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FEDERAL UNIVERSITY, DUTSINMADEPARTMENT OF BUSINESS MANAGEMENTGST 311 INTRODUCTION TO ENTREPRENEURSHIP SKILLS2014/2015 ACADEMIC SESSION

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ENTREPRENEURIAL MARKETINGLECTURE 1: DEFINITION OF MARKETING; it is a process that enables

people obtain their need or wants from organizations that have developed products or services that will satisfy these needs or wants of people.

Marketing can also be define as the art of getting the right products/services, to the right people, at the right time, at the right price, through the right channels and by the right promotion

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-The marketing process involves the following stages;i. Carrying-out need assessment to determine the

unsatisfied needs of potential customersii. Conception and production of product or service that

will satisfy the pre-determined customer neediii. Appropriate pricing of the available product or serviceiv. Communication to potential customers through

promotion of the product using appropriate channelsv. Making the product available through appropriate

distribution channel convenient for the potential customers

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MARKETING IN THE CONTEXT OF SMALL BUSINESSESCentral bank of Nigeria (CBN) defined small business as an outfit

with a labour size of 11-50 workers or a total cost of not more than N50 million, including working capital but excluding cost of land. If the labour size is not more than 10 workers and the total cost (including working capital but excluding cost of land) is not more than N1.5m, the outfit is referred to as “Micro or Cottage Industry”

Small scale businesses and cottage industry are often used interchangeably, but there is slight difference in their meaning.

In entrepreneurship and policy formulation, small scale businesses and cottage industries are treated as same

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IMPORTANCE OF MARKETING IN SMALL SCALE BUSINESS; in small business marketing serve as a means of;

1) Determination of the unsatisfied need of potential customers, which serves as the foundation of the business

2) Communication to potential customers on availability of products or services

3) Generation and boosting of sales4) Identification and focusing on new opportunities5) Maintaining or improving a market share6) Maintaining a steady revenue flows

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DIFFERENCES BETWEEN SMALL BUSINESS MARKETING AND LARGE BUSINESS MARKETING

The areas of differences include the following:1) Budget constraints; small business will have smaller budget on

marketing than large scale business2) Staffing; in small business marketing is usually conducted by the

entrepreneur and he combines it with the leadership role. In large scale business marketing is conducted by large number of staff operating under a given structure

3) Differences in creativity; due to availability of funds there may be more creativity in marketing in large scale business than small scale business

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4) Difference on strategy; marketing strategies of large scale business are usually stated in marketing plans, while the marketing strategies of small business may not be formally stated in marketing plans but informally known only to the entrepreneur

5) Customer interaction; small business have the luxury of interacting directly with their customers, while large scale business due to the large number of their customers may not have the luxury of interacting with their customers directly.

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ENTREPRENEURIAL MARKETINGLECTURE 2USE OF THE MARKETING MIX IN THE CONTEXT OF NEW VENTURESMarketing mix refers to the unique blend of the marketing elements that

suit the business at a given period of time. The elements often referred to as the 4ps are; product, price, promotion and place (distribution).

A great deal of creativity and imagination is required on the part of the entrepreneur to understand and properly blend the elements to suit the business at any point in time, as there is no perfect mix for all marketing situations; every marketing situation is unique and requires a unique marketing mix.

In view of their importance in marketing and the business in general, the marketing mix elements will be examined in details separately.

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1. PRODUCT; it is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. The term product is used to cover both tangibles and intangibles (services).

Product decisions require looking at the following areas:a) Product mix; this covers the range of products offered for sale by

the business outfit. To determine the product mix, it is important that small business owners engage in marketing research by way of need assessment to determine what people lack or what is currently not being delivered. It also entails knowing what kind stock to have, what kind of customers you will want to serve, what do they like to buy and how they want to buy

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b) Product feature; this is a complex bundle of physical attributes or features of the product or service. Features of products include colour, packaging, labels, brand names, sizes etc. features of services include promptness, efficiency, expertise, reliability, guarantees, pick-up delivery etc

It is important for the entrepreneur to know that product features influences customers’ perception of the product

The product should have features that will make customers to have a positive perception of it

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c)Product support; it refers to the help entrepreneurs may be required to render to customers in the use or consumption of a purchased product or service, which to a large extent determine repeat patronage. Examples of support services include; pre-sale advices, installation, reliable delivery, prompt follow up, availability of spare parts and after-sales service.

