ENTREPRENEURSHIP AND COMMUNICATION
CPA SECTION 2
CICT SECTION 1
CIFA SECTION 1
CCP SECTION 1
FOR JULY 2018 SYLLABUS
This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply entrepreneurial and communication skills in business and other environments
A candidate who passes this paper should be able to:
- Identify and screen viable business opportunities
- Develop a business plan
- Demonstrate entrepreneurial orientation
- Communicate effectively in a business environment
- Apply entrepreneurship competencies in response to the emerging trends in the business environment
- Entrepreneurial mindset
- Definition of entrepreneurship
- Historical development of entrepreneurship
- Characteristics of entrepreneurs
- Types of entrepreneurs
- Distinction between entrepreneurs and small business owners
- Approaches to entrepreneurship
- Importance of entrepreneurship to development
- Entrepreneurship and innovation
- Creativity and innovation
- Corporate entrepreneurship and innovation
- Qualities of entrepreneurial firms
- Social enterprises and sustainability
- Entrepreneurial ethics, responsibility and leadership
- Case study on corporate entrepreneurship
- Opportunity identification and development
- Approaches to creating new ventures
- Sources of innovative ideas
- Qualities of viable business opportunities
- Evaluating business opportunities
- Challenges of starting new ventures
- Why new ventures fail
- Business incubation
- Role of government in promoting entrepreneurship
- Creating and starting a new venture
- Approaches to creating new ventures
- Acquiring an established business venture
- Business planning
- Overview of the business plan
- Scope and value of a business plan
- Practical experience in writing of a business plan
- Business growth strategies
- Penetration, market and product development strategy
- Public and private placements
- Joint ventures
- Loans and equity financing
- Venture capitalists
- Informal risk capitalists
- Entrepreneurship and technology
- Internet and e-commerce
- The enterprise website
- Impact of globalisation
- Global entrepreneurs
- Business process outsourcing
- Electronic and mobile money transfers
- Business networking
- Crowd funding and crowd sourcing
- Nature of business communication
- Meaning of communication
- Purposes of business communication
- Internal and external communication
- The communication process
- Methods of communication
- Communication systems and networks
- Principles of effective communication
- Barriers to effective communication
- Written communication
- Rules of effective writing
- Business correspondence
- Proposal writing
- Forms and questionnaire design
- Circulars and newsletters
- Notices and advertisements
- Publicity materials
- Press releases
- Graphic communication
- Oral and non-verbal communication
- Oral communication in business
- Effective listening
- Non-verbal communication
- Interpersonal relationships
- Presentations skills
- Role of the chairperson
- Role of the secretary
- Conduct of meetings
- Information technology and communication
- Wireless technologies
- Electronic postal services
- Use of E-mails
- Ethics and integrity in business communication
- Concept of ethics and integrity
- Significance of ethical communication
- Factors influencing ethical communication
- Ethical dilemmas in communication
- Guidelines to handle communication ethics dilemmas
- Business ethics in communication
Emerging issues and trends
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DEFINITION OF ENTREPRENEURSHIP
Entrepreneurship is the process of coming up with new processes or ways of achieving some set objectives. Mostly it will involve the production of goods and services. It requires some ingenuity coupled with a lot of time and effort. There are risks involved in this process and they all have to be assumed. With the risks come rewards that are derived the person who has come up with the new process.
Who is an Entrepreneur?
An entrepreneur is a person who creates small businesses. Entrepreneurs are calculated risk- takers—they strive to maximize potential of their venture while simultaneously minimizing risk. They are able to recognize opportunities as they arise and create goods or services in order to take advantage of the opportunity before competitors catch on to it. Entrepreneurs may create new products or services, improve on current products or services, or simply find a new way to market existing products or services (Michael Paul, University of Wisconsin)
ENTREPRENEURSHIP AND INNOVATION
Creativity and innovation
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the establishment and effective operation of an enterprise. He carries out the whole set of activities of the business for its success. He recognizes the commercial potential of a product or a service, formulates operating policies for production, product design, marketing and organizational structure. He is thus a nucleus of high growth of the enterprise.
According some economists, the functions of an entrepreneur is classified into five broad categories:
- Risk-bearing function,
- Organizational function,
- Innovative function,
- Managerial function, and
- Decision making
- Risk-bearing Function:
The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all possible risks of business which emerges due to the possibility of changes in the tastes of consumers, modern techniques of production and new inventions. Such risks are not insurable and incalculable. In simple terms such risks are known as uncertainty concerning a loss.
OPPORTUNITY IDENTIFICATION AND DEVELOPMENT
METHODS OF GENERATING NEW IDEAS
Even with the wide variety of sources available, coming up with an idea to serve as the basis for the new venture can still be a difficult problem. The entrepreneur can use several methods to help generate and test new ideas, including focus groups, brain storming and problem inventory analysis.
Group of individuals providing information in a structured format is called a focus group. The group of 8 to 14 participants is simulated comments from other group members in creatively conceptualizing and developing new product idea to fulfill a market need.
