CHE 458 – Unit 5 Entrepreneurship and Business Development PDF

26/07/2024 CHE 458 – Entrepreneurship and Business Development (Unit 5) LECTURER: Kenneth Asamoah Boateng, PhD 1 Course Content CHE 458 Entrepreneurship...

26/07/2024 CHE 458 – Entrepreneurship and Business Development (Unit 5) LECTURER: Kenneth Asamoah Boateng, PhD 1 Course Content CHE 458 Entrepreneurship and Business Development (3, 0, 3) Entrepreneurship and free enterprise. Types of business and registration. Law of contract. Business planning and reporting. Product and service concept for new ventures. Market and market development. Organization and financing new projects. Current trend, e-commerce. Case studies. 2 1  26/07/2024 UNIT 5.0 MARKETING, TECHNOLOGY, LEGAL AND ETHICAL CONSIDERATIONS 3 5.0 Marketing, Technology, Legal, Ethical Objectives: 1. Understand the application of the marketing mix concept 2. Describe and appreciate the use and benefits of modern business technology 3. Explain the essence of compliance with the legal business regulations 4. Discuss how government regulations may apply to your business model 5. Explain the code of ethics 4 2  26/07/2024 5.1 Marketing and the Entrepreneur Entrepreneurs must become expert in marketing. Not only must they understand the concepts of marketing, they must be able to create and implement marketing strategies. This section will provide additional guidance about how to produce and implement an effective marketing plan. 5 5.1 Marketing and the Entrepreneur Objectives: 1. Understand and apply the marketing concept. 2. Identify the 7Ps of marketing. 3. Discuss product classifications. 4. Explain promotion mix and communication methods. 6 3  26/07/2024 5.1 Marketing and the Entrepreneur Marketing includes a variety of disciplines: sales, pricing, packaging, distribution and public relations. Definitions: Sales: Total amount collected for goods and services provided Pricing: The process of determining what a company will receive in exchange for its products 7 5.1 Marketing and the Entrepreneur Definitions: Packaging: The wrapping material around a consumer item that serves to contain, identify, describe, protect, display, promote and otherwise make the product marketable and keep it clean Distribution: The process of moving a product from its manufacturing source to its customers 8 4  26/07/2024 5.1 Marketing and the Entrepreneur Marketing does not just begin with a great idea or a unique product Instead it begins with customers who want or need your product and will actually be prepared to buy it. Even good marketing won't help an entrepreneur earn a profit or achieve his/her dreams if he/she does not build them around potential customers. 9 5.1 Marketing and the Entrepreneur Customers will not buy a product for the sake of buying it, but they buy the concept of what that product will do for them, or help them do for themselves. An example would be buying healthy food because you want to live long and remain healthy. A marketing strategy that ignores the customer does not serve a purpose. 10 5  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix The 7 Ps of marketing are 1. Product, 2. Price, 3. Place, 4. Promotion, 5. People, 6. Process, and 7. Physical evidence 11 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product Classification There are three major types of products: 1. Durable products Products that last for some time. They are usually actual products rather than services, e.g. a motor vehicle, a washing machine and machine tools. They are usually priced high and are relatively complex products. 12 6  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product Classification 2. Non-durable products These products are used up in the short term, e.g. food, drinks, vegetables, fruits and meat. They are bought fairly frequently and should be easily available to the customer. The pricing of these products is usually fairly competitive. 13 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product Classification 3. Services Services are products that offer immediate benefits as opposed to product that involve using, buying or owning. The problem here is that customers often cannot see a service, so the challenge for the small business is to show the value of the service. 14 7  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product Classification 3. Services (Cont’d) Examples of services include hairdressing, delivery, auditing and consultancy. Examples of Services Service Providers Medical services Dentist, physiotherapist Professional services Attorneys, accountants, consultants 15 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product classification and identification according to classes of target consumers Consumer products: These products are offered to individual customers. There are three major types of consumer products. o Convenience products are products that are purchased regularly. oThe customer does not make much effort or take long to think about buying convenience products. oExamples of convenience products are soap, toothpaste and coffee. 