Entrepreneurs should render product support services so as to encourage repeat patronage by customers

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2. PRICE; it is the value of the product or service expressed in Naira and kobo or any other monetary medium of exchange.

To determine an appropriate price for the product, the entrepreneur should consider the following factors;

i. Demand of the productii. Competitive reactionsiii. Target share of the marketiv. The economic climate of the societyv. Legal and ethical constraintsvi. The type of target market or users of the productvii. Cost of producing or buying goods

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If for any reason, the entrepreneur had cause to increase price of product, the following factors should be considered before taking the final decision on such an important matter;

i. Justification of the price increase not just simply on the grounds that it is time that prices are raised because there has not been an increase for some time

ii. Finding out through research intentions of competitors on increase of their prices. If their prices are very competitive then the business is not in position to charge a price that causes a loss of market share

iii. Never allow guess work to form part of the pricing strategy as it may be too late to redeem mistakes

iv. Finding out through research the range of prices customer consider to be acceptable and based final decision on the said range

v. Understand clearly the minimum Gross profit margin that is acceptable in the business and go by it accordingly

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3. Promotion; this encompasses everything to do with the way an organization communicates persuasively with people to influence them towards making a purchase of its product. There are five promotional tools as follows:

i. Advertising; this is paid non personal presentation and promotion of products to a target audience by an identified sponsor with the aim of getting patronage of the said product. The aims of advertising include informing potential customers of a new product; increasing the frequency of purchase; increasing the use of a product; increasing the quantity purchased; increasing frequency of replacement; presenting a promotional programme; bringing a family of products together; and making the organization behind a range of offerings known.

The medium of advertising include television, radio, handbills, newspapers, magazines and billboards.

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Ii Personal selling; this is a face-to-face presentation and promotion of products to one or more prospective buyers for the purpose of making a sell. It also involves the search for new prospects and follow-up service after the sale.

The major advantage of personal selling over advertising is that it provides a two way communication where the prospect can ask questions and seek clarification where necessary as against advertising which is strictly one way.

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Iii Public relations; this is a planned effort by an organization to influence some group attitudes or opinions to earn a public understanding and acceptance. A good public relations process has three steps: (1) Listen to the public through market research; (2) Change policies and procedures to accommodate the concerns and aspirations of the public; (3) Inform people that you are being responsive to their needs

For most small businesses, public relations means obtaining free publicity via stories placed in newspapers, radio, television etc with the objective of bringing attention to the business

The advantage of public relation over other promotional tools is that it has higher credibility than sponsored advertisement and promotion.

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Iv Publicity; it refers to any information about an individual, product or organization that is presented to the public through the media which is not paid for, or controlled by the seller. It can be viewed as a form of free advertising

It has a major advantage over advertising because publicity may reach people who will not to read or pay attention to an advert. In addition when a newspaper or a magazine publishes a story as news, the reader treats that story as news-and news is more believable than advertising.

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V Sales promotion; this consists of demand stimulating strategies other than advertising, personal selling and publicity. Such strategies include displays, demonstrations, exhibitions, shows etc. Sales promotion can be considered under the following marketing situations; (1) To move products or services that have slowed down may be due to loss of buyers’ interest or change of buying season; (2) To win back customers who have moved to competitors for reasons such as price, delivery of product, packaging etc; (3) To launch new product.

Sales promotion is considered very effective because it creates instant demand booster and leverages on the weakness of the average customer-greed-which makes him buy that much quantity.

The combination of promotional tools an organization uses is called its promotional mix and is usually determined by the nature of product, nature and location of customers, marketing objectives etc

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4. Place; it is the process of making the product available to the customer at the right time, price and place. In this context place refers to two aspects; location and distribution. The choice of location by small business operators is determined initially by the personal preferences of the entrepreneur and later concentration of customers. The choice of channels of distribution is determined by the nature of product and location of customers

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UNIQUE SELLING PROPOSITIONMeaning of unique selling proposition; it is the

process of creating some differentiation to make the product distinct from those of competitors. The differentiation prevent the business from becoming a “me too” one and create a preference for offerings. The higher the differentiation, the better for the business.

