
...
This will assist them
make a decision as to whether to invest more or give the business more time to grow
...
This he can achieve by preparing financial statements (Statement of comprehensive
income and statement of financial position)
...
The shareholders and any potential investor would
need the financial statements so as to make informed investing decisions
...
These will normally be reminders to meet obligations or notices of lapse in credit period
that was extended
...
Proper communication as to his inability to do the same is a sign of courtesy
...
3 Environmental Issues in Business
Fast forward: The physical environment around which the business operates should be as much
a concern to the entrepreneur as the physical premise of his operation
...
This has sparked
debates as to whether most entrepreneurs and executives give due importance to issues
concerning the physical environment in which their businesses operate or whether their main
motive is wealth maximization at the expense of a sound environment
...
This in turn has resulted
in external costs increasing as a result of waste management strategies that attempt to pass
on the cost hurdle to other parties
...
This may not apply to all corporations but more often
than not, all players in the business world have something to do with this
...
While most businesses want to
record high profits within a relatively short period of time, the environmentalists have long term
plans for the environment
...
To resolve the conflicts, there has to be some consensus between the environment support
groups and the business community
...
The N
...
Os with help from the government
can facilitate dialog in the following ways;
••
••
••
••
••
••
Encourage upcoming businesses to take social responsibility seriously and even have
this as part and parcel of their short term and long term business objectives
...
This ensures
that policy formulation regarding this matter will be given the importance it deserves
...
This also includes the top management
and directors of major companies
...
Clarify roles and responsibilities regarding environmental protection by developing an
organized structure to deal with environmental protection matters, defining environmentrelated procedures, etc
...
Strive to develop and provide advanced, highly reliable, wholly proprietary technologies
and products that will contribute to solving environmental and energy problems
...
In the performance of business activities overseas and exportation of products, pay full
heed to impact on the local natural and social environments and strive to protect those
environments; also, become actively involved in technological cooperation overseas in
matters of environmental protection
...
5
...
5
...
1 E – Commerce
E – Commerce also known as Electronic Commerce consists of the buying and selling of
products or services over electronic systems such as the Internet and other computer networks
...
The use of the internet in conducting trade in this manner is spurring and drawing on
innovations in electronic funds transfer, supply chain management, Internet marketing, online
transaction processing, electronic data interchange (EDI), inventory management systems, and
automated data collection systems
...
STUD Y
In any business, the motto often goes something like "We strongly believe that the customer
comes first and that we are obligated to be an innovative partner to society
...
Accordingly, in the performance of
its business activities the company should embrace the awareness that it is an integral member
of society and, in all aspects of its business activities, it will strive to reduce burden on the
environment and shall devote its comprehensive technological capabilities to the development
of technologies and products that will protect the environment, as its way of contributing to the
development of a sustainable society
...
G
...
108
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
The entrepreneur, in considering whether this is the path he wants to take, should arm himself
with all the pertinent facts about E-Commerce
...
E - Commerce has grown tremendously in the last few years, with retailers offering on line
shopping tripling in 1998 alone
...
One fact that cannot be argued against is that things are constantly changing and will continue
to do so into the foreseeable future
...
STUD Y
T E X T
A large percentage of electronic commerce is conducted entirely electronically for virtual items,
i
...
products that do not have a physical aspect attached to them, such as shares in the stock
market
...
Online retailers are sometimes known as e-tailers and online retail is sometimes
known as e-tail
...
Electronic commerce that is conducted between businesses is referred to as business-tobusiness or B2B
...
g
...
Electronic commerce that is
conducted between businesses and consumers, on the other hand, is referred to as businessto-consumer or B2C
...
com
...
Electronic commerce is generally considered to be the sales aspect of e-business
...
E-Commerce Features
E-commerce software ranges from affordable, off the shelf packages designed for small business
owners, to fully customizable software for larger firms
...
This software
provides an affordable way to open an on line sales channel
...
Why should an entrepreneur be concerned about E-Commerce? The following section
examines the benefits he is likely to receive;
•• More exposure, more profit
...
This gives the company a better chance to earn
more profit by providing the means to reach more customers
...
The company no longer needs to spend so much
on promotional materials or installation of expensive equipment to be used for customer
service, nor does it need to hire more personnel to do the inventory duties
...
A single person
can retrieve the database to check purchasing histories easily
...
Information sharing between business Partners and other businesses
E-commerce provides an effective way to exchange business information with partners,
as it is Internet-based
...
An entrepreneur's customers are also likely to benefit from E-Commerce in the
following ways;
•• Better choices
...
In addition to that,
there are no sales persons pressuring the customer into buying a product
...
Going on-line reduces company expenses
...
•• Customer satisfaction
...
The company utilizes these
features of the Internet to quickly respond to customer queries, thus providing better
customer service and greater customer satisfaction
...
It is important that the
entrepreneur is not carried away with the hype of technology
...
STUD Y
•• Convenient and time-saving shopping
The e-market is open 24 hours, every day
...
A click on the product and your
credit card information (for Electronic Fund Transfer) are all it takes to purchase an
item and have it delivered
...
T E X T
••
11 0
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
The entrepreneur is likely to increase sales as he will be running parallel systems for a while
before going full scale into e-commerce, should he decide to do this
...
The ISP will facilitate the creation
of an Internet presence of the business
...
The entrepreneur should also bear in mind the security issues as
he goes into e-commerce
...
Some of this data may pose a threat to the business in the sense that confidential
information may be picked up by a third party and used maliciously for personal gain
...
4
...
It
involves an organization taking out of its hands functions and processes that are not core to its
mainstream activities or reason for existence and entrusting these tasks and operations to an
entity that has the capabilities and expertise to carry them out more efficiently
...
The decision to outsource is often made in the
interest of lowering cost or making better use of time and energy costs, redirecting or conserving
energy directed at the competencies of a particular business, or to make more efficient use of
land, labor, capital, (information) technology and resources
...
The main motive for Business Process Outsourcing is to allow
the company to invest more time, money and human resources into core activities and building
strategies, which fuel company growth
...
They might even have to justify
work done internally, that could easily be outsourced
...
A business must focus on
improving productivity and yet, cut down costs
...
BPOs, or the units to which work is being
outsourced, often are flexible, quicker, cheaper and very efficient
...
The functions
or processes being outsourced range from manufacturing to customer service to software
development and much more
BPO is typically categorized into back office outsourcing - which includes internal business
functions such as human resources or finance and accounting, and front office outsourcing which includes customer-related services such as contact center services
...
BPO that is
contracted to a company's neighboring (or nearby) country is called nearshore outsourcing
...
4
...
The term ‘Globalization’ is often used to refer to economic integration
of countries
...
This process is
usually recognized as being driven by a combination of economic, technological, socio - cultural,
political and biological factors
...
After the Second World War, nations realized the need to unite in the major areas that affect
economic growth
...
The consequences of disagreements among nations can lead to very catastrophic financial
distressed as witnessed after the war
...
As a means towards
unification, several institutions were established to manage and control the flow of economic
goods between countries
...
Globalization has also since been facilitated by advances in technology which have reduced
the costs of trade, and trade negotiation rounds, originally under the auspices of the General
Agreement on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions
on free trade
...
Particular initiatives carried out as a result of GATT and the
World Trade Organization (WTO), for which GATT is the foundation were aimed at promoting free
trade and include:
••
••
••
••
••
••
Elimination of tariffs; creation of free trade zones with small or no tariffs
Reduced transportation costs, especially resulting from development of containerization
for ocean shipping
...
By analyzing what other businesses are doing and how they are managing the effects
of economic cycles in various countries, he can put himself in context and see to what extent the
world economic reality is impacting on his business operation
...
When used in an economic context, it refers to the reduction
and removal of barriers between national borders in order to facilitate the flow of goods, capital,
services and labour
...
Globalization
is not a new phenomenon
...
This
slowdown can be attributed to the inward looking policies pursued by a number of countries in
order to protect their respective industries
...
g
...
However, a contrasting
trend soon became evident in the emergence of movements protesting against globalization and
giving new momentum to the defense of local uniqueness, individuality, and identity, but largely
without success
Measuring globalization
Economic globalization can be measured in different ways
...
g
...
g
...
g
...
g
...
The index measures the three main dimensions
of globalization: economic, social, and political
...
Information on these studies can help the entrepreneur better understand
his customers and predict their consumer patterns
...
Effects of globalization
Globalization has various aspects which affect the world in several different ways such as:
••
••
Industrial - emergence of worldwide production markets and broader access to a range
of foreign products for consumers and companies
...
This acts to expand the entrepreneur's
scale of trade accross the boundary
...
As these worldwide structures grew more quickly than any
transnational regulatory regime, the instability of the global financial infrastructure
dramatically increased, as evidenced by the financial crises of late 2008
...
••
••
••
••
••
Economic - realization of a global common market, based on the freedom of exchange
of goods and capital
...
Political - some use "globalization" to mean the creation of a world government which
regulates the relationships among governments and guarantees the rights arising from
social and economic globalization
...
With the influence of globalization and with the help of The United States’ own economy,
the People's Republic of China has experienced some tremendous growth within the
past decade
...
China will have enough wealth, industry, and technology to
rival the United States for the position of leading world power
...
Informational - increase in information flows between geographically remote locations
...
▪▪ Language - the most popular language is English
...
▪▪ Approximately 40% of the world's radio programs are in English
...
Competition - Survival in the new global business market calls for improved productivity
and increased competition
...
Ecological - the advent of global environmental challenges that might be solved with
international cooperation, such as climate change, cross-boundary water and air
pollution, over-fishing of the ocean, and the spread of invasive species
...
On the other hand, economic development
historically required a "dirty" industrial stage, and it is argued that developing countries
should not, via regulation, be prohibited from increasing their standard of living
...
Some bemoan the resulting consumerism and loss
of languages
...
g
...
Some consider
such "imported" culture a danger, since it may supplant the local culture, causing
reduction in diversity or even assimilation
...
▪▪ Greater international travel and tourism
...
]
▪▪ Greater immigration, including illegal immigration
▪▪ Spread of local consumer products (e
...
food) to other countries (often adapted to
their culture)
...
Accessible to those who
have Internet or Television, leaving out a substantial segment of the Earth's
population
...
▪▪ Incorporation of multinational corporations in to new media
...
Social - development of the system of non-governmental organizations as main agents
of global public policy, including humanitarian aid and developmental efforts
...
g
...
Legal/Ethical
The creation of the international criminal court and international justice movements
...
The emergence of Global administrative law
...
They are often the result
of globalized corporations and the delocalization of economies that were once self-sustaining
...
The increasing pace at which international economies are being integrated over the
last couple of years has given rise to a lot of optimism for upcoming entrepreneurs
...
However, pundits are not so quick to give this phenomenon a green bill of health without looking
at the adverse effects that globalization has had in certain areas
...
Competitive advantage no
longer plays a major role in deciding what an economy should focus on
...
Where a country or nation has little material or physical product harvested
or mined from its own soil, an opportunity is seen by large corporations to take advantage of the
“export poverty” of such a nation
...
An example of this is the oil exploration activities that
have been taking place in Kenya
...
The opening up of markets abroad has seen an inflow and outflow of
economic, political and cultural values between nations
...
The end analysis is that most developing countries have taken it upon themselves to
solve most of their problems by copying what is done outside and in most cases this has had a
financial implication
5
...
4 Trade fairs/exhibitions
A trade fair is an exhibition organized so that companies in a specific industry§ can showcase and
demonstrate their latest products, service, study activities of rivals and examine recent trends
and opportunities
...
They are held on a continuing basis in
virtually all markets and normally attract companies from around the industry
...
He
will meet other entrepreneurs in the same industry who share a lot in common with him
...
The Internet is associated with the process of cultural globalization because it allows interaction
and communication between people with very different lifestyles and from very different cultures
...
The
internet has however brought with it a wave of new culture that has not gone very well with the
more conservative communities
...
This clash has led pundits to discourage the use of the internet
beyond what they consider necessary
...
Costs
include space rental, design and construction of trade show displays, telecommunications and
networking, travel, accommodations, and promotional literature and items to give to attendees
...
The entrepreneur should thus carry
out a cost benefit analysis of attending such events, in as much as they are of value to his
business
...
STUD Y
T E X T
An increasing number of trade fairs in many other countries are happening online, and these
events are called virtual tradeshows
...
EMERGING TRENDS IN ENTREPRENEURSHIP
11 7
••
••
••
Ethics refers to the knowledge of right and wrong
...
This is a written
set of rules on what is morally acceptable and what is not, in the work environment
...
The entrepreneur owes a duty of responsibility to all parties who have a direct impact
on his business
...
He
should undertake his obligation at all times without passing on the responsibility to third
parties
...
This comes in the wake or
the tremendous growth in world economies that seem to affect all nations at the same
time
...
Technology and business models that have been devised and applied successfully
in developed countries have given a boost to businesses in developing countries to
keep pace
...
Define the following terms
•• Ethics
•• Code of conduct
•• Social responsibility
•• E-Commerce
•• Globalization
...
Who are the stakeholders to which the entrepreneur owes a duty as he runs his business?
3
...
4
...
List 3 areas through which globalization has impacted on the way the entrepreneur does his
business?
6
...
What is the importance of the following to an entrepreneur?