16 8  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product classification and identification according to classes of target consumers Consumer Products oShopping products are products that customers would shop around for before buying. oThey compare prices, quality, design etc. Examples of shopping products are clothing, furniture and household items. 17 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Product classification and identification according to classes of target consumers Consumer Products oSpecialty products are products that customers make a special effort to buy. oExamples of specialty products are exclusive designer clothing, and TV sets. Industrial or business products Bought by a business for use in making other products or services. 18 9  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Price The price of your product(s) or service(s) should be based on the market research conducted during the data gathering stage (i.e. market analysis, competitor analysis). The aim or ultimate objective of pricing is to ensure that the business generates sufficient sales to achieve profitability and sustainability. 19 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Price Costs must be kept low as possible so that you will have room to vary your selling price(s) within an acceptable range. The selling price of the product must be competitive in the market and should be kept within an acceptable range to allow room for price variations in line with your competitors and your business profitability. 20 10  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Place When identifying a location for your business you need to build upon your initial market research, a description of potential buyers and the nature of the product. When selecting a location you should focus on the following: Who are the potential buyers (i.e. where do they live, where do they go regularly, do they have access to transportation, etc.)? The product requirements (i.e. do you need storage space, do you need refrigerated space, how much room do you need for product display, etc.)? 21 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Place When selecting a location you should focus on the following: The service requirements (i.e. do you need conference rooms, do you need classroom space, do you need private offices, etc.)? Access (i.e. is there customer parking, is it on a busy street, can my suppliers access my work environment, do you need to be in the tourist area, etc.)? Future requirements (does my location allow for growth, is the space flexible and can be used in a variety of different ways, etc.)? 22 11  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Place (cont’d) Based on the above research, the location can be selected using some criteria as follows: If the products are consumable, such as food and beverages, the shop can be located in residential neighbourhoods close to the clients. If the products are meant for student consumption, then the shop can be located near schools and universities. If the product or service is aimed at tourists, it can be any busy location that tourists frequent. 23 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Place (cont’d) Based on the above research, the location can be selected using some criteria as follows: If your products are for high income customers then you should co- locate your business in trendy shopping areas. If many competitors are situated in the same area, then this may be an advantage or disadvantage, all depending on your products and buyers 24 12  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Place (cont’d) Based on the above research, the location can be selected using some criteria as follows: For example restaurants like to locate in the same area because this encourages potential customers to at least explore the area for an eatery. 25 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Promotion Promotion concerns the range of methods used by a small business to communicate with its potential and current customers, employees and any other interested in the products and services. Informing potential customers about your product(s), its benefits and how to attract customers to buy from you is key. 26 13  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Promotion Through promotion you can: oInform: Provide information about a product. oPersuade: Try to build up a positive customer attitude to your business. Explain why customers should use you rather than the competitor. Convince them. oRemind: Support the customers who have already bought your product. Increase the loyalty of those who have bought before, making sure you have established the groundwork for possible future sales. 27 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Promotion The main methods used to communicate with customers are: Advertising is a form of impersonal broadcasting through commercial mass media (e.g. newspaper, TV, radio, Internet). It should be a pervasive form of promotion. It must capture attention. Sales promotion is an activity that is specifically designed to induce sales by enhancing the value for the consumer. This value may be created through volume discounts, providing more for less, etc. 28 14  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Promotion The main methods used to communicate with customers are: Publicity is the result of public service announcements or news generated through the media. Examples are newspaper or journal articles, recognition in public affairs, magazine stories and talk-show interviews. Personal selling means personal contact between a salesperson and potential customers resulting from sales effort. 