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Means of Achieving Unique Selling Proposition1) Creation of distinct image2) Using new or different technology3) Being distinct through product features4) Being distinct through customer service5) Adoption of a different distribution network6) Adoption of distinct brand names eg “baby

noodles” instead of “Indomie noodles”

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Importance of Unique Selling Proposition1) Makes customers to be less sensitive to

changes in price of products2) Ensures customer loyalty3) Protection against existing and new

competition4) Gaining of large market share5) High profit margin

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INTERNATIONAL MARKETINGMeaning of International Marketing; it is the process of

planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations

Business organizations that opted for international marketing has the option of selling identical products in all foreign market, ir “Standardization” or develop different products for different foreign markets or countries ie “Adaptation”

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Reasons for Going into International Marketing1) Expansion of market share2) Higher profit potentials in foreign markets3) Reduction of dependence on a single market4) Achievement of economies of scale5) Availability of skilled labour in foreign market

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Modes of Entry of International MarketingThere are three broad strategies for foreign market

entry and each strategy involves different levels of commitment, risk and profit

1) Exporting; this strategy involves sending items, services or persons from one country to another in return for goods, money or services. There is low risk associated with foreign markets since the company produces all its goods in the home country

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2) Joint Venturing; it involves teaming up with foreign nationals to set up production and marketing facilities. A joint venture can be formed in four ways as follows:

i. Licensing; in this strategy the licensor enters an agreement with a licensee in the foreign market, offering the right to use manufacturing process, trademarks, patent or other item of value for a fee or royalty. The advantage of the strategy is that the licensor improves his market coverage at a little risk, while the licensee gains production expertise at a minimum cost

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Ii Contract Manufacturing; this involves a contract with local manufacturers to produce the product, which the seller sells. It has the advantage of going into international market at a faster rate with less risk and minimum cost

Iii Management Contracting; in this arrangement a foreign firm is invited to help run a venture on behalf of a domestic firm. The domestic firm usually provides the capital while the foreign counterpart provides the know-how. The strategy also has the advantage of entering international market with less risk and minimum cost

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Iv Joint Ownership Venture; in this strategy foreign investors join with local investors to create a local business in which they share joint ownership and control. The foreign investor may buy interest in a local company, or a local company may buy an interest in an existing operation of a foreign company, or the two parties may form a new business venture. Joint ownership venture is usually necessitated due to political consideration or economic constraints or to satisfy a pre-condition for entry.

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3) Direct Investment; in this strategy the firm invest in foreign-based assembly or manufacturing facilities by either building a new plant or buying a substantial shares in already existing plant, or completely buying over an existing plant. Though the foreign firm will have advantages in areas of cheaper labour or raw materials, the strategy has the disadvantage of entering international market with degree of risk such as devaluation of currency, political crises, worsening economic conditions etc

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NEW OPPORTUNITIES FOR EXPANSION (E-BUSINESS AND E-COMMERCE)LECTURE 1INTRODUCTION Science and Technology have always influenced all areas of human endeavor,

business and trade inclusive The advancement of Science and Technology, more particularly in electronics

and internet, has profoundly influenced the conduct of business in the World The fast changing information technology and convergence of various

communication technologies have virtually taken the business practices by storm The use of internet has made the world small and through it, business

transactions are conducted globally at a faster rate The age of connectivity has reduced distances and brought people closer These developments, if properly harnessed, can turned into opportunities for

expansion in business

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DEFINITION OF E-BUSINESS; Electronic Business or e-Business refers to the use of information and communication Technologies (ICTs) such as computers, telephones, videos etc, to conduct business or facilitate activities and processes, including procurement, operation, manufacturing, marketing, sales, human resource management, finance, and research and development. E-Business is usually conducted via the internet, telephone and fax

A good example of a pioneering e-Business is Dell Computer Company. The company through its website track its orders, ensure door delivery and monitor change in demand for its products.

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DEFINITION OF COMMERCE AND E-COMMERCECommerce can be defined as the negotiated exchange of goods and

services between two or more individuals and/or companies in which each party hopes to gain benefit by exchanging something with the other party (or parties). Though money is not the only medium of exchange, but it is generally exchanged for all goods and services.

E- Commerce refers to the use of ICT comprising computers, telephones, video, fax, internet etc in buying, selling, transferring or exchanging products or services. In other words e-Commerce is a set of technologies, applications, and business processes that link business, consumers, and communities for the purpose of buying, selling, and delivering products and services; as well as for integrating and optimizing processes within and between participating entities.