•• Outsourcing
•• Trade Fairs
STUD Y
••
T E X T
CHAPTER SUMMARY
11 8
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
ANSWERS TO THE QUIZ
1
...
It is the study of morality as applied to
human behavior and involves choosing between right and wrong
...
It’s is a guideline to all the employees on how they should handle and report
matters on moral issues, especially where the customers are concerned and in relating
to each other
...
He should
ensure that the business as an entity meets its responsibilities to thirds parties in fulfilling
the promises and objectives it set out to achieve
...
The merchant (entrepreneur) gets to transact with his customer over the Internet
Globalization refers to the process by which local, regional or national phenomena
become integrated on a global scale
...
It acts as a linkage forum for small
businesses
...
Stake holders in the entrepreneur’s venture include;
•• Employees
•• Customers
•• Suppliers
•• The Government
•• Investors
•• The general public
3
...
•• A computer with Internet access
•• A website – It should facilitate online shopping
...
•• Industry – Globalization has opened up new markets and greater access to a variety of
goods and services
...
••
Economic – The entrepreneur can have a big market share as economies open up to
the international community
...
Advantages
•• Enabled industrial growth due to influx of more efficient production processes
•• Opened up markets for products only sold in niche markets
•• It has opened doors to the influx of technological advancements in different walks of
life
STUD Y
Trade Fairs
The entrepreneur will benefit from trade fairs in the following ways;
•• They provide a forum to show case his goods and services hence market himself
...
•• Potential investors attend trade fairs to 'scout' for potential investments to sponsor
...
•• Through trade fairs, the entrepreneur will be in a position to assess his competition
...
T E X T
Disadvantages
•• In certain countries, it has led to the sidelining of indigenous industries
•• The loss of cultural values as a result of globalization has been not been well taken by
conservatives
...
Outsourcing
The entrepreneur will benefit in the following ways;
•• He will focus more on the core functions of the business
•• The third party firms are experts in their respective fields hence the entrepreneur will
benefit from quality service
...
•• The entrepreneur can use the savings from outsourcing to invest in the business
...
(a) E – Commerce
(5 Marks)
(b) Business Outsourcing
(5 Marks)
(c) Globalization
(5 Marks)
(d) Trade Fairs
(5 Marks)
T E X T
121
STUD Y
EMERGING TRENDS IN ENTREPRENEURSHIP
STUD Y
T E X T
122
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
COMMUNICATION SKILLS
123
STUD Y T E T E X T
STUD Y Y E X T
STUD T
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CHAPTER ONE
SIX
COMMUNICATION SKILLS
STUD Y
T E X T
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COMMUNICATION SKILLS
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CHAPTER SIX
COMMUNICATION SKILLS
OBJECTIVES
By the end of this chapter, you are expected to;
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Understand the communication process and various modes of communication
Identify the various components that make up a communication system
Identify the advantages and disadvantages of the various media of communication
Know what communication skills are essential for the entrepreneur to acquire
Identify the barriers to effective communication
KEY TERMS
Communication: This is the process of exchanging ideas amongst two or more persons
...
Communication Channel: The route that a message will traverse before it reaches its intended
destination
...
The receiver
can either be a person or a location that has been identified in advance
Sender: This is the originator of the message or information that needs to be sent to a
predetermined destination
...
STUD Y
The entrepreneur will deal with all sorts of business associates in the course of running his business
...
The entrepreneur should
ensure that he is working with a team that shares his vision for the business
...
For this to be effectively accomplished, it is important
that the ideas the entrepreneur has are well communicated to his staff
...
The entrepreneur is not just the boss who gives
instructions and expects them to be followed to the letter
...
He
should develop skills that will enable him have a good working relationship with all the people he
deals with, both internal and external to the business
...
Effective communication, a vital tool
in running the business, is a two way process and should not be ignored by the entrepreneur
...
For him to succeed in this, he should
develop good relations with all his business associates
...
He will also be looking for essential communication skills from his
staff and this may be an important criterion for recruiting his staff
...
STUD Y
6
...
Messages are sent by the Transmitter (Tx) and
received by the Receiver (Rx) who sends back some form of confirmation that the message has
been received and understood
...
The particular route or path via which the message is sent connecting the sender and receiver
is called the channel of communication
...
The entrepreneur will need to identify a channel that is most appropriate for his type of
business
...
The tool or instrument used is the medium e
...
gesture, picture, letter,
report, telephone conversation etc
...
The time necessary to prepare and transmit the message considering its urgency
...
The complexity of the message
...
3 The distance the message is required to travel and in what condition it must arrive
...
The need for a written record e
...
confirmation of transactions, legal documents
...
The need for interaction or immediate exchange e
...
question and answer, instant feed
back etc
...
The need for confidentiality
7
...
Sensitivity to the effect of the message on the recipient
...
Cost, in relation to the above factors, for the best possible result at the least possible
expense
...
1
...
The sender and receiver
should both be in a position to read and write
...
Letter
2
...
Report
4
...
Press Release
Provides Written Record
Can be used to communicate complex ideas
Provides analysis and evaluation
Spreads information to dispersed receivers
...
Oral Communication
In oral communication, the two or more parties communicating with each other have to use
words to communicate
...
Some of the ways in which oral communication can be carried out include;
1
...
Interview
3
...
Public address
5
...
Telephone calls
7
...
Lack of time to think things out
Sometimes no written record of what was said
...
These images are presented to the audience for them to apply their visual skills to
decipher the message
1
...
g
...
Diagrams
3
...
Tables
5
...
Disadvantages
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May be difficult to interpret without written or spoken word
...
These machines cost a lot of money and are mostly used by medium scale to large
businesses
...
Fax
2
...
Teleconferencing
4
...
Takes a few seconds to connect large areas
...
Accuracy
Feedback-Allows for almost simultaneous exchange of information and responses
...
Faxed messages not readily accepted for legal purposes – but telexes are
...
6
...
2 Stages in the Communication Cycle
The following diagram represents the communication model that is used to explain the stages
involved in the communication cycle
Medium/channel of communication
...
He is the person who releases the information for the
intended recipient from one end of the communication system
...
Before releasing the message, it has to be encoded
...
This means choosing
whether words will be sufficient, whether a printed record and/or graphics are necessary
...
Receiver
This is the intended recipient of the message
...
This
involves putting the message in a format that will be understood by the receiver
...
When a
message arrives in the office, it is important to ensure that they are routed promptly and are given
the attention they deserve
...
Interpret the message: This is where the recipient interprets the message
...
Distortion of the message may occur if the
sender has not carefully encoded the communication, in which case the recipient will interpret
the message differently from how it was intended
...
For successful communication, the
response of the recipient must be the one intended by the sender
...
Such connections between people,
making communication possible, are called channels of communication
...
This is a track along which a messenger
would walk or run to deliver a message
...
Channels of communication are not just over distances
...
If the person you are talking
to considers that the matter you are raising is not his concern, your attempt to open up a channel
of communication will fail
...
2 Essential Communications Skills
Fast forward: Certain essential skills are important for the communication process to achieve
its purpose
...
People work better if they know why they are doing something, so management needs to
explain their policy to them
...
Thus efficient systems need to be established by the entrepreneur to test employee’s reactions
...
2
...
It's also about receiving information that others are sending to you, with as little
distortion as possible
...
And it's a process
that can be fraught with error, with messages muddled by the sender, or misinterpreted by the
recipient
...
In fact, communication is only successful when both the sender and the receiver understand the
same information as a result of the communication
...
When not successful, the thoughts and ideas that are actually sent do not necessarily reflect the
sender’s thoughts, causing a communications breakdown and creating roadblocks that stand in
the way of the sender’s goals – both personally and professionally
...
This inability makes it nearly impossible for them to compete effectively in the
workplace, and stands in the way of career progression
...
To do this, he must understand what his message is, what audience he is
sending it to, and how it will be perceived
...
The entrepreneur should learn the skills needed to effectively communicate with all those he
comes into contact with
...
Because they are common they can integrate them into
their style of communications to become more effective and successful
...
T E X T
The following are some of the essential communication skills that the entrepreneur should be
familiar with
...
When there is bad news or change,
these conversations should be delivered directly and respectfully
...
6
...
2 Communication Skills
Effective Listening
To be a good listener is as important as being a good speaker
...
Listening is not something that happens to us whether we
like it or not
...
We choose to listen or not to listen
...
It also explains
why some of us are very bad at remembering names, dates, times of meeting etc
...
Being a good listener is one way of earning the respect and affection of those you are with every
day
...
You will distort telephone messages, misunderstand
customer complaints etc
...
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Listening is not about just nodding one's head in understanding while the other person is talking
...
Make
you're your eyes are not looking side to side or over the other's shoulder, but instead are focused
on the eyes and face of the person you are talking with
...
When you really listen to people,
not only do you get to know them, but they might provide you with some information to help you
farther along toward future success
...
Paraphrasing is repeating, to the one you're communicating with, what you
just heard them say, but in your own words
...
This is engaging and interactive communication skill and every successful
person uses it
...
As one is communicating with another, the posture should
be relaxed
...
The
hands should not be tightly wrapped around each other in a closed gesture, nor should they
scratch the head, arms or face while they are either listening or talking
...
They don't stand stiffly,
nor do they slouch over while either standing or sitting
...
Tone of Voice
The tone of voice should be even
...
The communicator should take his time as he speaks so as not to use wrong or
inappropriate language
...
This means they ask questions, truly interacting with others
...
Asking questions educates them, and successful
people know the value of being educated
...
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6
...
Certain psychological and physical barriers between people may distort the communication
process and cause misunderstanding and confusion
...
standards could also hinder understanding of some information
...
Language
Misunderstanding and incorrect interpretation may result from the use of inappropriate or
ambiguous language
...
Background Knowledge
Lack of expertise or knowledge of a subject may impair understanding
...
Preconceived Judgment
Either party may already have made up his mind about the outcome or made judgments on the
topic
...
Personality clashes
Guarding of one's own area of work may affect objectivity and the degree of co-operation given
...
The superior
wishing to maintain authority and the subordinate protecting himself from criticism
...
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Perception
Sometimes people view situations in a completely different light
...
Poor Listening
Inattention results in lack of knowledge and misconceptions
...
This leads to a feeling of
remoteness and lack of involvement
...
Visual/oral distractions or poorly arranged furniture
could do the same
...
Closed doors also inhibit would-be communicators
...
Chain Distortion
As information passes along a communication chain it is affected by coding/decoding distortion
...
Sometimes the media
is changed
...
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Suspicion
In a vertical chain distortion occurs because of suspicion aroused by the differences in rank
between those on the chain
...
By the time these feelings from the bottom are expressed to top management it could
come out as “workers being unnecessarily stubborn” and produce the reaction
...
Noise
Noise is any unwanted signal
...
It could be distractions such as the fact that you have a headache,
or received very bad news that morning or had a quarrel with a close friend
...
Source
Msg
Encoding
Msg
Channel
Msg
Feedback
Decoding
Msg
Receiver
Context
Removing Barriers at All These Stages
To deliver messages effectively, the communicator must commit to breaking down the barriers
that exist within each of these stages of the communication process
...
If a message is too lengthy, disorganized, or contains errors,
the message is likely to be misunderstood and misinterpreted
...
Barriers in context tend to stem from senders offering too much information too fast
...
It is best to be mindful of the demands on other people’s
time, especially in today’s ultra-busy society
...
At each stage, there is the potential for misunderstanding and
confusion
...
3
...
We follow the process through
below:
At the Source
As the source of the message, one needs to be clear about why he is communicating, and what he
wants to communicate
...
On the Message
The message is the information that one wants to communicate
...
The success in encoding depends partly on
one's ability to convey information clearly and simply, but also on the ability to anticipate and
eliminate sources of confusion (for example, cultural issues, mistaken assumptions, and missing
information
...
On the Channel
Messages are conveyed through channels, with verbal channels including face-to-face meetings,
telephone and videoconferencing; and written channels including letters, emails, memos and
reports
...
For example, it's not particularly
effective to give a long list of directions verbally, while one can quickly cause problems if he gives
someone negative feedback using email
...
) Just as confusion can arise from
errors in encoding, it can also arise from decoding errors
...
At the Receiver
The message is delivered to individual members of your audience
...
One should
keep in mind, though, that each of these individuals enters into the communication process with
ideas and feelings that will undoubtedly influence their understanding of the message, and their
response
...
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On the Feedback
The audience will provide feedback, as verbal and nonverbal reactions to the communicated
message
...
Should there be a misunderstanding,
at least one has the opportunity to send the message a second time
...
This may include the surrounding
environment or broader culture (corporate culture, international cultures, and so on)
...
He may use the following strategies in solving
the problems;
Giving employees their space
The entrepreneur should also strive to give his employees space from which to operate
...
He should give them the independence they need to deliver results
...
Open day/ Out of the office activities
From time to time, the entrepreneur can organize outdoor activities like sports, staff parties,
environmental cleanup exercises with the community e
...
c
...
He should also encourage them that they should
not fear victimization once they resume work sessions
...
He should not assume that he has
the answers to all the problems the employees may have
...
Code of ethics
The entrepreneur should ensure he has a code of ethics in place that is fair to all employees
...
For instance, the entrepreneur should consider whether barring office
relationships is likely to affect the work attitudes of his staff
...
The entrepreneur should develop an approachable character
and should not be too autocratic
...
This is effectively achieved through a chosen
communication channel
...
