CEDR 342 Summary - Business Development & Management PDF

CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CED 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT) [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] BROUGHT TO U BY CHIDI JOE OF UNN NOTE: IT IS STRONGLY ADVISABLE TO READ THE ORIGINAL TEXTBOOK (365 PAGES) AT LEAST ONCE BEFORE READING THIS MATERIAL. THIS SUMMARY IS “NOT AN ALTERNATIVE” TO THE TEXTBOOK, BUT JUST A KEY POINT MATERIAL FOR LAST MINUTE PREPARATIONS BEFORE TAKING THE EXAM. [NOTWITHSTANDING, WE WISH YOU GOOD SUCCESS AS YOU TAKE THE EXAM.] CHAPTER ONE MANAGEMENT IN BUSINESS/ORGANIZATION [ SUMMARIZED BY ONAH GODWIN C. ] Key Definitions of Management Ejiofor (1981) : Management is the art of working particularly through people for the achievement of the broad goals of an organization. Akpala (1970) : Management can be a group of people and or process. Williams (2000) : Management is getting work done through others. Daft (2003) : Management is the process of attainment of organizational goals in an effective and efficient manner through planning, organizing, leading and controlling of resources. Stoner & Freeman (1989) : Management is both an art and a science of achieving organizational goals through people as a result of judicious application of available resources. Koontz 6 Distinctive Management Schools 1. The Management Process: The process school is based on the functions of the managers and views management as a universal process of getting things done with people working in organized groups, regardless of the type of enterprise 2. The Empirical School: Views management from a study of experience aspects and thereby the study and analysis of cases are considered to be critical. 3. The Human Behaviour School: States that since managing involves getting things done with and through people, management must be centered on interpersonal relations or human relations or leadership or behaviour science. 4. The Social System School: views management as a social system, a system of cultural interrelationships, where various social groups are viewed as a related and integrated system. 5. The Decision Theory School: This view concentrates on the rational approach to decisions dealing either with the decision itself, or to an analysis of the decision process. 6. The Mathematical School: Views management as a system of mathematical models and processes often represented by operation researchers or management scientists. Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Key Points To Note… Mangers are the people to whom management task are assigned. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] An idea can be a novel, a brand new contribution to knowledge or a mere expansion of already existing knowledge in such a way that more value is added to it through creativity and innovation. An effective manager should be a facilitator, who should be able to foster a collective effect. Through an effective management, an entrepreneur establishes a plan for creating a unique image in the minds of its customers for sustainable patronage. According to Kuei & Lu, Sustainable management is a management strategy that pursues economic development alongside environmental protection. The Work Mangers Do The works managers do can be viewed from two approaches which are Managerial Roles and Managerial Functions. Mintzberg (1973) Managerial Roles Include: (1.) Interpersonal (Figurehead, Leader, Liaison) (2.) Informational (Nerve Center, Disseminator, Spokesperson) (3.) Decision roles (Entrepreneur, Disturbance handler, Resource allocator, Negotiator). Mintzberg (1973) Management Functions Include: (1.) Planning: Management decides what to do, why it should be done, when to do it, how and where to do it. A plan can be seen as a blue print for the realization of organizational goals. Planning can be taken as a process, a rationalistic approach which identifies problems, evaluates necessary information, develops alternative courses of action, assesses the associated consequences of each alternative and then selects the best cause of action called plan. Planning can be classified as Corporate Planning, Strategic Planning and Tactical Planning. (2.) Organizing: Organizing function creates hierarchical structure of the organization and of authority relationship which results to different levels of management (Top, Middle and Lower Level). The organizing function is concerned with: Determination of the specific activities which are necessary for the accomplishments of the planned goals, Grouping of the activities to form a logical pattern, framework or structure, Assignment of the activities into specific positions and people, Provision of the means through which the efforts of the various members and groups are coordinated. Organizing also uses Power and Authority to carry out its function. It is important to note that TIME MANAGEMENT is an essential aspect of Planning and Organizing Functions of Management. Time is the scarcest and the most perishable resource. Time management is the act of controlling events. Scheduling and Sequencing are very necessary for effective time management. Principles of Time Management Practice Effectiveness, then Efficiency Delegate Work to Employees and Train Them List Objectives for each Day and Determine their Priority Practice Screening and Grouping Schedule Quiet Time Daily. Time Wasters and Possible Remedies: (please see page 10 for more details) Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH (3.) Directing: Here, personnel in the organization are guided in their work for the attainment of organizational objectives. To properly guide or direct these personnel, effective communication, motivation and appropriate leadership style must be used. Management Functions Under Directing: These include Communication, Motivation and appropriate leadership style. Communication: Is the process of transmitting information from one person or place to another. Managers spend up to 95% of their time communicating. Various forms of communication are: verbal (oral) and written. Formal communication are: downward, upward and horizontal communication channel. Informal communication includes: grapevine and gossip. Barriers to communication are: confusing inferences, polarization, wrong evaluation, lack of attention to the message. (please see page 14 on how to write a good memo) Motivation: According to Vroom, Motivation is a process which influences one’s choices among various alternatives of voluntary action. Motivation is the driving force which can stimulate one into action. Motivation in management is the process which channels and sustains desired behaviour towards goal accomplishments. The essence of motivating staff in an organization is to create a conducive atmosphere for them to put in their best in their work. According to Odrey (1986) Motivators include higher pay, prestigious title, name on office door, acclaim of colleagues etc. Theories of motivation in the Text include: Abraham Maslow’s Hierarchy of Needs, Vroom's Expectancy Theory, McGregor’s X & Y Theory. Appropriate Leadership Style: Which includes the Leadership Fundamentals. Leadership relationship is usually affected by 3 factors which are the leader, the led and the situation. Traits common with successful leadership are: intelligence, initiative, imagination, enthusiasm, courage, originality, communication ability, a sense of fair play, human understanding and supervisory ability. Harrell’s 4 trusts include: strong will, extraversion, power need and achievement need. Other classifications include: Participative Leadership Style, Autocratic Leadership Style, Partnalistic Leadership Style and Laisez Faire Leadership Style. (4.) Controlling: Controlling can be seen as complementing other functions of management. Controlling is the regulation of work activities to be in the tune with predetermined plans so as to ensure that the organizational objectives are realized. Akpala's 3 Elements/Steps in Control. (1990) 1. Establishments of Standards 2. Measuring Performance 3. Comparing Performance with Situation Akpala's Steps in Decision Making (1990) 1. Define the Problem to be solved 2. Recognize relevant factors that bear on the problem 3. Analyze and evaluate the impact of the relevant factors 4. Weigh alternatives for a choice. Note that: Decision making is inherent in all Managerial functions. Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER TWO BUSINESS ORGANIZATIONAL STRUCTURE [ SUMMARIZED BY UDEH CHIAMAKA ] Osuala (2005) defined business from economic perspective as an organization that supplies goods and services to generate profit. Management perspective. Business can be defined as activities that seek to satisfy existing and created needs of customers. Drucker (1993). It is an organizer activity conducted either by a person( entrepreneur) or an organisation that contributes to or assist in satisfying the economic want and needs of people. Organization Osuala (2000) is a group of people who work together to achieve an objective. An organisation that is controlled by employees with entrepreneurial mindset has tempo and character. An organisation is defined in term of formality and informality. Formal organisation are said to be planned and intended by its designers. The formal organisation are prescribed by rules and regulations which reflect the social, psychological and administrative assumption of designers. The formal organisation involves the set of groups, friends and attachments the inevitably develop when people are placed in regular proximity to one another. Business organisation includes sole proprietorship, partnerships and corporations. Non-business organisation includes public hospitals and social clubs that do no seek profits. The History of Organizational Structure Morch (1982) opines that the early theorists of organizational structure identifies the need of structure for effectiveness and efficiency. In 1960's a view came up suggesting that the organizational structure is an externally induced phenomenon rather that an artifact, because it is being controlled by staff/personnel. In the 21st century, Lim et al (2010) opines that the development of organizational structure relies on the expression of the management and the workers as compelled by organizational ethics and influenced by environment and the outcome. Elements of Business Organizational Structure. 1. Work specialization. 2. Departmentalization. 3. Chain of command 4. Span of control 5. Centralization and decentralization. 6. Formalization Types of Organizational Structure 1. Pre-bureaucratic entrepreneurial structures:- It is mostly found in small organization with small number of staff. - It best in solving simple task - Totally centralized - Managers make all key decisions - Communication done by one on one conversation - Based on weberian charismatic domination. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Characteristics 1. Creative leader. 