BTECH CHEMICAL ENGINEERING/BCOM HRM/BTECH SURVEY & GEO

INFORMATION

LESSON 4: Creativity and Innovation

CREATIVITY AND INNOVATION

Entrepreneurs are said to be change agents. Globalization has created firm competitiveness resulting
in an age demanding innovation. Organizations that cannot innovate and change will experience
problems. Cortese (2001) reports that “the incredible period of experimentation and creativity of the
past five years has changed the business environment irrevocably. To survive , organizations will
need to embrace change and adopt a more proactive approach to innovation – and this is the domain
of the entrepreneur. According to Drucker (1985), ‘Innovation is the specific tool of entrepreneurs,
the means by which they exploit change as an opportunity for a different business or a different
service.

Creativity and Innovation are important both for survival and for building competitive advantage.
Although not every creative business opportunity that entrepreneurs take will be successful, many
who are willing to go beyond conventional wisdom will be rewarded for their efforts. Successful
entrepreneurs are those who are constantly finding creative solutions to problems.

Definitions of terms: creativity, innovation, invention

Creativity refers to the intellectual power to create something new. This power symbolizes the quality
of imaginative skills to create something original rather than to imitate something which already
exists. Simply put, creativity refers to the intellectual ability to make or do something never seen or
known before, be it a physical object, production process, device, artistic object or form, solution to a
problem etc. Creative ability gains recognition based on what and how something is created namely:

 A creation which entirely is new;

 A creation achieved by synthesizing tow or more unrelated things or factors, and,
 A creation obtained in an entirely new shape by complete modification of something that
existed earlier.

Michael Michalko, a specialist in creative thinking suggests that persons gifted with creative skills
may be classified into two:

1. People of artistic talent such as: painters, sculptors, musicians, directors, actors, lyricists,
mine artists, comedians and authors;
2. People who use creative ideas in business; profession or personal services in the fields of
architecture, accounting, advertising, health care, information technology, consultancy.

Innovation: The dictionary meaning of innovation is: “introduction of a new thing”. If creativity is
the ability of imaginative skills to create something new, innovation is the actual introduction of the

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end-product of creative. In relation to creativity, innovation in fact refers to a creative change and this
change may be in the form of a new product, new service, new found material, new market
opportunity or a newly recognized business enterprise.

In essence creativity leads to conceptualization of a new idea or creation of a new invention, but
innovation facilitates commercialization of a new concept or invention. And this is made possible as
the entrepreneur breaks away from traditional business practices, takes initiative, mobilizes resources
and translates a new finding into a useful thing through innovation.

The entrepreneur assumes risks, introduces a change and thereby plays a key role in technological
progress, industrial advancement and economic growth.

Innovation is characterized by the following elements:

 Process: Innovation is a process (it can be learned and managed).

 Intentional: The process of innovation is carried out on purpose.
 Change: The innovation process results in change.
 Value: The essence of change is to create value (value addition in society, economy and
individual lives).
 Opportunity: Innovations can themselves be opportunities or respond to opportunities in terms
of identified needs.

Invention: Invention is something useful produced or obtained for the first time as a result of
ingenious study and complex experiment. It is a case of infusion of science into creative thinking. An
invention may be a new object, new understanding or new awareness.

Innovation is actually an act of introducing an invention into the market on a business basis for profit.
Invention is a scientific fact whereas innovation is an economic function (Schumpeter).

Role of creativity and innovation

1. In an open market competitive economy, a business person will have to look for a change that
will bring opportunities for him in order to:
 Increase market share, strengthen financial position and thereby protect his business
interests;
 Meet the requirements of a pressing situation;
 Diversify production base;
 Shift pattern of consumer demand, enhance productivity, improve quality; optimize
resource utilization or reduce per unit production cost. All these require creative changes.
In the world of harsh competition and sustained technological progress, the combined role
of creativity, invention and innovation is increasingly gaining prominence.
2. Creative ideas, inventions, technological changes, innovations, industrial development and
economic growth are interlinked. Technological changes put into practice through innovations

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 results in the introduction of new production methods, new merchandise, better utilization of
resources, quality or increased productivity. These achievements accelerate industrial
advancement, which in turn contributes to economic growth.
3. Thanks to the innumerable revolutionary inventions in recent times. Some of the most
impressive technologies and products that have been introduced since world war II include
atomic energy, missiles, computers, satellite communication, chemicals, printing machinery,
medical equipment, jet engine and state-of-the-art electronic gadgets.

