PGDE215

Post Graduate Diploma
In Eduation
Entrepreneurship in
Education
Module PGDE 215

Authors: George Murinda
Master of Business Administration (ZOU)
Bachelor of Arts (UZ)
Graduate Certificate in Education (UZ)
Graduate Diploma Associate CIS (CIS)
Graduate Diploma in Marketing (IMM)
Douglas Gasva
MEd. Educational Psychology (UZ)
BEd. Teacher Education (UZ)
Certificate in Education (Morgenster Trs’ College-UZ)
Cert. in Open and Distance Education (UNISA)
Cert. in Statistical Package for Social Sciences
(ALDN)Cert. in Information Technology (AVU)
Cert. in Project Development (UNIFEM)
Cert. in Fundraising and Resource Mobilization (FNSJ)
Content Reviewer: Dr Wellington Samkange

Doctor of Philosophy in Education (Fort Hare)
Master of Education in EAPPS (ZOU)
Bachelor of Education in EAPPS (UZ)
Certificate in Education (UZ)
Editor: Diana Mupunga

Master of Arts in Distance Education (IGNOU)
Post Graduate Diploma in Distance Education (IGNOU)
Graduate Certificate in Education (UZ)
Bachelor of Arts (UZ)
Published by: Zimbabwe Open University
P.O. Box MP1119
Mount Pleasant
Harare, ZIMBABWE
The Zimbabwe Open University is a distance teaching and open

learning institution.
Year: March 2013
Reprinted: January 2014/April 2013
Cover design: T. Ndhlovu
Layout : S. Mapfumo
I.S.B.N: 978 - 1- 77938 - 626 - 7
Printed by: ZOU Press, Harare
Typeset in Times New Roman, 12 point on auto leading
© Zimbabwe Open University. All rights reserved. No part of this