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DIFFERENCE BETWEEN E-BUSINESS AND E-COMMERCEThe terms e-Business and e-Commerce are often used

interchangeably, but conceptually they are different. E-Business is the use of ICT to conduct business which involves all forms of business activities such as procurement, marketing, sales, human resource management, finance, research and development (R&D), customer relations etc. E-Commerce on the other hand involves the use of ICT in buying, selling, transferring, or exchanging products or services and/or information.

The scope of e-Business is wider and it even covers all the activities of e-Commerce

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FEATURES OF E-COMMERCE1) Ubiquity; internet/Web technology is available everywhere and

anytime2) Global Reach; the technology reaches across national boundaries3) Universal Standards; the technology of internet is universal4) Richness; more powerful selling environment with video, audio, and

text messages5) Interactivity; the technology works through interaction with the user

and can stimulate face-to-face experience, on global scale6) Information Density; technology reduces information cost and raises

amount and quality of information available to all market participants7) Personalization and Customization; allows personalized messages to

be delivered to individuals/groups

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TYPES OF E-COMMERCEE-Commerce have been categorized according to the nature of the

market or by the technology used.Market Based Models1) Business-to-Consumer (B2C); in this model the business

organizations sell their products and/or services directly to the consumers. B2C is also categorized into the following:

i. Online Retailers/Storefronts; this is simply the online version of retail business

ii. Content Providers; these are companies that provide digital content information and entertainment over the web. Examples are Wall Street Journal online, ThisDay Newspaper online subscription

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Iii Portals; these are commonly used by companies that offer powerful search tools plus an integrated package of content and services. This model is being used by institutions of higher in registration of students

iV Transaction Brokers; this a model that processes online transactions for consumers. Companies using this model include financial institutions, Travel agencies and Job placement agencies

V Service Provider; as the name implies this model offers services online for its customers while charging subscription fees or one-time payment

Vi Market Creators; in this model, a company uses Internet technology to create market place that brings buyers and sellers together

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Vii Community Provider; these are sites that create a digital online environment where people with similar interest can transact, communicate, and receive interest-related information. Examples include Wisereath, Epinions.com and Oxygen.com

2) Business-to-Business(B2B); this refers to electronic business transactions directly between two or more companies, relating to the purchase and sale of goods and services. Examples of B2B include e-procurement, supply chain management, auction sites etc. Small and medium enterprises (SMEs) can benefit from business-to-business e-commerce as follows;

a. Purchase of indirect supplies such as office furniture, pens, paper etcb. Purchase of raw materials that go into the production goods and

services being sold

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C Selling Products or Services to New Vendorsd Leveraging (Sophistication) Existing Web Presence e Motivation for investment in e-procurement solution3) Consumer-to-Consumer (C2C); this model provides a way for

consumers to sell to each other in form of barter, swap meets etc. Examples of C2C include eBay.com and Craig-List.com in USA

4) Business-to-Government; as the name implies, it is a form of electronic business transactions between businesses and the government. In other words government buys or provides goods, services, or information to/from businesses or individual citizens.

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5) Business-to-Employee (B2E); this is a model where information and services are made available to employees online. The model involve use of intranet or Extranet to communicate to employees.

Technology Based Models 1) Peer-to-Peer (P2P); this enable Internet users to share files and

computer resources without having to go through a central Web server. Examples of P2P include Napster.com, Grokster.com etc

2) Mobile commerce (M-commerce); in mobile commerce, wireless digital devices such as cell phones and handheld devices are used to enable transactions on the Web. Key technologies are telephone network based 3G, Wi-Fi and Bluetooth

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KEY TECHNOLOGIES ENABLING E-COMMERCE EVOLUTION1) Computer hardware such as processors, memory chips,

drives and networks. Companies playing prominent role in computer hardware development include IBM, HP/Compaq, Dell etc

2) Computer Software Operating Systems and Server Software. Companies playing prominent role in software development include Microsoft, Apache RedHat Linux etc

3) Convergence of technologies leading to the integration of voice, data image, video data etc

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NEW OPPORTUNITIES FOR EXPANSION (E-BUSINESS AND E-COMMERCE)LECTURE 2DIMENSIONS OF E-BUSINESS AND E-COMMERCEBased on the degree of digitalization of product, process and delivery agent, e-

Business and e-Commerce can be classified into the following:1) Pure e-Business and e-Commerce; this is when all dimensions are digital or

electronic. This dimension is obtainable in developed countries.2) Pure non e-Business and e-Commerce; this is when all dimensions are manual

and physical involving both buyers and sellers meeting at a specified physical location. This dimension is obtainable in under developed countries