Factors that generally help promote development of innovation network are: labor skills, capital
generation, education system, science and technical infrastructure, labor/management relationship,
research and development etc.

Barriers to creativity

 Searching for one right answer;

 Focusing on being logical;
 Blindly following the rules;
 Becoming overspecialized;
 Avoiding ambiguity;
 Fearing mistakes and failures;
 Believing that you are not creative.

The creative process

Idea germination Preparation Incubation Illumination

Verification

Elements in the Innovation process

Translation of creative idea into useful application

Analytical planning Organizing resources Implementation Commercial

Application

To identify to obtain to accomplish to provide

Key people in the technological innovation

Creative source Champion Sponsor

Inventor or originator Entrepreneur or manager person or organization that backs

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(creates something new) (Pursues the idea) the innovation (finances, advice)

Forms of Innovation (Four Ps of Innovation)

1. Product Innovation: Consumer Products are the most obvious forms of product innovation.
Examples of product innovation include introducing new products, enhanced quality and
improving its overall performance. E.g. Cell phones.
2. Service Innovation: This takes the form of a new way of providing a service. E.g. creating an
online purchase system for customers; mobile banking services; online mode of teaching etc.
3. Process Innovation:  is the implementation of a new or significantly improved production or
delivery method. Process innovation includes significant changes in techniques, equipment
and/or software as has been applied previously.
4. Position Innovation: changes in the context in which the products or services are introduced.
5. Paradigm Innovation: A paradigm is a shift to a completely different type of technology. A
recent and more pertinent to this industry example is the iPhone.

Types of Innovation
 Incremental Innovation: Incremental innovation refines and improves existing designs
through improvements in the components.
 Radical Innovation: Radical innovations call for whole new designs using new components
configured in a new way.
 Modular Innovation: Does not involve new designs but involve at least significantly
different components where the function remains the same. E.g. a solar lamp.
 Architectural Innovation: Involves configuration of established systems to link together
components in a new way. The function changes dramatically. E.g. Sony Walkman.

Reading Assignment: Discuss the sources of Innovation

Left brain/right brain concept

From a neoro-psychological point perspective (Sperry, 1968; Ornstein 1977), the brain is divided into
two hemispheres:

The left side – handles language, logic and symbols. It processes information in a step-by-step
fashion. Left-brain thinking is narrowly focused and systematic, proceeding in a highly logical
fashion from one point to the next.
 Conscious – awareness and focused on problems
 Rational – conscious modeling of issues
 Analytical – use of knowledge in discrete applications to evaluate issues
 Logical deductive reasoning - to establish relations

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The right-side – takes care of the body’s emotional intuitive and spatial functions. It processes
information intuitively, relying heavily on images. Right-brain thinking is lateral, unconventional,
unsystematic and unstructured. It is this right brain lateral thinking that is the heart of the creative
process.
 Unconscious – unaware and unfocused on specific issues
 Non rational – special imagining without direction
 Intuitive – total experiences and emotions allowed to influence ideas
 Synthesizing – illogical reasoning and fantasizing to create analogies

According to Lewis (1987:38-9)

………………while the left brain requires hard facts before reaching conclusions, the right is happier
dealing with uncertainties and elusive knowledge. It favors open-ended questions, problems for
which there are many answers rather than a single, correct solution… The left specializes in precise
descriptions and exact explanations; the right enjoys analogies, similes and metaphors. The left
demands structure and certainty; the right thrives on spontaneity and ambiguity. Those who have
learned to develop their right-brain thinking skills tend to:
 Ask if there is a better way of doing things; challenge custom, routine and tradition;
 Be reflective – deep in thought; play mental games;, trying to see issues from a different
perspective; seem mistakes as pitstops enroute to success; realize there may be more than one
right answer.
Although the two halves normally complement each other, on occasion, they compete, or one half
refuses to participate. Most education systems since the time of the ancient Greeks have tended to
develop in their students left-brain capabilities. Lewis says:

“in class students are expected to acquire knowledge one step at a time, adding methodically to their
storehouse of facts until they have sufficient to pass exams. This demands left-brain skills. The
problems they are required to solve more often demand an analytical than an intuitive approach, This
too is a task for the left hemisphere. Written work, by which ability is chiefly evaluated, must be
organized well-argued and logically structured…all left brain skills”.
Gibb (1996) argues that if the education system is to develop entrepreneurs or more enterprising
individuals, there needs to be a shift in focus.