publication may be reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, without the prior permission of the Zimbabwe Open
University.
To the student
The demand for skills and knowledge academics, technologists and
and the requirement to adjust and administrators of varied backgrounds,
change with changing technology, places training, skills, experiences and personal
on us a need to learn continually interests. The combination of all these
throughout life. As all people need an qualities inevitably facilitates the
education of one form or another, it has production of learning materials that
been found that conventional education teach successfully any student, anywhere
institutions cannot cope with the and far removed from the tutor in space
demand for education of this magnitude. and time. We emphasize that our
It has, however, been discovered that learning materials should enable you to
distance education and open learning, solve both work-related problems and
now also exploiting e-learning other life challenges.
technology, itself an offshoot of e-
commerce, has become the most To avoid stereotyping and professional
effective way of transmitting these narrowness, our teams of learning
appropriate skills and knowledge materials producers come from different
required for national and international universities in and outside Zimbabwe,
development. and from Commerce and Industry. This
openness enables ZOU to produce
Since attainment of independence in materials that have a long shelf life and
1980, the Zimbabwe Government has are sufficiently comprehensive to cater
spearheaded the development of for the needs of all of you, our learners
distance education and open learning at in different walks of life. You, the
tertiary level, resulting in the learner, have a large number of optional
establishment of the Zimbabwe Open courses to choose from so that the
University (ZOU) on 1 March, 1999. knowledge and skills developed suit the
career path that you choose. Thus, we
ZOU is the first, leading, and currently strive to tailor-make the learning
materials so that they can suit your
the only university in Zimbabwe entirely
personal and professional needs. In
dedicated to teaching by distance
developing the ZOU learning materials,
education and open learning. We are
we are guided by the desire to provide
determined to maintain our leading
you, the learner, with all the knowledge
position by both satisfying our clients
and skill that will make you a better
and maintaining high academic performer all round, be this at certificate,
standards. To achieve the leading diploma, undergraduate or postgraduate
position, we have adopted the course level. We aim for products that will settle
team approach to producing the varied comfortably in the global village and
learning materials that will holistically competing successfully with anyone. Our
shape you, the learner to be an all-round target is, therefore, to satisfy your quest
performer in the field of your own for knowledge and skills through
choice. Our course teams comprise distance education and open learning
Any course or programme launched by ZOU is you may never meet in life. It is our intention
conceived from the cross-pollination of ideas to bring the computer, email, internet chat-
from consumers of the product, chief among rooms, whiteboards and other modern methods
whom are you, the students and your employers. of delivering learning to all the doorsteps of
We consult you and listen to your critical analysis our learners, wherever they may be. For all these
of the concepts and how they are presented. We developments and for the latest information on
also consult other academics from universities what is taking place at ZOU, visit the ZOU
the world over and other international bodies website at www.zou.ac.zw
whose reputation in distance education and open
learning is of a very high calibre. We carry out Having worked as best we can to prepare your
pilot studies of the course outlines, the content learning path, hopefully like John the Baptist
and the programme component. We are only prepared for the coming of Jesus Christ, it is my
too glad to subject our learning materials to hope as your Vice Chancellor that all of you,
academic and professional criticism with the will experience unimpeded success in your
hope of improving them all the time. We are educational endeavours. We, on our part, shall
determined to continue improving by changing continually strive to improve the learning
the learning materials to suit the idiosyncratic materials through evaluation, transformation of
needs of our learners, their employers, research, delivery methodologies, adjustments and
economic circumstances, technological sometimes complete overhauls of both the
development, changing times and geographic materials and organizational structures and
location, in order to maintain our leading culture that are central to providing you with
position. We aim at giving you an education the high quality education that you deserve. Note
that will work for you at any time anywhere and that your needs, the learner ‘s needs, occupy a
in varying circumstances and that your central position within ZOU’s core activities.
performance should be second to none.
Best wishes and success in your studies.
As a progressive university that is forward
looking and determined to be a successful part
of the twenty-first century, ZOU has started to
introduce e-learning materials that will enable
you, our students, to access any source of
information, anywhere in the world through
internet and to communicate, converse, discuss _____________________
and collaborate synchronously and Prof. Primrose Kurasha
asynchronously, with peers and tutors whom Vice Chancellor
The Six Hour Tutorial Session At
The Zimbabwe Open University
A s you embark on your studies with the Zimbabwe
Open University (ZOU) by open and distance
learning, we need to advise you so that you can make
This is where the six hour tutorial comes in. For it
to work, you need to know that:
· There is insufficient time for the tutor to
the best use of the learning materials, your time and
the tutors who are based at your regional office. lecture you
· Any ideas that you discuss in the tutorial,
The most important point that you need to note is originate from your experience as you
that in distance education and open learning, there work on the materials. All the issues
are no lectures like those found in conventional raised above are a good source of topics
universities. Instead, you have learning packages that (as they pertain to your learning) for
may comprise written modules, tapes, CDs, DVDs discussion during the tutorial
and other referral materials for extra reading. All these
· The answers come from you while the
including radio, television, telephone, fax and email
can be used to deliver learning to you. As such, at tutor’s task is to confirm, spur further
the ZOU, we do not expect the tutor to lecture you discussion, clarify, explain, give
when you meet him/her. We believe that that task is additional information, guide the
accomplished by the learning package that you receive discussion and help you put together full
at registration. What then is the purpose of the six answers for each question that you bring
hour tutorial for each course on offer? · You must prepare for the tutorial by
bringing all the questions and answers
At the ZOU, as at any other distance and open that you have found out on the topics to
learning university, you the student are at the centre the discussion
of learning. After you receive the learning package, · For the tutor to help you effectively, give
you study the tutorial letter and other guiding him/her the topics beforehand so that in
documents before using the learning materials. During cases where information has to be
the study, it is obvious that you will come across gathered, there is sufficient time to do
concepts/ideas that may not be that easy to understand so. If the questions can get to the tutor
or that are not so clearly explained. You may also at least two weeks before the tutorial,
come across issues that you do not agree with, that that will create enough time for thorough
actually conflict with the practice that you are familiar preparation.
with. In your discussion groups, your friends can bring
ideas that are totally different from yours and In the tutorial, you are expected and required to
arguments may begin. You may also find that an idea take part all the time through contributing in every
is not clearly explained and you remain with more way possible. You can give your views, even if
questions than answers. You need someone to help they are wrong, (many students may hold the same
you in such matters. wrong views and the discussion will help correct
The Six Hour Tutorial Session At The Zimbabwe Open University
the errors), they still help you learn the correct thing as the tutor may dwell on matters irrelevant to the
as much as the correct ideas. You also need to be ZOU course.
open-minded, frank, inquisitive and should leave no
stone unturned as you analyze ideas and seek
clarification on any issues. It has been found that Distance education, by its nature, keeps the tutor
those who take part in tutorials actively, do better in and student separate. By introducing the six hour
assignments and examinations because their ideas are tutorial, ZOU hopes to help you come in touch with
streamlined. Taking part properly means that you the physical being, who marks your assignments,
prepare for the tutorial beforehand by putting together assesses them, guides you on preparing for writing
relevant questions and their possible answers and examinations and assignments and who runs your
those areas that cause you confusion. general academic affairs. This helps you to settle
down in your course having been advised on how
Only in cases where the information being discussed to go about your learning. Personal human contact
is not found in the learning package can the tutor is, therefore, upheld by the ZOU.
provide extra learning materials, but this should not
be the dominant feature of the six hour tutorial. As
stated, it should be rare because the information
needed for the course is found in the learning package
together with the sources to which you are referred.
Fully-fledged lectures can, therefore, be misleading
The six hour tutorials should be so structured that the

