GENS301 - COMPLETE DETAILED SUMMARY

MODULE 1: CONCEPT OF BUSINESS AND NEW VALUE CREATION

1. BUSINESS PLANNING PROCESS

Introduction/Definition of Concepts
A business is an activity or entity, normally engaged in the provision of products and or services, for commercial gain,
extending to non-Commercial organizations that may or may not be profit oriented. This is irrespective of the size and
autonomy.

Important things to note:

 Non-governmental organizations, private, public service sector like schools and hospitals are regarded as
'businesses
 Plan is a statement of calculated intention to organize effort and resource to achieve an outcome. This may or
may not be in written form, but essentially comprising explanations, justifications and relevant numerical and
financial statistical data.
 Business can be classified into the following groups but not limited to: a small company; a large company; a
corner shop; a local business; a regional business; a multi-million naira business, multi-national corporation; a
charity organization, a Federal, State or Local Government Ministry, Agency or Department, an hospital, a joint-
venture; a project within a business or department; a business unit, division, or department within another bigger
organization or company, a profit center or cost center within an organization or venture, an individual or joint
ventures, etc.
 Business plan therefore could be referred to as the activities and aims of any entity, individual, group or
organization with the purpose of converting efforts to results. It is a formal statement of a set of business goals,
the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain
background information about the organization or team attempting to reach those goals.
 When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business
plan is required, since investors will look for their returns within that timeframe. Invariably, the business plan
simply serves as the detailed map of the venture that will guarantee a steady start up, a steady but gradual growth
and vitality of the business.
 Business planning process: is the process of determining all the goals, strategies and projected actions that
you intend taking to promote and ensure the survival and progress of your business within a given time
frame. This characteristically has two key aspects, one focused on making profits and the other focused on
dealing with risks that might negatively impact the business.
 Business plan serves as a blueprint to guide the organization’s policies and strategies

Business Planning Process:

1. Research
2. Strategize
3. Calculations
4. Drafting
5. Re-visitation and Proof-reading to finalize

Typical Structure for a Business Plan for a Start-up Venture:

1. Executive Summary: This is the general overview of the entire business. It is a summary of the business
idea, the mission statement, and a sketchy report of where your business fits in the market place and
why it will succeed. Questions that have to be answered here include:
a. What is the business?

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 b. What is the market?
c. What is the potential for the business?
d. What are the forecast profit figures?
e. What are the Funding requirements?
f. What are the prospects for investors and lender?
g. Business Description
h. Business Environment Analysis
i. Market Analysis
2. Marketing Plan: The marketing has to be adequately planned for and must include the:
 Market research
 Segmentation and targeting
 Detailed outline of the product or service
 Unique selling points
 Chosen pricing strategy
 Promotional plans
 Distribution strategy
 Customer service strategy
3. Operations Plan: Operations plan include the production process which must be explicitly explained.
The following may also be included depending on the type of business:
a. Physical location
b. Facilities
c. Equipment
d. Scale & location of operations
e. Capacity - potential and effective
f. ICT strategy
g. Engineering and design support
h. Materials required
i. Inventory levels and stock control plans
j. Purchasing arrangements
k. Sources of supply of key resources
l. Quality control plans
m. Staffing requirements
4. Financial Plan: This offers the idea about the finances to be involved. Other expectations from the plan
are:
 Details of capital required and uses
 The plan must include details of the external finance required
 The plan will outline how it is proposed to raise the finance
 Sources of finance: Short, medium and long term; Debt equity
 Evaluation criteria for performance review
5. Business Description
6. Business Environment Analysis
7. Market Analysis
8. Operations Plan
9. Management & Organization
Other Important things to know:
Ratio analysis: net profit margin, Gross profit margin, return on capital employed, liquidity and solvency
analysis effective business planning has to begin with an honest and realistic appraisal of the current position
of the business.
Reasons for a Business Plan: As the backbone of any enterprise, it is very essential for an entrepreneur to ask
him or herself why he needs a business plan. An axiom says if you fail to plan, then you have planned to fail.
A business plan serves as:
o Road Map/Guide for the Business
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 o Assurance of potentiality
o Define a Business
o Serves as Résumé for the Business
Factors That Motivate People to Begin New Businesses:
1. Joblessness
2. Financial Ambition
3. Desire to Control the Economy
4. Desire to pursue a business idea
5. Advantage of an opportunity in the market
6. Inherited Family Business
7. Desire to be their own boss
8. Replicating a Business Idea found in Another Environment
9. Frustration with low Pay
10. Preference for a Smaller Company Environment
11. Lack of opportunity in previous employer
12. The desire "to make things improve the world
13. Invite to begin someone else's business
14. Maintain own ethical values which their employer didn't share
15. Desire to be involved in operations
16. Exposure to Some Available Fund
17. Spirit of returning to the society
18. Life after Retirement
19. Favorable Government Policies and Procedures
20. Opportunity Search and Identification
21. Business Opportunity Identification Process: There are five stages that are discussed in relationship with
the process of opportunity identification. These stages are:
o Preparation
o Incubation
o Insight
o Evaluation
o Elaboration
Types of Opportunity
 Recognized type
 Discovered type
 Created/enacted type
There are five factors that influence identification of opportunities. These are:
1. Entrepreneurial Alertness
2. Prior Knowledge
3. Discovery versus Purposeful Search
4. Networking versus Solo Entrepreneur
5. Creativity
6. Entrepreneurial Alertness Factor
Opportunities from SWOT Analysis
 SWOT Analysis is a useful self-appraisal system for your strengths and weaknesses that help establish your
business or develop your business by exploiting your abilities, talents and opportunities.
 SWOT Analysis could also be that initial self-appraisal of the ability of the business opportunity to start and
survive.
Note:
 SWOT analysis was originated in the 1960s by Albert S Humphrey
 In essence, there is Business SWOT Analysis (BSA), and there is Personal SWOT Analysis (PSA).
 SWOT analysis is often described as internal/external analysis.

