CHAPTER TWO

ENTREPRENEURIAL DECISION AND PROCESS

A. The Entrepreneurial Decision: -Entrepreneurship is the symbol of business
strength and achievement. Entrepreneurs are the founders of today’s business success. Their
sense of opportunity, their drive to innovate, and their capacity for accomplishment have
become the standard by which free enterprise is measured. Entrepreneurs will continue to be
critical contributors to the economic growth through their innovation, research and
development effectiveness, job creation, competitiveness, productivity and formation of new
industry.
For the entrepreneur who actually starts his or her business, the experience is filled
with enthusiasm, frustration, anxiety and hard work. On the other respect, there is high rate
of failure due to poor sales, intensive competition or lack of capital. Furthermore, the
financial and emotional risks can be very high. It is in this uncertain condition that
entrepreneurial decision takes place. The next question to be raised is what factors/causes are
contributing for entrepreneurial decisions. In this regard, it is possible to suggest many
factors which are related to the entrepreneur him or herself, government policies, availability
of resources, market conditions etc. In any context, it would be very important to take sound
decisions based on several sub decisions to bring the overall success in the movement from
present life style to a new life style. Therefore, entrepreneurs should decide on
1. To leave the present career or life style
2. The desirability of the venture to the society.
3. The possibility of the venture in reference to the external and internal factors.
1. Decision to Change the Present Life Style
The decision to leave a present career is not an easy one. It takes great deal of energy to
change and create something new. The most important pushing/pulling factors to leave the
present life style and start a business are good opportunities in the Work environment and
disruption created in it.
i. Work environment. The work environment in which an entrepreneur is working currently
can be the main source of new opportunities. Individuals get experiences on management,
leadership, the use of technology and means to be successful in business. They become
familiar with the market situation or identify unfilled or unsatisfied customers needs and
wants. Moreover, because of research and development, individuals may develop product
ideas or process that may push them to form new business.
ii. Disruption. There is no greater force than personal dislocation to galvanize a person into
action. Any negative forces in the organization serve as inertia to start new business or to
leave a present life style.
Motivation for Entrepreneurship. Motivation refers to the way in which urges,
drives, desires, aspirations, and strivings or needs direct, control or explain the behavior of
human beings. What motivates an entrepreneur to take all the risks and launch a new venture,
pursuing an entrepreneurial career against the over whelming odds for success? Although
many people are interested in starting a new venture and even have the background and
financial resources to do so, few decide to actually start own business.
Motivational factors constitute the inner urge present in an individual who continuously
demands from him to do something new and unique as also to perform better than others.
McClelland and winter have made considerable studies and concluded that what motivates a
person to do something new or something to seek better is the inner urge which directs him
towards such ends. This urge also forces a person to use the resources efficiently than to be
negligent of it. Also important is the power of motivation which is really the end which one
seeks to attain. These motivational factors induce the person to undertake entrepreneurial
activities which relate to creating a new business where there was none. This also means to
excel the performance in carrying out any activity by striving through persistent efforts unlike
others who do not have sufficient capacity for hard work.
Given the sizable risks, time and energy requirements of entrepreneurship, why do so many
individual take the entrepreneurial thrust every year? Entrepreneurs are motivated to launch
business for a number of reasons. While the motivations for venturing out alone vary greatly,
they can be grouped in to two broad categories: pull factors and push factors.
Pull Factors.
Some individuals are attracted towards small business ownership by positive motive such as a
specific idea which they are convinced to work. Pull factors are those which encourage
individuals to become entrepreneurs by virtue of the attractiveness of the entrepreneurial
option. Some important pull factors are the following.
Independence: “Being my own boss” is a powerful motivator for many entrepreneurs. Who
seek the freedom to act independently in their work? As heads of business, they enjoy the
autonomy of making their own decisions like setting their own work hours, and determining
what they will do and when they will do it.
Need for independence has been suggested as a fundamental motivation of small business
owners. Entrepreneurs prefer to be their own boss, have often escaped from what they
perceived to be hierarchical regimes of the large corporation and to have realized a sense of
purpose through owning and managing their own business.
The need for power or control: The need for power has also been suggested as a source of
motivation. Power has been defined variously either as an attribute of an individual or as a
structural phenomenon. People with a desire for power not only enjoy being in charge but
also accumulate all the symbols and emoluments of power. They prefer to in to competitive
and status oriented situations and tend to be more concerned with gaining influence over
other and with their prestige than with effective performance.
Need for Achievement: Need for achievement is a desire to excel and achieve a particular
goal. The goal is set in relation to a standard and so the individual who is most motivated in
this way will strive to accomplish their goal through entrepreneurship.
Entrepreneurs characteristically like to take personal responsibility for finding solutions to
problems, they like repaid feedback and they aim to achieve moderately difficult tasks. That
is tasks which have a challenge but not beyond their capabilities.
Profit: Many entrepreneurs are enticed by the hefty of a highly successful business, although
the odds in favor of such considerable success are slim. Others are motivated by making
their own money in business surprising however; many entrepreneurs do not rate money as a
primary motivator for starting their own business.