Effective listening is an important communication skill that the entrepreneur should
strive to acquire
...
There are barriers to effective communication in the work place and with external
business associates that the entrepreneur should also strive to alleviate
STUD Y
T E X T
CHAPTER QUIZ
1
...
Identify 4 communication media the entrepreneur can choose from in setting up his
communication system
...
Describe the communication model, identifying the various components involved in the
process
4
...
5
...
Sender
This is the person who comes up with the message
...
Receiver
This is the intended recipient of the message
...
This
ensures that the message does not land in the wrong person’s hands
...
It ensures
that only the recipient can get the information contained in the message
...
2
...
The communication model refers to the system that ensures communication takes place
...
The components
involved include
•• Sender
•• Encoder
•• Communication Channel
•• Decoder
•• Receiver
•• Feedback
4
...
Examples include email, postal service, telecom, l etc
T E X T
Communication Medium
This refers to the communication tool that has been used to transmit the message
...
Examples include letter, telephone,
picture etc
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••
••
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Right tone of voice
Use of body language
Being interactive
••
••
••
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••
Noise in the communication channel
Hierarchical barriers in the work place
Educational /Social Background
Language barrier
Personality clashes
STUD Y
T E X T
5
...
(12 Marks)
(5 Marks)
(b) What is meant by the term ‘effective listening? Describe how this skill may be acquired and
developed
...
Appreciate the key role played by postal and courier services in the business
operation
Have learnt about what it takes to make a good business presentation
EXAM CONTEXT
A question from this area is yet to be examined under the new KASNEB syllabus
INDUSTRY CONTEXT
New ways of doing business are emerging and the organization needs to keep abreast with
the new trends
...
For the
business to excel in its relations with external parties, more so its customers, it has to put a lot of
emphasis on the quality of its communication infrastructure
...
STUD Y
Communication skills applied in the right way in business can bring the business to a whole
new level of carrying out transactions
...
Communication
channels with them need to be without barriers that may impact negatively on the business
...
The organization should ensure employees are well equipped with the relevant
communication skills especially those who deal with external parties from time to time
...
1 Meetings and Interviews
Fast forward: Meetings and interview are formal office events that should be prepared and
executed professionally
Meetings have for many years been used as a means of making decisions, of spreading
information or a means of resolving a particular problem
...
They may become unproductive, costly and a waste of time
...
The physical proximity of people seated round a table creates a special type
of relationship among those present which no form of written exchange or electronic substitutes
is able to produce
...
Functions of Meetings
Meetings may be held for any one of the following reasons:
••
••
••
••
••
••
••
••
To consult, exchange views and discuss matters of common interest
...
g
...
To inform staff about new work procedures or update them on other current
developments
...
To solve problems by pooling expertise
...
g
...
To investigate occurrences e
...
accidents
...
g
...
7
...
1 Types Of Meetings
The term ‘meetings’ ranges from the informal exchange of ideas between a few people to the
very formal statutory meeting governed by rules and procedures that are laid down
...
They are called at a short
notice either by means of a note or simply by word of mouth
...
Informal notes may be taken and circulated and decisions are taken by consensus or
by the person running the meeting after considering the views of the participants
...
Formal meetings
Are held after the people entitled to attend have been notified in writing some time before the
meeting
...
The notice is usually accompanied by an agenda
...
l
Formal protocol and meeting terms are used
...
Formal meetings are conducted by officials who
usually include the chairman, secretary and treasurer
...
Subcommittee Meetings
These are meetings consisting of members of a general committee who have been given a
particular task to perform which does not require the attention of all committee members e
...
to
arrange for a social function
...
g
...
7
...
2 Interviews
An Interview is a formal way of recruiting personnel into an organization
...
The human resource manager is in charge
of staffing in the organization and the onus is on him/her to schedule interviews as and when the
organization needs human resources
...
Whichever the policy in the organization is, interviews will be carried out in a formal manner as it
has to be in line with the vision the organization has on its staff image
...
In clubs it is usual for each member to have a vote while
at company meetings the voting shareholders are allowed to vote according to the number of
voting shares they hold
...
T E X T
Annual General Meetings
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The purposes of employment interviews are: a) To assess the personality of the applicant
...
c) To give the applicant information about the job
...
e) To assess the most suitable candidate for the job
...
Organizations
will align its recruitment policy on its corporate strategy
...
Given that he understands the nature of work that should be done within a predefined
time frame, he will allocate duties in a manner that will enable him send timely report to his
immediate management
...
Justification for extra manpower
The department manager will then require the supervisor to write a report that will justify the need
to hiring extra personnel
...
Duties and Responsibility
Once the report is received by the human resource manager, a list of duties and responsibilities
will be drafted according to the job designation the new employee is coming to be identified
with
Advertisement
For the purpose of transparency, the job vacancy will be announced publicly through the
appropriate media
...
This is based on the selection program the organization has for various levels of job
assignment in the organization
...
Applicants who are successful on
paper will be contacted for interviews
...
The short listed candidates
will be called in for interviews on a pre determined date and time
...
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The Interview Process
On the date of the interviews, all the panelists are expected to be at their stations
...
This meeting
need not take too much time, but a lot will depend on the following factors;
Urgency to fill the vacancy
The more urgent the position needs to be filled; the more urgent the interview process will
be carried out
...
This may warrant double or even
triple recruitment and may call for more time
...
2 Business correspondences; letters,
memos, circulars
Fast forward: Written business documents, whether circulating within or outside the organization
should be treated with a lot of professional care
...
This communication
is important to achieve the short term and long term objectives of the firm
...
Correspondences without the organization will be with suppliers, customers, the government and
other external stake holders of the organization
...
2
...
What determines the
level of formality and the communication media used depends on various factors;
STUD Y
Number of employees required for a given post
T E X T
There are some jobs that, due to the sensitive nature of the work involved, the interview process
has to be very thoroughly executed
...
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The degree of importance
A warning letter would be considered more serious than communication on ‘who called or came
to visit while you were away’
The urgency of communication
Urgent information may be communicated by telephone rather than on letter due to the fact that
the information may be of no use by the time it reaches the recipient
...
The difference in seniority between the sender the receiver of information
Communication between the CEO of the organization and his driver will hardly warrant any
written material
...
STUD Y
T E X T
The size of intended recipients
Information that needs to be communicated to all members of staff will normally be done on email
and will, in most cases be official communication
...
g
...
7
...
2 Without the Organization
Correspondences with parties outside the organization will more often than not be formal
...
In most cases, business correspondence with
outside parties is restricted to senior personnel of the organization
...
Goods and services will be sold to a wide range of customers; some in cash
and others on credit
...
Suppliers
Suppliers will be communicated with from time to time on matter to do with the goods and services
supplied by them to the organization
...
The organization, through the finance office will furnish the tax
authorities with the relevant documents needed for verification purposes by the tax authority
...
These letters will be formal and could be sent through email
...
3 Report writing; types, structure and
uses of reports
Fast forward: Report-writing skills are essential for effective business communication
Reports are meant to be USEFUL
...
Information is stored in files and retrieved for a purpose
...
To summarize investigations into causes and effects of problems or trends and to
recommend solutions e
...
the reason for a fall in sales
...
To provide statistical or financial summaries e
...
monthly sales reports
...
To record decisions made at a meeting
...
To supply information for legal purposes e
...
accident reports
...
To monitor progress e
...
in building work, in implementing a new scheme
...
To look into the feasibility of introducing new procedures, making new products, changing
machines
...
The function of a new report is thus to present facts and perhaps make a recommendation
...
There is an obligation on the part of the report writer to communicate information in an unbiased
way
...
It is important
that this information should be presented impartially, without any feelings/emotion or writers'
attitude standing out
...
STUD Y
Reports are formal communications that are usually intended to initiate a decision or action by
the person or group receiving the report
...
T E X T
7
...
1 Reports and their purposes
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7
...
2 Types of Reports
Written reports fall into two classes
...
Routine Reports
Many of the reports made in business are routine and deal with matters that periodically recur:
1
...
Periodical reports of departmental managers on the work of their departments
3
...
The Chairman’s annual report at shareholders meetings
They conform to a certain established pattern
...
Many of them are in fact made on pre-designed forms that greatly simplify the
work of preparing and presenting them
...
They are once-only
reports, called for to provide information on matters of particular interest and concern
...
They could be reports that are no more than replies to requests for information needed
to bring an executive up to date with developments OR
They could involve pro-longed investigating undertaken for the purpose of helping to
shape business policy
...
They may be in summary form and consist of only a single sheet or they may be
detached and extend over many pages
...
They may be made by individuals or by groups of people
...
They may be made by lay members of staff or by specialists – committees specially
appointed to investigate issues of wide ranging significance
...
3
...
Objectivity and factual
The style of a report should be factual and objective
...
If bias is
recognized, it will undermine the credibility of the report and its recommendations
...
In formal reports impersonal constructions should be used instead of ‘I’, ‘We’ etc, which carry
personal and possibly subjective associations
...
We found that
(Your name) found that………
...
2
...
The reader
may not share the technical language of the writer
...
3
...
The relative importance of points should be signaled, each point should be referenced
and the body of the text should be broken up to be easy on the eye
...
Important headings,
say sections of the report, may be in CAPITALS
...
(b) References
Each section or point in a formal report should have a code for easy identification and
reference
...
A B C D E
1
2
3
4
5 May be used to reference subsections
(a) (b) (c) May be used to reference points and
(i) (ii) (iii)
sub-points with appropriate indentation
...
Display techniques
T E X T
The material will have to be logically organized, especially if it is leading up to a conclusion or
recommendation
...
The layout of
the report should display data clearly and attractively
...
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E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Alternatively, a ‘decimal’ system may be used (as for the Dewey Decimal Classification
System in libraries)
...
Heading 1
1
...
1
...
1
...
2 Subheading 2 etc
...
Language and Readability
STUD Y
T E X T
Reports should be written in ordinary clear English
...
Spelling and grammatical mistakes should be avoided
...
Figures should not be confusing
...
The report must be readable
...
The use of bright colorful language adds interest to a report and makes it more readable
...
It is not enough for presentation to be clear, it must be attractive – in a form and in terms that
capture attention
...
3
...
3
...
1
...
Brief
...
STUD Y
T E X T
2
...
3
...
4
...
5
...
The terms
of reference should explain not only the purpose of the report but also any restrictions on its
scope
...
“The report
was to be handed in by 27th June 20…”
6
...
Alternatively, if the report is based on primary research the nature of fact-finding
should be explained
...
Sections
The main body of the report should be divided into sections
...
have a
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157
8
...
The main body of the
report should make cross-references to the appendices in appropriate places
...
Report Summaries
Long reports should be summarized in brief
...
The format of a written report varies considerably
...
Some may be produced in paragraphs of
continuous prose; others may be displayed under a series of headings, sub-headings with table
and diagrams
...
I
...
2
...
FINDINGS
Main Section Heading
Main Section Heading
Main Section Heading
First Sub-Heading of Section 3
...
3 etc
4
...
RECOMMENDATIONS
First Main Recommendations
Second Main Recommendations
Title
For this kind of report, at the top (or on a title page) should be the title of the report
...
Terms of Reference
Here is laid out the scope and purpose of the report
...
STUD Y
1
...
Could be: Telephone calls were made, documents/files consulted, computer files accessed,
visits of the site/observation, interviewing personnel, etc
...
Findings
The information itself is set out, with appropriate headings and sub-headings
...
The
content should be complete, but concise and clearly structured
...
This is
particularly helpful to those who may wish to read the entire report
...
II
...
It is shorter and less complex so it does not
require elaborate referencing and layout
...
Include everything that will help the reader to understand the
rest of the report
...
Findings Or Analysis Of The Situation
Here is set out the detailed information gathered, narrative of events or other substance of the
report
...
Generally the input of this section is not sufficiently complex to justify a highly schematized,
indented layout
...
Recommendations or means of solving a problem are outlined
...
III
...
Could be 50 or hundreds of pages
...
He can see at a glance what the different
sections are about; pass quickly over those that do not concern him and concentrate on those
that do
...
It gives him a bird's eye view of the subject
matter covered as well as a close-up of sections that specially interest him
...
Capitals, numerals, lettering, underscoring and indenting are all employed as devices for
presenting the different items with varying degrees of emphasis
...
Reports in letter form
Short reports could also be in the form of a letter addressed to the person at whose request the
report is made
...
Subject matter will be arranged in the following order:
••
••
Subject-heading
A reference to the request for the report
This is in the first paragraph and does not need a sub-heading
...
Appendices
Bibliography
STUD Y
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
▪▪
160
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Conclusions and Recommendations could be under the same sub-heading or separated
depending on the needs of the reader
...
The Memorandum Report
This format is used for internal reports especially within and between departments
...
Apart from the convenient title
headings, there are no particular requirements for structure, headings or layout
...
MEMORANDUM
CONFIDENTIAL
To________________________
Ref ____________________________
From _____________________
Date____________________________
Subject_______________________________
STUD Y
T E X T
Forms and reports
Some commonly prepared reports have certain standard content requirements and can therefore
be pre-printed with appropriate format and headings and filled in when needed
...
g
...
V
...
They help collect data in standardized procedures
ii
...
iii
...
They provide handy sources of reference
v
...