tasks for each session are very clear. Work for each
session, as much as possible, follows the structure given
below.
Session I (Two Hours)

Session I should be held at the beginning of the semester. The main aim
of this session is to guide you, the student, on how you are going to
approach the course. During the session, you will be given the overview
of the course, how to tackle the assignments, how to organize the logistics
of the course and formation of study groups that you will belong to. It is
also during this session that you will be advised on how to use your
learning materials effectively.
The Six Hour Tutorial Session At The Zimbabwe Open University
Session II (Two Hours)

This session comes in the middle of the semester to respond to the
challenges, queries, experiences, uncertainties, and ideas that you are
facing as you go through the course. In this session, difficult areas in the
module are explained through the combined effort of the students and
the tutor. It should also give direction and feedback where you have not
done well in the first assignment as well as reinforce those areas where
performance in the first assignment is good.
Session III (Two Hours)

The final session, Session III, comes towards the end of the semester.
In this session, you polish up any areas that you still need clarification on.
Your tutor gives you feedback on the assignments so that you can use
the experience for preparation for the end of semester examination.
Note that in all the three sessions, you identify the areas
that your tutor should give help. You also take a very
important part in finding answers to the problems posed.
You are the most important part of the solutions to your
learning challenges.
Conclusion for this course, but also to prepare yourself to

contribute in the best way possible so that you
In conclusion, we should be very clear that six can maximally benefit from it. We also urge you
hours is too little for lectures and it is not to avoid forcing the tutor to lecture you.
necessary, in view of the provision of fully self-
contained learning materials in the package, to BEST WISHES IN YOUR STUDIES.
turn the little time into lectures. We, therefore,
urge you not only to attend the six hour tutorials ZOU
Contents
Overview __________________________________________________ 1
Unit One: Conceptualising ‘Entrepreneurship’
1.0 _______ Introduction ________________________________________________ 5

1.1 _______ Unit Objectives ______________________________________________ 5
1.2 _______ Definition of Terms __________________________________________ 6
_________ 1.2.1 Entrepreneur ___________________________________________ 6
_________ 1.2.2 Entrepreneurship ________________________________________ 7
_________ 1.2.3 Intrapreneurship ________________________________________ 7
_________ Activity 1.1 _________________________________________________ 8
1.3 _______ The Scope of ‘Entrepreneurship’ ________________________________ 8
_________ 1.3.1 The general scope of entrepreneurship ______________________ 8
_________ 1.3.2 Skills needed in entrepreneurship ___________________________ 9
_________ 1.3.3 Theories on entrepreneurship _____________________________ 10
_________ Activity 1.2 ________________________________________________ 11
1.4 _______ Benefits and challenges of entrepreneurship _____________________ 11
_________ 1.4.1 Benefits of entrepreneurship _____________________________ 11
_________ 1.4.2 Factors that influence entrepreneurship ____________________ 12
_________ 1.4.3 Barriers to entrepreneurship _____________________________ 15
_________ Activity 1.3 ________________________________________________ 17
1.5 _______ Relevance of Entrepreneurship to Education _____________________ 17
_________ Activity 1.4 ________________________________________________ 18
1.6 _______ Summary __________________________________________________ 18
_________ References _________________________________________________ 19
Unit Two: Theories of Entrepreneurship