LESSON 5: THE BUSINESS ENVIRONMENT (Refer to lecture notes)

The Business Environment

The condition of the business environment plays a vital role in shaping the nature of entrepreneurial
activity and the dynamics of new enterprises. A business does not operate in a vacuum. Normally, a

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business operates in a multidimensional environment. The environment itself is subject to a large
degree of change. The affiliation between business and its environment is one of mutuality: this
means that, the environment exerts pressure on the business while the business, in turn, influences
some aspects of its environment. The nature of the environment in which the business enterprise
operates therefore needs to be clearly understood by new as well as existing firms.

Meaning of Business Environment

According to the Institute of Chartered Accountants study pack (2009) business environment can be
defined as a set of factors or conditions that are external to the business but which have influence on
the operations of the business enterprise. External in the context means that these factors or forces are
not usually within the control of the business enterprise. The environment can also be described as
the web of forces which form the setting in which the firm makes its decisions. In order to succeed,
an entrepreneur must take its environment into account in making its decisions. The conditions or
factors within the business represent its internal environment. Contrasting the elements of the
external environment, these conditions or factors are generally viewed as controllable by the
business. Examples are the quality of interpersonal and inter-grouped relationships, the nature of the
production and distribution facilities, financial and human resources, etc are subject to the control of
the firm. The external environment is generally interpreted as uncontrollable as no single business
can ascertain or influence it. Erstwhile the
external environment is the surrounding in which all firms in the industry operate.

Components of the business environment

1. The Internal Environment

These are factor within the firm and to a certain extent tend to be controllable because the firm can
change or modify these factors to improve its efficiency. However, the firm may not be able to
change all the factors. The various internal factors are:

Mission and objectives

 Mission is defined as the overall purpose or reason for its existence which guides and influences its
business decision and economic activities. The business domain of the company, direction of
development, business philosophy, business policy etc are guided by the mission and objectives of
the company. The objective of all firms is assumed to be maximization of profit.

Organization structure:  The organizational structure, the composition of the board of directors, the
professionalism of management etc are important factors influencing business decisions. The nature
of the organizational structure has a significant influence over the decision making process in an

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organization. An efficient working of a business organization requires that the organization structure
should be conducive for quick decision-making.

Corporate culture:  Corporate culture is an important factor for determining the internal environment
of any company.
 In a closed and threatening type of corporate culture the business decisions are taken by top
level managers while the middle level and lower level managers have no say in business
decision-making. This leads to lack of trust and confidence among subordinate officials of the
company and secrecy pervades throughout the organization. This results in a sense of
alienation among the lower level managers and workers of the company.
 In an open and participating culture, business decisions are taken by the lower level managers
and top management has a high degree of confidence in the subordinates. In this type of
culture, participation of workers in managerial tasks is encouraged. Development of work
culture and the growing involvement of the workers or employees in company affairs and the
sympathetic attitude of the management towards its employees are all equally responsible for
maintaining a healthy internal environment in the business.

Quality of human resources:  Quality of employees is an important factor in business. The

characteristics of the human resources like skill, quality, capabilities, attitude and commitment of its
employees etc could contribute to the strengths and weaknesses of an organization. Due to the
importance of human resources for the success of the business firms, now-a-days there are special
courses for managers so as to be able to select and manage efficiently the human resources of a
company.

Value system:  The value system of an organization means the ethical beliefs that guide the
organization in achieving its mission and objectives. It is a widely acknowledged fact that the extent
to which the value system is shared by all in the organization is an important factor contributing to its
success.

Labor unions:  Labor unions collectively bargain with the managers for better wages and better
working conditions of the different categories of workers. For the smooth working of business firms,
good relations between management and labor unions are required. Otherwise there will be
disruptions through industrial action.