They ensure a uniformity and consistency of approach in dispersed offices e
...
bank
branches, insurance branches or government offices
...
Clerical staff can be readily trained to vet accurate completion of forms
viii
...
Design of Forms
Guidelines on a Good Form Design
1
...
g
...
The name of the organization should appear at the top if it is to be used externally
...
The overall design should be uncomplicated and functional, not forbidding to the eye
of the form filler, and convenient for retrieval purposes
...
BUSINESS COMMUNICATION
SURNAME
161
ADDRESS
FIRST NAME
DATE OF BIRTH
TELEPHONE NUMBER
MY POLICY NUMBER IS
4
...
Sufficient room should be allowed for the information requested, but too much space
also gives a false impression of what is required
...
6
...
g
...
7
...
g
...
SIZE
COLOUR
Small
Red
Medium
Blue
Green
Large
PLEASE TICK BOX
I enclose cheque/postal order/cash* to the value of Ksh _____________
* Delete as appropriate
8
...
9
...
10
...
E
...
top copy to customer
(white); second copy (pink) to purchasing department; third copy (yellow) to accounts,
etc
...
The form meets the requirements for typewritten entries and computer output
...
Any part of the report not intended for completion should be kept clearly separated and
marked
...
Forms to be used in a factory or out-of-doors should be made from suitable sturdy
paper
...
STUD Y
Examples:
T E X T
It is an advantage to state alternatives in the form – for the person completing to
delete as appropriate, or to tick or cross the appropriate box
...
162
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
14 Related items should be grouped together on the form, separated from other areas
(with boxes, etc) and arranged in a logical sequence, so the user can identify them
quickly
...
Lastly, it is important not to forget to monitor these forms from time to time
...
After designing a form, produce a test model of the firm
...
Ask
them to criticize it constructively and make any necessary amendments
...
Did they understand what was needed? Were any parts
left uncompleted? If so, why?
7
...
6 Control of Forms
STUD Y
T E X T
It is very common for people to hold larger stocks of forms than they actually need to avoid
running out
...
Many organizations centralize the design and control of forms within the Organization and
Methods (O & M) Department or within the Administrative Department
...
They are reviewed
regularly and a check is kept on issues so that departments don’t overstock
...
It contains:
i
...
ii
...
It is usually addressed “to
our shareholders”
...
But more
important he should tell WHY certain things happened
...
When the chairman uses words such as
“Despite the________” OR “Except for ______” it is a sign of problems
...
It should show that
management is getting the company in good shape for the coming years
...
Statement of Financial position/ Balance Sheet
This shows how the company stands at a single point in time
...
Things that can quickly be turned into cash are current assets
...
Current liabilities are the debts due in
one year, which are paid out of current assets
...
If working capital shrinks, it’s a sign of trouble
...
Long-term debt
High and rising debt, relative to equity is not a problem for a growing business
...
Statement of Comprehensive Income/ Income Statement
Shows how much the company made or lost over the year
...
Letters and parcel to be delivered to customers or suppliers will have to
be sent through the channels the organization has deemed appropriate
...
Today, most business
correspondences are carried out over the Internet
...
t
...
Larger
organizations will employ the use of electronic data interchange to facilitate business transactions
from inception to conclusion
...
g
...
t
...
T E X T
7
...
4
...
There has been tremendous development in this industry
...
Over the decades, private institutions have taken up the challenge and many small
businesses have been opened up to offer the service
...
One of the important challenges to postal and courier services, both public and private, is
competition from other communications services such as facsimile, electronic-mail, and data
networks, particularly in the business-to-business market segment
...
STUD Y
T E X T
Traditionally, postal services have been in use in the following areas;
1
...
Postal services related to parcels consisting of pick-up, transport and delivery services
of parcels and packages, whether for domestic or foreign destinations;
3
...
g
...
Other postal services which includes mailbox rental services, "poste restante" services,
and public postal services not elsewhere classified
7
...
2 Courier Services
...
Courier will be very important especially for a business that deals a lot with
door to door servicing of customer orders
...
An organization may
choose to use courier as opposed to postal services due to the following reason;
1
...
Nature of commodity – fragile product may call for extra care in handling
3
...
The demand for high quality service as a competitive
aspect of business has led to many businesses to value the quality of this service as rendered
by suppliers
...
Most courier firms also double up to offer postal services
...
Postal and courier services are dependent on physical means of delivery, particularly
air and road transport services
...
7
...
People enjoy presenters who are inviting, engaging and informative
...
One should strive to learn the formula, practice the skill and
eventually will gain the competency
...
5
...
Who will attend--and how many? The content of presentation should be aimed at the audience,
and the choice of visuals to meet the needs of the presenter's group
...
What is the purpose of the presentation? Is it to explain a plan or project; to tell people what to
do--and how; report on what's been done; get support for an idea; define or solve a problem; gain
consensus for a decision; provide training; or encourage motivation
...
What information is needed to support the purpose of the presentation? How will it be presented?
One should keep his points short, concise and understandable to the audience
...
STUD Y
Presentations constitute an important aspect of doing business
...
Presentations may also be required where the entrepreneur is in the business of
consultancy
...
the customer gets
value for money
...
166
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Where is it going to take place? The room that the presentation is in will have an impact on how
one presents
...
5
...
Then, a BODY which has a series of points with each point beginning with a
statement of fact followed by supporting material
...
In timing the presentation, an ideal breakdown would be:
STUD Y
T E X T
••
••
••
Opening - 10 to 20 percent of the total time allocated
Body - 65 to 75 percent
Closing - 10 to 20 percent
It is encouraged that each point the presenter makes be clearly stated, illustrated and supported
...
He should avoid jargon but devote a similar amount of time to each
main point; otherwise the audience may consider it less important
...
7
...
3 Tips for Successful Presentations
••
••
••
••
••
Plan the timing
Make points clear
Speak clearly
Use visuals that can be seen by all
End the presentation on time
Building Confidence
Nervousness is healthy--it shows that the presentation is important
...
One should rehearse until he is comfortable with the
material
...
The presenter should realize that people want him to succeed
...
Relax
...
When getting nervous, he should
breathe shallowly
...
3
...
The presenter should realize that he has more
power and energy when he stands erect with weight balanced equally on his feet
...
The presenter should concentrate on the message, not on how he is coming across
...
He should use eye contact
...
He should find a few supportive faces and hold their
eyes as he makes a point
...
He should turn nervousness into positive energy
...
He should not apologize
...
He should forget perfection
...
He should learn to laugh at himself
...
10
...
11
...
After the Presentation
Once a presentation has been delivered, the presenter should ask a trusted colleague in the
audience to give him feedback afterward
...
As mentioned earlier, ethics is the study of morality of acts
...
Ethics refers to a set of principles prescribing a behavioral code that explains
what is good and right or bad and wrong
...
(Koratko and
Hodgetts, 2004),
Ethics is the study of moral issues and values
...
A person who behaves ethically is one who operates in an upright and honest manner
...
In some countries, the society may not look down
upon giving bribes in business, yet in others, this may be taken as a serious offence that warrants
law enforcement
...
Ethical communication is
fundamental to responsible thinking, decision making, and the development of relationships
and communities within and across contexts, cultures, channels, and media
...
We believe that unethical
communication threatens the quality of all communication and consequently the well-being of
individuals and the society in which we live
STUD Y
Fast forward: Ethical considerations have to be put in place when handling communication tools
within the organization
...
6 Ethics in communication
168
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
When it comes to communication, specifically in business, there is no limit to the number of ethical
issues that may impact on the reputation of the business
...
However, if used badly, the
same tools we adopt to make work easier may be the same tools that if abused may bring the
moral question of rightness or wrongness to the fore for debate
...
The internet, for instance is full of erroneous and even dangerous information that is difficult
for people without a scientific education or training to interpret in context, particularly given
the uncertainties inherent in the scientific process
...
Guidelines in the use of communication technology in business may be summarized as follows;
STUD Y
T E X T
Developing an ethical culture
This should start from top management and drill down to the lowest level of staff in the organization
...
The use of the telephone
for instance should be associated by courtesy and good manners
...
Employee Training
If management gives the issue of ethics the importance it deserves, then the necessity of ensuring
that all employees are indoctrinated into this aspect of the organization culture should come as
no surprise
...
For each tool in the work place, such as the Internet
that will be used for sending emails for instance or doing transactions, there should be a policy
to ban the use it for tasks not related to the job
...
Open Forums
Management should promote the sharing of information, opinions, and feelings when facing
significant choices while also respecting privacy and confidentiality of the members of staff
BUSINESS COMMUNICATION
169
Freedom of expression
Freedom of expression should be encouraged when it comes to moral issues
...
The
management should encourage the courageous expression of personal convictions in pursuit of
fairness and justice
...
This touches on the human resource office and appraisal reports
...
These activities need to be given due attention in order to facilitate efficient
running of the organization
...
Meetings in the organization should be well organized
...
Communication within and without the organization should be done professionally as
the image of the organization will be impacted by the manner in which this is done
...
Formal reports should be well written, given the
fact they the information contained therein is sensitive to the business and can have
serious implication if it’s incorrect or wrongly written
Postal and courier services are what enables an organization communicate effectively
and professionally with outsiders
...
Business presentations skills are essential to everyone working in the organization
...
The top
management should lead by example in enabling an environment where moral values
are upheld
...
CHAPTER QUIZ
1
...
What are the main types of meetings and what are they designed to achieve?
3
...
Identify types of reports that you know
5
...
For what purpose would an organization require postal and courier services?
7
...
BUSINESS COMMUNICATION
171
ANSWERS TO THE QUIZ
1
...
It encompasses both personal and
infrastructural aspects that go into making correspondence in the business environment
efficient and effective
...
g
...
To give an account on the usage of funds and other resources e
...
monthly financial or
sales reports
...
g
...
To monitor progress e
...
in building work, in implementing a new scheme
...
4
...
Special Reports
These are different and are not submitted as a matter of general practice
...
5
...
It is the purpose of the report that determines
its structure
...
Report Title
ii
...
Confidentiality clause
iv
...
Terms of Reference
vi
...
Reports are written to accomplish the following:
T E X T
2
...
The main functions of meetings are;
•• To consult, exchange views and discuss matters of interest to all who are present
...
g
...
•• To make decisions democratically
...
•• To plan or monitor progress e
...
production
...
g
...
•• To make recommendations e
...
to an executive
...
Main body divided into sections as per the content page
viii
...
Report Summaries
6
...
•• Delivering goods and services to customers
•• Sending business documents to customers e
...
invoices, statements e
...
c
•• Responding to customer queries
•• Corresponding with the bank or other financial institutions
7
...
Composure
...
One should learn
to relax and breathe before making the presentation
...
ii
...
There is more confidence when standing erect with weight balanced equally
on the feet
...
Focus
...
iv
...
This will help the audience know that the presenter is speaking to them,
not at them
...
v
...
He should mention those funny incidents that happened on the way to the
meeting room
...
He should use anecdotes to bring the statistics, facts, and figures that he needs to
deliver to drive them home
...
This will only be
possible if it exploits new Internet technologies
...
••
••
••
••
••
••
••
••
••
••
The most successful organizations are being pushed by their top management to exploit
new Internet technologies
...
Businesses have been swift in realizing the opportunities provided by the web and
have developed websites in order to advertise and sell products and services, promote
corporate images and; to provide information (especially public services)
...
The web’s high-speed environment forces tight cross-functional integration across al
the company’s business divisions and functions and will also force management to
acquire IT skills as well as business skills to lead such change
...
Intranets enable employers to talk with and challenge one another, share ideas and
create new knowledge fostering experimentation with new ideas, products and services
before they are launched
...
Companies can generate over 50% of their total revenue on-line with about 40% of unit
volume shipped directly to customers without the company ever touching the product
...
Many companies, not only welcome you by name on their sites (if you have previously
purchased a product), but also remember your preferences and uses intelligent datamining software to suggest related products and services
...
Your report will be tabled at the next board meeting
...
174
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
••
••
••
••
••
••
••
••
STUD Y
T E X T
••
They make you feel at home on their sites, so much so that you don’t mind doing some
‘work’ for them such as order entry which saves their time and money
...
While the market will be the final judge, the important lesson is that companies are
taking risks to become more efficient than they are now
...
”
Successful companies hire not only the best, but the right kind of people who accept
an environment of rapid change, aggressive growth, are optimistic and like to have fun
while working hard
...
The question ‘to be or not to be on the internet’ is no longer relevant – the real question
has become how to develop a successful Internet strategy
...
The use of Internet and the Web will continue to grow in importance for business as
new applications are exploited and the number of people able to access the internet
increases
...
(25 marks)
(b) In what main sections would you format a formal written report and what is the purpose
of each of these sections?
(15 marks)
(Total: 40 marks)
Question Two
(a) What advice would you give to a colleague who has been requested to make a short
presentation to the board of directors on application of an innovative management
technique?
Your advice, in form of a checklist should include how to prepare and deliver a
presentation
...
Explain the role of a participant:
(i) Before the meeting
(ii) During the meeting
(10 marks)
T E X T
175
STUD Y
BUSINESS COMMUNICATION
STUD Y
T E X T
176
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
IT IN BUSINESS COMMUNICATION
177
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
CHAPTER ONE
EIGHT
IT IN BUSINESS
COMMUNICATION
STUD Y
T E X T
178
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
IT IN BUSINESS COMMUNICATION
179
CHAPTER EIGHT
IT IN BUSINESS COMMUNICATION
OBJECTIVES
By the end of this chapter, you are expected to:
••
••
••
••
••
Explain how ICT has affected business communication in recent years
Identify the various technologies that have revolutionized how business communication
is carried out
...