Role Models: Perhaps one of the most important factors influencing entrepreneurs in their
carrier choices is role models. Role models can be parents, brothers or sisters, other relatives
or successful entrepreneurs in the surrounding community or nationally touted individual
entrepreneurs. Highly visible role models seem to stimulate entrepreneurial activity.
Watching other’s successes inspired to start their entrepreneurial career by another
entrepreneur, a parent, a local business person, or a famous entrepreneur.
Push Factors. Push factors on the other hand are those which encourage entrepreneurship
by making the conventional option less attractive. Many people are pushed (forced) in to
founding a new business by variety of factors. Some of the push factors include:
An Alternative to a Dissatisfying Job: Many entrepreneurs are former executives and
employees of larger corporations who were highly dissatisfied with their jobs. Some were
bored with their work and frustrated with the corporation’s disinterest in their ideas. Others
were frustrated by the slow decision making, the bureaucracy, and their limited autonomy as
managers in large companies.
An important factor that influences someone to start an entrepreneurial career is
dissatisfaction with traditional careers that involve working for someone else. Slow career
progress, the inability to effect quick changes within the organization, low wages, and office
politics are just some of the reasons cited for this dissatisfaction.
Job Insecurity: Given the substantial risks and uncertainly of entrepreneurship, person
security may seem on unlikely motivator. However, in a time of much corporate downsizing
and layoffs, some entrepreneurs view running their own business as a more secure
alternative, especially those in the middle and latter stage of their corporate careers.
Personal and Professional Growth: The challenges of building a business innately involve
individual growth. To be successful, an entrepreneur must be able to cope with risk,
uncertainly, and stress, handle many different interpersonal relationships, and manage a
business with limited resources. Many individuals become entrepreneurs to experience this
growth and the fulfillment gained from building a business in to a purposeful, productive
entity.
Unemployment: Some individuals start their own business when they fail to get
employment. Self-employment is taken as the best alternative for those who are not
employed. When unemployment increases, many people start their own business and become
entrepreneurs. There are a number of environmental factors that “push” people to find new
firms. These entrepreneurs are motivated as much or more by entrepreneurial rewards than
by an “escapist or refugee” mind set.
2. Decision on Desirability of new Venture
The perception that starting a new company is desirable is influenced by many factors. Some
of these determinant factors that are highly related to the individual’s life are
Culture, Families, Teachers and Peers.
Culture: a culture values differently for various activities. Thus, a culture may totally or
partially stand in support or against for entrepreneurship. There are also subcultures within
the culture that prohibit you though the culture allows you to become entrepreneur. Thus,
there are many entrepreneurial subcultures in every culture that negatively affect the
supportive environment. For instance, during earlier times of Ethiopia, merchants,
handicraftsmen, weavers’ etc businesses were valued low. American’s promotes those
individual to be their own boss (work independently) after the age of eighteen while
Ethiopians don’t have confidence to let youths to assume any job responsibilities
independently.
Family: Family traits play an important role in entrepreneurship. A study indicated that most
of founders of companies had fathers and/or mothers who valued their independence. This is
because families give encouragement, support and value to company formation.
Teachers: Teachers influence individuals significantly as entrepreneurship is one possible
career path. The exercising courses in entrepreneurship and innovation tend to spawn or
generate.
Peers: An area with an entrepreneurial pool and meeting places where entrepreneurs and
potential entrepreneurs meet and discuss ideas, problems, solutions spawns etc.
3. Decision on Possibility of the new Venture
Once the desirability of the ventured is ensured, the next question to be raised is the
possibility of it. Several factors have various positive impacts on the feasibility of the new
venture. Some of these factors Includes Government, background of the entrepreneur,
market situations, role models, sources of finances, etc..
Government. Contribute much by providing infrastructure, establishing fair tax rate or
allowing tax exemptions, levying protection tax, providing incentives, ensuring peace and
security, maintaining and enforcing rules and regulations etc.
Backgrounds of Entrepreneur. Knowledge acquired from education and previous business
experiences make a potential entrepreneur self confident and successful in forming or
managing a new venture. In this sense, entrepreneurs are not born but develop.
Marketing. A successful company is established in an area where there is market demand.
Thus, entrepreneurs find potential area of market besides possessing marketing skills in
production, promotion, pricing and distribution.
Role models. Entrepreneurs who start a new venture gain experiences and how to approaches
from role models in a similar business operation. In addition, role models help new starters
to develop strong spirit. This is because; new owners develop the feeling of “if that person
could do it, so I can.”
Finance.While most of the start-up money for any new company comes from personal
savings, credits, friends, and relatives, there is still often a need for additional seed start-up
capital. Therefore, the availability of financial sources or lending agencies enhances the
possibility of the new venture. This is because; entrepreneurs can access loans with less or no
collateral as well as low interest rate either for the long term or short term.