Physical resources, financial resources and technological capabilities:  Physical resources such as,
plant and machinery, various forms o equipment, and technological capabilities of a firm determine
its competitive strength which is an important factor for determining its efficiency and unit cost of
production. Research and development capabilities of a company determine its ability to introduce
innovations which enhances productivity of workers. It is, however, important to note that the rapid
technological growth and the growth of information technology in recent years have increased the

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relative importance of intellectual capital and human resources as compared to physical resources of
a company. The growth of Bill Gates’ Microsoft Company and Murthy’s Infosys technologies is
mostly due to the quality of human resources and intellectual capital than is superior to physical
resources. The business also requires a sound capital structure and adequacy of funds to survive and
to take timely advantage of opportunities in the market place.

 2. The Task or Micro Environment

Micro environment includes those players whose decisions and actions have a direct impact on the
company. The various constituents of micro environment are:

Suppliers of inputs:  An important factor in the external micro environment of a firm is the supplier
of its inputs such as raw materials and components. To reduce risk and uncertainty business firms are
advised to keep multiple suppliers of inputs.

Customers: The people who buy and use a firm’s product and services are an important part of
external micro environment. Since sales of a product or service is critical for a firm's survival and
growth, it is necessary to keep the customers satisfied. Firms employ marketing mix strategies to
attract and retain customers. Marketing mix means a set of controllable variable marketers use to
remain relevant in their target markets and include the 4 Ps (Product, Price, Promotion Place) or 3 Ps
(People, Physical evidence, Process)

Marketing intermediaries:  In the firm's external micro environment, marketing intermediaries play
an essential role of selling and distributing its products to the final customers. Marketing
intermediaries provide an important link between a business firm and its ultimate customers.

Competitors:  Different firms in an industry compete with each other for sale of their products. As a
consequence of liberalization of the Kenyan economy and globalization there has been an increase in
firm competitiveness. Now, Kenya firms have to compete not only with each other but also with
foreign firms whose products can be imported. In America, American firms face a lot of competition
from the Japanese firms producing electronic goods and automobiles. Such competition affects a
firm’s marketing mix strategies and more often than not, has cost implications.

Publics:  Publics are entities that have vested interests in the way firms conduct their businesses and
include: environmentalists, media groups, women’s associations, consumer protection groups, local
groups, citizens associations are some important examples of publics which have an important
bearing on the business decisions of a firm. The existence of various types of publics influences the
working of business firms and compels them to be socially responsible.

3. Macro Environment

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Economic Environment: Economic environment includes all those forces which have an economic
impact on business. Accordingly, total economic environment consists of agriculture, industrial
production, infrastructure, planning, basic economic philosophy, stages of economic development,
trade cycles, national income, per capita income, savings, money supply, price level, government
fiscal and monetary policies, exchange rates, employment, and population. Business and economic
environment is closely related. A business usually collects all its required inputs from the economic
environment available and also absorbs the output of business units

Socio-cultural Environment: Social environment consists of the customs and the traditions of the
society in which a business entity exists. Socio-cultural is a composite series of social and cultural
conditions established in the society. These factors have far reaching effects on business conditions.
They include:
 Nature and lifestyles of the people – their values and norms
 Education and literacy rates/ and levels of exposure
 Importance or place of women in the workforce
 Traditions, customs and habits of people
 The groups they form and the nature of interactions among the groups and the institutions
they have created for themselves.
 Role of family
 Marriage and religion/religious beliefs
The social and cultural environment also influences the demand for a variety of goods and the type of
employees the industry require. Moreover, the obligation of business to society also depends on the
cultural milieu in which the firm is operating. Culturally, Kenyans prefer imported items and this has
adverse effects on local industries. The classification of the population into low, middle and high
class dictates what businesses should be located where and the type of goods and services such
businesses should offer.

Political Environment: Political environment constitutes all the factors related to government affairs
and the manner in which the country is governed; including conflict resolution mechanisms.
Governments are charged with responsibilities to ensure that there are structures put in place for the
maintenance of law and order, provision of basic infrastructure and security of life and property to
create an atmosphere where meaningful business activities thrive. Also, the government should
ensure that while developing or making policies, laws and regulations, it should help to accelerate
and improve the welfare of the society.

In view of the foregoing, business organizations that are armed with the policy thrust of the
government are able to anticipate the pulse and direction for the government and thereby adjust their
operations accordingly. However, in times of political instability, there is a situation of policy
instability and uncertainty from the point of view of business organizations. In addition, in most
developing nations, a change in government does not always follow clear-cut procedures. These

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frequent changes in governments especially during military dictatorships create unnecessary tensions
and uncertainties.