29 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix People These are the customers, employees, suppliers, management, partners and all other stakeholders impacted by your business. It is how you treat them and how others see them being treated. It is reflected in the values that your company embraces and demonstrates in your day to day business operation and interaction with people. 30 15  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Process This will include the processes required to provide different services or products to the customers and understanding of the effectiveness of these processes is very crucial. E.g. is it car delivery service, drive through window service, courier delivery, etc. 31 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Physical (Evidence) This refers to the experience of using a product or service. This can be demonstrated through the provision of information to customers, so that they can understand more about the product or service at hand. 32 16  26/07/2024 5.1 Marketing and the Entrepreneur 5.1.1 The 7 Ps of the Marketing Mix Physical (Evidence) Expert testimonial, demonstrations and examples of successful implementation are ways to demonstrate the usefulness of the product or service. Such information can be provided in the form of brochures, pamphlets, webinars, YouTube demonstrations, etc. 33 5.1 Marketing and the Entrepreneur Summary Marketing is a complex and time consuming process. It is more than just advertising and making sales calls. It is about the image your company projects. It is about how you approach potential customers and how you support existing customers. It is about how you treat others and how you communicate with people. The 7Ps of marketing should be considered when developing marketing strategies for your company. 34 17  26/07/2024 5.2 Technology and the Entrepreneur The growth in the speed of computing, the power of computers and the drop in costs is beneficial to business start-ups. The need to communicate, share and collaborate online is essential to most businesses these days. It is important for entrepreneurs to take advantage of the latest technologies to help them manage their business, sell their products and services and communicate with their customers and suppliers. 35 5.2 Technology and the Entrepreneur Objectives 1. Understand the use of business technologies. 2. Describe modern business machines used by entrepreneurs. 3. Explain Internet and e-Commerce concepts. Definition: Technology is scientific knowledge applied to business by all kinds of people including entrepreneurs. 36 18  26/07/2024 5.2 Technology and the Entrepreneur 5.2.1 Modern Business Machines Used by Entrepreneurs Some of the technologies required by a start-up business include: Cell phones and smart phones. Desktop computer hardware (MAC or PC) and supporting printers, scanners, etc. Laptop or Tablet hardware for mobile businesses. 37 5.2 Technology and the Entrepreneur 5.2.1 Modern Business Machines Used by Entrepreneurs Some of the technologies required by a start-up business include: Access to local area networks to connect business computers Access to the Internet and wide area networks to support external communications. Access to a cloud network for file storage, sharing, collaboration and back-up. 38 19  26/07/2024 5.2 Technology and the Entrepreneur 5.2.1 Modern Business Machines Used by Entrepreneurs Business software including: o Word processing. o Spreadsheet. o Presentation software. o Bookkeeping software. o Database software. o Web design software. 39 5.2 Technology and the Entrepreneur 5.2.1 Modern Business Machines Used by Entrepreneurs Specialized software for specific industries. Retail hardware such as cash registers, scanners, inventory tracking contacts, etc. Presentation hardware (e.g. projectors, video walls, etc.) Security and monitoring hardware and software. Energy saving systems. Audio conferencing and video conferencing systems. 40 20  26/07/2024 5.2 Technology and the Entrepreneur 5.2.2 Internet and e-Commerce The Internet is an essential part of any business. Some of the common business activities completed via the Internet include: Company information site. Customer education and awareness. Marketing of products and services. Receiving customer orders and shipping of products. Online customer support and technical support. 41 5.2 Technology and the Entrepreneur 5.2.2 Internet and e-Commerce The Internet is an essential part of any business. Some of the common business activities completed via the Internet include: Communications with potential and current customers. Ordering supplies and other materials from other companies needed to support the business operation. Communicate and work with virtual employees or contractors used to support the creation of your products or the delivery of your services. Provides alternative revenue streams through the advertising of other products and services provided by similar businesses. 