B. The Entrepreneurial Process and Challenges:

In order to establish and run a successful business goes through a process known as the
entrepreneurial process. It consists of the following phases:
1. Identifying and evaluating the business opportunity
2. Developing the business plan
3. Determining the resources required for the business
4. Managing the resulting business
1. Identifying and evaluating the business opportunity. This phase is the first and the
most difficult since most business ideas don’t suddenly appear. Generally a new business
opportunity may be the result of a technological change, market shift, government regulation
or competition. Good business opportunities are often the results of the entrepreneur being
alert to the environment or extra effort in establishing opportunity identification mechanisms.
Most entrepreneurs do not have formal mechanisms to identify new business opportunities.
However, there are some sources such as consumers, members of distribution channels, and
technical people that are generally fruitful. Often the most and best business ideas come from
customers, complaints and remarks such as I wish there were a better product… or I wish I
could find a product that is specially made for… “may result in the inception of a new
business idea and a new product.
Distribution channel members such as whole sellers, distributors and retailers are also good
sources of business ideas. Their proximity to consumers of the product gives them the
opportunity to better see a market gap or a demand for a better product. Technical people
are also good source of ideas for a new business. Technical people are also working on
various projects may come across a new or better way to manufacture a product. Regardless
of its source however, a newly generated business idea must be carefully examined. This
evaluation of the business idea is perhaps the most critical of the entrepreneurial process as it
is the phase in which the profitability of the business idea will be determined.
The evaluation phase deals with the assessment of the opportunity for its length, its real and
perceived value, its risks and returns, its differential advantage in its competitive
environment and its with the personal skills and goals of the entrepreneur. Here, it is very
important to note that the opportunity must also fit the personal interests of the entrepreneur.
A person, without the necessary interest or skill to start a new venture may not become a
successful entrepreneur even if he or she has a brilliant business idea.
At this particular phase as a matter of formal procedure the entrepreneur may prepare an
opportunity assessment plan. The plan also referred to as opportunity analysis focuses on the
issues that enable the entrepreneur to make the decision whether to act on the opportunity or
not. Focusing entirely on the opportunity this plan includes a description of the product or
service, an assessment of the entrepreneur, the team and the opportunity of all the activities
and resources needed to translate the opportunity into a viable business venture and the
sources of capital to finance the establishment of the ventures well as its growth.
The assessment of the opportunity is not an easy task. However, in fact, it is the most difficult
and critical aspect of the opportunity analysis. Through the assessment analysis the
entrepreneur answers questions such as what market need does the product satisfy, What
resources to use, from which sources will be required to convert the business opportunity in
to a business venture, is the entrepreneur fit to act on the opportunity and how fierce is the
local and international competition?
Remember that a business idea is not a business opportunity until it is assessed objectively
and judged to be feasible. You may wish to choose one of the ideas that seem most
promising for more detailed study. Trying to consider too many would make your focus on
only one business idea. You are more likely to fall love with it and could lose your
objectively.
Developing Business Plan
Once a business idea is selected the concept must be sharpened by an in depth planning
process. The result of this step is a comprehensive business plan-the “blueprint” for the
implementation process.
A business plan is a document the entrepreneur prepares before going to the implementation
stage. It details every aspect of the business, and the marketing, financial organizational and
operational plans is also useful to develop and opportunity and determine the resources
required for the business and their sources. In addition the plan will be dealt in greater depth
in chapter four. Developing the business plan is often difficult because the required resources
for the plan may not be readily available and or the entrepreneur may not have rich
experience in business plan preparation.
Determining the Required Resources
The entrepreneur needs to identify the resources required for the business before embarking
on the business opportunity. The entrepreneur starts this phase with an assessment of his
present resources. Then carefully identifies all the resources required to get the business on
its feel and run it successfully. Here the entrepreneur must be careful not to understate the
quality and quantity of the required resources. The entrepreneur also needs to classify the
required resourced in to two: the ones that are vital and the ones that are just helpful. It is
also important to evaluate the impact of insufficient or inappropriate resources on the
business. The next step will be to acquire the needed resources in the right quality and
quantity on a timely basis. The resources needed may be finance, machinery, raw materials
etc…
Managing the Venture
Once the required resources for the business have been acquired, the entrepreneur will deploy
them through the implementation of the business plan. At this stage the entrepreneur
examines the operational problems of the growing enterprise a task that involves the
implementation of an effective management approach and structure. An effective control
mechanism also needs to be set up in order to identity and tackle emerging problems and
challenges on time. Some entrepreneurs find managing and leading the venture they created
very difficult a distinction between entrepreneurs and managers weaknesses, and take the
greatest possible advantage of opportunities available.