Technological Environment: The technological environment can be regarded as the state of the use
of scientific principles and mechanical arts employed to different tasks in the society. In the Kenyan
context, the indigenous technology is applied by those who engage in peasant farming, small scale
businesses and even in the mining, quarrying and construction business. On the other hand, more
advanced technology is engaged in the steel industry, breweries, textile, banks, hospitals, Most
African countries are not self sufficient in their technological input and so they rely heavily on
modern technologies from America, Japan, India, Korea, Europe, etc. However, their dependence on
foreign technologies has to some extent, advanced the technological climate positively in some
industries and negatively in others. (To solicit for examples from students)

Legal/public Policy Environment: This consist of the laws, regulations and procedures of a country
which business enterprises are anticipated to comply with in the course of their operations. These
laws may facilitate successful business conduct as well as constitute major handicaps to successful
performance. Furthermore, in carrying out their business operations, business enterprises are required
by law to pay taxes, value added tax, capital gains tax, import duties, excise duties, etc. There are
also labor laws that
synchronize the contract of employment specifically the relationship between employers, employees
and the unions, Trade Mark Act, Essential Commodity Act; Weights and Measures Act; the
minimum wage a person must be paid, employee compensation, etc.
Deregulation of capital markets has made it easy for firms to collect capital from primary markets;
Advertisement of alcoholic and tobacco products is prohibited and one is required to give statutory
warning. Removal of control from foreign exchange encourages foreign investment.

Global Environment: This refers to all those elements on the international scene, which can help or
inhibit the decisions and operations of the business enterprise. Globalization denotes expansion of
international trade borrowing and lending and investment. Globalization is in the self-interest of
consumers because they can buy low-cost goods and services produced in other countries. It is also in
the self-interest of MNCs that produce in low-cost regions and sell in high-price regions.
Globalization demands that whatever the nature of their economies, their level of development, and
whatever their location in the global economy, all countries must pursue a common set of economic
policies. In particular, they must permit the free and indiscriminate operation of transnational
corporations in their economies.

Demographic Environment: The demographic environment includes the size and growth of
population, life expectancy of the people, rural-urban distribution of population, the technological
skills and educational levels of labor force. All these demographic features have an important bearing
on the functioning of business firms.

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  The labor force in the country is always changing. This will cause changes in the work force
of a firm. The business firms have to adjust to the requirements of their employees. They have
to provide child care services, labor welfare programmes etc.
 The technological and educational skills of the workers of a firm are determined by the
human resources available in the economy which are part of the demographic environment.
 The size of the population and its rural- urban distribution determine the demand for the
products of industrial firms.
 The growth rate and the age composition of the population determine the demand pattern of
goods. If the child population is high then the demand for baby foods and baby clothes will be
high. On the other hand, if the life expectancy of the people is high then the demand for goods
will be those that will cater to the tastes and needs of elderly people.
 The demographic environment is also important for business firms as it determines the choice
of technology by them.

Natural Environment: Natural environment influences business in diverse ways. Businesses in

modern times are dictated by nature. The natural environment is the ultimate source of many inputs
such as raw materials and energy, which firms use in their productive activity. In fact, the availability
of natural resources in the region or country is the basic factor in determining business activity in it.
The natural environment which includes geographical and ecological factors such as minerals and oil
reserves, water and forest resources, weather and climatic conditions are all highly significant for
various business activities. For example, steel producing industries are set up near the coalmines to
save cost of transporting coal to distant locations. The natural environment also affects the demand
for goods. For example, in places where temperatures are high, the demand for coolers and air
conditioners are high. Similarly, weather and climatic conditions influence the demand pattern for
clothing, building materials for housing etc. Natural calamities like floods, droughts, earthquake etc.
are devastating for business activities.

Ecological Environment:  Due to the efforts of environmentalists and international organizations

such as the World Bank, NEMA, people have now become conscious of the adverse effects of
depletion of exhaustible natural resources and pollution of environment by business activity.
Accordingly, laws have been passed for conservation of natural resources and prevention of
environment pollution. These laws have imposed additional responsibilities and costs for business
firms. But it is socially desirable that these costs are borne by business firms if nations want
sustainable economic growth and also healthy environment for human species.