LEGAL ISSUES AT START UP

The four major legal issues that should be attended to are:
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 1.Address legal restrictions/Limits
2.Choosing a Business Entity Type
3.Sole Proprietorship
4.Partnership
5.Limited Liability Corporation
6.Corporations
7.Protect Intellectual property
8.Generating and Registering a Business/company name
o Characteristics of choosing a Business name:
 It should be easily and proudly expressible.
 It should be easy to comprehend and spell.
 It has to be creative and imaginative. (Sound well)
 Avoid common or generic names.
 It must clearly advertise your business ideas and represent all you do so that your production line
will not be limited.
 It should be distinctive and concise and without ambiguous words. consider the generated name in
an alphabetical list such as the yellow pages
9. Checking the Company name and trademark
10. Developing basic legal documents
INTRODUCTION/DEFINITION OF CONCEPTS
 Feasibility analysis: is a comprehensive research study required by the entrepreneur or his agent to
determine the practicability, profitability and viability of the business idea
Reasons for Feasibility Analysis
Feasibility analysis is all about questioning your concept, ascertaining which components are in place to make
it realistic to easily execute and recognizing the biggest obstacles you're likely to face.
Feasibility analysis mainly assists to:
Appraise the business marketplace for the new business idea; assess if the Managing team have the personality
generally known with successful business persons. It is advisable to have self-assessment first. One must have
that personality suited, skilled and knowledgeable to run a business and lead a group to success.
How to Write a Feasibility Analysis Report
A feasibility analysis report for a startup business can be a simple or complex exercise, depending on the type
of business. The best approach is to first determine what the entrepreneur requires it for and what interests
him/her. Then, set the criteria that need to be fulfilled in order to justify the startup business or convince
decision makers who have to approve whatever for the business. The structure/contents template of a
feasibility analysis report is neither rigid nor limited, and depends only on the needs, type and organization that
require it.
Template and Structure for a Feasibility Analysis Report
 Proposing Entrepreneurs‟ Profile:
 Team Members Names:
 e-mail addresses:
 GSM Telephone Members:
 Positions of Team members in the Business:
 Postal and Residential Addresses:
 Educational Qualifications:

 Business Name: This indicates the type of registration, whether a sole proprietorship, partnership,
corporation or limited liability venture. Please note that a public limited liability company carries the “Plc”
after the name or the “Ltd” when proposed as a private limited company.
 Business Location Headquarters and Branches: A good description of the possible headquarters location of
the company, its branches and facilities including offices and manufacturing plant.
 Background History of the Business: This refers to the business overview and should briefly describe the
proposed business. It should be specifically spelt out how it shall be organized and a proposed aspiration of the
venture to be a small company forever or to be developed into an international standard later.
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 Business Objective: This is always as conceived by the business team. It describes the main concept and the
essence of the business. The main objectives usually put forward by most entrepreneurs are the generation of
income, provision of jobs for the youth, improving the economic status of the business location and setting
new standards or products in the business environment.
Funding sources are arranged below in progressively required:

 Founders, Friends & Family or Bootstrapping Phase

 Business Angels
 Venture Capital (VC)
 Initial Public Offering (IPO)
 Founders, Friends and Family

MODULE 2: THEORIES OF GROWTH: AN OVERVIEW

 Entrepreneurship is recognized as the engine of economic growth and poverty reduction worldwide. This is
because the social and economic value added through innovation and employment generation is critical to the
increase in the overall productiveness of the economy.
 It is essential for businesses to grow in order to serve the interest of the owners and also contribute positively
to the economic development of regions and nations (Acs, 2006 and Autio, 2007).
CONCEPT OF BUSINESS GROWTH
Business growth means expanding firm’s products and services or expanding its target markets, or some
combination of each. Any increase in the volume of activities of enterprises is a clear indication of growth.
In explaining the pattern of business growth, many theories rely on “The life-cycle approach. This approach
posits that just as humans pass through stages of physiological and psychological development from infancy to
adulthood, businesses also evolve in predictable ways and encounter similar problems in their growth” (Bhidé, 2000).
 Is proposed that businesses pass though infancy, growth, maturity and then decline or even close shop. Some
scholars suggest more or fewer stages of development. However, there is no consensus on the number of
stages, or on how they are related.
Reason for Business growth:
The question often asked is what motivates people commit to starting and growing their businesses. Usually,
entrepreneurs tend to make critical investments, take acceptable risks and learn consistently because of their desire to
make money and enjoy all the rights and privileges that come along with wealth. Other reasons include improved
social status and well-being, greater opportunity for philanthropy and community services, and gaining control over
their own destiny. Employees attribute increase in income/ benefits and advancement with businesses that grow.
On general note, startups and small businesses generate employments opportunities. ILO (2007) estimated
that about 70% of the people in Sub-Saharan Africa rely on small and informal establishment for their livelihood. For
example in South Africa, the share of employment provided by SMEs sector is estimated at 60% and generated about
40% output (Lukacs, 2005). In Botswana, small business contributed between 30–45% to the nations GDP and
accounted for more than 60% of wage employment
Types of Business Growth
There are two main types of business growth:
1. Internal Growth: Internal growth is typically a steady process of expansion from within the firm. The
owner(s) of the business contribute more capital, or plough back profits into the business to acquire new
assets, employ more staff, build additional plant or deploy new technology. The main advantage of this
approach is that the business is able to leverage its assets and experience over time. The main
disadvantage is that it takes time, and rivals may be expanding and gaining competitive advantage as
well. NASCO Nigeria plc. used this approach by expanding into the production of detergents and carpets.
Thus, through hard work and careful planning owners can grow their businesses successfully.