4.2 Developing entrepreneurial strategy

A. Taking Moderate Risk

There is a popular axiom, which states that everyone faces risks everyday. You cannot cross
the street without some potential damage that you will be hit by a car. Life is full of risk. Risk
is simply the possibility of damage, injury or loss. Risk is also defined as a condition where
there is "uncertainty" about the future outcome. For instance, taking a risk does not mean that
we are going to take a fire or storm, or take a ship, or a factory. Rather it is to mean that we
place ourselves in a situation or position where there is some doubt about the future outcome.

Starting or buying a new business and running it involves some forms risk. Unfortunately, the
higher is the reward from the business the greater will be the risk the entrepreneur is to face.
It should be noted that people who successfully innovate and start come in all shapes and
sizes but they do have a few things, which others do not. It has been often expressed that an
entrepreneur is risk taker but not a gambler, (which are seen as uncalculated risks).
Entrepreneurs have special quality to recognize potential risks and prepare effective strategies
to deal with them. It becomes more helpful to see the entrepreneur as a risk manager.

In dealing with uncertainty, the entrepreneur has to identify, assess, evaluate and manage
such risks.

1. Identifying Risks.

The first step to be considered in managing risk is to identify different types of risks that will
occur in the future and damage the business. An entrepreneur would face different types of
risks. Some of these are discussed below. Financial risk in most ventures the individual puts a
significant portion of his/her or others' resource at stake. This money or resource will, in all
likelihood, be lost if the venture fails. The entrepreneur may also be required to sign
personally on the venture's obligation that far exceeds his/her personal network. The
entrepreneur, thus, will be exposed to personal bankruptcy. And that is why many people are
unwilling to risk their savings, house property and salary to start a venture. The following
risks are commonly faced by entrepreneurs when they start their own business

Career risk

A question frequently raised by potential entrepreneurs is whether they will be able to find a
job when go back to their old job if their venture will fail. To reduce such risks, starting a
part-time business is popular gateway to entrepreneurship. Part-time entrepreneurs have the
best of both worlds; they can ease into business for themselves without sacrificing the
security of a steady paycheck and benefits. A major advantage of going into part-time
business is the low risk in case the venture collapses. Many part-timers are" testing the
entrepreneurial wasters" to see whether their business ideas will work and whether they enjoy
being self-employed. As they grow, many part-time entrepreneurs absorb more of the
entrepreneur's time until they become full-time businesses.

Family and social risks

Starting a new venture consumes more of the entrepreneur's time and energy. Consequently,
his / her other commitments may suffer. For example, those who are married and especially
those with children, expose their families to risks of an incomplete experience, and the
possibility of permanent emotional scars.

Psychic risk

The greatest risk may be to the well being of the entrepreneur. Many can be replaced; a house
can be built; spouse, children and friend can usually adapt the life. But some entrepreneurs
who have suffered from financial catastrophes have been unable to bounce back, at least not
immediately. The psychological impact has proven to be too severing for them. Psychic risk
also comes from taking complete responsibility. It is great to be a boss; but many
entrepreneurs find that they must make decisions on the issue, which they are not well
experienced.

When there is no to ask, the pressure can build quickly. The realization that the decisions they
make are the cause of failure or success has devastating effect on some people; it creates
more psychological tension on the mind of the potential entrepreneurs.

Lower quality of life

The long hours and hard work needed to launch a business can take their toll on the rest of
the entrepreneur's life. Business owners often find that their role as a husband or as a wife
and as father or mother take a back seat to their roles as business founders. Even the tension
that will be created because of uncontrollable factors usually tends to give the hardest time of
their life.

Long hours and hard work

Business start-ups often demand that owners keep nightmarish/frightening schedules. In

many star-ups, six or seven day workweeks with no paid vacations are that norm. When the
business closes, the revenue stoops coming in and the customers go elsewhere. Even when
you own your own business, you still always are working for someone else-your customers
and clients.

Political risk

Political risk refers to the potential instability, corruption, and violence in a country or
region. It is an important variable because incase where political risk is high, it is difficult and
costly to procure, protect, and dispose of resources. This is the risk of governmental
nationalization and legal appropriation.

In general, entrepreneurial activities and existence of risk are inseparable ideas in the
development of entrepreneurship. It is a process that all will be participating for the purpose
of the reward in order to reimburse the limitation of the activity. Hence, as a potential
entrepreneur, you need to identify and evaluate all possible risks that you will face.

2. Analyzing the Cause of Risks

A successful entrepreneur is someone who is able to assess and evaluate potential risks.

In evaluating risks, the entrepreneur needs to analyze the possible cause of risk. The two
primary cause of business risk are change in market conditions & economic shifts, and the
likelihood of accidents.