A group method of obtaining new ideas and solutions is called brainstorming. The brainstorming method for generating new ideas is based on the fact that people can be stimulated to greater creativity meeting with others an d participating with organized group experiences. Although most of the ideas generated from the group have no basis for further development, often a good idea emerges.
CREATING AND STARTING A NEW VENTURE
Approaches to creating new ventures
Starting a new business is a serious undertaking. Yet many aspiring entrepreneurs I know approach it as a fun project, get-rich quick scheme, or perhaps an expensive hobby. Others quit their day jobs and commit everything to their new passion, without regard for their own well-being, or the welfare of others around them. Neither of these approaches bodes well for success
- Take the largest risk to get the biggest return.Startups always involve risk, but should not be risky. Every business move should be planned and well thought out, with milestones set in advance. Processes should be in place to ensure that even if something does not go as planned, you, your family, and even your job are secure.
- Let your passion drive your cash flow projections. Moderate your optimism. That means coming up with revenue and expense assumptions that balance your natural optimism and determine how much cash the business will really need. Then take your revenue projections and cut them in half. Now take your expenses and double them.
- Your idea will attract the funding you need. Assume that raising money from investors to get started will be difficult, unless you have a track record in business, or friends with deep pockets. Will key funding be your family’s entire nest egg, or just half? Are you going to bootstrap, or borrow from personal assets?
- Pretend your family doesn’t matter. Discuss the plan and the costs with your spouse or significant other. It’s essential that the two of you be in agreement on key milestones and how much to put on the line. It is better to risk less and be on the same page than to risk more and have your spouse worried and resentful day after day.
- Mix personal and business funds. Put your risk capital into a separate checking account before you start.Once you see it moved from your savings account to an account tied to risk, it becomes real. You now have a clear financial framework to help you make better decisions, and you will act more strategically, less impulsively.
- Use personal credit cards for business. Keep your personal credit cards separate from the business.You need to do this as a way of tracking, accounting, and leveraging business payments and expenses for tax purposes. Never commingle personal and business funds. Remember that credit card cash advances are very expensive loans.
- Keep business expenses in the bottom desk drawer. Hire a bookkeeper or setup a QuickBooks chart of accounts on your first day in business.If you don’t set up a system early, you will spend tremendous amounts of time and energy going back trying to reconstruct business transactions, for you, your investors, and tax preparers.
- Don’t formalize the business until you get revenue. Have an attorney set your business up as a Corporation, the books, before the first transaction. We live in a very litigious society, so you need to at least protect yourself from liability. Set aside money to create a proper legal entity and get business insurance. It is not just about you.
- Strive for success before thinking about your own payback. Being unprepared for success is the fastest way to lose your first million. It is important to constantly expand your understanding of how investments work, so that as your business grows and spills off cash, you are able to manage personal profits.
- Hedge your bets starting several initiatives or products. Decide to launch one business or product at a time. The best route to success is not to spread your energy and focus on ten things, hoping one will work. Give that one focus everything you’ve got, or you will likely not have the resources to anything well.
Definition of a business plan
A business plan is a detailed account of the conversion of the entrepreneur‘s ideas and vision into a real, functioning business. It is a document that sets out how the entrepreneur intends to execute the ideas he has thought of for his business. It‘s a written document that describes all the steps that the entrepreneur plans to carry out in opening and operating a successful business. A business plan identifies the product or service the entrepreneur will produce how he will produce it and who will buy it. It is also in the business plan that the entrepreneur identifies who he will be working with. He needs a team that will assist him win customers from competitors, increase and maintain the market share for his product. Once all this has been written, the entrepreneur will also need to come up with a convincing financial plan, that is, a budget of how the business intends to use the funds and most importantly how the investment will yield returns
BUSINESS GROWTH STRATEGIES
Penetration strategy is the concept of taking aggressive action to greatly expand one’s share of total sales in a market. The resulting increased sales volume typically allows a business to produce goods or obtain merchandise at lower cost, thereallowing it to generate a higher profit percentage. Also, as the organization acquires more market share, this reduces the sales of its competitors, possibly forcing some to drop out of the market.
There are a number of ways in which a business can engage in penetration strategy. The most common alternatives are as follows:
Price reduction. The most common penetration strategy is simply to reduce prices. If customers are price sensitive, they will respond buying more of the company’s products and services. However, this approach only works if a company’s offerings are considered to at least have the median level of quality of competing offerings. This approach is not a good one when competitors can easily match or exceed the company’s lowered prices, thereinitiating a price war. Also, lower prices may reduce customer perceptions of the value of a company’s goods and services, so that a return to higher prices at a later date cannot be achieved.
Terms improvement. A company can offer longer payment terms or a more generous product return policy. This approach will likely allow the company to scoop up sales from the more financially unstable customers in a market, and can result in large bad debt losses. It also requires more funding to pay for receivables that are outstanding for longer periods of time.
Expanded marketing. A company can spend more marketing funds on improving the branding of its products. If combined with no increase in product prices, the result can be a perception that a company’s offerings are a bargain, resulting in additional market share.