2. External Growth: External growth can be carried out by seeking external finance, or by merger and
acquisition. These approaches tend to rely on bringing external resources into the business in order to
fund expansion. In this case, there is the possibility of changes in the ownership structure of the firm or
changes in its gearing position. See topic 2 for more details on mergers and acquisition.
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Strategies for Growth:
 Expanding Product Line or Service Offerings
 Opening new branches/division
 Exportation
 Innovation
 Creating and Maintaining Online Presence
 Franchising and Licensing
 Merger & Acquisition
 Competition
NOTE:
1. It is well understood that Small Scale Enterprises (SMEs) are the most effective means of generating
employment and fostering growth.
2. Nigerian people have demonstrated that even without government support and direction, they are capable
of staring and growing ventures. This resilience of Nigerians can be found in the following trades:
 Movie and music
 Internet cafes
 Phone cards and call stands
 Business centers
 Satellite installation and repairs
 Computer soft and hard wares
 Transportation
Other business activities that experienced significant growth in the last few years include:
 Furniture making
 Printing press
 Steel works
 Bread and confectioneries
 Photo studious and video coverage
 Automobile dealership and repair
 Electric generators and repairs
 Electronics and repairs
 Restaurants
 Chemists
 Super markets
 Traditional medication
 Tailoring and design
 Block making

Challenges of Business Growth in Nigeria:

1. Lack of coherent economic empowerment policy
2. Technical constraints
3. Deteriorating economic condition
4. Lack of productive culture
5. Weak Investment climate and Doing Business Indicators

Critical Success Factors for Growing Businesses:

1. Clarity
2. Competence
3. Reputation
4. Resilience
5. Creativity
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 6. Concentration
7. Courage
8. Learning from failure and moving on
9. Financial Discipline
10. Investment in people

MODULE 3: SOURCES OF FUNDS

Finance has long been considered by Small and Medium Enterprises (SMEs) operators as an important issue.
Obtaining financial resources assistance in the amount required and when they are needed can be more difficult for
small scale entrepreneurial ventures than for established organizations.

Other reasons for sourcing business finance include the following:

 Upgrading facilities to comply with stricter environmental regulations
 Financing production in cases where there is significant lag between when costs are incurred and when
payments are received;
 Purchasing of new equipment or facilities;
 Purchasing of business vehicles; and
 Building up inventory in advance of a busy season
SOURCES OF FUNDS FOR NEW AND ENTREPRENEURIAL VENTURES
There are several sources of finance for both new and old entrepreneurial ventures. These sources are:
 Personal Savings
 Borrowing from Friends and Relations Trade Credit
 Accrual Accounts
 Retained Earnings
 Equity Financing
 Bank Loans
 Project Financing
 Venture Capital:
- Wealthy individuals
- Foreign investors
- Private investment funds
- Pension funds
- Major corporations.
 Debt Financing
 Commercial Draft
 Banker’s Acceptance
 Bills Discounting
 Commercial Paper
 Inventory Financing
 Bank Overdraft:
Before banks grant overdraft, the following factors are considered:
- The purpose for which the fund is required
- The character of the entrepreneur
- The management and financial position of the business
- The capacity of the business
- Collateral security (this depends on the amount of money involved)
 Loans from Corporative Societies
 Hire Purchase
 Leasing:
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 The following points are important and worth noting by any entrepreneur that wants to enter into
lease agreement:
- Ownership of the asset does not rest with the business until the asset is sold at residual value at end of
contract
- Capital allowances may be claimed by leasing institution but not by the business.
- Lease payments are tax deductible that is, passed as expenses in Profit and Loss
- Leasing does not normally affect borrowing capacity unless financial legislation requires balance
sheets to reflect leasing finance
- Period of repayment matches expected life of asset
- Immediate use of asset.
 Factoring
 Microfinance Bank:
Microfinance bank was established in 2005 by the Central Bank of Nigeria according to the provisions of
Section 28, sub-section (1) (b) of the CBN Act 24 of 1991(as amended) and in pursuance of the
provisions of Sections 56-60(a) of the Banks and other Financial Institutions Act (BOFIA) 25 of 1991. This
was mainly to promote monetary stability and a sound financial system in the country.
Three features distinguish microfinance from other formal financial products. These are:
- The smallness of loans advanced and or savings collected
- The absence of asset-based collateral
- Simplicity of operations
 Public Offerings:
Public offerings usually result in long term sources of funds which include the following:
a. Ordinary shares: Ordinary shares represent the ownership position in an organization. Ordinary
shares holders are also called shareholders and the risk bearers of the firm their rate of dividend
is not fixed rather it depends on the discretion of the management. Ordinary shares can be issued
at par, discount or premium. The rights of shareholders include:
- Right to participate in the annual general meeting and vote
- Right to appoint a proxy
- Right to have access to the organization’s books
- Right to contribute to the appointment of members of the board
b. Preference shares:
Preference shares as a long term source of funds are certificates of ownership in organizations that
usually have a fixed rate of dividends which must be paid before ordinary share dividends. It is
considered as a hybrid security because it has many features of both ordinary shares and
debentures. The types of preference shares include:
 Cumulative and non-cumulative preference shares,
 Redeemable and non-redeemable preference shares,
 Participating and non-participating preference shares.
The following features make preference shares to be in the class of ordinary share:
- The non-payment of dividends when the company is insolvent
- Dividends are not deductible for tax purposes; and
- some preference shares have no fixed maturity date
 On the other hand, the following features make preference share to be in the class of
debenture:
- Fixed rate of dividends
- Preference shares do not share in the residual earning of the firm
- Preference shareholders have claims on the income and assets of the business
before the ordinary shareholders in the time of winding up
c. Debentures:
Debentures are certificates of debts and they are long term sources of funds that give the holders
the opportunity to collect the principal amount at a fixed future date. Debentures have definite
interest rate which is payable at annual basis until the capital sum of the amount borrowed is fully
paid. They are issued in units of hundred and the interest rates depend on the prevailing interest
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 rate in the money market and financial condition of the firm. The following are the features of
debenture:
- Debentures are negotiable instruments;
- The interests on debenture are tax-deductible;
- They have a fixed coupon rate;
- Debentures are redeemable at specific date;
- Debenture holders do not participate in the control of the firm; and
- Debentures are secured either on floating or fixed assets.
 Small Business Investment Organizations:
These can be government owned or private owned with debts being government guaranteed:
Examples of institutions under this category are:
- Small and Medium Industries Equity Investment Scheme (SMIEIS)
- Central Bank of Nigeria (CBN, National Economic Reconstruction Fund (NERFUND)
- National Bank for Commerce and Industry (NBCI), Small Scale Industries Credit Scheme (SSICS)
INTERNAL AND EXTERNAL SOURCES OF FUNDS
Internal financing is the term for a firm using its profits as a source of capital for new investment, rather than
distributing them to firm's owners or other investors and obtaining capital elsewhere while external financing
consists of new money from outside of the firm brought in for investment.
External financing is the phrase used to describe funds that firms obtain from outside of the firm. It is contrasted to
internal financing which consists mainly of profits retained by the firm for investment.
Advantages of internal sources:
- capital is immediately available
- there is no interest payable on such fund
- there is no control procedures regarding the credit worthiness of the owners
- there is no third party’s influence
Disadvantages of internally sourced funds
- It is somehow expensive.
- It does not easily increase capital.
- It is not as flexible as external financing
- It is not tax-deductible.
- It is limited in volume because it is subject to the capability of the owner(s) to raise fund internally
FORMAL AND INFORMAL SOURCES OF FUNDS
Formal sources of funds represent those institutions that are registered with appropriate authorities to transact the
business of finance with entrepreneurs. Examples of formal sources of funds include loans from commercial banks,
insurance company etc.
Informal sources of funds are provided outside the structure of government regulations and supervision. Examples
of informal sources of funds include those groups or individuals that are involved in loan disbursement with little or
no formal regulations e.g. Esusu, thrift savings scheme, cooperative society etc.
Advantages of formal sources of finance
(i) Provides proper guidelines and documentation for loans.
(ii) Business advisory support from the banks that is lending.
(iii) Helps the entrepreneur to stay focused on the business because of interest rates.
Advantages of informal sources of finance
(i) It helps entrepreneurs to have easy access to funding.
(ii) Less documentation is involved in loan process.
(iii) Entrepreneurs do not stand the risk of loss of assets or business to the institution

MODULE 4: MARKETING (MARKETING FOR BOTH SMALL AND LARGE BUSINESSES)

1. Marketing: is a specialist activity that influences the success of any organization whether small or large. In
very pedestrian language, marketing can be conceptualized as a process that enables people obtain their
needs or wants from organizations that have developed products or services that will help satisfy these needs
or wants of people

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 2. Marketing is a process that encompasses a number of activities that are interrelated and interdependent
The implication of these definitions is that successful marketing rests on the premise that proper need assessment
has to be carried out to determine what the market desires or is lacking.
Differences between Small Business Marketing and Large Business Marketing
a. Budget Constraints: In a small business one thing is very obvious and that is operating on a lean budget
particularly as it relates to marketing plan. The huge organizations sometimes called corporate titans, have
astronomical budgets to cover their promotions.
b. Staffing: When you peruse through the organogram of a big corporation like Globacom Nigeria Limited, you
will find the Commercial Director Marketing at the helm of affairs. He has six Divisional Directors with six
Business Development Managers assisting them. The organization chart of a small business puts
responsibility for marketing in the top box, where the business owner manages the process as a hands-on
task. In essence, you will not have the luxury of professionals as in the Globacom example.
c. Differences in Creativity: Large companies like Cadbury Nigeria Plc. routinely require millions of Naira to
produce advertorials with the single purpose of establishing brand awareness and market orientation. Small
businesses adopt a significantly different method.
d. Differences on Strategy: In large companies like Nigerian Bottling Company Plc. documents of business plans
are numerous and probably found on bookshelves in the company. In the case of small businesses, the term
marketing plan may sound like rocket science to the owner. Interestingly, a marketing work plan is quite
simple and fairly manageable.
e. Customer Interaction: Small businesses have the capacity to interact directly with their customers, get to
know them on a personal level, and learn exactly what their needs are. More often than not, large
organizations do not have this luxury