Change of market conditions - some of the risks that almost all entrepreneurs face involves
competition, policy changes, style changes, and change from fluctuating economic
conditions. Do you remember our previous financial policy? There were no any private banks
and insurance corporations but as the policy changes many financial institutions starts to
flourish. What will be the future regarding this policy? There are many national policies,
which are subjected to change including education policy, investment policy, tax regulation
and property ownership right policy. The economic shifts like inflation, depression and the
like, affects the success of the business.

Accidents -businesses also face risk beyond these market and economic shifts rather they
would face risks which caused by natural or man made accidents like fire, flood, earth quake,
and upturn. For example, a merchandise shipment of electronics may be destroyed in transit
or a warehouse may burn down and larger amounts of expensive inventory may be lost. So,
such possible causes should be investigated before the damage.

3. Managing the potential risks

Once the potential risks are identified and their possible causes are investigated, the
entrepreneur designs possible strategies to manage the risks. Some risks are easier to control
than others though the action of the owner / entrepreneur will vary with the circumstances
faced by him. Basically, an entrepreneur can use four methods to control risk.

I. Risk Avoidance (Eliminating the Risk)

Upon deep investigation of the nature of the risk, the entrepreneur will avoid the risk totally
by abandoning or refusing to undertake an activity in which the risk seems too costly, i.e.
Entrepreneurs must be willing to take moderate risks when they believe there is a strong
likely hood that they will succeed.

ii. Risk Reduction (Minimizing the Risk).

This method consists of using various methods to reduce the probability that a given event
will occur. Although some risks cannot be avoided, most can be appreciably reduced. The
primary risk reduction technique is prevention.

Effective management is clearly the best way to reduce the impact of many risks. Careful
control of financing, productive control activities, marketing and other management concerns
help ensure that the results of most risks will be profits rather than result in loss or failure of
the business.

A successful entrepreneur can minimize risks either through the limitation of his/her financial
state or by reducing the degree of uncertainty, so that they can be calculated accurately and
decisions can be made with more reliability. Many entrepreneurs also control risk by keeping
fixed assets to a minimum level or by renting office facilities rather than using personal funds
to purchase land and buildings.

iii. Risk Transfer

It means shifting of the consequence of a risk to persons or organizations outside your

business. The entrepreneur is someone who is willing to accept the risks that cannot be
transferred through insurance, which is the process by which an insurance company agrees to
pay an individual or organization an agreed upon sum of money for a prospective future loss.
However, the availability of insurance is important because it enables the entrepreneur to
transfer risk instead of accepting the full risk liability. For example, if you start in a business,
you will be faced with a number of risks that can prevent the business operating successfully.
These would include theft of stick, fire, damage to vehicles through motor accidents, and
injury to member of the public through the action of the business that can easily be
transferred through insurance policies and in some cases such insurances may be compulsory
(must be done because of law or a rule).

iv. Risk Assumption also known as risk absorption or risk retention.

There are certain risks that are not insurable and the entrepreneur sets methods of controlling
risk by the planned acceptance of the risk or loss. In some instance, reducing certain risks
may be too expensive. Generally, the small business owners will assume risks in which losses
that their occurrence will not produce significant financial consequence on the business.
Remember that most dreams cannot come true unless some risks are taken.

N.B. Most entrepreneurs use a combination of methods when controlling and managing risks,
her tuition fee and daily expense. She considered getting a full - time job but realized that she
would not have enough time to do her studies and keep the job. Her solution was to start a
small business venture (Beauty Salon). But starting and running the business requires a total
of Br. 17,500 to make available equipments, operating supplies and building rent, which is
impossible for her to raise the required capital from her personal saving.
She finally came - up with an idea of organizing a five -day trade - show within the college's
compound together with her classmate, Sitotaw and Mintamir for the purpose of generating
the start - up capital of the Beauty Salon. Upon getting acceptance from her classmates, she
determined that the tradeshow should consist of more of selling convenience items. She
anticipated the total expense (advertising cost of printing posters, cost of printing tickets,
transportation and telephone call) to be Br. 2000. Moreover, the items to be available
required a total of Br. 10,500. But currently, the group members have Br. 4,600 in the bank.
She calculated that the maximum gross receipt would be Br. 18,900, i.e. the business venture
wouldearn a profit of Br. 6,400.

Required:

i. What risks are involved in this business venture?

ii. How could these risks be reduced or eliminated?

Conflict Management in small business development

The entrepreneur identifies risk of establishing a venture and the possible entry strategies.
Then, the entrepreneur should discover the effect of conflict management when he / she want
to develop his venture.

Conflict is a natural disagreement resulting from individuals or groups that differ in attitudes,
beliefs, value or needs. It can also originate from past rivalries and personality difference.
Conflicts can emerge among individuals or group members in an organizational setting.

Sometimes, conflicts can also emerge when one has a number of needs or objectives but
unable to satisfy all at one time due to limitation of resources; people have unlimited wants.
So it is common that conflict of interest to emerge.