ENTREPRENEURSHIP AND TECHNOLOGY
E – Commerce
E – Commerce also known as Electronic Commerce consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of the internet in conducting trade in this manner is spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction’s lifecycle, although it can encompass a wider range of technologies such as e-mail as well.
The entrepreneur, in considering whether this is the path he wants to take, should arm himself with all the pertinent facts about E-Commerce. He should carry out extensive research into the trends in external markets and assess how this pattern is taking effect in the local economy.
E – Commerce has grown tremendously in the last few years, with retailers offering on line shopping tripling in 1998 alone. The Internet has offered merchants a method of reaching new markets and new customers, and customers have found E – Commerce an effective way of researching and purchasing goods without the hassles of crowds, parking and checkout lines. One fact that cannot be argued against is that things are constantly changing and will continue to do so into the foreseeable future. Change has become the one constant rule in E – Commerce and probably will be for some time to come.
A large percentage of electronic commerce is conducted entirely electronically for virtual items, i.e. products that do not have a physical aspect attached to them, such as shares in the stock market. However, most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.
NATURE OF BUSINESS COMMUNICATION
Meaning of Communication
Communication to the transmission or exchange of information between two or more persons
.The information emanates from the source to the destination and eventually back to the source in the form of a feedback. The information being exchanged is referred to as a massage and the process develops to a communication process.
Communication is all about sending and receiving information. It is in its simplest sense a human relationship involving people who come together to share, to dialogue and to continue.
PeterLittle defines communication in his words “communication is the process which information is transmitted between individuals and or, organizations so that an understanding response results”
William Scott in his organization theory defines communication” Administrative communication is a process which involves the transmission and accurate replication of ideas ensured feedback for the purpose of eliciting action which will accomplish the organizational goals”
Definition of Written Communication
It refers to the innovative activity of the mind which involves a careful choice of written words organized in a correct order of sentences in order to pass information from one person to another.
Written communication involves any type of interaction which makes use of written words, organized in a correct order of sentences in order to pass information from one person to another.
Written communication is very common in business situations facilitating both internal and external communication in the form of memos reports letters etc.
Advantages of written communication
- Written communication helps in laying down apparent principal policies and rules for an organization.
- It is a permanent means of communication and therefore useful where records have to be
- Assists in establishing accountable delegation of responsibilities
- Written communication is more precise and explicit in passing information ( messages)
- It provides records for future references
Legal defense can depend upon written communication
Refers to the sending and receiving of messages/information use of spoken words
Oral communication requires that the sender and receiver (s) communicate with each other that use of words of mouth.
It may be carried out through, face to face interactions, interviews and meetings etc.
Advantage of oral communication
- There is physical proximity
- Allow for instant exchange of ideas
- Feedback is immediate
- Easter to persuade
Disadvantages of oral communication
- Difficult to control when large numbers are involved
- Lack of time to think through
- Lacks reference for records keeping
Definition of Meetings
Meeting are proceeding carried out two or more people over matters of common interest which are discussed over a given period of time or
It is a gathering of a number of people for transactions of common business or for legal purposes
Meeting can be principally categorized into
- Committee meetings
- Command meetings
Meetings are associated with time wasting but when property handled can be useful means of especially group communication.
Success of a meeting will depend on.
- A clear definition of the purpose of the meetings
- Distributing the agenda among all the members on time
- Providing the facts in advance for easy deliberations
- Restricting the numbers invited to the meetings
INFORMATION TECHNOLOGY AND COMMUNICATION
Technology and communication refers to the process of combining various technologies in order to improve the efficiency of receiving recording and transmitting information.
The system developed increase the productivity managerial users and offer professionals time and effort needed to produce access and receive business communication promptly
- The internet is a giant worldwide network. The internet started in 1969 when the United States Government funded a major research project on computer networking called ARPANET (Advanced research Project Agency Network) when on the internet you move through cyberspace.
- Cyberspace – is the space of electronic movement of ideas and information.
- The web provides a multimedia interface to resources available on the internet. It also known as WWW or World Wide Web. The web was first introduced in 1992 at CERN (Centre of European Nuclear Research) in Switzerland. Prior to the web, the internet was all text with no graphics animations, sound or video.
- Common internet applications
- Communicating on the internet includes e-mail, discussion groups ( newspaper) charts groups
- You can use e-mail to send or receive messages to people around the world
- You can join discussion groups or chat groups on various topics
ETHICS AND INTEGRITY IN BUSINESS
Concept of Ethics and integrity
Ethics refers to standards of behavior that tell us how human beings ought to act in many situations in which they find themselves – as friends citizens business people , professionals e.
Ethics is not the same as
- Following the law
- Following culturally accepted norms
Ethics in communication refers to the standards of right and wrong that apply when sending and receiving messages
They are the principals what is right and what is wrong based on values shared in the communication process.
Business integrity is the reliability with which the business undertakes its transactions with the various parties with which it interacts.