2. Transformational. Advantages 1. Easy decision making 2. Flexibility of style 3. Easy to manage Disadvantages. 1. Lacks standardization 2. Lacks hierarchy 3. Delay, when controller is competent. 2. Bureaucratic structure/Line Structure: In this structure accuracy, precision, speed, unambiguity, strict subordination, reduction of friction and cost control are achieved. Characteristics * It has clearly defined job specification * Report and command goes from top to bottom (manager to subordinate staff). * It recognises hard work. Advantages * Managers have control over organisational decision-making. * It is most appropriate for task and person-oriented managers. * Strategic decisions are made by the top management. Disadvantages * It demoralizes staff from being innovative and creative. * An automatic leader always choose the behaviors of centralizing all decision-making. *Low ranked staffs are not given the opportunity. 3. Post-Bureaucratic Organizational Structure(PBO): It provides a level playing Provided to enable subordinates suggest their opinions for organizational structures Characteristics: * Democratic in nature. * Directing * Supportive * Participate * Achievement oriented. Advantages: * Promotes tram work * Encourages innovation ideas. * Subordinate participates in Decison making. * Organisational goal is accomplished as a result of group work. Disadvantages: * Familiarity among staff away cause delays * Reduced commitment * Lacks orderliness. 4. Functional Structure: Weber (1949). It emphasizes coordination, supervision and task allocation. Major functions in an organization includes: production, marketing, human resources, accounting and purchasing. Characteristics of Functional Structure. * operations efficiency * clearly defined function * specialization [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Advantages * produces standardized goods and services * production and large volume of goods and at low cost. * function are separated by expertise. Disadvantages * Rigidity in decision making * lack of group cohesion * Separation of duties hinders team work. 5. Division Structure/Product Organizational Structure:- Product structure consisted of independent divisions. A division comprises of functions which produce a product. Example of product/division structure are. Regional/Geographic Division Structure: A structure that is organised geographically, is supervised by top managers who has oversight function in the regions. (pls check regional structure diagram in the textbook. pg-31). Product Type Divisional Structure: Each product is supervised by product manager who approves the prototypes of the product and also checkmates the staff. (Also check diagram on this structure, from the text). Consumer /Customer Divisional Organizational Structure:- This structure is chosen to ensure that the expectations and demands of customers are met. (Check diagram in the text) Characteristics Of Divisional Structure * It increase specialization * Efficiency of work is attainable * Simplicity of process. Advantages * promotes healthy completion and efficiency. * It is operated by assigning responsibilities to groups. * It boost employee morale. * Easy to allocate function to different department. * Helps coordination. Disadvantages * Supports unhealthy rivalries. * It increase costs by requiring more qualified manager. 6. Matrix Structure: Here, employee are glued based in functions and products simultaneously. The organization takes advantage of the strength of products model to make up for the weakness of function model. Organogram Or Organizational Chart Organogram is the most common diagram used to illustrate the relationship among departments, superiors, and subordinates. It is a intuitive reflection of organizational structure. It is the road maps that beaks job into sections, departments, units, products and regions. Purposes Of Organogram * it can display function division. * It allows people to know whether responsibilities are set properly or not. * It tells of someone is under the overweight work load. * It provides information * It can tell of some talented person, have not been able to draw out the best in themselves. In conclusion (Please see the textbook for organogram chart showing the various types. Pages 31, 32, 34, 35 [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER THREE FORMS OF BUSINESS OWNERSHIP AND FRANCHISING [ SUMMARIZED BY ABAKPA CECELIA E. ] One of the major challenges an entrepreneur encounter is choosing a form of ownership immediately an entrepreneur decides to launch a business. The major forms of business ownership are: 1. Sole proprietor or one man business. 2. Partnership. 3 Corporation. 4. Limited liability company Sole proprietor or one man business: This form of business refers to a business that is established and managed alone. As the name implies, this nature of business is the simplest and most common form of business ownership. If the business is successful and makes profit he keeps the entire profits generated in the business since he shares profit and the liabilities with no one. Advantages of sole proprietorship 1. He makes business decisions alone. 2. Easy and inexpensive to create. 3. Profits from the business are taxed once and as personal income tax. 4. He shares profit alone. 5. He can terminate the business any time. 6. Free from government interference. 7. Makes decision alone Disadvantages of sole proprietorship 1. Unlimited liability; he's answerable for any debts. 2. Limited source of financing. 3. Inadequate skills and knowledge. 4. Lack of continuity Partnership business: An association of two or more people with definite goals who decides to contribute financial resources together and work for the common purpose of profit making. Its can also be seen as an organization of two or more individual who agreed to come together and pull financial and managerial resources jointly to run a business and share profit and loss in a defined ratio. Types of Partners: General partner and Limited partner General partner they invest money in the business and also are involved in the day to day operations and running of the business. They are fully involved in the management of the business thereby making them responsible for any liability in the business. Limited partner they have limited liability in the business. Limited liability implies that liability of a partner in the business is solely limited to the partner's investment in the partnership. Formation of partnership: Basically, partners put document their agreement into a written agreement for legal and operational purposes. Partnership agreement may be expressed in writing or it could be oral or may be implied I.e it may be inferred from the conduct of the parties. Partnership agreement: This is also called deed of partnership, it is a written document that outlines in details the rights and responsibilities of all the partner in the partnership business. It is helpful to prevent disputes and disagreement on the role of each partner in the business and the benefit of each partner. In the document the following information are required: 1. Name of the partnership. 2. Place of business. 3. Purpose of business. 4. Capital contribution. 5. Profits and loss distribution. 6. Management and voting requirements. 7. Dissolution of partner Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Admission of a new partner: At any point there is a need for additional fund; new partners may be needed if the existing partners cannot raise the additional funds. New partners may also be admitted if there is no need for managerial help for quality business decision. The partnership is reconstituted and a new agreement is enters into to carry on the busines of the firm. With the newly admitted partners. The new agreement will specify two main right of the new partners: 1. Right to partake in the sharing of the assets of the new partnership 2. Right to share in the profit or loss of the partnership. Dissolution of a partnership: Dissolution or termination of a partnership business is a way by which the affairs of the partnership are wound up and any ongoing nature of the partnership relationship would be terminated. Reasons under which partnership can be dissolved 1. Loss of profit or when the partnership goes bankrupt 2. When the partnership involves in illegal activities 3. Merger with another of a partnership. 4. Change in the status such as switching to a cooperation Advantage of a partnership business 1. Easy to established. 2. Adequate managerial skills and specialization. 3. Adequate financial resources 4. Profits made from partnership business is not subject to business tax rather partners pay personal income tax. Disadvantages of partnership business 1.lack of continuity. 2. All the partners are liable and responsibly for any debts or risk incurred. 3. There are the possibilities of disagreement and dispute among partners. 4. Unlimited liability for some partners. 5. Sharing of profit and loss Corporation business: Its a legal and registered company formed by group of persons. Its a legal entity which is separate and different from the owners. The owners if cooperation are called share holders. Characteristic of Corporation: 1. Legal existence. 2. Limited liability. 3. Continuity of existence Types of Corporation 1. Publicly held cooperation: its a cooperation which has large number of share holders 2. Closely held cooperation: usually controlled by small number of person often family members Advantages of Corporation 1.Limited liability. 2. Capacity to raise capital. 3. Continuity. 4. Transferable ownership. 5. Separate legal entity Disadvantages of cooperation 1.Expensive to form. 2. Double taxation. 3. Legal requirement and regulations. 4. Potentials loss of control by founders [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Limited Liability Company: Its a form of business organization that has some benefit of a Cooperation and some of a limited partnership. Its very simple to form wen compared to cooperation. The owners of limited liability company are called members , they are not liable for debt incurred by the company. Two major documents required in Limited Liability Company are: 1. Articles of organization 2. Operating agreement Types of limited liability company 1. Domestic LLC 2. Member managed LLC 3. Manager managed LLC 4. Single member LLC 5. Multiple member LLC 6. Series LLC 7. Anonymous LLC Advantages of Limited Liability Company 1.Limited liability protection. 2. Tax free 3. Open membership. 4. Flexible profit distribution 5./Compliance requirements are minimal Disadvantages of Limited Liability Company 1.Prudence personal record. 