In order to solve your conflict of interest consider the following points.

To Manage a Conflict within You - "Core Process", it is often in the trying that we find
comfort, not in getting the best solution. The following steps will help you in this regard.

1. Name the conflict, or identify the issue, including what you want that you are not getting.
Specify and list your objectives. Consider:

a. Writing your wants down to come to a conclusion.

b. Talk to someone, including asking him or her to help you summarize the
conflict.

2. Evaluate the relative worth of each objective.

Set priority to each objective based on their relative importance to you.Get perspective by
discussing the issue with your friend or by putting it down in writing. Consider:How
important is this issue?Does the issue seem worse because you are tired, angry at something
else, etc.?What is your role in this issue?

3. Pick at least one thing you can do about the conflict.

a. Identify at least three courses of action.
b. For each course, write at least three pros and cons.
c. Select an action - if there is no clear course of action,
pick the alternative that will not hurt, or be least hurtful, to yourself and others.
d. Briefly discuss that course of action with a friend.

4. Then do something.

a. Wait at least a day before you do anything about the

conflict. This gives you a cooling off period.
b. Identify and calculate the resources available including
time. Evaluate your moral.
c. Then take an action. Develop procedures for routine
tasks.
d. Allocate your resources to the prioritized needs/wants.
e. Evaluate your action and the relative importance of the
objectives you prioritized again. Have in your own mind, a date when you will act again if
you see no clear improvement.

The conflicts that can arise between/ among individuals in an organizational or group setting
are discussed below.

The ingredient/ causes of conflict

There are certain factors that cause conflict between/ among individuals. Some of them are
noted below.

Needs- needs are things that are essential to our well being. Conflicts arise when we ignore
others' needs, our own needs or the group's needs.

Perception- People interprets reality differently. They perceive differences in the strictness,
cause and consequence of problems. Misconception or differing in perception may come
from self-perception, other's perceptions of situations and perception of threat.

Power- How people define power and use power is an important influence on the number
and type of conflicts that occur. This also affects how conflict is

Managed- Conflicts can arise when people try to make others change their action or to gain
unfair advantage.

Value-Values are beliefs or principles we consider to be very important. Serious conflict

arises when people hold incompatible values or values are not clear.

Conflicts also arise when one party refuses to accept the fact that the other party holds
something as a value rather than a preference.

Feelings and emotion-Many people let their feelings and emotions become a major influence
over how they deal with conflict. Conflict can also occur because people ignore their own or
others' feeling and emotions. Other conflicts occur when feelings and emotions differ over a
particular issue.
 Conflict is not always negative. In fact it can be healthy when effectively managed. Healthy
conflict can lead to:

 Growth and innovation

 New ways of thinking
 Additional management option
 .Raise and address problems.
 Energizes work to be on the most appropriate issues

Helps people "be real", for example, it motivates them to participate. Helps people learn how
to recognize and benefit from their differences

If the conflict is understood, it can be effectively managed by reaching a consensus that meets
both the individual's and society's needs. This results in mutual benefits and strengthens the
relationship. The goal is for all to win by having at least some of their needs met.

Conflict is a problem when it:

1. Hampers productivity.
2. Lowers morale.
3. Causes more and continued conflicts.
4. Causes inappropriate behaviors.

Managing conflicts

There are five steps to manage conflicts. Some will want to changes to take more quickly
than others.

1. Analyzing the conflict

The first step in managing conflict is to analyze the nature of conflict. To do this, you will
find it helpful to ask questions. Answers may come from your own experience, your partners,
or local media coverage. You may want to actually interview some of the groups involved.

2. Determining Management Strategy

Once you have a general understanding of the conflict, you will need to analyze and select
the most appropriate strategy. The following conflict management strategies are discussed.

i. Collaboration. This result from a high concern for your group's own
interest, matched with a high concern for the interest of other partner. The outcome is
'win/win.' This strategy is generally used when concerns for others are important. It is
also generally the best strategy when society's interest is at stake.This approach helps
build commitment and reduce bad feelings. The drawbacks are that it takes time and
energy. In addition, some partners may take the advantage of the other's trust and
openness. Generally regarded as the best approach for managing conflict, the objective
of collaboration is to reach consensus.
ii. Compromise. This strategy results from a high concern for your
group's own interest along with a moderate concern for the interest other partner. The
outcome is "win some/lose some." This strategy is generally used to achieve temporary
 solution, to avoid destructive power struggles or when time pressure exists. One
drawback is that partners can lose sight of important value and long-term objectives.
This approach can also distract the partners from the merit of an issue and create a
cynical climate.
iii. Competition. This strategy results from a high concern for group's
own interest along with a less concern for others. The outcome is "win/lose." This
strategy includes more attempts at bargaining. It is generally used when basic rights are
at stake or to set a precedent. However, it can cause conflict to escalate and losers may
try to retaliate.
iv. Accommodation. This resulted from a low concern for your group's
own interest combined with a high concern for the interest of other partners. The
outcome is "lose/win." This strategy is generally used when the issue is more important
to others than to you. It is a "good will gesture." It is also appropriate when you
recognize that you are wrong. The drawbacks are that your own ideas and concerns do
not get attention.
v. Avoidance. This is resulted from a low concern for your group's own
interest coupled with a low concern of others. The outcome is "lose/lose." This strategy
is generally used when the issue is insignificant or other issues are more pressing. It is
also used when confrontation has a high potential for damage or more information is
needed.