3) Partial e-Business and e-Commerce; this is when some dimensions are digital and others are physical. This dimension is obtainable in developing countries

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E-COMMERCE AS DRIVER FOR SMALL BUSINESSESThe need for micro and small enterprises to consider adopting e-

Commerce is driven by global, regional and national business trends. This relates to markets, costs, new technologies and political factors. Other driving factors include;

1. Adaptation to rapid market changes that are impacting on export and domestic markets

2. Cost competition and the need to compete more effectively in both local and international sectors

3. Globalization of the production and supply of goods and services and need to integrate small enterprises more effectively into the supply chains of larger businesses

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4. Increased customer expectations and consumer power-buyers expecting to be able to access web-based information about products and services

5. Adaptation to new technologies-an over all need for technological upgrading

6. Greater role for information in business and the need to access process and communicate it efficiently and effectively

7. Government deregulation and liberalization-lowering costs and access

8. Bilateral and multilateral trade agreements-opening up markets to developing country producers

9. Adaptation to higher quality product standards

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ADVANTAGES AND DISADVANTAGES OF E-COMMERCEADVANTAGES1. Cost reduction benefits such as reduces cost of establishment of e-

commerce, reduced running cost, reduced travelling cost, reduced cost of materials, reduced marketing and distribution cost and reduced sales cost

2. Market benefits comprising improved customer service and brand awareness and increased market awareness

3. Increased efficiency in areas such supply chain management, performance of internal functions and communication with customers, government, shareholders etc

4. Better service delivery5. Competitive advantage6. Human Capital Development

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DISADVANTAGES1. Incurring of extra cost in areas such as investment in a computer, network

connection, bandwidth etc 2. Risk of failure; e-Commerce ventures may be more likely to fail than conventional

businesses3. Risk of losing focus; e-Commerce involves a lot of activities and trying to carry out

all the said activities the business may lose focus of its original mission and vision4. Opportunity cost; with e-Commerce costs must be incurred in areas like staff

training and their reorientation 5. Sustainability; a small business may be able to venture into e-Commerce, but its

sustenance can be a huge burden due to recurrent costs, continuous staff training etc

6. Technology phobia by owners of small businesses and their employees can affect level of implementation of e-Commerce and its benefits accruing to the business

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SWOT ANALYSIS ON THE USE OF E-COMMERCE BY SMEs IN NIGERIAStrengths1. Favourable government policies and attitude towards development

of the ICT infrastructure2. Availability of mobile networks3. Availability of intermediated access to ICTs eg Internet cafes and

telecentres4. Falling cost of some aspects of e-Commerce components like

hardware and telecommunication charges5. Growing IT sector and skills6. Support of e-Commerce by government and Non governmental

agencies7. High proficiency in the ICT and e-Commerce language ie English

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Weaknesses1. Lack of nationally coordinated ICT policy and infrastructure2. Lack of ICT infrastructure and facilities in rural areas3. Low literacy rate and fluency in ICT language ie English4. Lack of access to ICT infrastructure and facilities by vast

majority of the population5. Lack of e-Commerce awareness and skills among

entrepreneurs and their support staff6. Absence of an e-Commerce culture7. Poor ICT reliability and security combined with relatively

slow-speed of networks

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Opportunities1. Availability of primary product export sectors such as

agriculture, horticulture, fisheries, forestry and mining products2. Manufacture exports3. IT based services that are readily traded over the internet such

as software, data entry, call centre operations etc4. Tourism and travel related sectors5. “Traditional” sectors with export market appeal such as

handicrafts, textile, arts, natural medicine etc6. Large population of young people who are ICT driven7. Availability of mobile networks that can facilitate e-Commerce

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Threats1. Competition and penetration of local or existing export

markets by e-Commerce capable overseas firms2. Growth of larger firms able to invest more in e-Commerce

than SMEs3. Increased disparities between few early adopters of e-

Commerce and many ‘laggards’4. Increased disparities between urban and rural areas5. Wasted investments in e-Commerce by early adopters6. Growing automation leading to loss of low labour cost

advantage

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STEPS TO STARTING E-COMMERCE BY SMEsStep 1. Stating Out: this involves simple messaging using mobile communicationsStep 2.Gettin Online: this involves sending messages through E-mailStep 3. Web Publishing; this involves making available information about the

enterprise and its products by using an online brochure in the form of web publishing