2.Termination of LLC CHAPTER FOUR BUSINESS DEVELOPMENT AND SUSTAINABILITY [ SUMMARIZED BY OKIBE CHIMA F. ] 80% of small businesses Fail within the first five years in developing countries, and the high rate of small businesses affects the unemployment rates and poverty level. It also undermines economic development and discourages entrepreneur. -Some of the required skills needed for successful business development includes: Open mind set, readiness for a candid and rational self - assessment and the aptitude to admit failures. The most critical issue beyond the conception, implementation and execution of a business development idea is the end result. Concept Of Business Development -Eric et al.(2017) describes business development as the creation of long term value for customers, markets, and business relationships. -Business development in simplest terms is an idea, initiatives and activities designed towards establishment of better business. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH -Serensen(2012) Noted That The Practice Of Business Development Depends On The : 1 company stage in business life cycle (emerging, growing, maturing, declining) 2 ownership structure of the company (public, equity, private) 3 company size structure and portfolio ( Small, large, simple, complex) 4 management risk profile and style (risk averse, risk taker, proactive, reactive) What An Entrepreneur As Business Developer Should Know -Competitors activities -The customer profile -new and unexplored market opportunity - the contemporary state of the business (strengths, weakness, opportunities and threat) SWOT - the long-term view with regards to the initiatives being proposed. Drivers Of Business Development Activities -Strategies for business growth - strategies based on internal sources - intensive growth strategies while intensive growth strategies can offer an entrepreneur an opportunity in three different areas; Market penetration. Product development Market development Benefits Of Intensive Growth Strategy -it leads to optimum utilization of Resources -firms enjoy economies of scale as they expand their area of operation. - companies use own physical, financial and human resources and have control over the strategy. Integrative Growth Strategies These involves the identification of the opportunity available for growth of an entrepreneurial organization through integration with other parts of marketing system. And this can be achieved through - backwards integration - Forward integration - Horizontal integration Diversification Growth Strategy: That is business sustainability and further encourages growth, firms operations must be diversified. And they are 3 types of diversification strategies: - horizontal diversification - concentric diversification - conglomerate diversification Benefits Of Diversification - reduction of business risks. - profitability of the firms - Enhancement of skills and abilities of workers. Strategies Based On External Source An entrepreneur can also use external parties to help their business to sustain and grow. And such external parties include franchising, joint venture, mergers and acquisitions, leveraged buyouts. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Franchising is an alternative means by which an entrepreneur may expand His or her business by having other pay for the use of the name products services etc Types Of Franchising; - product franchising - manufacturing franchising - business format franchising Advantages Of Franchising To The Franchisee - Product acceptance - Management expertise - Capital requirement - Knowledge of the market Joint venture; entrepreneur can also achieve growth and sustainability of business through joint venture. Mergers and acquisitions; transaction involving two or more companies where only a company survives is referred to as a merger. Reasons For Mergers And Acquisitions - Another major use of merger particularly among large companies is increasing organizations market share. - profitable organizations may combine with a less successful company in order to use the losses as a tax write off while expanding the entire business. Types Of Mergers -Horizontal Mergers -Vertical Mergers -Market-extension merger Mergers Distinguished On Basis Of How They Are Financed: Purchase mergers & Consolidation mergers CHAPER FIVE BUSINESS AND SOCIAL RESPONSIBILITY [ SUMMARIZED BY EGWUATU CHIWENDU ] Business correlate with environment because business does not exist in a vacuum, but in an environment, likewise environment needs business for development. Hence both depends on each o9ther for existence, survival and development. The environment does not develop on itself, but it taps into the environment and ploughs back part out as profit to the environment in the form of social amenities. The word business means different things to different people. To a student, business is his studies. To a house wife business is the up keep of the house. To an economist business is seen as profit Generally, odigbo (2011) says that business is an economic act, which is carried out by an organization to achieve some targets relating to production, profit, diversification, technological movement and expansion. Social comes from the word, society, which means according to advanced learners dictionary a particular community of people who share the same customs, laws etc. responsibility also means a duty to deal with or take care of somebody or something so that you may be blamed if something goes wrong. Social Responsibility: this is the responsibility of an organization for the impacts of its decision and activities on society and the environment through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Types Of Business Micro or petty business: this is the type of business operated at a very small scale of which the profit margin barely sustains the owner. Medium business: this is a business that cannot be rated too small or too large Macro business: this is a business owned ad sponsored by Government Corporation Classification Of Businesses Consumer product related business: these include ll types of consumer product corporations Drilling related businesses: these include all corporations involved in all types of fossil-fuel products. Service related businesses: these include all corporations involved in the provision of different kinds of services to humanity. Aqua related businesses: these include all types of corporation involved in aqua related business. Technological related businesses: these include all corporation involve in the manufacturing of all kinds of technological machines. BUSINESS ENVIRONMENT Business environment denotes the full range of public policies, institutions regulations and administrative systems within which people and firm operate. Adverse Effect Of Business On The Society Air pollution effect, Water pollution effect, Acid rain, Oil drilling, Land pollution effect, Wastes produced by garbage recycling industries and factories, Farming: burning of land, fertilizer usage, greenhouse effect, mining, odour pollution, noise pollution effect. Business Social Responsibility Towards The Host Community Corporate governance and ethics Health and safety care Environment stewardship Human rights up-holding Right to life Right to freedom Right to freedom from discrimination Right to fair and equal, hearing Right to freedom from un lawful, imprisonment Right to work and receive commensurate compensation. Involvement of and respect for diverse culture and then disadvantaged people. Corporate philanthropy and employment provision Customer satisfaction an d adherence [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH to principles of fair competition. Anti-bribery and anti-corruption measures. Provision of social amenities Provision for means of information dissemination. Community Responsibility Towards Business Security provision, Co-operation, Hospitality, Integrity, Being law-abiding, Cohesion The Role Of The Government To Ensure Peaceful Co-existence Between The Organization And Its Environment Surveillance duty, Social and job security, Commitment and fairness, Social control, Bi-lateral cooperation. The Role Of The Media In The Enhancement of Peaceful Co-existence Of An Organization And Its Host Community. Watch Dog Role: Good governance, Accountability, Transparency Correlation Role: Trust, Honesty, Consistency/quality of goods Socialization Role Entertainment Role Socio-economic Benefits Enjoyed By Host Community From Organization Community development in terms of water, access roads, health care facilities, electricity, security etc., Employment, Scholarship, Solidarity, Consideration and cooperation assured The Benefits Enjoyed By Organization From Its Community Host Co-operation, Peace and harmony, Hospitality, Supply of human labour Disadvantages Of Having An Organization In An Environment Bribery and corruption, Violence, Environmental pollution, Displacement, Environmental chaos CHAPTER SIX THE NATURE AND CONCEPTUAL FOUNDATION OF BUSINESS, CREATIVITY AND INNOVATION [ SUMMARIZED BY ASOGWA EBERE M. ] In our daily lives, we may be engaged in many activities and these activities that man engage in for the purpose of earning a living is known as economic activity. The economic activity can be categorized as profession, employment and business. Business include this economic activities that seek profit by providing goods and services to others. Creativity and innovation are the integral part and the main engine of business growth. They are instruments of successful entrepreneurship. The ability to create and innovate determines much of what an enterprise is able to do. Nature and Scope of Business The need to satisfy ones need and the need of other is known as human activities. These activities are done for different reasons either for the purpose for which they are undertaken or the final result. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Human activities undertaken for the purpose of earning money or livelihood are called economic activity. Whereas activities undertaken to drive self-satisfaction are called no economic activities. Classification of Economic Activities 1. Profession: The term profession refers to all those economic activities by which an individual render personal services of specialized And expert nature based on professional training and skill and require the observance of certain rules and regulations. When people are engaged regularly in a particular economic activity, trying to earn a livelihood such activity is known as occupation Features Of Profession It is an occupation for which the individual has to acquire a special knowledge and skill. The are paid for providing services and is called fee. They are regulated by professional body, which framed the code of conduct to be followed by the members professionals. Professionals acquire the specialized knowledge mostly from colleges, university, or specialized institutes. Professionals usually engage in private practice, some work in organizations as employees or consultants, some are engaged in both. Though professionals may charge a fee when they provide services, they are not to exploit the people using their knowledge of expertise. 