3. Pre -negotiation

To make the stage for effective negotiation, the groundwork must be laid. The following
should occur before negotiation initiation. One partner raises the possibility of negotiation
and begins the process. If one is willing to approach the other to encourage them to reach in
agreement, a trusted outsider could be brought in as a facilitator.

i. Assessment- Conditions must be right for negotiation to be successful. Key

players must be identified and invited. Each side must be willing to collaborate with the
others. Reasonable deadlines and sufficient resources are necessary to support the
effort. Spokesperson for each group must be identified and involved. Parties need to
determine which issues are negotiable and which are not.
ii. Ground rule and agenda-The groups must agree on ground rules for
communication, negotiation and decision -making. This should agree on the objective
of the negotiation process. An agenda of issues to be covered needs to be developed.
iii. Organizations- Meeting logistics must be established including agreed upon
times and places. People must be contacted and encouraged to attend. Minutes must be
taken so that information can be distributed before and after meetings.
iv. Joint fact-finding- The group must agree on what information is relevant to
the conflict. This should include what is known and not known about social and
technical issues. Agreement is also needed on methods for generating answers to the
questions.

4. Negotiation

When negotiation starts it should involve the following points.

i. Interest- When negotiating is sure to openly discus interests, rather than stated
 options. Interest includes the reasons, needs, concerns and motivations underlying
positions. Satisfaction of interests should be the common goal.
ii. Options- To resolve conflicts, concentrate on inventing options for satisfying
interests. Do not judge ideas or favor any of the options suggested. Encourage
creativity, not commitment.
iii. Evaluation- Only after the partners have finished listing options, should the option
be discussed. Determine together which ideas are best for satisfying various
interests.
iv. Written agreement- Documented areas of agreement and disagreement to ensue
common understanding. This helps ensure agreement can be remembered and
communicated clearly.
v. Commitment- Every partner must be confident that the others will carry out their
part of the agreement. Discuss and agree upon methods to ensure partners
understand and honor their commitment.

5. Post negotiation.

Once negotiation is completed, the group will need to implement the decisions made. Some
key steps include:

i. Ratification- The partners must get support for the agreement from stakeholders
that have a role to play in the agreement. These stakeholders must be partners and
should have been involved in the previous steps. Each organization will need to
follow its own procedures to review and adopt the agreement.You and your
partners' jobs are not done when you have reached agreement. Communication and
collaboration should continue as the agreement is carried out. The partnership will
need to have a plan fort monitor progress, document success, resolve problems,
renegotiate terms and celebrate success.
ii. Negotiation skill- Negotiation is an important skill for coming to an agreement
when conflicts develop at home, at work and when dealing with issues like those
related to watershed management (dividing).Separate people from the problem.
When negotiating, remember that you are dealing with people who have their own
needs, emotion and perception. Some conflicts are based on difference in thinking
and perception. These conflicts may exist mainly in people's mind. It helps for each
party to put themselves in to the other's shoes so they can understand each other's
point of view.Identify and openly discuss differences in perceptions, being careful
not to place blame. In addition, recognize and understand the other side's emotion
as well as your own.
iii. Develop optional solutions- When developing optional solutions that meet the
interest of sides, try to meet as many of each side's interests as possible. Start by
inviting all sides to brainstorm ideas.

Develop objective of criteria.

When you develop criteria for selecting or combining possible alternatives, revisit the
conflict interest. These cannot be ignored or wished away. Instead discuss them as you begin
developing criteria for judging alternatives. Also keep in mind principles such as fairness,
efficiency and scientific merit.
 Strive for criteria that are legitimate, practical and unbiased. You may also find it helps to
explore the criteria used in making past decisions and discuss criteria with your partners or
out side experts.

4.5 Managing Personal Time

I do not have enough time! "I have to work late tonight." "I have to pick up the kids from the
school." "I have to go grocery shopping." "I'm too tired to get out of bed that early!" "I am
too exhausted after work." "I think I need another rest day." "I don't have time to take a lunch
break." And there is one challenge that we all must deal with, no matter who we are or how
we are training - the challenge of time management. We have all made these excuses at one
time or another in our life. We can all make these excuses and today. But as committed
enthusiasts and competitors, we have to find a way to overcome what can become an
overwhelming difficulty in what we have been working so hard to achieve.