KEY TERMS
Information Technology (IT): The enabling mechanism, which facilitates the processing, and
flow of this information as well as the technologies used in the physical processing to produce
a product or provide a service
...
Information on the target computer is viewed using a Browser such as Internet Explorer or
Netscape
...
STUD Y
The world is becoming a global village with communication taking place at the speed of light
from one corner of the earth to the other
...
The
tremendous growth in trading activity has also necessitated the need for improved methods of
coping with increased usage of resources to ensure efficiency in production
...
This calls for an extensive feasibility study depending on the nature of technology and
the magnitude of operations to be automated
...
His conviction is what will drive him to
support IT in his business as a management tool
...
This chapter focuses on the technical details of the various forms of IT infrastructure the
entrepreneur may find useful to his business
...
This should be done with respect to the nature of business the business is
undertaking
...
Technology is dynamic hence the need to be always on
the lookout for emerging trends in business
...
1 Emergence of IT in Business
Fast forward: Information Technology has impacted on all aspects of doing business today
...
Businesses have started incorporating IT in their corporate strategies
strategy as a way of embracing technology in their business operations
...
In the chain of trade, most firms have been forced to adopt IT policies that comply
with those that their business associates have adopted
...
One example from the banking industry is
cheque processing
...
I
...
is affecting nearly every facet of human endeavor, and that effect is to speed up, to simplify the
process of work, of innovation, of scientific exploration
...
My productivity,
my ability to transfer my thoughts into text has probably trebled or possibly quadrupled
...
The rate of change, in IT, is exponential
...
But
in 10 years time, we could do the same 100 years in just 7 years
...
IT is well used in most facets of life ranging from home appliances to industrial applications
...
The difference here
stems from the fact that the functional IT to be found as feature enhancement in cars, phones,
IT IN BUSINESS COMMUNICATION
181
kitchen appliances and entertainment systems comes pre-packaged and is rarely the primary
purchase motivator
...
This means that someone must take ownership of the function
...
The management of the organization should take a systematic approach to
adopting IT as an investment given the cost implication and the fact that it is intended to drive the
organization to meeting its objectives
...
1
...
There is
little to be gained by the entrepreneur from hiding the potential impact in order to move a project
along towards a point of no return
...
Avoid Planning for Failure
Expectations must be clearly defined and Service Level agreements should be set beforehand
...
Penalty clauses may be included, but is must always be appreciated that failure with
fiscal compensation is still failure and it will still adversely impact business
...
Keep the Benefits in Focus
If all this is starting to look discouraging, the entrepreneur should think about the benefits to
be gained
...
This does not mean that every entrepreneur needs to become an IT expert
...
Instead of undertaking a full analysis of the project, they make quick
decisions where a lot is at stake
...
The
spectacular failure of government department IT projects is clear evidence of this
...
What the system will do, how this will be achieved, what will
it cost and what will it save all must be addressed
...
Good craftsmen also know when to invest in new tools
...
Keep Control
The secret is to remain in control at all times
...
In order to achieve this it will be necessary for the entrepreneur to analyze and document each
affected process
...
STUD Y
T E X T
8
...
Every organization has a set of predefined objectives that are crucial for its long term growth
...
These broad plans that can also be
broken down into smaller plans are called objectives
...
This is called ‘creating and presenting shareholder’s
wealth
...
Results from these
activities are measured and reported on against business objectives
...
IT can be taken as one of the means of achieving the major goals of the company
...
At the same
time, IT on its own needs to be discussed separately as one of the main strategies
...
IT is no longer an enabler of business
strategy, but an integral part of it
...
8
...
1 IT governance
Business objectives and the competitive environment;
Current and future technologies and the costs, risks and benefits they can bring to the
business;
The capability of the IT organization and technology to deliver current
and future levels of service to the business, and the extent of change and investment this might
imply for the whole enterprise;
••
••
Cost of current IT and whether this provides sufficient value to the business; and
The lessons learned from past failures and successes
...
This ensures that the investment can result in efficiency;
•• Overcome cultural changes
The IT strategy articulates the enterprise’s intention to use IT for some or all of approved reasons,
based on business requirements
...
When formulating the IT strategy, the enterprise must
consider:
T E X T
IT governance is the responsibility of the Board of Directors and executive management
...
3 Practical aspect of various
technologies
Fast forward: Technologies should be adopted based on business needs of the organization at
all times
8
...
1 Staff Location Systems
STUD Y
T E X T
The pace at which commerce and industry move today is largely due to technological advances in
the field of communications
...
Typed messages can be sent and received by telex, copies of documents can be transmitted
to distant locations within seconds using fax, remote branch terminals can communicate with
mainframe computers at head office etc
...
Extensions are called by pressing a button
...
It saves movement between
offices and frees hands during talking and listening
...
They can be
invaluable in cases of emergency e
...
fire
...
The disadvantages are that when used frequently it can be ignored; it is the
cause of distractions and irritation; the person making the announcement may not have a clear
voice
...
It is useful
when you do not know the exact location of the person to be contacted
...
The intention is to call the particular individual
to the phone or particular location to be given a message e
...
airport, reception
...
These "beeps"
send out high-pitched audible sounds when activated from a central point e
...
the switchboard
...
They are widely used by doctors and by executives in large organizations
...
They do not cause as much disturbance as the public address systems
...
They enable confidential messages to be relayed once telephone contact has been
made
...
They cover a wider distance (e
...
up to 20km)
...
The beeper is rendered useless if it is forgotten in the briefcase
...
A restricted area is covered-not as much as the public telephone network
...
Each person on the ‘call list’ has a code of so many
long and so many short buzzers-similar to the Morse code
...
With a coded buzzer everyone must stop and
listen carefully to the signals to discover whether it is his particular call sign
...
There
are three such methods:
1
...
Up to 80 coded signals can be transmitted on such a
system
...
The second method is a clock on which the figures are illuminated either singly or in a
combination to indicate members of the staff called
...
The third system is a series of coloured lights only
...
g
...
Disadvantages
1
...
2
...
3
...
STUD Y
It operates over a much wider area than the beeper (nationwide)
...
T E X T
Radio Paging
186
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
8
...
2 Telex and Facsimiles
Telex
A teleprinter is a machine which resembles a typewriter with a telephone dial
...
The printed copy of the messages
is produced on teleprinters at both the sending and receiving subscribers’ installations
...
The service is available day and night and messages may be transmitted to a subscriber even
though his teleprinter is unattended, provided it is switched on
...
STUD Y
T E X T
To send a message
1
...
The operator must then wait until the correspondent’s answer back code appears on
her teleprinter
...
These
codes and telex numbers are contained in the Telex Directory
...
On receipt of the correspondent's answer back code, the operator sends her own code
and then proceeds to send the message
...
When she has finished she repeats her answer back code and then waits to see the
correspondent's code to confirm that the full message has been transmitted
...
The message is previously
prepared on punched tape and checked for accuracy
...
Typical transmission speeds are 70 words a minute-twice the normal speed of
an operator
...
The advent of Information Technology gave a large boost to telex communication systems and
current telex systems resemble a desktop PC rather than the typewriter appearance of earlier
teleprinters
...
By employing electronic text preparation and editing techniques
telex messages may be prepared, edited and checked prior to transmission by means of VDU
...
The new electronic teleprinters have many additional facilities which include:
1
...
2
...
3
...
4
...
IT IN BUSINESS COMMUNICATION
187
The advantages of telex are:
1
...
Reliability of written communication
3
...
Ability to receive messages outside office hours
5
...
6
...
Fax (Facsimile Transmission)
Fax refers to a system of transmitting exact copies of documents quickly and accurately over
telephone lines to another fax terminal
...
The modem of the receiving fax machine decodes the analogue signals received into digital
signals which the fax machine decodes into the same pattern of text or images of the original
and prints it out onto a roll of paper which is loaded into the machine and guillotined into an
appropriate size
...
In
order to save costs or avoid busy transmission times, most fax systems allow the user to ‘stack’
a number of messages for onward transmission until a predetermined transmission time, say
overnight
...
This function is usually set up at the end of the office day when no further messages
are to be sent by normal means
...
Status Reports e
...
after every 50 transmissions
...
This provides a means of monitoring fax bills
...
Storage of addresses-up to 100
3
...
Auto re-try when lines are busy
5
...
6
...
7
...
8
...
9
...
Plain paper is used
...
into electronic signals
...
The receiving fax machine may be located
anywhere in the world and connected by telephone lines, cables or radio/satellite networks
...
It involves converting digital
signals to analogue for telephone transmission (most of the existing telephone networks are still
analogue) and back to digital via built-in fax modems
...
Error detection and correction
...
11
...
Fax machines come in various sizes and in various levels of sophistication
...
Early in the history of fax there were compatibility problems between one manufacturer's machine
and another but they now confirm to international industry standards
...
Easier to use-as simple as a photocopier
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
Disadvantages
1
...
Personnel may be unable to
cope
2
...
Legal implications – faxed message does not have legal currency
...
Messages once dispatched are irretrievable
...
8
...
3 Electronic Mail
Electronic mail is the term used to describe a range of electronic transmission services but is
commonly applied either to a company’s mailbox system operated via its own computer or to one
of the services provided by internet service providers (ISPs)
...
A message is keyed in and addressed by code to relevant mailbox users
...
E-mail is normally incorporated in Local Area Networks or may be provided by a public service
...
In addition, digital PABX telephone exchanges
provide access to Local Area Networks, mainframe computer terminals, word processors, telexes,
microcomputers, electronic printing equipment and electronic mail stations
...
The
receiver enters a personalized code via the keyboard on his terminal, which allows messages to
be read on a video screen
...
A password must also be entered, which is not displayed for security purposes
...
Each user of the system is allocated a ‘mailbox’ which is a segment of the computer’s internal
memory that stores messages
...
The input of the
command ‘mail’ connects the user to the electronic mail system
...
Either ‘send’, ‘read’ or ‘scan’
...
Flagging up the arrival of an incoming message construction of a directory of incoming
mail by date/time of arrival
...
Indication of what mail has not been read by user
...
Facility to store or discard incoming mail
...
Facility for reading mail on monitor, sending it on to only another LAN user, making a
hardcopy of message for reference outside LAN
...
Displaying a ‘flag’ on the monitor to indicate arrival of an urgent incoming email message
while the user is operating another package
...
Ability to set up predetermined groups of message recipients and send the same email
message to all e
...
all Heads of Department or all staff working in Personnel
...
Facility to check whether recipient may/may not have a message
...
Ability to set up a ‘bring forward’ system for emailed messages with action requests
...
All outgoing messages are electronically filed for user reference
...
Facility to send a created file with an email message to another LAN user
...
Ability to put a ‘destroy’ message deadline on outgoing mail
...
Advantages of Email
1
...
2
...
3
...
STUD Y
The ‘read’ command allows the user to read the whole of the message, but ‘scan’ lists only the
sender of the message, the time, date, and a single line describing the message content
...
Messages may be sent to a number of people without a physical reproduction
of them
...
A reply can also be attached to a message for automatic transmission back to the
sender of the original message
...
190
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
4
...
5
...
6
...
7
...
8
...
9
...
10
...
STUD Y
T E X T
Disadvantages of E-Mail
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
9
...
10
...
8
...
4 Electronic Conferencing
One of the ways in which executive time is taken up is in attending meetings
...
Increasingly, conferences are taking place, both nationally and internationally, by
means of telecommunication links
...
Audio Conferencing
Audio conferencing makes it possible for two or more groups of people located in different parts
of a country or in some other country to be linked simultaneously by telephone
...
Where technical matters are being discussed, simultaneous transmission of graphic information,
engineering data or pictures can be achieved by the use of facsimile equipment or computer
terminals
...
Although it is an expensive method of communication, it provides the advantage of a face-to-face
meeting without the wear-and-tear of travel
...
Any documents, models or technical drawings being
discussed can be shown close-up on the TV monitors
IT IN BUSINESS COMMUNICATION
191
Computer Workstation Conferencing
It is possible to interlink remotely located computer workstations
...
Each circle member may key in comments and
responses viewable by all, or may ‘converse’ with an individual participant of the conference
circle in privacy
...
Interactive Software Conferencing
With this system a PC user can dial up a colleague(/s) across the world and, with contact
established, transmit a screen – displayed, software application – say a graph, chart or document
– which may be updated, modified or altered by any of the participants, as they converse over
the phone
...
Such meetings may be more difficult to chair
...
Some participants may be camera shy
...
Face-to-face pre-meeting contact is lost
...
Technical problems/breakdowns may occur
...
Inconvenience of going to a confravision centre (a confravision centre is a regional
studio set up with teleconferencing facilities
...
Private links may be set up between private organizations
...
6
...
Data Storage and Retrieval
An essential part of the Office Manager's task is to supervise office services, which include the
storage of information and its retrieval
...
However even if the office were to become fully automated, it is unlikely that paper
would disappear entirely
...
STUD Y
1
...
2
...
3
...
4
...
5
...
6
...
7
...
8
...