2. Employment :Employment is the economic activity, rendered by one person to another under a contra of service, for some remuneration. It refers to a condition by which a person works regularly for others and gets wages/ salary in return. Features of employment It is an occupation where a person (called employee) is to work for another (called employer). They are certain terms and conditions of work like how many hours a day or a week or a month, leave facility, salary/wages, place of work. The employees get salary Legally the employer-employee relationship is based in a contract and any deviation from any did permits the other party to take legal recourse. They are jobs that do not require technical education or speculated skill for employment but for skilled job, specialized job and technical jobs, a certain level of basic /technical education is required. The main purpose behind employment is to secure assured income through wages and salaries. 3. Business: business may be defined as activity involving regular production or purchase of goods and services for sale, transfer and exchange with an object of earning profit. Business resources: The means and sources of help through which things needed and wanted are produced are known as economic resources. These economic resources included: natural resources, capital resources and human resources. Characteristics Of Business It is an occupation where a person is engaged in production (manufacturing) or trading (buying and selling) of goods and services. Business is an activity carried out on a regular basis. A single transaction is not regarded as business. The main objective of any business is to earn profit. Every business require some investment in cash or kind or both. It is usually provided by the owner or is borrowed at his own risk. The earnings are always Uncertain, because one cannot predict the future or have control over business involves an element of risk and it is borne by the owner of the business. Importance of Business Business provide better quality and large variety of goods and services Thereby improving the standard of living of the people. It generate employment in the country, which in turn reduces poverty, through provision of [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH opportunity to work and earn a livelihood. Facilitates mass production of goods and services and also helps in utilizing the available scarce resources in the country. It helps the country to participate in international trade through the production and exportation of quality goods and services to foreign countries. Enables the people of the country to use quality goods of international standard. It encourages the use of modern method Of production in order to get quality goods. It provide opportunities for growth And expansion of one's business and give better returns on invested capital. Objective of Business To produce goods and services efficient to meet the needs and desires of customers To produce the goods and services at a profit. To protect the health and wellbeing of employees. To exercise good community citizenship in relation Witness neighbuors and community. To support the laws and regulations of government jurisdictions. To provide desired sound growth for the firm and its profit. To protect the quality of the environment through the firms operations and community programme. Other objectives include: Economic objective, Social objective, Human objective, National objective, Global objective Classification of Business Activities 1. Industry 2. Commerce Classification of Industry ( please see page 95 & 96 of the textbook) Classification of Commerce ( please see page 97 of the textbook) Creativity: Creativity is a mental process involved in the generation of new ideas or an association between existing ideas. It is the ability to combine ideas in unique way or to make unusual association between ideas. Creativity is a point of origination for innovation and enterpreneurship.invention occurs during the process of creativity. Components of Creativity 1. Creative thinking Skill 2. Knowledge 3. Motivation 4. Creative techniques 5. Problem reversal 6. Forces analogy 7. Attribute listing 8. Mind maps 9. Brainstorming Characteristics of a Creative Entrepreneur (Emmanuel, 2011) 1. Tendency to stick to the guns when his ideas are challenged [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH 2. Questions authorities 3. Works long and hard on something that intrigues him. 4. Is often curious in getting new ideas off the ground. 5. Flexible in reasoning and in action. He is always ready to shift from one approach to another when tackling problems. 6. Prefers complexity to simplicity and tends to be more independent. 7. Apt to disagree with orders that make no sense Ways to Stimulate Creativity in an Entrepreneur (Emmanuel, 2011) 1. Instruction 2. Listing of one's attributes 3. Lateral thinking 4. Stimulating the worker's creativity 5. Motivation 6. Adequate preparation Factors That Can Hinder Creativity 1. Fear and anxiety 2. Environment and bad company 3. Lack of confidence 4. Worrying over unknown 5. Defensiveness Importance of Creativity 1. Appraise and understand problems fully 2. Identify the best ways to combat competition easily 3. Have a change of approach In facing challenges 4. Analyze viable alternative critically for effective decision making 5. Be unique and different in product positioning 6. Diversify his business operations Creative Processes and Stages of Creativity ( please see page 101 of the textbook ) Innovation: Innovation is the creation of a better product or process in order to meet the needs of final consumers. It can also be regarded as ways of marketing, distribution or producing a product or service and involves the introduction of something that is fundamentally different from what is in existence. Characteristics of an Innovative Entrepreneur 1. Conceptual Fluency 2. Must learn to consider ideas 3. Ability to suspend Judgment 4. Must be less authoritative and flexible 5. Ability for independent judgement 6. Must see himself as unique and different from others Reasons for Innovations 1. The desire to overcome labour shortages 2. The desire to overcome material shortages [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH 3. The desire to meet excess demand 4. The demand by customers for better quality of product 5. The desire to use the work of research and development department 6. The constant pressure of competition Areas of Innovations 1. Process technology 2. Market innovation 3. Product innovation 4. Process of distribution 5. Factors of production 6. New model/ product differentiation Importance of Innovation 1. Have an edge over competitors 2. Reduces Production Cost 3. Sustains Profitability by determining their levels of productively 4. Effects changes in the organization, resulting in efficiency and growth 5. Attract More customers Sources of Innovations 1. Unexpected occurrence 2. Incongruities 3. Process needs 4. Demographic change 5. Perceptual change 6. Industry and market changes 7. New knowledge CHAPTER SEVEN CONTROLLING IN BUSINESS; TECHNIQUE FOR ENHANCING PROFITABILITY [ SUMMARIZED BY KALU CHUKWUEBUKA ] A key managerial function in business is control. Control is vital a business because it assist the business in detecting error and taking necessary corrective actions in order to minimize deviations from goals and standard of the firm. Fayol (1949), who postulated in the definition of control as it relates to management ‘’ control of a venture involve ensuring that all activities are being done according to laid down plans and principles that has been adopted. Information is a major benefit of controlling in business as it provides what is needed for the smooth running of the business. Controlling is evaluating and correction of performance in an organization to ensure that business objectives and plans are achieved. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Controlling consist of three (3) steps; 1. Setting performance standard 2. Comparing performance against standard 3. Taking correction and actions when necessary. The following are the best organizational control Being understandable, Being strategic and result oriented, Encouraging self-control, Being timely Being positive in nature, Being flexible, Exhibiting fairness and objectivity Types of Control in an Organization Preliminary control: this is also called feed forward control. It is achieved at the beginning if the work activity. It ensures appropriate durations are put in place as well as the right resources. Concurrent control: the focus is on what takes place during work process. It is also called steering control. It supervises work done. Post action control: it is called feedback control and done after the completion of an action Performance standard is mostly measured in monetary terms such as revenue, cost and profit. It is also measured as unit produced, number if defective product, quality of customer service, financial statement, sales report, and production result and customer’s satisfaction. MANAGERIAL CONTROL This is systematic effort by business management to compare the performance of predetermined standards, plans or objectives in order to determine if performance is in line with these standards and take remedy action required to see that humans and other corporate resources are used efficiently and effectively. Control requires the acquisition of a clear picture of where the responsibility for deviation from standard is. Budget and performance audit are the two major traditional control technique. Audit is the examination as well as verification of record and supporting documents. A budget audit gives information of where an organization is as regards to initial plan or budget. Performance audits tries to check if the report figures reflect actual performance. FACTORS THAT ENHANCE BUSINESS PROFIT Profit is the life blood of any market economy. A strategy which a firm can adopt to improve their profitability is price discrimination. Price discrimination occur when a business charges a different prices to different groups of customers for the same goods or services for no reason associated with cost. BASIC OF INCREASING PROFIT; See figure1 page 108 MARKETING AS A BUSINESS FUNCTION Marketing starts from product development till the product gets to the final consumer for the biasness to make wave in the market. It includes pricing, packaging, trademark, product design and value of output. MANAGING BUSINESS GROWTH Business has different stages in a life cycle. The success of a business depends solely on the management. The basis life cycle is called the ‘S curve’ involved three stages. The slow stage (live/die); at this stage the survival of the business depends in the manager. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH High growth stage (being a manger); it involve transformation of the entrepreneur into effective manager. Maturity stage (being a diversifier) ; this is when the manager needs to develop himself to sustain growth Achieving a steady growth in a business, Management, Effective planning, The market, Promotion, Diversification TRAINING AND DEVELOPMENT FOR AN ORGANIZATION For an organization to meet up with the ever-evolving socioeconomic environment, the manager should always go for training and development courses. Objectives Of Training Increase in productivity, Reduction in rate of business failure, Improved customer relationship, Better management if time and other resources, Improved morale. CHAPTER EIGHT SUSTAINABLE BUSINESS: THE ESSENCE OF MANAGINNG INFORMATION FOR EFFECTIVE DECISION MAKMING [ SUMMARIZED BY OGBODO OBINNA ] The word sustainable development emerged in the context of a growing awareness of an imminent ecological crisis. The term sustainability and sustainable appeared for the first time in oxford dictionary during the second half of the 20th century. Evolution of information system The evolution of information system started from the 1950s between 1950 and 1960, it was just in the form of data processing but as info9rmation and commnicatio9n technology advanced it evo00lved as well. Below is a summary of the evolution table from 1950 to present 1950-1960 Date processing 1960-1970 Management reporting 1970-1980 Decision support 1980-1990 Executive support 1990-2000 Knowledge management 2000-present E-Business Sustainable business is act of providing systems and strategies for a business to operate in a responsible manner that ensure profits, but benefits people, communities and environment. Sustainable business can be represented with the triple bottom line Profit (Economic) people (social). planet (Environment) According to financial times lexicon, some best practices that espouse business sustainability include: Stakeholder engagement, Environmental management system, Reporting and disclosure, Life cycle analysis [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Similar Terms Corporate social responsibility (CRS): CRS is the act of assessing the impact of a business on a society, evaluating their responsibilities and taking measures to balance the current stakeholder’s’ interests. Ethical business: this is when business focuses more on code of conduct or ethics guiding their business conduct, sources o material, product and service, their quality and service standard. Information: Information is processed from date that are consciously generated, stored, managed, disseminated and protected. Data itself are facts about an entity. Qualities of information Timely, Accurate, Complete, Economical, Flexible, Reliable, Relevant, Simple, Accessible, Verifiable, Secured Information Systems: information systems comprises of people, processes and technologies involved in collecting, processing, transmitting and sharing data representing information. TYPES OF INFORMATION Expert system: is also called knowledge-based system, it is a computer system that is designed to analyse data and produce recommendation, diagnosis and decisions that are controlled. Management information system (MIS): MIS is about information systems at management level often organization that serves the function of planning, controlling, and decision making by proving routine summary and reports. Geographic information system (GIS): GIS can be used to tie facts (data) to physical locations. Decision support system (DSS): DSS are used to support problem-specific decision-making. Transaction processing system (TPS): TPS provides away to collect, process, store, display modify or cancel transaction. Steps for building sustainable business and role of information systems Performing a stakeholder analysis, Setting sustainable development poloi8cies and objectives, Designing and executing an implementation plan, Developing a supportive corporate culture, Preparing reports, Enhancing internal monitoring processes [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER NINE OPERATING ENVIRONMENT AND ENTREPRENEURSHIP DEVELOPMENT IN NIGERIA [ SUMMARIZED BY EDEH HANNAH ] Entrepreneurship is viewed as an intentional and planned behaviour that increase economic efficiency, bring innovation to markets, create new jobs and raise employment levels. According to Cueivo et al. (2007), there are 3 basic ideas used to capture entrepreneurial activity: The First Idea focuses on individuals willingness to face uncertainty, accepting risks and the need for achievement. The Second Idea centers on economic and environmental factors that propel and sustain entrepreneurial activity. The Third Idea focuses on the functioning of institutions, culture and societal values. These ideas shaped the conceptualization of Entrepreneurship. Gartner (2001) equated a conceptualization of Entrepreneurship to the description of elephant. Schumpeter suggested 5 Categories of behavior that characterizes an entrepreneurial venture. 1. Introduction of new goods 2. Introduction of new methods of production 3. Operating of new markets 4. Operating of new sources of supply 5. Industrial reorganization Operating Environment: Theoretical Perspectives - From psychological perspectives, there are three main theories; trait theory, motive theory and cognitive theory. - One of the first attempt to understand Entrepreneurship was from trait theory. - Traits associated with Entrepreneurship include risk taking ability, resilience, optimism, conscientiousness, innovativeness and adaptability. -. McClelland (1961) need for achievement motive theory argus that it is the inherent need for personal achievement that motivate entrepreneurs to excel. - Cognitive theory explain Entrepreneurship as definitive thought processes that lead to positive evaluation of self. -. Discovery theory focuses on environmental conditions that are important for Entrepreneurship -. Creation theory focuses on the cognitive views to capture entrepreneurial perspectives. -. The concept of alertness has been used to explain the difference between entrepreneurs and non- entrepreneurs. - Alertness is conceptualize to categorize individuals in terms of risk preference, information, asymmetric etc. -. Discovery theory is based on search-systematically searching the environment to discover new opportunities to produce new products and services. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH -. Creation theory Posit that entrepreneurs do not search for opportunities since there is no existing one rather they engage in activities that lead to development of enterprise. Environmental Factors and Entrepreneurship - Environmental factors can either be positive or negative forces - Some of environmental factors include: 1. Set of wide ranging economic. 2. Technological trends. 3. Socio cultural. 4. Demographic. 5. Political 6. Legal. 7. Industry sectors. 8. Market competitors. 9. Customer. 10. Supply of materials. 11. Techniques of production. 12. Global forces Factors that limit or facilitate Entrepreneurship development in Nigeria 1. Government, public policy: Policy is a guiding principle that governs actions. Government influence the market mechanism and make them function efficiently by removing conditions that create market perfections. 2. Culture: environmental culture refers to set of values, beliefs and attitudes held in high esteem by society. 3. Access to capital 4. Infrastructures and Entrepreneurship: Audretsh, heger and veith(2005), demonstrated 4 types of infrastructure: highways infrastructure, Railways infrastructure, knowledge infrastructure, communication infrastructure. 5. Influence Of Education: it could be formal or informal education CHAPTER 10 ENTREPRENEURSHIP ENVIRONMENT AND ORGANIZATIONAL CULTURE [ SUMMARIZED BY ELEAZAR OGOCHUKWU H. ] Burlton defined business as any organization whose aim is to create results of value for someone who cares about those results. Laguna and Marklurd defined business as an organizational entity that deploys resources to provide customers with desired products or services. Business functions are: Financing, production, marketing, management and recruitment. In performing these functions, businesses interact with their environment. Kazmi defines environment as literally the surroundings, internal, intermediate and external objects, influence or circumstances under which someone or something exists. Entrepreneurship Environment is seen as the entirety or totality of factors, influences or circumstances that affect the operation of a business. Factors that make up entrepreneurship environment are: Location of a business, the employees to hire, raw material suppliers, customers, etc. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Note: Any entrepreneurship activity with no cognizance of the environment has higher probability to fail. Characteristics of Entrepreneurship Environment : 1. Dynamism: It is not static(It changes). The changes are motivated by these factors: Desire to maximize profit, natural events, market changes, technological changes, etc. 2. Complexity: It is not a trouble-free and straight forward one. 3. Multi-faceted: Influences are multidimensional. 4. Bilateral: It has bidirectional relationship and effect with business 5. Uncertainty: It is unpredictable. Classification of entrepreneurial environment: Two categories Namely Internal entrepreneurship environment and External entrepreneurship environment. Internal Environment: This is the environment which the entrepreneur has absolute or partial control of its functions. It consists of factors like ownership structure, infrastructure, organizational structure, customers, managers, employees, etc. According to Agu, Internal environment is further divided into two: Core Internal entrepreneurship environment and Peripheral internal entrepreneurship environment. Core internal environment: It deals with entrepreneurship environmental factors that are absolutely in the control of the business, e.g ownership structure, infrastructure, organizational structure, etc. Peripheral internal environment: Are those factors that affect the business directly which the business does not have absolute control of, e.g customers, competitors, financial community, unions, local communities, government agencies, etc. External environment: It deals with those factors and influences that the entrepreneur cannot control, even though they have significant effects on the business survival and growth. They include: demographic factors (sex, age, income, etc) Legal/political factors (laws, government agencies, etc) Technological factors (technological knowledge and innovations) International factors, socio-cultural factors, economic factors and cultural factors. Entrepreneurial organizational culture is a system of shared values, beliefs and norms of members of an organization. It includes an organization's expectations, experiences, philosophies, behavioral system of workers, etc. Elements of entrepreneurial organizational structure includes: 1. People and empowerment focused. 