Step 4. Web Interacting; this involves interaction with customers online allowing them to browse through images, descriptions and specifications of products/services

Step 5. Web Transacting; this involves making transactions on the web and is like having a full e-Commerce that covers the entire transaction process

Step 6. Web Integration; this provides an electronic platform that links customer-facing processes such as sales and marketing (“the front office”) with internal processes such as accounts, inventory control and purchasing (“the back office”)

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PROCESS OF PLANNING E-BUSINESS 1. Take a careful at the business; analyze your business processes

and look ways to eliminate inefficiencies. Identify ways that your online strategy can compliment your offline business strategy

2. Start the preliminary research; explore what other businesses are doing on the internet, both in your field and others. This will allow you to determine how web sites are structured, how they function and what opportunities may exist for your company

3. Define the goals of e-Commerce; the goals can be like increase in sales, reduction of cost, enhancement of customer service etc

4. Research the Industry; this will provide a broad view of trends in the industry and e-Business opportunities

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5. Research the customer; the e-Commerce product, service, and strategy must be ideally suited to the existing market and provide what customers want, need, and are willing to pay for

6. Research the competition; competitive analysis should identify current and potential competitors as well as their strengths and weaknesses

7. Establish the marketing strategy; the marketing section should outline the e-Business product, pricing, distribution, and promotional strategies

8. Establish the implementation and operations plan; define the responsibilities, staffing requirements, and equipment that will be required to set up the e-Business

9. Create the financial schedules; determine how much the venture will cost and when will it become profitable?

10. Format and assess the e-Business plan; design a business plan using the information collected and if need be consult professionals to see if the business model make sense.

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MANAGING CHANGE AND TRANSITION: FROM START UP TO GROWTH

LECTURE 1DEFINITIONS OF CHANGE, TRANSITION AND THEIR DIFFERENCESChange: it is an observable event that often occurs quickly. The

result of change is that things will be different from the way they were before the change occur.

Transition: it is the process in which something changes from one state to another. The result of transition is that things or specifically business organizations will move from one stage of development to the next one, which may be positive or negative.

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It is not the failure to identify change that hurts organizations, instead, it is the failure to implement change (ie transition) that hurts organizations. In the U.S (where business environment is more conducive than that of Nigeria) over 50% of small businesses fail in the first year and 95% fail with the first five years. In Nigeria, due to harsher business environment, the statistics will be in the reverse order- 95% in the first year and 50% in the first five years.

Premature failure of small businesses is usually attributed to lack of effective management of CHANGE and TRANSITION

This makes management of change and transition in business imperative and integral part of the entrepreneurship process

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Differences between Change and Transition1) Change is made up of events, while Transition is an

on-going process2) Change is visible and tangible, while Transition is

psychological process that takes place inside people3) Change can happen quickly , but Transition, like any

organic process, has its own natural pace4) 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.

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PHASES OF BUSINESS GROWTH AND MANAGING TRANSITION IN BUSINESS

Business like human beings have life cycle passing through six identifiable inevitable phases as follows:

Phase 1; Start up/Infancy- at this stage the entrepreneurs who founded the business are busy creating products and opening up markets. Informal communication works due to few number of staff. In view of the numerous activities taking place and the inability of the entrepreneur to cope with them, the phase will culminate into “leadership crisis” which requires involvement of professional management.

At the phase the major functions of the entrepreneur will include mentoring, teaching of employees and setting business targets for them

The entrepreneur also needs to be flexible, seek advice from experts and makes sales a top priority

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Phase 2; Fast growth/childhood- at this stage growth continues in an environment of more formal communications, budgets and focus on production and marketing. In view of the numerous products and markets involved, the phase will culminate into “Autonomy crisis” which will require new structures for delegation of responsibilities. The phase is also characterized by an increase in employee size and income

At the phase the major functions of the entrepreneur will include creation of adaptations of products/services that customers already know and love, hard work and increase the speed of delivery of goods and services

A conducive atmosphere for creative brainstorming should be created by having a team of 3-8 persons and inculcation of the culture of creativity in solving problems

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Phase 3; Adolescent- the stage is characterized by more employees and revenue and the focus is fostering growth through delegation

At the phase the entrepreneur should create a corporate structure for the business and spend 80% of time with marketing manger and the remaining 20% with others

The entrepreneur should also explain the business objectives to the corporate managers, draft a report format and meet with each one every week