Some of the critical factors in the business environment common to African states include:
 Near collapse of critical social and economic infrastructure. (EP)
 High bank lending rates which are a great disincentive to new investment.(E)
 Uncontrolled imports leading to high mortality rates of firms in the manufacturing,
agricultural, and mining sectors.(L)

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  Lack of long-term investible funds for manufacturing activities.(P)
 Government policy inconsistency (P).

LESSON 5: IDENTIFYING AND RECOGNIZING OPPORTUNITIES

Definition of terms:
A business opportunity is a positive trend in the external environment that presents entrepreneurs
with a chance to advance entrepreneurial ventures through innovation. It is an occasion to add value
by performing differently from and better than competitors.

An idea is not an opportunity. An idea is the conception of a possibility. It is a course of a perception

that a course of action is potentially profitable or value-adding. However, an idea is important in
business because:
 It serves as a seed from which a business may or may not develop.
 If refined, it gives forth a great organization. An opportunity is an idea conceived, selected,
planted, cultivated, and harvested. An opportunity is a potentially profitable business refined
from an idea
 The range of business ideas are nearly infinite. Entrepreneurs can therefore generate
numerous business ideas from which they can choose what gives them drive and passion to
do.

Developing ideas

Substantial

Idea(s) Opportunity Venture creation

Well developed

Entrepreneurs build successful organization based on skill to create, recognize and identify
opportunities. An opportunity is a favorable set of circumstances that creates a need for a new
product or service.

Opportunity identification refers to ability to recognize a problem or opportunity gap and create a
business to fill it. Opportunity recognition searches for an opportunity and starts a business.

Sources of Business ideas

 Reading magazines, books
 Friends/relatives/family
 Networks

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  Observations
 Creativity/creative thinking seminars
 Hobbies
 Active listening
 Franchises
 Personal research and development
 Patent brokers
 Former employers
 Trade fairs/exhibitions/Agricultural shows
 Education and training

Opportunities have the following essential characteristics (which entrepreneurs use to evaluate the
viability of a business idea):

 They are attractive – based on returns;

 Durable – based on market scope; long lasting
 Reliable demand – based on markets ability to buy or repetitiveness in purchase;
 Timely – describing the ability of the entrepreneur to capitalize on the opportunity when its
window is open. Window of opportunity explains the time period the firm can realistically
enter a new market to capitalize for instance on “first mover” advantage. When the market
matures, the window of opportunity closes.
 Availability of capital;
 Competitive advantage;
 Compatible with goals and talents - Fits within a firm’s objective and government policy.

Ways to identify opportunities:

1. Observing trends: The first approach to identifying opportunities is to observe trends in the
business environment. Potential entrepreneurs could use two tools: PEST analysis or SWOT
analysis. The figure below shows environmental trends suggesting business opportunities:

Political and regulatory

changes e.g. new laws

Economic forces (state of

the economy, consumer
spending
Social patterns,
forces level
(social and Technological advances
of disposable income (new technologies,
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BWW trends, Technical University of Kenya class notes 2021
demographic changes, emerging technologies, new
uses of old technologies
Political and regulatory changes – New laws can create opportunities for one to start a business to
assist companies, individuals and government agencies comply with such laws. Likewise, changes in
government regulations motivate business owners to start firms pursue “differentiation” by exceeding
regulations or introduce new products in the market.

Economic forces – An understanding of economic trends is helpful in determining areas that are ripe
for new business ideas.

- When the economy is strong, people have more money to spend and therefore willing to
spend cash on discretionary products and services and vice versa,

- Changes in the workforce create opportunities too. An increase in the number of women in
the workforce can lead to increased needs in salon and boutique services.

Social factors – changes in lifestyles open windows of opportunity in social circles. When people get
busy, it creates opportunities in fast foods industries.

Social networking sites such as the face book should be observed as they create business
opportunities because they allow people to communicate and connect.