2. Value creation through innovation and change 3. Attention to the basics. 4. Hand on management 5. Doing the right thing 6. Freedom to grow and to fail. 7. Commitment and personal responsibility 8. Emphasis on the future. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Entrepreneurship Environmental Analysis: It deals with the study of the organizational environment to identify environmental factors or components that significantly influence operations. 4 key steps of environmental analysis : 1. Scanning, 2. Monitoring, 3. Forecasting, 4. Assessment Methods of analyzing entrepreneurship environment ( Strategic Analysis Methods) 1. SWOT analysis (Strengths Weaknesses Opportunities and Threats) 2. PEST analysis (Political factors, Economic factors, Socio-cultural factors and Technological factors) 3. PESTLE analysis: The addition of 'LE' to 'PEST' (Legal factors and Environmental factors) 4. PESTLIED analysis: The addition of 'IED' (International, Environmental or Ecological and Demographic factors) 5. STEEPLE analysis (Socio-cultural, Technological, Environmental or Ecological, Economic, Political, Legal and Ethical factors) 6. Porter 5 forces which includes: Competitors, buyers, potential entrants, suppliers and substitutes. 7. Value chain analysis 8. Stakeholders analysis 9. Four corner's analysis 10. Early warning system Coping strategies to influences in the external entrepreneurship environment 1. Passive strategy: The entrepreneur or the business is expected to do nothing about these influences. 2. Adaptive strategy: An entrepreneur creates a way to cope with influences from the environment. 3. Innovative strategy: It requires that an entrepreneur be proactive in his/her business dealings by engaging regular research and development (R&D). CHAPTER ELEVEN SOURCES OF FUNDS [ SUMMARIZED BY IKE FAVOUR C. ] Sources of funds are the places where capital can be acquired for establishment, operation and expansion of a business. Capital is a form of wealth employed to create more wealth. To a business or investment executive, capital represents “an asset” An entrepreneur appreciates capital as seed money or injection capital or adventure capital - the amount of money he needs to start-up a business. Entrepreneurs Require 3 Different Types Of Capital, As Follows: 1. Fixed capital; to procure a company's fixed assets i.e. land, building, plant and equipment, etc. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH 2. Working capital; required to support a company's short-term operations. 3. Growth capital; this is the capital required to finance a company's growth or expansion in a new direction. NOTE: It is best entrepreneurs to source for capital from multiple sources (layered financing), instead of relying on a single source as a convention. Sources Of Funds Nwude (2004) categorized sources of funds in three (3): Short term, Medium term and Long term. Unamka & Ewurum (1995) grouped the sources simply into 2: short term and long term Short-term Finance - is fund loaned or borrowed for a period not exceeding 2 years. It is used to finance working capital needs and will include sources as: trade credit, accrual and deferred taxes, prepayment, bank overdraft, discount, revolving credit agreement, inventory financing, bill of exchange and others. Medium Term Finance may be defined as funds available for use for duration of between 1 - 10 years. Instrument used are: term loan, venture capital, leasing, hire purchase, mortgage, service contract fund and others. Long-term Finance - Duration: 10 years and above. Instrument used: shares (ordinary and preference), bonds, warrants right issue, depreciation and retained earnings. The above classification can further be divided into: Equity and Debt financing Equity Financing - is the amount of capital brought into the business by the owners/promoters of the business. Equity capital is also known as "Risk capital". Debt Or Leverage Or Gearing Up Financing - is the money that the owners of an enterprise have borrowed which must be paid with interest. Irrespective of the various classifications, entrepreneurs have the following sources of money for business: INFORMAL SOURCES FORMAL SOURCES Personal money from savings or family inheritance Thrift Societies Funds from an individual’s family and friends Isusu Sale of Assets or Capital Stock Partnership Trade Credit Age Grade Association Depreciation Cooperative Societies Service Contracts Mortgage Loans Retained Earnings Credit Union Commercial Bank Loans Line of Credit Angels and Venture Capital Funding Leasing Government Finance Companies Insurance Companies [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Details of Some Financing Sources 1. Personal funds (equity or owners money) - money saved 2. Funds from an individual's family and friends - they give soft loan 3. Service Contract: There exist servant-master relationship here. The master rewards the servant for his service after a particular period of time. 4. Thrift societies - comprise of individuals with common interest. They contribute money and give loan to their member at reduced or low interest rate. 5. Isusu - consist of group members who contribute a fixed amount individually, and the entire sum is handed to one person on rational basis from the first to the last. 6. Partnership - entrepreneurs can choose to partner to expand the capital base of a venture. Agreement is governed by "deed of partnership" 7. Sale of assets or stock 8. Trade credit - is a short-term financing, provided by suppliers or raw materials and other items or service providers to their customers whereby payment is made at a future date. 9. Mortgage loans - this is a long-term loan, against which a property for instance, building is offered as security. 10. Bank Credits - i.e. bank overdraft 11. Short-term loan 12. Age grade associations 13. Cooperative societies 14. Credit union - i.e. town development unions, church members or other group members pool funds together by way of savings or welfare schemes. 15. Franchising - the franchiser grants exclusive right to the franchisee to manufacture, sell, distribute and market with the franchiser's expertise. 16. Microfinance bank - less collateral but higher interest rate compared to other commercial banks 17. African development Bank (ADB) 18. Leasing - an enterprise promoter can acquire plant and machinery through leasing instead of outright purchase of the equipment. 19. Government - through different agencies and specialized banks provide short-term and medium term soft loans to entrepreneurs to facilitate industrialization and economic growth. 20. Crowd funding - a new method of financing in Africa through the internet. 21. Professional money lenders - i.e. Ren money. The tenure is often very short. 22. Angels - angel investors are affluent individuals interested in business with promising growth potentials, and provide capital for business start-up. 23. Venture capital - an organization which have a dedicated pool of capital and engage in providing funds for establishment of potentially viable new businesses or expansion of existing businesses with great profit potential. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH International Organizations that Assist Businesses With Grants And Loans. 1. The Tony Elumelu foundation 2. African Women Development Fund (AWDF) 3. U.S African Development Foundation (USADF) 4. Seedstars World 5. Start-up accelerators: invest in technology companies through program that last for 3 months. 6. 9 Mobile. CHAPTER TWELVE CREDIT MANAGEMENT AND SUSTAINABLE ENTREPRENEURSHIP DEVELOPMENT [ SUMMARIZED BY ONWUHA JULIET C. ] Globalization policy has created several unexpected hardships and concerns in every country including Nigeria and one of the most critical concerns is need to reduce poverty. One of the global strategies that will reduce poverty is job creation. Job creation requires developing entrepreneurship and entrepreneurial mindset through establishment of an enterprise. Entrepreneurship comprehends the concept of enterprise, which is the process of applying both human and material resources to produce goods and services for the benefit of the consumers. Enterprise development is majorly influenced by credit. Credit is therefore trust which allows one party to provide resources to another party where the other party does not reimburse the first party immediately. Credit consist of any form of deferred payment. Credit management is implementing and maintaining a set of policies and procedures to minimize amount of capital tied up in debtors as well as to minimize the exposure of the business to bad debts. Credit provision is the main product which financial institution provide to potential entrepreneurs as a main source of generating income. A key requirement for effective credit management is the ability to intelligently and efficiently manage customer credit lines. Credit management starts with the sales and does not stop until the full and final payment has been received. Credit management encompasses two sides management strategies, lender and borrower. CONCEPT AND MEANING OF CREDIT The word credit was derived from a Latin word ‘credo’ meaning ‘believe or I trust'. According to Jo Etta(2001) credit is the trust which allows one party to provide resources to another party where the second party does not reimburse the first party immediately but instead arranges either to repay or return those resources at a later date. According to Aggarwal and Godell (2016), credit is applied to that belief in a man’s probability and insolvency which will permit of his being entrusted with something of value belonging to another whether that something consist of money, goods, services, or even credit itself. Credit is dominated by a unit of account in modern societies. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH TYPES OF CREDIT CREDIT CARDS: it allows users to borrow money from a bank or to withdraw cash. BANK LOANS: it can be paid off in monthly installments over a particular period OVERDRAFT: It allows one to withdraw money after the bank account balance reaches zero. HIRE PURCHASE AND PERSONAL LOANS: Purchase agreement is a mechanism for borrowing money in order to purchase goods. Personal loans allow one to borrow an agreed amount and pay it back with interest over a fixed period of time. CASH CREDIT: is the credit that is given in cash to business firms. OVERDRAFT: Customers are permitted to withdraw the amount over and above his balance up to extent of the limit stipulated. DEMAND LOANS: it has no maturity period and maybe asked to be paid on demand and it is influenced by subjective behavior. TERM LOANS: it is an advance for a fixed period to an entrepreneur who engaged in industry or business. INNOVATIVE CREDIT PRODUCTS: the growth of innovative retail products offered by Nigerian banks are: CREDIT CARDS: it is seen as alternative cash and it is allowed by banks for customers to buy goods and services on credit using credit cards. DEBIT CARD: It is used as the credit cards for purchasing products and also for drawing money from the ATMs. CREDIT INSTRUMENTS: it helps in the promotion and development of entrepreneur business. Some credit instruments include : Cheque: It us an order drawn by a depositor on the bank to pay a certain amount of money which is deposited with the bank. Bank draft: is used by banks on either its branch or head office to send money from one place to another. Bill of exchange: it enables a seller to issue an order to a buyer to make the payment either to the seller or to a person whose name and address is mentioned on the big within a period of time Promissory note: is an instrument in writing containing an unconditional undertaking signed by the maker to buy a certain sum of money only to or the order of certain person or bearer. Government bonds: government issues a sort of certificate to the person who subscribes to these loans. Treasury bill: they are bills issued by government in anticipation of the public revenues. Traveler’s cheque: It is the facility given by the bank to the people. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH ADVANTAGES OF CREDIT. Exchange of ownership, Employment encouragement, Increase consumption, Saving encouragement Capital formation, Development of entrepreneurs, Easy payment, Elasticity of monetary system, Priority sector development. DISADVANTAGES OF CREDIT Encourage wasteful spending, Encourage weakness, Economic crisis, Encourage inefficient. CONCEPT OF CREDIT MANAGEMENT Credit management is the process of granting credit. Credit management can be in two ways ; those associated with financial institution and others associated with entrepreneurs businesses. Credit risk management is practice of mitigating those losses by understanding the adequacy of both banks capital and loan loss reserves at a given time. Credit risk management is a function performed within an enterprise to improve and control credit policies that will lead to increased revenue and lower risk including increasing collections, reducing credit cost, extending more credit to creditworthy customers and developing competitive credit terms. CRITERIA FOR EXTENDING CREDIT The number of criteria varies from three to eight or even more which is translated as 3C's to 9C's of credit. The 5c's of credit has become most popular criteria of assessing customers by financial institutions before extending credit to them. The C's are components of credit analysis. LEDGER'S CRITERIA FOR EXTENDING CREDIT (2000) THE THREE C's OF CREDIT 1. Character – moral hazard, 2. Capacity -Repayment Risk capacity, 3. Collateral- Security Risk THE FIVE C’s OF CREDIT Character, Capacity, Capital, Collateral, Condition. N. B: The 5c's of credit has become most popular criteria of assessing customers by financial institutions before extending credit to them. THE SIX C's OF CREDIT Character, Capacity, Capital, Collateral, Coverage, Conditions THE NINE C's OF CREDIT Character, Capacity, Capital, Collateral, Coverage, Conditions, Competence, Confidence, Consistency. FACTORS FACILITATING CREDIT DEFAULT. Complacency, Carelessness, Communication, Contingencies, Competition, Cluelessness. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER THIRTEEN MANAGEMENT OF WORKING CAPITAL IN ENTREPRENEURSHIP: THE CONCEPTUAL PERSPECTIVE [ SUMMARIZED BY CHUKWUEMEKA CHINENYE ] Entrepreneurs Can Be Classified Based On: Types of business, Ownership, Gender, Size of plant and machinery, among others. Based on type of business Trading Entrepreneurs: undertake trading activities by procuring finished products from the manufacturer and selling them directly to end users as middlemen between manufacturers and consumers. Manufacturing Entrepreneurs: identify the needs of the people; explore the resources and technology to produce the items of need to satisfy people’s need. Agricultural Entrepreneurs: engage in activities in the agricultural chain such as irrigation, mechanization, cultivation, packaging or marketing agricultural produce. Based on Use of technology Technical Entrepreneurs: they engage in new and innovative methods in science and technology to power industries. Non-technical Entrepreneurs: are those who do not engage in science and technology but imitate. Based on ownership Private Entrepreneurs: owned by individuals (sole owners), State Entrepreneurs: Government owned. Joint entrepreneurs: Combination of private and public authority partnership. Based on Gender Men Entrepreneurs, Women entrepreneurs Based on size of plant and machinery Small scale, Medium Scale, Large scale enterprise Management of Working Capital (WC) Poor management of working capital is one of the more common reasons for corporate failure. Major exit strategies for venture capitalists Ceasing Operation, Acquisition by existing or new investors, Leveraged buyouts, Initial Public Offerings (IPO) Concept Of Working Capital Working capital is a financial metric which represents the operating liquidity available to the business. The concept of working capital can be seen from 2 perspectives: Gross Perspective, Net Perspective Gross Working Capital: is the sum total of all current assets and current liabilities. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH Main components of working capital are current assets: stock (of raw materials, work in progress, finished goods), cash in hand, debtors, short term securities. Current liabilities: payment due to creditors, bank overdraft, outstanding tax, short term loans Primary Components of Net working capital are: inventory, account receivable, and account payable. Interest- bearing current liabilities, which includes short term debt and the current maturities of long term debt, are a form of financing and are therefore not part of net working capital. Concept of Working Capital Management Working capital management (WCM) is all about management decisions that influence the size and effectiveness of the working capital. The main task of the working capital management is the matching of the current assets and current liabilities movements over time. The Two Main Objectives Of Working Capital Management: To increase profitability, To increase liquidity Management of Working capital involves management of working capital cycle. Working Capital Cycle is the length of time or time lag between the cash investment in purchase of raw materials and the recovery of cash by the way of sale of goods. The longer the cycle is, the longer a business is tying up capital in its working capital. Forms Of Current Assets Till Cash Recovery From Sale. Inventory period, Receivable period, Payable period Measures of working capital management Key dates in product cycle that influence the firm’s investment in working capital: Account payable period: which starts when current asset items are obtained on deferred payment till the time the payment is made. Inventory conversation period: starts from the time current assets items are obtained to the time the finished goods are sold off. Account receivable period: starts from the time the form sold the finished goods to the time it’s customers pay their bills Cash operating cycle: which is the sum of the inventory period and account receivable period gives the length of time it takes the purchased raw materials to transform then into cash Cash conversion cycle: the length of time it takes from the inception of the production process to the time cash is realized less the time allowed by creditors for their payments to materialize. (See page 190 for formula) Raw materials period is the number of days raw materials are held in store before they are converted into work in progress. Work in progress period is the number of days the raw materials are being processed before conversion to finished goods. Finished goods period is the number of days the finished goods are held in store before they are sold. The total of these three make up the inventory conversion period. Cash operating cycle (COC) The difference between the operating cycle and the account payable period is called the cash conversion cycle (CCC). The COC shows the financing needs of a company regarding the operating activities. The length of the COC determines the actual inventory and receivables levels and this affects considerably the amount of current assets which should be held by the business. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH The capital needs l, with respect to the operating activities are finally determined by taking the difference between the sum of the accounts receivable and the inventories minus the account payable. This difference is called the net working capital or the CCC. The CCC is the most popular measure of working capital management (WCM). Reducing CCC to a reasonable minimum, generally, leads to improved profitability. Other subsidiary working capital cycle in form of turnover includes the following: Inventory turnover: measures the number of times average inventory is used up in the year relative to the total purchases and the higher the number of times, the better. Receivables turnover: measures the number of times average receivables is built up in the year relative to the sales and the lower the number of times, the better. Payables turnover: measures the number of times the firm paid up its average debts to its creditors in the year relative to the total purchases and the higher the number of times, the better. Current ratio: measures the coverage of current liabilities by the current assets and the higher the better, with the standard set at 2:1. Quick ratio:measures the coverage of current liabilities by current assets less stocks and the higher the ratio the better with the standard set at 1:1 Net working capital is the capital a company requires to run its day-to-day operations. It is defined as current assets minus non-interest-bearing current liabilities. (See page 192 for illustration) The length of time it takes a firm to convert it’s raw materials into finished products is called Inventory Conversion Period (ICP) or Inventory Period (IP). The length of time it takes a firm to collect cash from its credit sales is known as accounts receivable period (ARP) or account collection period (ACP) or receivables period (RP). The length of time it takes a firm to recover cash tied down in both raw materials and sales is termed Cash operating cycle (COC). The length of time it takes for a firm to pay off cash for it’s short term credit purchases is known as accounts payable period (APP) or creditors period (CP). CCC is COC less the APP. CCC is said to have a positive relationship with company profitability. Criteria For Evaluating Credit Risk Character, Capacity, Capital, Collateral Condition of the customers An entrepreneur can improve liquidity by debt factoring and invoice discounting. Factors That Determine Working Capital Nature of business, Level of daily activities that involve relevant current assets, Anticipated disappointment by debtors. Anticipation of emerging profitable opportunities, Opportunity cost of funds involved, Level of inflation in the country, Availability of near-liquid assets, Availability of borrowing outlets, Cost of borrowing, Economic conditions in the country where boom, normal or recessive period, Relationship with suppliers. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER FOURTEEN VENTURE CREATION & GROWTH: MANAGING TRANSITION FROM START-UP TO GROWTH [ SUMMARIZED BY ORJI NNENNA ] To discuss business firm growth, it is usually convenient to categorize firms into two; those established to enable the individuals promoting it gain self employment and those established with the innate desires of the promoters to grow the business big. Firms with no growth ambition mostly start off as sole proprietors which are owner managed and may remain so all through their life span. The no growth ambition businesses are called “lifestyle businesses” they constitute majority of businesses in Nigeria. The other category is the oriented business firms. Business growth or transition : the meaning It is a process that predisposes business firms to create increasing employment opportunities especially for non equity holders as it organically expands its operations sustainably over a period of time. (See diagram @ page 210) Growth Theories These includes chance models of growth, stage models of growth (lifecycle model of growth),and predictive models of growth. 1. chance models of growth This theory states that the growth of a business and its ability to survive the transition stages from small to big businesses is a chance thing and majority derives from luck 2. stage models of growth ( lifecycle models of growth) Here there is a belief that business ventures have lifecycles which pass through some identifiable stages that ultimately require a change to characteristics, skills, management strategy and structure and resource requirement. Here we have the Greiner’s lifecycle curve and Stokes and Wilson composite model. Greiner’s model of business firm growth Stage 1: start up/infancy ( growth through creativity) This stage, entrepreneurs are busy creating products and opening up markets. Here informal communication persists and wage bills are low. This phase ends with leadership crisis. ( see diagram in page 212) Stage 2: fast growth/childhood (growth through direction) This stage comes to an end with an autonomy crisis, heralding the introduction of new structures based on delegation. The entrepreneur is to focus on how to double the business revenue which can be achieved by creating new adaptation’ of products that customers already know and love. The challenges here includes : managing cash flow effectively, sticking to product schedules, building and growing a customer base. Stage 3: Adolescent (growth through delegation) This is characterized by more employees and revenue. The entrepreneur plays roles such as: fostering growth through delegation, ensure proper and effective marketing management, and design a feedback mechanism to ensure proper monitoring. Stage 4: maturity (growth through coordination and monitoring) [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH In this phase, growth continues with the previously isolated business units reorganized into products groups or service practices. This phase ends on red tape crisis. Stage 5: (growth through collaboration) This phase ends with a crisis of internal growth. Growth can only come by developing partnerships with complementary organizations. Stage 6: Growth through extra-organizational solutions. Change is all about the outcome we are trying to achieve; transition is about how we will get there and how we will manage things while we are en route. The Churchill And Lewis Model Of Firm Growth They acknowledged that the characteristics of small business ventures vary widely to the point that a given individuals experience may not precisely match the model. (See diagram on page 215) Stokes, Wilson, And Mador Composite Lifecycle Model Of Growth They describe the management styles of the founding entrepreneurs of business firms and their evolving key functional activities as they pass through transition. Here we have five stages : Stage 1.concept/test Most of the activities here are carried out before the business venture is launched. Here the business is conceptualized and planned. Stage 2: Development/abort stage After the business is launched, it either develops to a viable size or fails and is aborted at a very early stage. Stage 3: Growth/decline stage At this stage the business venture has become viable and successful. At this stage there is need to divide managerial task and hire non owner managers. Stage 4: maturity At this stage the business undergoes a period of stability. Stage 5: Regrowth /decline At this stage the business venture has penetrated and entrenched itself in the market and enjoys obvious competitive advantage. Limitations Of Lifecycle Models 1. most business firms may not live to go through stages 3 to 5 2. stages models use historical narrative to predict the future of a venture. 3. the hypothesis that growth from one stage to another is triggered by a particular type of crisis has not been empirically proven. [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH The Stars Model of Business Growth It was developed to remedy some of the challenges observed in the earlier firm stage models. (See diagram on page 219) Turnaround stage: After start-up and immediate initial success, the venture may be heading towards failure, making a turnaround very crucial. For successful turnaround focus on,: change products, re-evaluating the business plan, go for early breakdown and be decisive and fast. Managing And Accelerating Growth: This can be done by modifying the business for quicker response to market needs. Sustaining growth/success: Some business reach their desired level of growth/success by struggle to sustain it. Attentions should be on business-model innovation developing a persistent competitive advantage through continuous improvement of the business model. Predictive models: Here we have financial models and non financial models. Financial models: Here we also have univariate financial model and multivariate financial model Univariate financial model: This uses one individual financial ratio progressively to make predictions of small firms success. It uses single financial ratios instead of a set of ratios as composites. Multivariate financial model (multiple discriminate analysis): This can be used to classify business firms on the basis of their characteristics as measured by financial ratios, into two groups; those which are likely to fail and those not likely to fail. Criticism of predictive financial models The 3 financial models try to predict the future, but they use historical data. Non financial predictive model ( the characteristics approach to for growth) Here we have three components : entrepreneurs characteristics, cooperate strategy characteristics and business firm characteristics. (see diagram on page 222) Entrepreneurs Characteristics The entrepreneurs personality generally determines his risk complexion on issues like: willingness to use external finance, willingness’ to engage consultants. Here we have five distinct ways through which it manifest: motivation, demographics, managerial experience, team and age. Motivation, Demographics: the entrepreneurs demographics like age and education influence firm growth. Teams : this means the number of entrepreneurs involved in founding a business venture. 1. Enterprise Characteristics: Legal form: the legal form of a business firm affects its integrity which has implications on its performance. Age and size: younger firms grow faster than older firms and smaller firms grow faster than large firms. Location & Market industry [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH 2. The Characteristics Of The Corporate Strategy External equity: one of the limitations of small business firm is inability to raise enough resources that could be mobilized for growth. Market positioning: in other to get market positioning, there is need to segment the market, select a target segment, and put efforts in place to establish a unique position in the market. Managing Stress And Pressures In Business Transition Stress is simply defined as a persons adaptive response to a stimulus that places excessive psychological or physical demands on the person. The stimulus known as stressor refers to anything that induc3s stress. The stressor can be physical or psychological and must be excessive for a particular individual for stress to result. Stress may be positive or negative, positive stress is called “Eustress” while negative stress is called “Distress”. Ways Of Managing Stress -Breaks are necessary -learn the art of streamlining work -intelligent use of limited resources. -learning the art of deligence Learn to trust your instincts -have a creative mind Management strategy from startup scale to growth -be a good listener -create feedback loops -build peer-to-peer networks -align employees and business goals Factors influencing the growth of an enterprise -the idea -the leaders -the team(human resources) -the capital(financial resources) The plan -the execution -the planning -the marketing -the growth pattern [ COMPILED BY 0’20 MARKETING CLASS, FACULTY OF BUSINESS ADMINISTRATION, UNEC ] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CEDR 342 SUMMARY [BUSINESS DEVELOPMENT & MANAGEMENT] Brought to U by RTR. IGWILO CHIDIEBELE JOSEPH CHAPTER FIFTEEN PERSONNEL MANAGEMENT AS AN ENTREPRENEURIAL TOOL [ SUMMARIZED BY NGANGBO PRISCILLA ] The major goal of entrepreneurs is to increase productivity and profitability Meaning of personnel management : Personnel management is the management of people or staff working with the entrepreneur to achieve his objectives. CONTRIBUTIONS OF VARIOUS SCHOLARS TO PERSONNEL MANAGEMENT. 1. According to Armstrong (2014), personnel management is a strategic, integrated and coherent approach to the employment, development and well being of the people working in an organization. 2. The Institute of Personnel management of the United kingdom is of the opinion that personnel management is a part of management that deals with with people at work and their relationship within the enterprise. 3. The Nigerian Institute of personnel management states that personnel management is concerned with people at work and their relationship within an enterprise. DIFFERENCE BETWEEN PERSONNEL MANAGEMENT AND HUMAN RESOURCES MANAGEMENT 1. Personnel management is the section in an organ

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