2.0 _______ Introduction _______________________________________________ 21
2.1 _______ Unit Objectives _____________________________________________ 22
2.2 _______ Entrepreneurship Theories ___________________________________ 22
_________ 2.2.1 Economic perspectives ___________________________________ 22
_________ Activity 2.1 ________________________________________________ 26
2.3 _______ Sociological Perspectives ______________________________________ 26
_________ 2.3.1 Max Weber’s Sociological Theory __________________________ 27
_________ 2.3.2 Collins’ Entrepreneur Typology ___________________________ 27
_________ 2.3.3 Idiosyncratic Perspective _________________________________ 28
_________ 2.3.4 Leibenstein’s ‘Gap-fillers’ Theory _________________________ 29
_________ 2.3.5 McClelland’s Achievement Motivation Theory ________________ 29
_________ 2.3.6 Peter Drucker’s Theory __________________________________ 29
_________ 2.3.7 Other personality attributes ______________________________ 30
2.4 _______ Marxist Perspective __________________________________________ 30
_________ 2.4.1 Marxist philosophy _____________________________________ 31
_________ 2.4.2 Marxist view of the entrepreneur __________________________ 32
_________ Activity 2.2 ________________________________________________ 33
2.5 _______ Entrepreneurship Models _____________________________________ 33
_________ 2.5.1 The Timmons Model of Entrepreneurship __________________ 33
_________ Activity 2.3 ________________________________________________ 36
2.6 _______ Relevance of Entrepreneurship Theories to Education _____________ 36
2.7 _______ Summary __________________________________________________ 37
_________ References _________________________________________________ 38
Unit Three: Entrepreneurial Characteristics for Business Success

3.0 _______ Introduction _______________________________________________ 39
3.1 _______ Unit Objectives _____________________________________________ 40
3.2 _______ The Entrepreneurial Self -Assessment Tool (ESAT) _______________ 40
_________ Activity 3.1 ________________________________________________ 42
3.3 _______ Basic Entrepreneurial Skills __________________________________ 42
_________ 3.3.1 Technical skills _________________________________________ 42
_________ 3.3.2 Marketing and sales skills ________________________________ 42
_________ 3.3.3 Financial accounting ____________________________________ 42
_________ 3.3.4 Business management ___________________________________ 43
_________ 3.3.5 Leadership ____________________________________________ 43
_________ 3.3.6 Communication ________________________________________ 44
_________ 3.3.7 Delegation ____________________________________________ 45
_________ 3.3.8 Negotiating ____________________________________________ 45
_________ 3.3.9 Decision making _______________________________________ 46
_________ 3.3.10 Time management _____________________________________ 46
_________ 3.3.11 Change management ___________________________________ 47
_________ Activity 3.2 ________________________________________________ 48
3.4 _______ Personality Characteristics/Attributes ___________________________ 48
_________ 3.4.1 Personality traits _______________________________________ 48
_________ 3.4.2 Effective habits ________________________________________ 51
_________ Activity 3.3 ________________________________________________ 54
3.5 _______ The A to Z of the Characteristics of an Entrepreneur _____________ 54
_________ 3.5.1 Baskerville and Flanagan’s A to Z model of the ________________
_________ characteristics of an entrepreneur _____________________________ 54
_________ Activity 3.4 ________________________________________________ 57
3.6 _______ Relevance of Entrepreneur Characteristics to Education ___________ 57
_________ Activity 3.5 ________________________________________________ 58
3.7 _______ Summary __________________________________________________ 58
_________ References _________________________________________________ 59
Unit Four: Vocational and Technical Education and
Entrepreneurship
4.0 _______ Introduction _______________________________________________ 61