MARKETING MIX IN NEW VENTURES:

Marketing Mix: is the unique blend of the elements of marketing that will apply to the business. These elements are:
product or service itself; the location of the business; the distribution methods adopted by the business; the price at
which the products will be sold; the advertising and promotion alternatives available to the business; and how the
product will be sold as well as the level of customer service to be provided. These elements are often summarized
and commonly referred to as the 4Ps - product, price, promotion and place.

Other Important things

 Product: This is anything offered that is capable of satisfying a particular need or want. Products in the
context of marketing discourse are tangible and when you pay for them you hold onto something that
you can see, touch and feel. Product decisions require looking at the following areas:
- product mix;
- product features and
- product support
 Place: In marketing, a business must have the right product, at the appropriate time and price, and in
the right place. In this context, place refers to two aspects; location and distribution. Location as a
component of marketing mix is critical to some and almost irrelevant to others
 The combination of promotional tools an organization uses is called its promotional mix.
 Advertising: This is paid non personal communication through various media by organizations and
individuals who are in some way identified in the advertising message. The medium of advertising
include; television, radio, handbills, billboards (electronic and non-electronic), newspapers, magazines,
music and internet
 Personal selling: This is face-to-face presentation and promotion of products and services.
 Public Relations: This is defined as the function that evaluates public attitudes, changes policies and
procedures in response to the public’s requests, and executes a programme of action and information to
earn a public understanding and acceptance. In essence, a good public relations (PR) programme has three
steps.
1. Listen to the public through marketing research.

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 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
 Publicity: This is talking arm of PR. It is one of the major functions of almost all organizations. Publicity
is any information about an individual, product or organization that is distributed to the public through the
media and that is not paid for, or controlled by the seller. In essence, it can be viewed as a form of free
advertising
 Sales promotion: Sales promotions (SP) are used to help promote the sale of the product or service. SP
campaigns could be used in the following scenarios;
- To move products or services that have slowed down probably created by loss of buyer interest
or change of buying season
- To win back customers who have moved to competitors for reasons such as price, delivery of
product, pedestrian packaging among others
- To launch new products. This allows the customers to experience the new product or service.
 Price: The phrase that goes mostly with cheap is poor quality, yet everyone wants a bargain. But as a bargain
is essentially something worth more than it costs (and therefore rare) what they really want is value for
money.
It should be noted that the term price could be used differently depending on the sector and the
context. For example, all these refer to the amount you pay in exchange for the value received;
? Guest Lecturer - Honorarium
? Apartment - Rent
? Doctor - Consultation Fee
? Highway - Toll
? Import / Export - Duty
? PHCN / GSM - Tariff
? Insurance - Premium
? Association - Dues
? Bank - Interest
? School – Tuition
Factors Affecting Price:
1. Competition in the market and marketing strategies
2. Demand for your product
3. Introducing a new product

INTERNATIONAL MARKETING
International marketing is the process of planning and conducting transactions across national borders to create
exchanges that satisfy the objectives of individuals and organizations. International marketing has forms ranging
from export-import trade to licensing, joint ventures, wholly owned subsidiaries, management contracting among
others.
Other Important Terms to note
Adaptation
This addresses the concern of whether companies should have identical products in all countries or develop products to
satisfy local tastes and desires. In the discourse of International marketing, standardization is sometimes used
interchangeably with globalization i.e. treating entire market as a single one for both production and marketing
reasons.
Modes of Market Entry
There are three broad strategies for foreign market entry and each one involves its own level of commitment, risk
and degree of profit. These are Exporting, Joint Venturing and Direct Investment.
1. EXPORTING: This is the process of sending items, services or persons from one country to another in return for
goods, money or services. This involves occasional and active exporting of goods and services.
2. JOINT VENTURING
Joint venturing is the second method of entering a foreign market by teaming up with foreign nationals to set up
production and marketing facilities. Joint venturing differs from exporting in that a partnership is formed that leads to
some production facilities abroad, and it differs from direct investment in that an association is formed with someone

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in the country. A joint venture is the association of two or more people to carry out a particular business or
contract. A joint venture can be formed in four ways:
- Licensing
- Contract Manufacturing
- Joint Ownership Ventures
- Management Contracting

3. DIRECT INVESTMENT

The third strategy that could be employed in order to operate in a foreign market is through direct investment. In this
the firm may invest in foreign-based assembly or manufacturing facilities by either building a new plant or buying
substantial shares in an already existing plant, or completely buying over an existing plant. The following benefits are
derivable to the foreign investor:
1. The firm may secure cost economies in the form of cheaper labor or raw materials, government investment
incentives, freight savings, and tax concession, etc.
2. The firm will also gain a better image in the host country because it creates job opportunities to the local
nationals.
3. The firm can develop a deeper relationship with the government, customers, local suppliers, and distributors,
enabling it to adapt its products to the local market.
4. The firm retains full control over the investment and therefore, can develop manufacturing and marketing
policies that serve its long-term international objectives.