42 21  26/07/2024 5.2 Technology and the Entrepreneur 5.2.2 Internet and e-Commerce E-commerce is the paperless exchange of business information via the internet (Longernecker et al. 2003) Benefits provided by e-commerce: It is another way of conducting business transactions that was traditionally carried out using telephone, mail or face to face. It gives smaller companies opportunities to compete with bigger companies. Small companies serve small geographic area and internet blurs geographic boundaries. 43 5.2 Technology and the Entrepreneur 5.2.2 Internet and e-Commerce E-commerce is the paperless exchange of business information via the internet (Longernecker et al. 2003) Benefits provided by e-commerce: E-commerce allows any business to access customers no matter where they live. Helps small firms with cash flow problems by reducing their sales cycle. It helps small companies to build stronger customer relationship. 44 22  26/07/2024 5.2 Technology and the Entrepreneur 5.2.2 Internet and e-Commerce What is Sales Cycle ? The term “sales cycle” describes all the steps of a sales process, starting from the first customer contact to closing the deal and follow-ups. It’s a potential client’s journey from recognizing they need a product to making a purchase. It’s a roadmap for a salesperson. 45 5.2 Technology and the Entrepreneur 5.2.3 Identifying Technologies As part of the business planning and start-up process one must identify how technology can benefit and support the business operation. Technologies must be selected that will deliver the services needed to help grow the business. Remember to keep the customers and potential customers in mind. 46 23  26/07/2024 5.2 Technology and the Entrepreneur 5.2.3 Identifying Technologies Questions to ask: What type of technologies do the customers have access to? Do they use technologies to identify products and services? What type of technologies do the suppliers use? 47 5.2 Technology and the Entrepreneur 5.2.3 Identifying Technologies Questions to ask: Will I need access to a specific type of technology or specialized software to facilitate communications with suppliers? What technologies do I need to help control my inventory or manage my cash flow? 48 24  26/07/2024 5.2 Technology and the Entrepreneur 5.2.3 Identifying Technologies All of these considerations should be included in the planning process. Selecting the correct technologies at the beginning of the business will ensure one does not need to change later on or that one wastes time and energy converting from one technology to another. Consider different options for procuring technologies. The options include purchasing the technologies, leasing technology or paying others to support the technology needs. 49 5.2 Technology and the Entrepreneur Summary The importance of technology to entrepreneurs has been emphasized. Connections to mobile and virtual worlds will not only expand entrepreneurs’ business horizons but also afford them opportunities to understand the operations of global markets and the impact of international business standards to their businesses. Ensure the selection of appropriate technologies is part of the initial planning process. 50 25  26/07/2024 UNIT 5.0 MARKETING, TECHNOLOGY, LEGAL AND ETHICAL CONSIDERATIONS 5.3 Legal and Ethical Considerations 51 5.3 Legal and Ethical Considerations We discussed the regulatory framework that your business needs to work in. This meant choosing to be registered as a sole proprietor, partnership, limited liability company or public limited liability company. This is the first decision that one must make. One must learn to operate a company within the legal and ethical framework within the country. 52 26  26/07/2024 5.3 Legal and Ethical Considerations Objectives 1. Explain legal issues impacting a small business. 2. Describe what is ethical and not ethical in business operations. 3. Explain how you will develop a code of ethics for your business. 53 5.3 Legal and Ethical Considerations 54 27  26/07/2024 5.3 Legal and Ethical Considerations 55 5.3 Legal and Ethical Considerations 5.3.1 Legal Requirements of Businesses As part of the business planning process one must become familiar with the laws and regulations in the country or community that guides the start-up and operation of a small business. These may include: Requirements for registering a business, including procedures for naming the business. Local laws that govern business operations. 56 28  26/07/2024 5.3 Legal and Ethical Considerations 5.3.1 Legal Requirements of Businesses As part of the business planning process one must become familiar with the laws and regulations in the country or community that guides the start-up and operation of a small business. These may include: Guidelines that govern the health and care of employees and customers. The tax code for small business operations. Codes of conduct relevant to specific industries, sectors or profession 57 5.3 Legal and Ethical Considerations 5.3.1 Legal Requirements of Businesses Governments may offer certain facilities or incentives to entrepreneurs starting a new business. These may take the form of: Grants to set up a small business. Micro-finance opportunities. Tax relief. Recognition in the community, etc. Legal aid. 58 29  26/07/2024 5.3 Legal and Ethical Considerations 5.3.2 Government Regulations The owner of a small business/enterprise will have to deal with local and national government regulations and laws. Time must be taken to research the regulations before starting the business. Knowing the regulations is as important as knowing the market. It is important to be familiar with the laws that will govern the business in order to plan ahead to ensure that the operations will be law abiding. 