T E X T
Advantages
192
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Having worked in an office and seen some of the systems in operation, it will help the reader to
understand the basic principles
...
To be effective,
it should of course, suit the needs of the organization and the people using it, but there are certain
essential requirements which are common to most
...
Therefore one should know the main methods of classifying
documents
...
g
...
g Nairobi comes before Narok subject
Chronological (or date) order e
...
14/3 comes before 18/4
Apart from these, there are the more sophisticated systems such as :
••
••
••
Alpha-numerical
Decimal
Terminal digit
Retention Policy
This means the period of time that documents and files should be kept on a current system
before they are either destroyed or transferred to reserved storage
...
IT IN BUSINESS COMMUNICATION
193
••
••
••
••
Information Technology has been the driving factor behind business process automation
...
IT has become second nature to businesses regardless of
the industry of operation
...
IT should be able to fit well in the organization’s
strategy without holding back the key operations
...
The process of incorporating the IT strategy in the overall business strategy is a sign of
management’s commitment in the automating operations
...
Telex and Facsimiles
2
...
Electronic Mail
4
...
Audio Conferencing
6
...
An organization should only automate
those aspects of communication that are in line with its overall strategy
...
What value would IT add to business operations?
2
...
Why should management look closely into its own corporate strategy before investing
in IT?
4
...
Why has the Fax become more popular than Telex in the offices?
6
...
7
...
8
...
STUD Y
••
T E X T
CHAPTER SUMMARY
194
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
ANSWERS TO THE QUIZ
1
...
If used wrongly, e
...
adopted before
undertaking feasibility study, it may well result in the organization missing the mark on
attaining its corporate goals
...
STUD Y
T E X T
2
...
Businesses have become
so interdependent and this is regardless of their geographical locations
...
Due to the interdependencies existing in businesses,
associates have been forced to design policies that are in line with their counterparts
who have embraced IT, in an effort to streamline their modes of transactions to what is
best practice
...
The corporate strategy is what the organization exists to do
...
Anything that is not in
line with the achievement of these objectives should not be the focus of management
...
An organization’s management should critically focus on its corporate
goals and assess to what extent the adoption of IT will lead to the said goals
...
4
...
This has been applied through the following technologies
•
•
•
•
Electronic Commerce; through e-commerce, buying, selling and payment for goods
and services can take place
Electronic Mail; this has facilitated correspondence and the sending of
attachments
Video conferencing; trade partners in separate regions can transact visually
Electronic Data Interchange – Business documents can be exchanged in the
process of doing trade
...
The facsimile transmission has become more popular than the telex for various
reasons
...
It is easier to use than the telex
• There is no lengthy training required to operate the facsimile machine
...
• The fax is very flexible
...
It is invaluable to architectural or
engineering firms which may need to communicate a message with a drawing,
sketch etc
...
This gives it authority and authenticity
...
With the facsimile, errors are eliminated (e
...
typing errors), as no intermediate
treatment is necessary
...
g
...
The fax is faster in terms of preparation
...
8
...
One of the ways in which executive time is taken up is in attending meetings
...
Increasingly, conferences are taking place, both nationally and
internationally, by means of telecommunication links
...
• Audio conferencing makes it possible for two or more groups of people located in
different parts of a country or in some other country to be linked simultaneously by
telephone
...
Although it is an expensive method of communication, it provides the
advantage of a face-to-face meeting without the wear-and-tear of travel
...
Any documents, models or technical drawings being discussed can be shown
close-up on the TV monitors
T E X T
6
...
As an intra-company facility, electronic mail can improve message sending and help
eliminate the need for a considerable amount of paper, particularly where staff have
personal computers on their desks
...
Email has a high-speed send/receive cycle
...
(5 marks)
(e) List and briefly explain the items required to access the Internet
...
(b)
This strategy certainly helps the entrepreneur to assert his presence in the industry as a
supplier
...
This move also creates jobs for other people and in this way, the entrepreneur also thinks
about the society his business serves
...
This comes
in when the entrepreneur sees that his first work is doing well and there is room for more
...
In this way he doesn’t sit back and let the business
thrive on the success of the first project
...
With the rapid expansion of the business, the operations also become rather
complex in nature
...
The
entrepreneur will, here think of employing the services of qualified professionals to help him
run the business
...
Incorporating Information Technology
IT has become relevant to all businesses today
...
In the growing
world of business, it has come as a necessity that a business arms itself with an ICT strategy
that works
...
Clients don’t
need to hear the intricate details of the entrepreneur’s personal life
...
But by far the most important factor about being professional is being consistently
professional
...
Clients should be able to at least contact the business via email and a
land line number
...
If he will not be
in the office, to check email for most of the day, he should set an auto-responder that lets
people know when he will be checking his email and possibly include his cell phone number
as well
...
Listen to Others
Trying new things whether it be a marketing strategy, a new business system, a piece
of software or a new product/ service, can be good for the growth of the business
...
If
the staff feel as though their ideas are listened to, considered and possibly even implemented,
the more likely the entrepreneur is to have some great ideas being generated!
Learning from mistakes
The entrepreneur should make a concerted effort to learn from his mistakes
...
Once he has made
the mistake and is aware of the reason behind the failure, he should use it to his advantage
and try a different strategy or modify the initial idea
...
He
should persevere even if it appears that he is not making headways
...
This perseverance also translates into other aspects of
business as well, whether it is a new marketing idea or a potential client or business lead
...
If the entrepreneur’s budget allows, he should consult
a professional marketing firm or start off with the basics and try to get his business as
much exposure as possible through various platforms such as; a website, e-newsletter,
business cards, a company brochure, vehicle branding and possibly an advert in an industry
magazine
...
Without this attribute, he
may find himself in a situation where he cannot do anything but let the business collapse due
to lack of information and experience
...
Mismanagement
The entrepreneur should be aware that big businesses are successful because of the trust
the owners put on their staff
...
Poor staffing methodology can be a cause of mismanagement
Poor Business Ethics
This comes as a challenge due to the low level of importance given to it by entrepreneurs
...
The entrepreneur may well spend time trying to fix the wrong problem while still being
unethical
...
If the entrepreneur finds it more
expensive to acquire loan to expand, his may not achieve the goals of his business, in which
case he will find it challenging to reached the untapped market
...
If he cannot get
his supplies on time, it means that goods will not be produced on time for the waiting market
hence lost revenues
...
This can be disruptive to operations
...
Financial risk
Where an entrepreneur places the entire of his savings into the venture with the firm belief
that he will earn something in return, he risks losing a lot of money if this does not happen
...
He may not have a fall
back plan if the business collapses
...
This may adversely affect family and relations
...
The risk here is the probability of failure in the mind of the entrepreneur
...
The growth of the industry will translate to growth of business and consequently demand
for more workforce
...
This is based on the profits made by the businesses
...
Social responsibility
STUD Y
T E X T
This responsibility ensures the entrepreneur plays an active role in his physical environment
...
This should be clearly highlighted in the company’s policy
...
Formation of cartels
The formation of cartels helps the many small individual firms that perhaps could not have
had the same bargaining power as the cartel
...
The smaller firms
eventually grow and play important roles in the economy as well
...
e
...
It also entails establishing new markets by engaging new technologies
...
The franchiser grants rights to manufacture or distribute a product to the
franchisee in return for royalties
...
These strong points are
what he will utilize to get himself started on something new
Assess his surrounding
This means taking a step backwards and analyzing the industry of his choice to see who
else doing or attempting what he has in mind
Identify gaps that may be tapped
He will need to be very keen to spot the areas that have potential for invention and innovation
and plan to capitalize on them
Select one of he gaps identified based on his strengths
...
He will select one specific area among many to invest in
...
The entrepreneur will also need to carry out a risk assessment or appoint an expert to do this
for him
...
Lay out an execution plan
Planning is the most important part of this thought process
...
The entrepreneur
will assess the environment to spot this phenomenon before moving on
...
It basically means coming up with an
improved product
...
The entrepreneur
becomes resourceful by simply making use of by products or waste products of a previous
production process to create demand for a new product
...
The arrangement would normally be terminated after
the objectives have been attained
...
Depending on the agreement, the distributor may be limited to selling only that
company's goods or it may have the freedom to market several different product lines or
services from various firms
Question Two
(a)
Know your strengths and weaknesses
This basically means taking stock of the positive qualities for business that the entrepreneur
possesses and thinking of how to put it to good use
...
Running the business enthusiastically
The entrepreneur should take up the challenge of introducing something new in the market
with optimism
...
Knowing the product/ service
The entrepreneur should seek as much assistance as possible from the parent company
...
Carrying out a market assessment
The entrepreneur should seek out the reaction of the market to the new product he is about
to introduce
...
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
Need for training
The entrepreneur should find out whether dealing with the product or service requires further
training and if so, he should find out the scope of training required
Rate of Return
The entrepreneur should find out whether with the resources he has, he can still make more
in another investment
...
Check with current operators
207
This entails calling up entrepreneurs who have taken up the opportunity to find out how they
are fairing and what problems they are encountering
...
By paying to acquire a franchise, the entrepreneur
would actually be investing his money the risk undertaken by the third party
The majority of franchise operations are consumer-oriented retail operations which rely on
good location, visibility and easy access to the establishment
...
This may work against the
entrepreneur's plans for the business
...
Having a better location could translate into lots of sales over
a couple of years
...
If the seller decides not to supply information or guidelines that could help the entrepreneur
once he is in operation, he may not have much recourse available to him
...
If this is the
case and he deviates for any reason whatsoever, he runs the risk of the licensor canceling
the agreement
...
Most parent
companies will require books to be opened for examination at pre-designated periods of time
...
Most smart buyers of business opportunities
will negotiate the point in the agreement stipulating sources of supply in case product quality
is inconsistent
...
The entrepreneur still runs the risk of losing the business because his property
contracts may have been financed through the parent company
...
It is the process of enlarging a business’ circle of trust
through negotiation
...
Importance
Entrepreneurs can take advantage of the complimentary nature of the various business
in the economy in which they operate
...
This information helps the entrepreneur understand his environment better
...
The networks can be a source of
sustainable competitive advantage as well as a means of procuring other resources that can
be a source of competitive advantage
...
The objective of cost reduction can be
greatly enabled through networking where production processes avoid wasteful duplication
of resources, utilize by-products and processes, and may even allow the partners to share
brands and distribution channels
External Motivations
This motivation drives the joint venture to come up with improved current strategic positions
with respect to the industry in which they belong
...
A joint venture could also
act to preempt the possible entry of new competitors thereby giving the partnership a lead
that is less likely to be challenged in the industry
...
g
...
It could
also be a room for creating a presence in a market that has not yet been born, but chances
are high that once the demand is created, there will be high returns
...
The firms come together to promote their own values and social agendas
...
They include friends, family, close business associates, former teachers
at the university etc
...
The entrepreneur engages other entrepreneurs,
customers, vendors and other constituents in the operating environment in boundary
spinning activities
...
Agglomerate Networks
An agglomerate network is a set of indirect relationships between firms that are competitors
...
209
Organic Networks
STUD Y
T E X T
This is an indirect relationship between non – competing organizations
...
These relationships are not task-oriented and may consist of strong ties linkages
such as friends and close associates or weak ties links
...
Having a law
making organ within its structure, it can, through an act of parliament, formulate policies that
will enhance the creation and establishment of small businesses
...
Policy documents that address various
areas and even geographical locations should be set with the objective of ensuring equitable
chances to all stake holders
...
Most of the NGOs
are mainly involved in credit delivery, business training, providing general consultancy, and
providing short term loans
...
This calls
for the need to strengthen the institutions supporting small and medium enterprises
...
Creating forums for networking
Networks are so important for the entrepreneur who is just starting out
...
The business linkages are also critical because networking is crucial in the business world
...
The government can establish organs that will
specialize in bringing entrepreneurs with good proposal and strategic investors together
in a common forum
...
There is always bound to be
political interference where the business environment is concerned raising questions as to
the main issue that needs to be addressed
...
These can cushion the small
businesses against the adverse effects of economic cycles
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
2 11
Question Two
The various forms of business include:
Sole Proprietorship
This is a business owned by one person
...
The problem is, of course, that a one-person
business can’t make as much money as a large business, the owner will have to work very
hard, and if the business loses money, the loss translates directly to the owner
A sole proprietorship is generally the simplest way to set up a business
...
A creditor with a
claim against a sole proprietor would normally have a right against all of his or her assets,
whether business or personal
...
Partnership
Corporation
A corporation is a legal entity that is separate from its owners, the shareholders
...
Directors, officers and insiders can bear some liability for their involvement with
the corporation
...
", "Incorporated", "Inc
...
Whatever the term, it must appear with the corporate name on all documents,
stationery, and so on, as it appears on the incorporation document
...
This attribute of legal
personality has received considerable judicial exposition in relation to registered companies
and the overall practical effects of the decided cases may be summarized as follows:
Factors to Consider in selecting a suitable form of business include:
Taxation
The entrepreneur should assess how the Government will tax him and his business under
the various forms of business ownership
...
It may work in his favor in
subsequent periods
...
In order to establish the terms of the business and to protect partners
in the event of disagreement or dissolution of the business, a partnership agreement should
be drawn up, usually with the assistance of a lawyer
...
Where two or more persons wish to form a partnership, then
it is recommended that they agree on the terms upon which the partnership will be run and
the relationship between each other
...