MODULE 5: NEW OPPORTUNITIES FOR EXPANSION

Introduction
Science and Technology have always influenced modes, practices and procedures of business and trade. 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 pace. The age of connectivity has
reduced distances and brought people closer. This can be directly attributed to the development of electronics and
communication technologies.
Computers and the Internet are now increasingly widely used to function as part of doing business. Transactions
conducted through the Internet have enormous implications on the international competitiveness of every nation,
giving rise to new and exciting opportunities in national and international industries, the governments and for
individuals.

WHAT IS E-BUSINESS?
Electronic Business or e-Business refers broadly to the use of technologies, particularly the Information and
Communication Technologies (ICTs), to conduct business or facilitate improved business activities and processes,
including procurement, operation, manufacturing, marketing and sales, logistics, human resources management,
finance, and research and development. Originally, the term e-Business refers primarily to the digitally enabled
transactions and processes within an organization, involving information systems under the control of the organization.
E-Business could be generally described as any ICT enabled system that suppliers, distributors, or customers use, as the
basis for conducting their business operations, such as:
• Communicate with clients or suppliers via email;
• Send email to other organizations to order supplies;
• Sell or promote products or services via a web site and/or email;
• Publish a web site to provide public information about the business;
• Use the Internet for online banking and paying bills
• Research information about customers and competitors using web sites;
• Provide technical or customer service by email or web site; and
• Manage and distribute internal organization documents via an intranet

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WHAT IS E-COMMERCE?
Electronic commerce (e-Commerce) describes the process of buying, selling, transferring, or exchanging products,
services, and/or information through computer networks, principally the Internet (Turban et al., 2004). Electronic
commerce can also be described as the sharing of business information, maintaining of business relationships, and
conducting of business transactions by means of telecommunications networks (Zwass, 2003).
DIFFERENCE BETWEEN E-BUSINESS AND E-COMMERCE
As was mentioned earlier, e-Commerce refers to online transactions. However, there is much more to e-Business
than selling products and services. What about research, development, marketing, procurement and customer
relations? The term "e-Business" highlights the fact that definition of e-Commerce was too narrow.
TYPES OF E-COMMERCE
1. Business-to-Consumer
2. Business-to-Business
3. Consumer-to-Consumer (C2C)
4. Business-to-Government (B2G)
5. Business to Employee (B2E)
6. Mobile commerce (M-commerce)

E-COMMERCE AND SMALL BUSINESSES

The 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 including:
• Adaptation to rapid market changes that are impacting on export and domestic markets.
• Cost competition and the need to compete more effectively in both local and international sectors.
• Globalization of the production and supply of goods and services – and the need to integrate small enterprises
more effectively into the supply chains of larger businesses.
• Increased customer expectations and consumer power – buyers expecting to be able to access web-based
information about products and services.
• Adaptation to new technologies – an overall need for technological upgrading.
• Greater role for information in business and the need to access process and communicate it efficiently and
effectively.
• Government deregulation and liberalization – lowering costs of access.
• Bilateral and multilateral trade agreements – opening up markets to developing country producers.
• Adaptation to higher quality standards such as ISO9000 – ICTs are acting as an enabler in this area.
Advantages of E-Commerce
 Cost Reduction Benefits
 Increased Efficiency
 Better Service Delivery
 Competitive Advantage
 Human Capital Development
Disadvantages of E-Commerce
 Extra Cost
 Risk of Failure
 Risk of Losing Focus
MODULE 6: CONCEPTS OF BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
Ethics, in the simplest term, involves learning what is right or wrong. When this word is applied to the world
of business it is called business ethics. Simply put, business ethics involves knowing what is right or wrong in a
business environment and doing what is right with regard to effects of products or services and in relationships with
stakeholders (Gebler, 2012). Business ethics is the applied ethics discipline that addresses the moral features of
commercial activity. According to Wikipedia (2012a), business ethics otherwise referred to as corporate ethics
represent a form of applied ethics or professional ethics that examines ethical problems that arise in a business
environment. It applies to all aspects of business conduct. In a nutshell, social responsibility otherwise referred to as
corporate social responsibility (CSR) is a mode of ethics that implores the entrepreneur to act in a way to benefit
society (Pairier, 2012). It is a subcategory of business ethics.