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Phase 4; Maturity- at this stage work continue to be submerged under increasing amount of bureaucracy and growth is through coordination and monitoring. Due to large number of employees working in isolated business units, the phase will ends on a “Red-Tape Crisis”

At the phase the entrepreneur should ensure that employees contribute positively to achievement of corporate goals and managers develop procedures to get work done

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Phase 5; Growth through collaboration- to minimize the effects of red tape bureaucracy, employees collaborate to work in flexible teams to deliver projects in a matrix structure supported by sophisticated information systems. Due to numerous teams involved, the stage will culminate into a crisis of “Internal Growth”

Phase 6; Growth through extra-organizational solutions- to over come the crisis of internal growth, attention will be focus on developing partnerships with complimentary organizations in form of merger, outsourcing, acquisitions, networks and other solutions involving other companies.

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MANAGING TRANSITION FROM START UP TO GROWTH: THE STARS MODEL

The model(by Watkins 2003 and 2009, a professor at Harvard Business school) provides five stages on the evolution and development of business as follows;

S= StartupT=TurnaroundA=Accelerating growthR= RealignmentS= Sustaining process

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Startup stage: when starting a business the focus should be on generating cash, gathering skilled labour, product and marketing development, securing adequate inventory, and acquiring production technology. This requires good vision, sufficient capital and assembling of a talented business team

Turnaround stage: a turnaround is critical when there is a need to save a failing business. The focus should be on business restructuring and obtaining external advice as needed. This involves changes in marketing strategies, technologies and staff rationalization.

Managing and accelerating growth stage: this involves dealing with the challenges and opportunities of increasing demand. The focus should be on improving the existing systems and creating new business structures

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Realignment stage; at this stage the business is not showing any sign of trouble and demand of product is increasing but not as high as in the accelerated growth stage. The focus should be on maintaining business structures established at the accelerated growth stage.

Sustaining growth/success stage; this entails the struggle to maintain success in business manifested inadequate sales, high revenue, motivated employees etc. The focus should be on business innovation and developing a persistent competitive advantage

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COMMON CAUSES OF FAILURE OF IN BUSINESS TRANSITIONS FROM STARTUP TO GROWTH

1) Choosing a business that is not profitable2) Inadequate cash reserves or capital3) Failure to clearly define and understand market, customers and their buying habits4) Failure to price product or services correctly5) Failure to adequately anticipate cash flow6) Failure to anticipate or react to competition, technology, or other changes in the

market place7) Lack of experience of managers8) Failure to be creative and innovative9) Poor communications within and without the business10) Poor location and low sales11) Personal use of business funds

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PLANNING AND DECISION MAKING IN TRANSITION SITUATION

Meaning of Planning; it is the process of deciding in advance what to do, how to do it, when to do it and who is to do it.

Planning can be at corporate level or lower levels. It can also be in form of short term, long term, operational or strategic. Strategic planning is concerned with long term while operational planning is concerned with the short term planning

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The planning process involves the following steps;1) Analyzing the environment/identifying investment

opportunity2) Setting objectives3) Forecasting the environment/developing the planning

premise4) Determining alternative courses of action5) Evaluating alternative courses of action6) Selecting a course of action7) Formulating support plans8) Budgeting for the plan

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FACTORS TO CONSIDER IN PLANNING FOR A SUCCESSFUL TRANSITION

1) Determination of transitional objectives2) Personal Review; what is your personal situation and

what are the necessary planning initiatives?3) Business Review; what is your current business

situation and how does it reach its potential?4) Consider the best way to exit; what method of

transition should be adopted to meet your objectives?

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THE BENEFITS OF TRANSITION PLANNING1) Maximizes company value2) Controls how and when to exit3) Sets and helps establish actions to achieve business

and personal goals4) Determines the path for moving away from day to day

business responsibilities5) Ensures survival of the business and strategies for

growth6) Preserves family harmony

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Definition of Decision Making; it is the process of identifying and selecting one alternative course of action from two or more possible alternatives based upon some criteria.

Decisions are made when there is;Deviation from experienceDeviation from existing plan Issues to address from customers, clients,

government, competitors and other stakeholdersPerformance or lack of it

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Decisions can be programmed or Non-ProgrammedProgrammed are routine and repetitive decisions that

are associated with standardized decision rules. They are often made in accordance with written or unwritten rules, procedures, policies or regulations. For example deciding how much to pay a newly employed staff

Non-programmed decisions are decisions that occur so frequently that standardized decision rules to solve them are not available. For example decision on restructuring, declining sales, stress etc.