4.1 _______ Unit Objectives _____________________________________________ 62
4.2 _______ Defining Vocational and Technical Education _____________________ 62
_________ 4.2.1 Definition of technical and vocational education and ____________
_________ training ___________________________________________________ 62
_________ 4.2.2 Objectives of TVET _____________________________________ 63
_________ Activity 4.1 ________________________________________________ 64
4.3 _______ The Scope TVET ____________________________________________ 64
_________ Activity 4.2 ________________________________________________ 65
4.4 _______ Benefits and Challenges of Vocational and Technical Education ______ 65
_________ 4.4.1 Benefits of vocational and technical education _______________ 66
_________ 4.4.2 Challenges in technical and vocational education and ____________
_________ training ___________________________________________________ 66
_________ Activity 4.3 ________________________________________________ 68
4.5 _______ Enhancing TVET Programmes Through Entrepreneurial Education _ 68
_________ Activity 4.4 ________________________________________________ 70
4.6 _______ Case Study: How Entrepreneurship Can Be Incorporated into a Study ___
_________ Programme ________________________________________________ 71
_________ Activity 4.5 ________________________________________________ 72
4.7 _______ Summary __________________________________________________ 72
_________ References _________________________________________________ 73
Unit Five: Entrepreneurial Business Idea Generation

5.0 _______ Introduction _______________________________________________ 75
5.1 _______ Unit Objectives _____________________________________________ 76
5.2 _______ Sources of Business Ideas ____________________________________ 76
_________ 5.2.1 Employees, external market opportunities ___________________ 76
_________ 5.2.2 Employees ____________________________________________ 77
_________ 5.2.3 Customers ____________________________________________ 77
_________ 5.2.4 Mastermind groups _____________________________________ 78
_________ Activity 5.1 ________________________________________________ 79
5.3 _______ Guide to Choosing Business Ideas ______________________________ 79
_________ Activity 5.2 ________________________________________________ 83
5.4 _______ The Business Idea Generation Model ___________________________ 83
_________ 5.4.1 Self- assessment of entrepreneurial skills and characteristic ____ 84
_________ 5.4.2 Brainstorming _________________________________________ 85
_________ 5.4.3 Screening the three ideas _________________________________ 85
_________ 5.4.4 Evaluation against Critical Success Factors (CSF’) ___________ 86
_________ 5.4.5 SWOT analysis evaluation _______________________________ 88
_________ Activity 5.5 ________________________________________________ 91
5.5 _______ Relevance of Business Idea Generation to Education ______________ 91
5.6 _______ Summary __________________________________________________ 91
_________ References _________________________________________________ 92
Unit Six: Entrepreneural Strategy Formulation
6.0 _______ Introduction _______________________________________________ 93

6.1 _______ Unit Objectives _____________________________________________ 94
6.2 _______ Defining ‘Strategy’ and ‘Strategy Formulation in Entrepreneurship’ __ 94
6.3 _______ Importance of ‘Strategy Formulation in Entrepreneurship’ _________ 95
_________ Activity 6.1 ________________________________________________ 96
6.4 _______ Phases in Strategy Formulation _______________________________ 96
_________ 6.4.1 Diagnosis _____________________________________________ 97
_________ 6.4.2 Formulation ___________________________________________ 97
_________ 6.4.3 Strategy implementation _________________________________ 98
_________ Activity 6.2 ________________________________________________ 98
6.5 _______ The ‘Business Plan’ _________________________________________ 99
6.6 _______ Choosing Best Strategy Alternatives in Entrepreneurship __________ 101
_________ Activity 6.3 _______________________________________________ 102
6.7 _______ Resource Utilisation in Strategy Formulation ___________________ 102
_________ 6.7.1 Human resources ______________________________________ 102
_________ 6.7.2 Financial resources ____________________________________ 104
_________ 6.7.3 Material resources _____________________________________ 105
_________ Activity 6.4 _______________________________________________ 105
6.8 _______ Relevance of Entrepreneurial Strategy Formulation to Education ___ 105
6.9 _______ Summary _________________________________________________ 106
_________ References ________________________________________________ 107
Unit Seven: Marketing in Entrepreneurship
7.0 _______ Introduction ______________________________________________ 109