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Features of Business Ethics
 Code of conduct: Business ethics is a code of conduct. It tells what to do and what not to do for the welfare of
the society.
 Based on moral and social values: Business ethics is based on moral and social values. It contains moral and
social principles (rules) for doing business. This includes self-control, consumer protection and welfare,
service to society and fair treatment to social groups amongst others.
 Gives protection to social groups: Business ethics give protection to different social groups such as
consumers, employees, small businessmen, government, shareholders, creditors, etc.
 Provides basic framework: Business ethics provide a basic framework for doing business. It gives the socio-
cultural, economic, legal and other limits of business. Business must be conducted within these limits.
 Voluntary: Business ethics must be voluntary. The businessmen must accept business ethics on their own.
Business ethics must be like self-discipline. It must not be enforced by law.
 Requires education and guidance: Businessmen must be given proper education and guidance before
introducing business ethics. The businessmen must be motivated to use business ethics. They must be informed
about the advantages of using business ethics. Trade Associations and Chambers of Commerce must also play
an active role in this matter.
 Relative Term: Business ethics is a relative term. That is, it changes from one business to another. It also
changes from one country to another. What is considered as good in one country may be taboo in another
country.
The Need for Business Ethics:
 To stop business malpractices
 To improve customers' confidence
 To ensure survival of business
 To protect employees and shareholders
 To Develops good relations
 To Creates good image
 To Smoothing functions
 To satisfy consumers
 Importance of labor
 To have a Healthy competition
Ethical Principles for Entrepreneurs
1. Honesty
2. Integrity
3. Promise-keeping and trustworthiness
4. Loyalty
5. Fairness
6. Concern for Others
7. Respect for Others
8. Law abiding
9. Commitment to Excellence
10. Leadership
11. Reputation and morale
12. Accountability
Importance of Ethics in Business
1. Provision of moral compass
2. Ethics implicitly regulate area and details of behavior that lie beyond governmental control.
3. To meet stakeholder’s expectation
4. Definition of the rights and duties between a company and significant others
5. Enhancement of business performance
6. Others include; Consumer and customer approval and loyalty, Promoting self-regulation and deterring
government regulatory intervention, and Enhancing corporate reputation

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 MODULE 7: MANAGING TRANSITION: FROM START UP TO GROWTH

Change/Transion
In business, change is the way things will be different, and transition is how you move people through the stages
to make change work. Efforts at leading change, however, can be serious, if not outright disastrous, unless the
entrepreneurs manage transition. Yet managing transition well is often the most neglected part of a change initiative
(Stevens, 2008). Entrepreneurs manage business transitions from one state to another in one or two basic ways, either the
business transforms itself i.e. do things differently, or it can replicate its existing routines, processes and actions.
The steps involved are:
- identifying the needs,
- setting up the transition team,
- laying out the plan,
- getting inputs from stakeholders,
- finalizing the plan,
- clearing the path and
- Marking the progress of the transition by milestones.
The managers should recognize that challenges might arise in the process of transition and the same should be
resolved to ensure success.
The Phases of Business Growth
Michael Masterson (Ready Fire Aim Book), proposed four (4) stages or Phases of business growth:
1. start-up/infancy,
2. fast growth/childhood,
3. adolescent and
4. Maturity.
While Larry E. Greiner originally proposed the Greiner Curve in 1972 with five phases of growth. Later, he added a sixth
phase (Harvard Business Review, 1998).
The six growth phases are:
1. Growth through creativity,
2. Growth through direction,
3. Growth through delegation,
4. Growth through coordination and monitoring,
5. Growth through collaboration and
6. Growth through extra-organizational solutions.
A combination of the works of these two authors gives a better understanding in the phases of business growth
Other Important things to Note:
Major functions of a Start-up Entrepreneur:
 Mentoring and Being Mentored- Attend seminars, read books, and take advice from successful people in the
industry or a related-industry
 Teaching everything he knows to his employees that will make the business to grow
 Setting business targets - for him and his employees who should be focused on increasing his customer
base and improving the quality of customer service.
To transit from start up to growth, the entrepreneur must:
I. Be flexible- for instance, flexible to try different marketing strategy
II. Ask for advice from smart people;
III. Make sales his top priority
IV. Discover their optimum selling strategy- this might be a combination of media, pricing and quality

How to manage fast growth/childhood and double business revenue:

1. Create new adaptations of products/services that customers already know and love
2. Work hard
3. Work with smart people
4. Find a productive way to engage your employees so that you become a group that reproduces great products/services
5. Increase the speed in the delivery of goods and services

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Formula for Creative Brainstorming:
1. Have a team of 3-8 persons
2. Have a limited amount of time (1-3 hours)
3. Have an agenda/goals and objectives
4. Let everyone contribute
5. Have strict rules- such as time limit for each contribution, no specific criticism, be positive
6. Encourage a culture of creativity in solving problems
Roles of an Entrepreneur:
1. Employee- contribute positively
2. Manager- develops procedures to get work done, supervision etc.
3. Business builder- articulate values, philosophy and vision, supervision
4. Wealth builder- determines what the company is worth and what to do to increase its worth.
The STARS Model
The STARS model (drawn from Watkins 2003 and 2009)
The STARS model (Watkins 2003, 2009) in the Figure provides a perspective on business evolution and development that
identifies the most common business transition:
• Start-up
• Turnaround
• Accelerating growth
• Realignment
• Sustaining success.
The common causes of failure in business transitions include:
• Choosing a business that isn't very profitable
• Inadequate cash reserves
• Failure to clearly define and understand your market, your customers, and your customers' buying habits
• Failure to price your product or service correctly
• Failure to adequately anticipate cash flow
• Failure to anticipate or react to competition, technology, or other changes in the marketplace
• Overgeneralization
• Over reliance on a few key customers
• Putting up with inadequate management
• Lack of experience of managers
• Poor cash flow management
• Absence of performance monitoring
• Over borrowing and poor debtor management
• Lack of financial skills and planning
• Failure to innovate
• Poor inventory management
• Poor communications throughout the organization
• Competition
• Poor location and low sales
• Over investments in fixed assets
• Personal use of business funds and
• Unexpected growth (Mason, 2012).
DECISION MAKING IN BUSINESS TRANSITION
A decision is a choice made from at least two alternatives while decision- making involves the selection of one
alternative from two or more possible alternatives, based upon some criteria. Decisions can either be programmed or non-
programmed. However, to make an effective decision, a manager should create a constructive environment, generate
good alternatives, explore these alternatives, choose the best alternative, check the decision, communicate the decision,
and take necessary actions.