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The steps involved in the non-programmed decision-making process

i. Define the problemii. Recognize the need to resolve the problemiii. Develop alternativesiv. Evaluate alternativesv. Select the best alternativevi. Implement the best alternativevii. Monitor and evaluate the results

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CONDITIONS UNDER WHICH MANAGERS MAKE DECISIONS

1) Conditions of certainty; there is enough information to know exactly what the outcome of the decision made

2) Conditions of uncertainty; there is no enough information to know outcome of decision made

3) Conditions of risk; under this condition, the decision maker can know the probability of each of the various possible outcomes associated with decision, even though they cannot be completely certain which particular outcome will actually occur

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Steps in Making Effective Decision1) Create a constructive environment; establish the objective, agree on the

process, involve the right people, allow opinions to be heard, asking the right questions etc

2) Generate Good Alternatives; generate ideas and consider different perspectives

3) Explore the Alternative; evaluate the feasibility, risks, and implications of each choice

4) Choose the best Alternative; after evaluation of the alternatives, the next step is to choose between them.

5) Check your Decision; this involves looking the decision to be made dispassionately to ensure that common errors are avoided

6) Communicate your Decision and move to Action; this entails explanation and communication of the decision made to appropriate stakeholders like employees, shareholders, government etc

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MANAGING TRANSITION: FROM START UP TO GROWTHLECTURE 2DEFINTION OF BUSINESS CONTROL; it is the process of establishing standards,

comparing performance against these standard and correcting deviationsTYPES OF CONTROL1) Financial control2) Inventory control3) Quality control4) Credit controlTECHNIQUES OF CONTROL5) Budgeting 6) Break-even Analysis7) Financial Analysis

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PERSONAL DISCIPLINE IN BUSINESS TRANSITIONMeaning of Personal Discipline; it means doing what needs to be done, when it

needs to be done, whether one like it or not.(Patience + Motivation + Determination=Self Discipline) To attain self discipline, the entrepreneur should;I. Deciding in advance what is to be achievedII. Writing down goals and objectivesIII. Setting deadlines with specific milestonesIV. Making a list of things needed to achieve goalsV. Organize list by both sequence and priorityVI. Take action on plans immediatelyVII. Do something every day that moves one in the direction of major goalsVIII. Avoid distractions like cell phones, emails etc

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BENEFITS OF ENTREPRENEURIAL SELF DISCIPLINE1) Entrepreneur’s thoughts are translated to actions during difficult

times2) Accommodation of additional responsibilities3) Makes the entrepreneur dependable both for himself and others4) Aids in building character of struggle to achieve goals despite

perceived difficulties5) Makes the entrepreneur to have a strong desire and passion6) Helps the entrepreneur to learn to manage stress and allow critical

thinking about the task at hand7) Keeps the entrepreneur in focus and prevent unnecessary distraction

from original goals8) Leads to judicious use of limited resources

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STRESS AND PRESSURES IN BUSINESS TRANSITIONDEFINITION AND CAUSES OF STRESS; it is a state which affects the

nervous system and causes it to swing into action and stimulate the various body organs to slow down or increase in their normal activities

The causes of stress for entrepreneurs include;i. Excess workloadii. Poor management styleiii. Poor relationships (formal and informal) at work and family

levelsiv. Organizational change and restructuringv. Lack of employee support

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SYMPTOMS OF STRESSPhysical Symptoms1) Headache2) Nausea ( a feeling of wanting to be sick)3) High blood pressure4) Inability to sleep well or read well5) Lack of appetite6) Frequent indigestion or heart burn7) Constipation or diarrhea8) Constant tiredness9) Tendency to sweat quickly10) Out of control behaviour like shouting violence, aggression, taking too

much drugs, alcohol, cigarettes etc

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Mental Symptoms1) Forgetfulness2) Emotional Instability3) Indecisiveness4) Loss of sense of humour5) Lack of interest in anything6) Depression7) Slow in learning new things8) Feeling of being a failure9) Difficulty in concentrating

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STRESS MANAGEMENT TECHNIQUES1) Clarify personal vision and avoid time wasters2) Create time for leisure3) Play more and laugh more4) Celebrate achievements5) Identify and confront sources of stress and get excited

always6) Handle conflict positively7) Become more self-caring8) Remember and practice READ- Relaxation, Exercise,

Attitude, and Diet