T E X T
A partnership is a relationship that substitutes between two or more persons carrying on a
business common with a view to making profit
...
The firm cannot survive as a business
without proper capitalization, and this will include both matters of equity and debt
...
Before the
entrepreneur even thinks about starting the business, he’ll need to have a good relationship
with his bank or an established financial institution
...
Liability
This will determine whether the entrepreneur can be sued for issues arising between the
business and his customers
...
The entrepreneur should
protect himself from liability issues, and he should ensure that he is not personally held
responsible for any unfortunate happenings
...
The best way the entrepreneur can avoid a dispute or
potential litigation, however, is to prepare a solid agreement in which he is confident he has
negotiated the best terms for his business
...
The emergence of entrepreneurship has elicited a lot of reactions from
scholars in the field
...
These have been
divided into two broad categories
The macro view entrepreneurial thought
1
...
Financial/Capital School of Thought
3
...
The Entrepreneurial Trait School of thought
2
...
The Strategic Formulation School of thought
(b)
The macro view entrepreneurial thought:
According to this school of thought, factors beyond the control of the entrepreneur constitute
the reasons for going into business
...
The constituents of this school of though are:
•
•
Environmental School of thought
Financial/Capital School of Thought
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
•
213
Displacement School of thought
1
...
They further argue that institutions and societal values grouped together form
an environmental framework that strongly influences the development of entrepreneurs
...
In addition, the social group a person belongs to often may affect
the potential development of an entrepreneur
2
...
e
...
He may either take up a loan or decide to
save up his
...
b) Ongoing venture stage:
The financial consideration here is how to manage cash, make investments, undertake
financial analysis, and evaluate the financial position of the venture
...
c) Decline or succession stage:
The entrepreneur will be forced at some point to investigate the future profitability of the
venture
...
This decision of course, has a financial consideration
...
Displacement School of thought
This view suggests that individuals will not pursue a venture unless they are prevented or
displaced from doing other activities
...
Factors within his control can be attributed to whether or
not his vision yields returns
...
The
following schools of thought comprise this view point
...
The Entrepreneurial Trait School of thought
2
...
The Strategic Formulation School of thought
1
...
Those behind this school of thought suggest that if certain traits associated
with successful entrepreneurs are established and supported early in life, this will lead
eventually to entrepreneurial success
...
Family development and education are also important traits which contribute to the success
of an entrepreneur
2
...
The
proponents further argue that creativity, market awareness, developing the right idea, at the
right time, for the right market niche are the essential ingredients to entrepreneurial success
...
The argument is that through strategic planning and
formulation an individual is able to develop an effective venture
...
It’s a document that is prepared by
the owner of the business since he knows the business better than anyone else
...
(b)
This section provides the reader with the genesis of the business idea; how it came about,
perhaps following a moment of inspiration on the entrepreneur
...
It is an important section as it may or may not convince the potential
investors
...
This is
what will give the investors a clearer understanding of the overall picture of the proposed
business
...
If this section flops, then no
matter how well written the other sections of the plan are, chances are high the reader will
not be motivated to read ahead
...
If he is raising funds to start the business, then this
should not be confused with funds required for expansion, for instance
...
As a rule of thumb, if the plan will be used
to attract investors or lenders, this is the primary objective and outsiders are the primary
audience
...
Products and services
Here, the entrepreneur should clearly explain what he plans to bring into the market
...
This will give the entrepreneur an indication of the market perception of the product or
service
...
If the product is new, the entrepreneur should explain what new thing it is going
to add to the present market
T E X T
Description of the business background
STUD Y
216
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Competition
The entrepreneur will need to carry out an analysis of other firms in the industry to find out
how they have managed in the past
...
The entrepreneur will also need to do a competitive analysis
...
When
exploring weaknesses he should include information that will help allay any concerns that
may arise as to their ability to significantly hinder his success
...
If he has existing customers, he should provide an analysis of who his customers are,
their purchasing habits, their buying cycle
...
If a business has no customers, there is no
business
...
Potential investors will look
at this section carefully to make sure there is a viable method to reach the target market
identified at a price point that makes sense
...
What resources and
processes are necessary to get the product to market? This section of the plan should
describe the manufacturing, Research and Development, purchasing, staffing, equipment
and facilities required for his business
...
Investors must feel confident that the management
team knows its market, product and has the ability to implement the plan
...
If this area is lacking, his chances for obtaining financing are bleak
...
Whether it is additional training required or additional management staff needed, he
should show that he knows the problem exists, and provide his options for solutions
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
1
...
The summary
is used for presentation to potential investors who may have little time to thoroughly go
through the detailed plan
...
Attachments/ supporting documentation
The entrepreneur must include any documents that lend support to statements made in
the body of his company's business plan
Question Two
Whose responsibility is it to prepare the business plan? Why is this so important?
(5 Marks)
The entrepreneur has the sole responsibility for preparing the business plan
...
He has to own the
process of preparing the plan and not delegate it to some one else
...
It doesn't matter if he is using the business plan to seek financial resources or to evaluate
future growth, define a mission, or provide guidance for running the business; he is the one
who knows the most about the business
...
Only he can come up with the financial data, the purpose of his business, the key
employees, and management styles e
...
c
...
If he needs further help in
one area, then he may seek the assistance of an expert in the respective field
...
Most lenders will require that he comes up with a business
plan before they can consider him for financing
...
It comes as later requirement when the business
needs additional cash to continue its operations
...
STUD Y
(a)
T E X T
Clearly explain 5 benefits that an entrepreneur stands to gain from a well prepared business
plan
...
If he doesn’t have a thorough understanding, it will be difficult to explain
it to third parties
...
Through a well prepared business plan, the entrepreneur will
be able to see clearly the problems he had not thought of earlier, so he becomes well
prepared psychologically to deal with them
...
Without a business plan, it becomes difficult for the entrepreneur to have
a clear sense of direction
...
Management Tool
In the business plan, the entrepreneur puts in writing what his vision for the business
is
...
They need to be achievable as
unachievable targets may make the business plan lose credibility
...
If not, then he will have
sufficient basis to manage the growth of the business to direct it towards the right direction
STUD Y
T E X T
A tool for planning and guidance
A business plan in itself is a planning tool
...
The entrepreneur has set out what he
needs to achieve within a give time frame so he will set out all these in the business plan
...
A business plan will act as a learning tool for them
...
The business plan thus also acts
as a source of guidance where the way forwards seems unclear
...
By taking an objective look at the business the entrepreneur
can identify areas of weakness and strength
...
A toll for risk analysis
The risks involved in the business are perhaps something that the entrepreneur may not
want to dwell upon too much
...
These could be
financial, operational or control risks
...
Once an informed reader looks at the
plan with all these risks highlighted, he may find it a more realistic proposal and be willing to
invest
...
It defines the purpose,
the competition, management and personnel
...
The roles and responsibilities of the operational and
management staff will also be clearly defined
...
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
219
Reference Tool
STUD Y
T E X T
A well prepared business plan offers a benchmark against which actual performance can be
measured and reviewed
...
The plan provides
an ideal setup
...
At all times the entrepreneur should keep his business at par with his
targets as well as with what the competitors are aiming at and even further
...
However, actions taken by the entrepreneur in his own
capacity have a direct impact on how the public perceives the business
...
There are many stake holders in the industry ranging from direct
customers, business associates, the government and its organs e
...
c
...
Social responsibility
is therefore the response given to these parties by the entrepreneur through his business
enterprise
...
Some of these include;
Customers
The customer is the most influential stake holder of a business
...
The entrepreneur can ensure that his
customers’ interests are well taken care of in the following ways;
••
••
••
••
Treating them with respect
...
Dishonesty can ruin a
business reputation to an extent that it may never recover its good will
The entrepreneur should be objective and truthful about the success of his products or
service
...
He should be fair in the manner in which he handles disputes
...
What the entrepreneur needs to do to achieve
amicable relationship with his clients is to be as cool headed as possible when it comes
to dispute handling
...
He therefore needs to establish good relations with the supplier at all times
••
••
••
He should uphold ethical business practice
...
He should be patient with the supplies in waiting for deliveries
...
Should the entrepreneur refuse to take up the suppliers’ products for one reason or
another, it is good business practice to inform the supplier this in writing
...
If he foresees difficulties, he should communicate with
the financiers in good time
...
This will assist them make a decision as to whether to invest more or give the
business more time to grow
...
He should free himself from
any bias in the preparation of the financial statements
...
This will ensure that the
code is not out of context with the legal requirements
...
This entails assessing the effects of the ethic codes that are in place and checking what
impact, if any they have on productivity
•• Identifying the top five to ten ethical values that are high priorities within the
organization
...
•• Composing a code of ethics for the business
...
This will make the ethic codes more relevant to the individual work of every
employee
...
This entails including wording that indicates that all employees are expected to conform
to the values stated in the code of ethics
...
This
ensures that the code of ethics is applied uniformly across all levels of management
T E X T
A business can encourage employees to adhere to a company’s code of ethics in the
following ways
222
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Question Two
(a)
E-commerce includes all business activities and processes occurring over the Internet
...
It
also provides a convenient means by which to purchase goods and services offered by a
company
...
An entrepreneur may benefit from e-commerce in the following ways:
STUD Y
T E X T
•• More exposure, more profit
...
This gives the company a better chance
to earn more profit by providing the means to reach more customers
...
The company no longer needs to spend
so much on promotional materials or installation of expensive equipment to be used for
customer service, nor does it need to hire more personnel to do the inventory duties
...
A
single person can retrieve the database to check purchasing histories easily
...
•• Information sharing between business Partners and other businesses
E-commerce provides an effective way to exchange business information with partners,
as it is Internet-based
...
(b)
Outsourcing is a contractual agreement whereby an organization hands over control of part
or all of the functions to an external party
...
The contractor provides the resources and expertise required to perform the agreed service
...
The entrepreneur
should well understand the benefits that can accrue to him and his business should he take
up this management aspect to handle the non-core business needs
...
There is a lot of flexibility with respect to both organization and structure
Some of the services that can be provided by thirds parties include;
••
••
••
••
Postage and courier services
Transport and security
Catering and cleaning services
IT installation and maintenance
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
223
(c)
Globalization is a phenomenon that describes how local, regional or national realities
become integrated on a global scale
...
In this, national economies are unified into the international economy through
trade, foreign investments, capital flows, migration, and the spread of technology
...
The term can also refer to the transnational
dissemination of ideas, languages, or popular culture
...
The movement of material and goods between and within
national boundaries can also boost the entrepreneur’s range of products
...
Access to more information
With globalization comes an increase in information flows between geographically remote
locations
...
The entrepreneur can use the
information he collects to plan for his business growth and identify opportunities
Positive effects of competition
Survival in the new global business market calls for improved productivity and increased
competition
...
(c)
A trade fair is an exhibition organized so that entrepreneurs with like minds and belonging
in a specific industry can showcase and demonstrate their latest products, service, study
activities of rivals and examine recent trends and opportunities
...
They are held on a continuing basis in virtually all markets and normally attract
companies from around the industry
...
He will meet other entrepreneurs in the same industry who share a lot
in common with him
...
T E X T
Source of financing
STUD Y
224
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Advertising
the existence of his products
...
Recruitment
STUD Y
T E X T
The entrepreneur can also attract skilled personnel who normally attend such events looking
for job opportunities
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
225
CHAPTER SIX
Question One
(a)
Sender: This is the originator of the message or information that needs to be sent to a
predetermined destination
...
Receiver: This is the desired destination of the message that is intended to action
...
The intention is to hide the message context such that should it end
up in the wrong hands, the recipient will make no sense from it unless he has the decoding
formula
(b)
1
...
It provides a better understanding of what takes place in the
communication process
A typical communications system consists of:
•• Source System
This is the point that generates data to be transmitted
...
Within the source
system, is a devise that prepares the message, giving it a format that can be relayed
through the communication network
...
It converts
data into transmittable signals
•• Transmission system
This is the communication channel
...
Depending on the communication system, it could be a telephone wire, a fibre optic
cable or wireless media
...
It comprises
the receiver, which converts received signal into data and the workstation or server
computer that stores the information
...
STUD Y
226
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
This can be diagrammatically represented as shown below
Source
Eg
...
g
...
G server
Destination System
Question Two
(a) Most barriers to communication are interpersonal
...
The superior
wishing to maintain authority and the subordinate protecting himself from criticism
...
••
Educational/Social Background
Differences sometimes cause feelings of inferiority/superiority
...
••
Language Barrier
Misunderstanding and incorrect interpretation may result from the use of inappropriate or
ambiguous language
...
••
Background Knowledge
Lack of expertise or knowledge of a subject may impair understanding
...
••
Rivalry/Jealousy
Personality clashes or guarding of one's own area of work may affect objectivity and the
degree of co-operation given
...
To make effective listening
possible, several positive approaches can be made
...
What thoughts are uppermost
in his mind? In what frame of reference should his words be taken?
You listen better by actively concentrating
...
Avoid distractions like noise, poor seating etc
...
This encourages the speaker and helps him
assess how well/badly the message is getting home
...
” and probe for more information
e
...
“In what way do you feel…
...
There is a tendency to dismiss out of hand a topic where the content appears
to be too advanced or too detailed
...
In fact, the more unfamiliar
the subject-matter the more likely the speaker is to find himself wrestling with difficulties
of expression but this should not put off the listener
...