Definition of Decision Making: Decision-making is the process of identifying and selecting a course of action to solve a
specific problem. Decision-making involves the selection of one alternative from two or more possible alternatives,

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based upon some criteria. Decision- making is the art and science of giving thought to, and making a choice or judgment
about an idea or a problem.

Simple decisions usually need a simple decision-making process. But difficult decisions typically involve issues like these:

• Uncertainty - Many facts may not be known.

• Complexity - You have to consider many interrelated factors.
• High-risk consequences - The impact of the decision may be significant.
• Alternatives - Each has its own set of uncertainties and consequences.
• Interpersonal issues - It can be difficult to predict how other people will react.
Throughout the career of a manager, therefore, he must make several decisions, on a daily basis. The more it is done, the
more expertise the manager acquires. Four possible situations usually alert the manager that there is a problem that
requires a decision to be made.
? A deviation from experience.
? A deviation from existing plans.
? External sources, e.g. customers, clients, etc.
? The performance, or lack of it, from competitors.
The Characteristics of Decision-Making
• Decision-making permeates all management.
• It is essential to the operation of the management process in any form of organizational setting.
• It involves judgment.
• It includes risk and uncertainty, since it deals with future values.
Conditions under which Managers make Decisions
In general, managers make decisions under three possible conditions, namely: certainty, risk and uncertainty. Each of
these conditions is briefly discussed below.
1. Decision-making under conditions of certainty
2. Conditions of risk
3. Conditions of uncertainty
BUSINESS CONTROL
This is the process of measuring and correcting the activities of subordinates to ensure that plans are
completed and goals are achieved. Control is implemented by comparing actual results to planned results and
correcting any significant differences. Managers control their organization by continually monitoring the use and
performance of resources especially money and people
Different types of control include the following:
1. Financial control
2. Inventory control
3. Quality control
4. Credit control
Controlling Techniques
A variety of tools and techniques have been used over the years to help managers in controlling their operations.
Three of such tool which shall be discussed here are:
1. Budgeting
2. Break-even analysis
3. Financial analysis
Control of business activities
Control of business activity takes place at two levels - control from within the organisation which is Internal and external
control
PERSONAL DISCIPLINE IN BUSINESS TRANSITION
Meaning of Personal Discipline
Self-discipline means doing what needs to be done, when it needs to be done, whether you like it or not. It is for this
reason self-discipline is required for starting and growing a business, it will get you through all the difficult obstacles
that will get in your way.
(Patience + Motivation + Determination = Self Discipline)
Here are some suggestions for the self-disciplined entrepreneur:
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  Keep staff on track with the vision and mission of your business.
 Find an accountability partner.
 The more successful the entrepreneur is in his business, the more opportunity is created for him to be able
to do other things.
 The entrepreneur needs to have adequate funding, a stable competent team, strong systems and processes, and
excitement behind his vision.
Entrepreneurs and Tips for Self-Discipline
 Decide exactly what you want. If you want to increase your income, decide on a specific amount of money, rather
than just “make more money.”
 Write it down. A goal that is not written down is like cigarette smoke; it drifts away and disappears. It is vague and
insubstantial. It has no force, effect, or power.
 Set a deadline with specific milestones. Pick a reasonable time period and write down the date when you want to
achieve it.
 Make a list of things you need to do to achieve your goal. The biggest goal can be accomplished if you break it
down into enough small steps. Schedule your day the night before.
 Organize your list by both sequence and priority. A list organized by sequence requires that you decide what you
need to do in what order.
 Take action on your plan immediately. Don’t delay. Move quickly. Procrastination is the thief of time, and it
shortens your life. Finish the most difficult tasks early in the day.
 Do something every day that moves you in the direction of your major goal. This is the key step that will guarantee
your success.
 Avoid distractions. Turn off any distractions like cell phones, email, internet, or social media. Use of internet,
computer, your iPhone, iPad, and laptops are beneficial but don’t waste your time browsing irrelevant
materials on- line.
Benefits of Entrepreneurial Self Discipline
 Self-discipline will ensure that the entrepreneur’s thoughts are translated to actions during the most difficult of
times. Self-discipline must be cultivated.
 Self-discipline will help the entrepreneur accommodate additional responsibilities.
 Discipline will make the entrepreneur dependable, both for himself and others.
 It will aid in building character by keeping the entrepreneur in the fight as difficult as it may be to ensure that his
goals are fulfilled.
 It will help the entrepreneur have a strong desire and passion
 Discipline helps the entrepreneur learn to manage stress and allow him think critically and clearly about the task
at hand in any environment.
 It keeps the entrepreneur in focus and does not let external factors distract him from his original goals.
 It leads to judicious use of the limited resources and helps the entrepreneur have the will power not to be
distracted by momentary desires.

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