One of the major stress factors in owning a small business is that there simply is not enough
time to accomplish all that needs to be done to keep your business running smoothly. As an
entrepreneur, you are constantly faced with choices about how to spend your time. Your time
is a valuable commodity and you can only make it go so far. Keep in mind that it is not just
how much time you have, but what you do with it that counts.

As a potential entrepreneur you should consider your personal time management ability
seriously for your success. So, let us discus what time management is and how can we
manage our personal time effectively.

Time is a-tool that can be drawn upon to help you accomplish results, an aid that takes care of
a need, an assistant in solving problems.

Characteristics of time

1. Time is a resource. Many people refer to time as a resource. A

resource is something that lies for use, or something that can be drawn for aid. Time meets
this definition. "Time is the scarcest resource and unless it is managed nothing else can be
managed." Peter Drucker
2. It is free. Time is not like other resources, because you can not
buy it, sell it, rent it, borrow it, lend it, store it, save it, multiply it, manufacture it, or change
it.
3. All you can do is spend it. Time is also free; you receive 24
hours simply byWaking-up early in the morning- And most writers on the subject noted that
our attitude toward time is affected by the fact that time is free-we do not have to buy it.
Probably, that is why most of us do not place much value on time; if we had to buy our time,
we would probably spend it much differently than we do now.
4. Equitable- Not only time is free; it is equitable. "Everyone, not
only entrepreneurs but all, receives exactly the same amount of time each day." Even if we
use our time well, we do not receive an extra amount. We still receive the same daily
allotment as the person who wastes time.
5. Time is life. Since you cannot increase the quantity of time you
receive, the quality of time is the only variable. Your time belongs to no one else. No one else
can spend it for you. Other people may make demands on how you spend your time, but it is
still you who must do the spending. Only you can improve the quality of your time
 ultimately, you spend your time, as you well. Hence, time is life. The way you spend your
time defines your life -which you are. Your time is your own and your commitment to the
time management is really a commitment to your self - and what is important to your life.
6. It is not adaptable- Time is not adaptable, but people are,
managing time meansadapting ourselves to its passage in some appropriate satisfying
manner. If time seems to be out of control, we must learn to adopt new more appropriate
habits.

Hence, we have to change ourselves. Change is difficult because most of our habits are
deeply ingrained. We have to declare war on ourselves if we hope to change the way we
spend our time.

1. Understanding the need for time management

First you have to recognize that a need to use time exist, i.e. you have to be committed to
examining new methods for getting the most out of the day. Without being committed and
motivation you will not succeed. If you fail to recognize that you could, should and can get
more of out of the time, you will never be able to unlearn old habits, and develop new
effective behavior. "Recognize the value of time."

2. Collect information.

Once the needs are established, you have to find out where time goes. If you are going to manage
time effectively, then you need to know you are spending your time. How much time do you
spend in meetings, or on telephone? than usual or less than usual.

3. Time analysis

The third step in time management is analysis. This requires you to find out what consume
your time. Once you have a list you will have to distinguish between the legitimate users,
those things and activities, which lead to personal and organizational success and the time
waster, which creates little of values to you and the organization.

Moreover, you should examine the information from three points of view necessity,
appropriateness and efficiency. This would allow you to discontinue certain tasks, delegates
others and/or find ways to increase efficiency through technology, new products or personal
work habits.

a. The test of necessity. First you should scrutinize each activity to be sure necessary-not just
nice, but necessary. It is common to do things when their usefulness is past, i.e. monthly
reports where the information is not longer used. This test of necessity should help to reduce
your task to the essential elements.
b. The test of appropriateness. Once the essential tasks have been identified, the next step
should determine who should perform them, i. e. appropriateness in terms of department
and/or skill level. There are probably activities that could be given to others. You may also
find you are doing work beneath.
c. The test of efficiency. The third analysis examines tasks that remain, you are doing necessary
work, you should then ask, "is there a better way?" This will encourage you to find a fast
way, using better technology or establish better procedures to handle recurring activities.
4. Action plan

From your analysis, develop action plan to bring about the desired improvement in your use
of time. This means you to develop a plan that is structure around real priorities. The plan is
blue print of ensuring that they fulfill the target in their key result areas. Setting priorities in
the use of time is a two-step process. (i) listing things that need to be done and (ii) prioritizing
items on the list

A daily-prioritized list is the best way to focus attention on your most important objectives.
Work from the top of your list. If unexpected demands come up, assess their priority and
handle them accordingly. Do not use something unexpected as an excuse for distraction

Hint for Successful Time Management.

1. Clarify your objectives. Set at least one major objectives each day and achieve it.
2. Record a time log periodically to analyze how you use your time, and keep bad time
habits out of life.
3. Analyze everything you do in terms of your objectivesEliminate at least one time
waster from your life each week.
4. Plan your time
5. Make a to-do list every day