59 5.3 Legal and Ethical Considerations 5.3.3 Licenses and Registration Depending on the type of business, different types of business operating licenses may need to be applied. Not all licenses may be applicable to the type of business. 60 30  26/07/2024 5.3 Legal and Ethical Considerations 5.3.3 Licenses and Registration Here are some examples of the different licenses that may be needed: oTrader’s license gives individuals permission to operate businesses in specific areas and permit trading in specific types of business. oTour Guiding License that allows individuals to organize and conduct tours in in the region. oVehicle Operating License to operate special equipment, buses, tractor, trailers, etc. 61 5.3 Legal and Ethical Considerations 5.3.4 Licenses and Registration One may also be required by law to register the business for tax purposes. Some common forms of tax are: Value Added Tax (VAT) Registration is a requirement by law. Exemptions may apply; it is important to determine if this will apply to the business. 62 31  26/07/2024 5.3 Legal and Ethical Considerations 5.3.4 Licenses and Registration Some common forms of tax are: Business/Corporate tax requirements Small businesses/enterprises sole proprietor and partnerships may be are exempt from direct taxes depending on the type of business. Most companies/corporations are required to pay corporate taxes. The company/corporation may be tax-exempt for a specified period of time or if their sales value doesn’t reach a certain amount per year. It is extremely important for one to research all the tax laws that can apply to the business so that the business can run without fiscal liability. 63 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations for Entrepreneurs Not only must business be conducted in a legal way, it must be conducted in an ethical way. Ethics refer to moral principles or a set of values held by an individual or group. Ethical business practices include assuring that the highest legal and moral standards are observed in a company’s relationships with the people in the business community, including the most important people in the business; customers and employees. 64 32  26/07/2024 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations A business should make a list of values that will guide the ethical operation of the company. The business leaders may even decide to provide a list of ethical practices that the company will embrace and demonstrate. This list can be in the form of a code of conduct. 65 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations Codes of conduct may describe how to ethically deal with issues like: Compliance with laws, rules and Environmental management. regulations. Proper use of company assets. Conflicts of interest. Payments to external providers or Dealings with the public. politicians. Health and safety within the Confidentiality. workplace Financial management and reporting Competition and fair dealings. Trustworthiness. Discrimination and harassment. 66 33  26/07/2024 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations for Entrepreneurs A reputation for ethical business practices builds trust in your organization among business associates and suppliers. Strong supplier relationships are critical to a successful business. The entrepreneur is the role model for employees. If one’s behaviour includes lying, taking money out of the cash register, or taking home some of the inventory or supplies, then employees with follow that lead. 67 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations for Entrepreneurs Family members may see the business as their own and take things that really belong to the business. Employees may see this as being dishonest, or as a conflict with their needs for a raise in pay. The community expects your business to operate in an ethical manner that enhances the image of the community as a whole. For example, If you are located in a mall your code of ethics will help or hinder customer traffic for the other businesses too. 68 34  26/07/2024 5.3 Legal and Ethical Considerations 5.3.5 Ethical Considerations for Entrepreneurs A reputation for telling customers anything they want to hear, regardless of the truth, eventually hurts your business and other businesses around you. It usually isn't illegal to lie to customers, but it isn't good business. Ethical behaviour is merely making good business decisions based on established “code of ethics”. Entrepreneurs should establish a written code of ethics that can serve as a framework for decisions to be made by the entrepreneur as well as employees. 69 35