Rid yourself of the habit of picking out one point made by the speaker and dwelling on
it while he is continuing with others, which you will miss
...
You will also find it beneficial to form better listening habits by repeating back what the
speaker has said to show you are trying to understand and that you are interested
...
Effective Listening
To be a good listener is as important as being a good speaker
...
Listening is not something that happens to us
whether we like it or not
...
We choose to listen or not to listen
...
The hands should
be free, maybe at the side, but seldom kept in the pockets
...
All those things make the listener nervous
...
Also, one should be very careful in the words chosen
to express oneself
...
The person communicating should have a good command
of language and knows how to use it effectively
...
This means they ask questions, truly
interacting with others
...
STUD Y
T E X T
(c)
228
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
CHAPTER SEVEN
Question One
INTERSWIFT COMPANY LIMITED
REPORT ON SUCCESSFUL BUSINESS TRANSFORMATION ON THE INTERNET
TERMS OF REFERENCE
To carry out a study of business transformation on the Internet in order to identify several
important factors common to their success in the business world as requested by Mr
...
PROCEDURE
1
...
2
...
FINDINGS
1
...
The web’s high-speed environment forces tight cross-functional integration across al
the company’s business divisions and functions and will also force management to
acquire IT skills as well as business skills to lead such change
...
2
...
Understanding e-commerce is a key to success in today’s globalizing economy, where
rules formulated in distant capitals have an increasing impact on cross-border trade
and competition in home markets
...
Businesses are using intranets for the internal display of company manuals covering
employment and other procedures; easily updated internal news and information
services, company catalogues; and project notice boards (to which project participants
can add information and comments to be seen by all)
...
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
229
The network also extends to customers through the use of extranets for enhancing
customer relationships and managing its supply-chain
...
Putting the customer in the driver’s seat makes business sense, especially given the
one-to-one marketing focus that is becoming the hallmark of electronic commerce
...
”
Successful companies hire not only the best, but the right kind of people who accept
an environment of rapid change, aggressive growth, are optimistic and like to have fun
while working hard
...
1
...
2
...
3
...
4
...
5
...
MAUREEN AKINYI
INFORMATION TECHNOLOGY MANAGER
Question Two
(a)
1
...
Consider the purpose of the talk
...
Collect and assemble the necessary material – from previous knowledge or experience,
from discussions with others, from documents and reference works
...
4
...
The
presentation should be short
...
Prepare a list of the principal topics of the presentation to ensure that notes are not
constantly referred to
...
For example, for an annual general meeting, he should ensure that the Directors’
Report was enclosed in his notice and agenda
...
If any research needs to be done,
he should ensure it is carried out in advance
...
If he cannot attend the meeting, he should pass his apologies, fill in a
proxy (if necessary) and forward anything that was required of him in advance before the
meeting
...
He should ensure that he has a supply of writing paper and
that he has signed the attendance register
...
If he is a speaker, he should ensure that he speaks within his allotted time, if he is
chairing the meeting he should ensure that he is running the meeting in a fair and orderly
manner and adhering to the relevant law/rules
...
It creates publicity of the organization not just locally but also on an international level
...
Websites also allow easier purchasing such as orders being placed from the web site
...
If the organization already has a dedicated lease line, email is much cheaper and faster
as compared to surface mail
...
As an educational tool, the Internet can be used to carry out research and learn a lot of
valuable information
2
...
Through E-Commerce, the entrepreneur can find himself in untapped
market where he can set his business empire
3
...
The world has been turned into a village as a result of the
Internet
...
(c )
Problems arising from the use of the Internet
••
••
••
••
••
Viruses – a lot of viruses are introduced into the Internet and if not detected and
cleaned may have the effect of destroying the organizations database or crashing the
computers
...
Accessing undesirable web sites such as pornographic sites
...
Unnecessary spam/junk mail will also end up being sent which leads to waste of time
as employees read or the junk mail that has been sent to their in boxes
...
Organizations, individuals, schools, etc have gone on-line to experience this medium
...
One
can also access the internet from cyber cafés, various branches in libraries, etc
...
A single message may be sent simultaneously to many recipients
...
It has direct input and retrieval from the keyboard;
virtually instant dispatch and retrieval; other files can be attached to email messages and is
easy to download and instant responses can be sent
...
Cost effectiveness particularly with rise in postal charges
...
Prevents interruptions
...
Efficient in that it enables flexible working-from home or even abroad
...
Facilitates wide message distribution where used intra-company
...
Enables messages to be date-activated which ensures that they are delivered
automatically to pre-determined future dates
...
This is the route through which
the organization will achieve the targets, both long term and short term that the management
has set
...
The Information Technology (IT) strategy is part of the corporate strategy
...
In this sense, a lot of attention needs to be given to
this investment
...
SUGGESTED SOLUTIONS TO EXAM QUESTIONS
233
( c)
STUD Y
T E X T
The IT strategy would be redundant if the interest of the business was not the major overriding
concern for management
...
IT resources are at the disposal of management and the IT management staff
also report to top management
...
It would mean that, no matter how sophisticated the technology
is, if the usage is not in line with the attainment of corporate objectives, then it is the same
as not investing in IT all together
...
STUD Y
T E X T
234
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
235
REFERENCES
CHAPTER ONE
STUD Y
T E X T
236
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
REFERENCES
237
REFERENCES
•
Entrepreneurship Dollinger, MJ
...
business-opportunities
...
franchisefinder
...
za
•
http://www
...
co
...
shtml
•
Article Source: http://EzineArticles
...
_Churchill
•
http://www
...
com/bizopportunities/buyingabizopp/article42940-2
...
entrepreneur
...
html
•
Entrepreneurship – Strategies and Resources by Marc J
...
bized
...
uk/learn/business/accounting/cashflow/trail/cashflow4c
...
wikipedia
...
wikipedia
...
mindtools
...
htm
T E X T
Entrepreneurship Baron, RA
...
Awareness: The process is imparting entrepreneurs with information about relevant facts that
have direct impact on their business plans
...
Business Life cycle: Phases that a business undergoes from inception till natural death or
closure
...
Business Objective: A specific goal that the owner(s) of a business have set as the target for
their operation over a given period of time
...
Business Opportunity: A viable business potential to create something new, i
...
a product or a
service and establishing new markets by engaging new technologies
Code of Ethics: A prescribed set of rules that a person or an organization associates with in all
circumstances on ethical matters
...
Communication Channel: The route that a message will traverse before it reaches its intended
destination
...
Communication: This is the process of exchanging ideas amongst two or more persons
...
Competition: The existence of rivalry amongst business to secure a larger market share
through strategized sales and marketing plans
...
Corporation Aggregate: A legal entity formed by at least two people and whose membership at
any one time legally consists of at least two people
...
The tasks are specific to the office and can be discharged by anyone else
who subsequently occupies the office
...
T E X T
Business plan: A detailed account of how the owners of a business plan to convert ideas and
vision into a real, functioning profit center
...
242
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
Courier: The sending of message or parcel from one location to another using an identified third
party
Decoding: Reformatting the data received into a readable format at the receiving end of the
communication channel
...
Economic development: A process of gradual improvement in general welfare of the country in
terms of its main sources of revenues and infrastructure
...
The attendants can be miles apart but can still correspond
using either visual or audio aids
...
e
...
It is commonly applied
either to a company’s mailbox system operated via its own computer or to one of the services
provided by internet service providers
Encoding: The process of applying a formula to format data to be transmitted into a set of unique
characters that cannot be translated by any unauthorized person along the communication
channel
...
Enterprise: A well organized business set up that is constituted by a manager along with a team
who work together to pursue a business goal,
Entrepreneur: Someone who devises a new production methodology and producing output
(goods or service) based on the new concept
Entrepreneurship: The process of coming up with new processes or ways of achieving some set
objectives
...
Ethics: A study of the moral issues and values that form the basis of human behavior in
society
...
The entrepreneur engages
other entrepreneurs, customers, vendors and other constituents in the operating environment in
boundary spinning activities
Franchise: A business arrangement where the inventor (franchisor) develops a plan for the
provision of a product or service and another, the franchisee uses the plan to avail the product
or service
...
Hierarchical barriers: Communication barriers that exist between superiors and subordinates
in an organization
...
GLOSSARY OF TERMS
243
Industry Cycle: The sequence of growth, maturity and decline of any industry that has an impact
on the success or failure of a young firm
Information Technology (IT): The enabling mechanism, which facilitates the processing, and
flow of this information as well as the technologies used in the physical processing to produce
a product or provide a service
...
Internet filters: A software utility that blocks certain sites considered inappropriate for anyone to
view from being accessed within the organization’s internet
...
Information on the target computer is viewed using a Browser such as Internet Explorer or
Netscape
...
Marketing Strategy: A laid out plan on how to ensure produced goods and service reach the
targeted customer
...
Networking motivations: This refers to what drives entrepreneurs to form networks for their
businesses
...
Networking: This is the process of enlarging a business’ circle of trust through negotiation
...
Noise: Unwanted signal along the communication channel
...
Oral Communication: Correspondence where the parties concerned have to share information
by word of mouth
...
The activities are
normally non-core to the business mainstream operations
...
Parent Company: A company that has an arrangement with another, usually a smaller one
...
Partnership: A business relationship that is run by two or more persons carrying on a business
common with a view to making profit
...
Applies to a Limited Liability Company
...
They include friends, family, close business associates,
former teachers at the university etc
Physical environment: The natural tangible phenomena that surrounds the business premises
and on which the business owes an obligation
Ploughed back profits: Profit that is not distributed to shareholders but re-invested into the
business for a particular or general purpose
...
The aim is to ensure continued existence in the industry
Professional: An individual with specialized skill in a particular area of study
...
Rack jobber: An appointed agent who sells products on behalf of a parent company
...
STUD Y
T E X T
Receiver: This is the desired destination of the message that is intended to action
...
The sender can be a person or a machine at a particular location
...
Service diversification: Similar to product diversification, where the business is in the service
industry
...
Staffing: The process of hiring qualified personnel to fill in position(s) that become vacant or that
are created on need basis in the organization
...
Sweatshops: Business opportunities that are set up in poorer countries by the richer ones to
explore and utilize production resources e
...
cheap labor, but only temporarily until legislation is
changed against the practice, upon which another ‘sweatshop’ is opened in another country
...
They also get an opportunity to study activities of
rivals and examine recent trends and opportunities
...
T E X T
245
STUD Y
GLOSSARY OF TERMS
STUD Y
T E X T
246
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
STUD Y T E T E X T
STUD Y Y E X T
STUD T
X T
247
INDEX
CHAPTER ONE
STUD Y
T E X T
248
E n t r e p r e n e u r s h i p a n d C o m m u n i c at i o n
INDEX
249
INDEX
A
Accountant
...
190
Automation
...
49
Awareness
...
242
Business
...
21, 22
Business plan
...
50, 212
Capitalize
...
8
Cartel
...
13
Challenges
...
101
Communication
...
129
Competence
...
7, 32, 33, 36, 44, 72, 74, 77, 78, 79, 180, 201, 208, 209, 219
Corporation Aggregate
...
54, 241
Correspondences
...
81
T E X T
Body language
...
9, 202
Culture
...
25
Distributorship
...
46
E
E Commerce
...
12
Economy
...
125, 126, 130
STUD Y
T E X T
Electronic Commerce
...
190
Electronic mail
...
10, 188
Employment opportunities
...
5, 14, 41, 42, 48, 49, 62, 63, 65, 183, 242
Entrepreneur
...
4
Entrepreneurship
...
59, 64, 99, 106, 107, 113, 137, 213
Ethics
...
99, 241
Experience
...
127, 128, 129, 137, 139
Financial risk
...
26, 242
INDEX
251
G
GATT 1
...
111, 112, 114, 115, 117, 118, 180, 194, 223
I
Industry
...
27, 44, 63, 180
Intercom
...
107, 110, 113, 114, 115, 118, 168, 193, 194, 223, 243
Interview
...
8
Joint Venture
...
241
Legal representation
...
54
Linkages
...
132
M
Management
...
46, 75, 77, 83, 84, 216
Marketing
...
46
Meetings
...
11, 203
Motivation
...
32, 208
STUD Y
J
T E X T
IT governance 1
...
31
Noise
...
4, 13, 15, 31, 47, 73, 74, 79, 82, 84, 85, 102, 106, 118, 149, 181, 182, 183, 194,
216, 218
Oral communication
...
110
P
Parent company
...
48, 210
Partnership
...
244
Perpetual Succession
...
9, 202
PlaceCityenterprise
...
165
Product
...
7
Profits
...
25, 244
Re - invention
...
10
Risks
...
78
Self employment
...
42
INDEX
253
Social responsibility
...
102
Speaker
...
81
Statement of Comprehensive Income
...
81
Statutory Corporation
...
60, 78, 81, 83, 85, 196, 214, 243
Strength
...
115
Systems
...
13, 204
Trade fair
...
25
V
Video conferencing
...
10
Written communication
...
111
Y
Yahoo
...
186
T E X T
Technology
Title: Enterprenuership and communication
Description: CPA SECTION 1 NOTES ON ENTREPRENEURSHIP AND COMMUNICATION
Description: CPA SECTION 1 NOTES ON ENTREPRENEURSHIP AND COMMUNICATION