Below are examples of social trends that are currently affecting how individuals behave:

- Retirement of baby boomers;

- Increasing diversity of the workforce;
- Increasing interest in healthy foods and “green” products;

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 - Increasing focus on health care, fitness, and wellness;
- Emphasis on alternative forms of energy;
- Increased globalization of business etc

Technological advances: In the case of technological advances the idea is to find out how technology
can be harnessed to help satisfy basic and changing human needs. For example, the cell phone was
motivated by an increasingly mobile population to offer ability to communicate with co-workers,
customers, friends, and families from anywhere and everywhere. E-commerce allow customers to
order and pay for goods and services in the comfort of their homes and offices.
Technological advances also provide opportunities to help people perform everyday tasks in better or
more convenient ways. E.g. making bookings in the hospitality industry online.
Also once technology is created, other businesses emerge to offer services or produce complimentary
products.

2. Solving a problem: The second approach to identifying opportunities is to recognize

problems and find ways to solve them. (i). The problems can be recognized by observing the
challenges that people encounter in their daily lives. People keep complaining about one thing or
another e.g. inability to sleep; very bright bulbs; inability to get rid og garden weeds etc.
(ii). Companies have also been started by people who have experienced problems in their own lives
and realized the problem could be solved by a business opportunity. (iii). Some problems are solved
by entrepreneurs who frame a problem differently than it’s thought of before and then propose an
appropriate solution. The solution is often easier and less expensive than previous fixes.
3. Finding gaps in the market place: Product gaps in the marketplace represent potentially
viable business opportunities. Many entrepreneurs discovered in the 19 th century that there weren’t
colognes made specifically for men. One can in this century start a company to make clothing for
youth who want to be stylish but do not want to wear clothes that are too revealing.
4. The corridor principle: Most opportunities are discovered through the corridor principle
which states that once an entrepreneur starts a firm, he starts a journey where “corridors” leading to
new venture opportunities.

5 Recognition of Human Needs

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Physiological needs – these are physical requirements for human survival and must be met first. If
these requirements are not met, the human body cannot function well. Air, water, and food , sex,
education, medi-care
Safety needs - Once a person's physical safety needs are relatively satisfied, their safety needs take
precedence and dominate behavior – secure jobs, insurance policies, savings accounts, safety needs.
These may be classified in terms of manifest include:

 Personal security
 Financial security
 Health and well-being
 Safety net against accidents/illness and their adverse impacts

Social needs – (Love and belonging) - These are interpersonal and involve feelings of belongingness
in one’s social groups otherwise can create a feeling of loneliness, rejection and depression. Social
needs include:

 Friendship
 Intimacy
 Family

Self esteem - this includes the need to have self-esteem and self-respect; presents the typical human
desire to be accepted and valued by others. People often engage in a profession or hobby to gain
recognition. These activities give the person a sense of contribution or value. Low self-esteem or
an inferiority complex may result from imbalances during this level in the hierarchy. People with low
self-esteem often need respect from others; they may feel the need to seek fame or glory. This may
include a need for status, recognition, fame, prestige, and attention. 

Self-actualization – it is expressed in the saying: "What a man can be, he must be. This quotation
forms the basis of the perceived need for self-actualization. This level of need refers to what a
person's full potential is and the realization of that potential. Maslow describes this level as the desire
to accomplish everything that one can, to become the most that one can be. For example, one
individual may have the strong desire to become an ideal parent. In another, the desire may be
expressed athletically. For others, it may be expressed in paintings, pictures, or inventions.

Self-transcendence - In his later years, Maslow explored a further dimension of needs, while
criticizing his own vision on self-actualization. He explains under this need that the self only finds its
actualization in giving itself to some higher goal outside oneself, in altruism and spirituality

©Betsy BWW Technical University of Kenya class notes 2021

GROUP ASSIGNMENT 1

Q1. The following are some of the myths associated with Entrepreneurship and Entrepreneurs.
1. Entrepreneurship is a ticket to riches and life’s success
2. It takes a lot of Money to Start a Successful Business
3. Entrepreneurs Are Born Not Made
4. Entrepreneurs Are College Dropouts
Number 3 is the most highly researched myth. In your assessment, do you think Entrepreneurs are
Born or Made? (The assessment should be based on empirical data not personal opinion or
imagination).

Q2. Using a SWOT analysis, describe our country’s Business Environment and identify
entrepreneurial opportunities a potential entrepreneur may take advantage of in the assessed
environment.

CLASS READING AND DISCUSSION:

5. How can an entrepreneur use the Human Needs Theory to identify business
opportunities?
6. How does culture and politics influence entrepreneurial behavior?

©Betsy BWW Technical University of Kenya class notes 2021