7.1 _______ Unit Objectives ____________________________________________ 110
7.2 _______ The Marketing Concept _____________________________________ 110
_________ 7.2.1 Definition of terms ____________________________________ 110
_________ 7.2.2 Evolution of the marketing concept _______________________ 111
_________ Activity 7.1 _______________________________________________ 114
7.3 _______ The Marketing Mix Variables _________________________________ 114
_________ 7.3.1 The product __________________________________________ 114
_________ 7.3.2 The price ____________________________________________ 119
_________ 7.3.3 The place ____________________________________________ 122
_________ 7.3.4 Promotion ___________________________________________ 124
_________ Activity 7.2 _______________________________________________ 127
7.4 _______ Services Marketing _________________________________________ 127
_________ 7.4.1 Defining the concept ‘service’ ____________________________ 128
_________ 7.4.2 Nature of services _____________________________________ 128
_________ 7.4.3 Marketing mix variables for services ______________________ 130
_________ Activity 7.3 _______________________________________________ 130
7.5 _______ Relevance of Entrepreneurial Marketing to Education ____________ 131
7.6 _______ Summary _________________________________________________ 131
_________ References ________________________________________________ 132
Unit Eight: Selling in Entrepreneurship
8.0 _______ Introduction ______________________________________________ 133

8.1 _______ Unit Objectives ____________________________________________ 134
8.2 _______ Conceptualising the Personal Selling Concept ____________________ 134
_________ 8.2.1 Definition of personal selling ____________________________ 134
_________ 8.2.2 Scope of personal selling ________________________________ 135
_________ Activity 8.1 _______________________________________________ 138
8.3 _______ Principles of Personal Selling ________________________________ 138
_________ 8.3.1 Sales professionalism ___________________________________ 139
_________ 8.3.2 Negotiation ___________________________________________ 140
_________ 8.3.3 Relationship marketing _________________________________ 142
_________ Activity 8.2 _______________________________________________ 144
8.4 _______ Functions of Sales Persons __________________________________ 144
_________ Activity 8.3 _______________________________________________ 145
8.5 _______ Profile of Salespersons ______________________________________ 146
_________ Activity 8.4 _______________________________________________ 147
8.6 _______ Relevance of Entrepreneurial Personal Selling to Education. _______ 147
8.7 _______ Summary _________________________________________________ 148
_________ References ________________________________________________ 149
Unit Nine: Financial Accounting in Entrepreneurship

9.0 _______ Introduction ______________________________________________ 151
9.1 _______ Unit Objectives ____________________________________________ 152
9.2 _______ Meaning and Scope of Financial Accounting ____________________ 152
_________ 9.2.1 Meaning of financial accounting _________________________ 152
_________ 9.2.2 Scope of Financial Accounting ___________________________ 153
_________ Activity 9.1 _______________________________________________ 154
9.3 _______ Divisions, Function and Purpose of Accounting _________________ 154
_________ 9.3.1 Divisions of accounting _________________________________ 154
_________ 9.3.2 Function and purpose of accounting ______________________ 155
_________ Activity 9.2 _______________________________________________ 156
9.4 _______ Accounting Concepts and Principles ___________________________ 157
_________ 9.4.1 Concepts relating to the balance sheet _____________________ 158
_________ 9.4.2 Concepts with respect to the income statement ______________ 159
_________ Activity 9.3 _______________________________________________ 160
9.5 _______ Recording Financial Transactions _____________________________ 160
_________ 9.5.1 Source documents _____________________________________ 160
_________ 9.5.2 Subsidiary books or books of original entry ________________ 161
_________ 9.5.3 The ledger ___________________________________________ 161
_________ 9.5.4 Double entry book-keeping ______________________________ 162
_________ Activity 9.4 _______________________________________________ 162
_________ Activity 9.5 _______________________________________________ 164
9.6 _______ Depreciation Accounting ____________________________________ 164
_________ 9.6.1 Definition ____________________________________________ 164
_________ 9.6.2 Calculating depreciation ________________________________ 164
_________ 9.6.3 Accounting entries for depreciation _______________________ 165
_________ Activity 9.5 _______________________________________________ 165
9.7 _______ Financial Accounting Reports ________________________________ 165
_________ 9.7.1 The trial balance ______________________________________ 166
_________ 9.7.2 Trading and profit and loss account _______________________ 167
_________ 9.7.3 The balance sheet _____________________________________ 167
_________ Activity 9.6 _______________________________________________ 172
9.8 _______ Financial Reports Analysis __________________________________ 172
_________ 9.8.1 Simple elementary analysis ______________________________ 173
_________ 9.8.2 Cash flow analysis _____________________________________ 173
_________ 9.8.3 Ratio analysis ________________________________________ 173
_________ Activity 9.7 _______________________________________________ 175
9.9 _______ Relevance of Financial Accounting to Education _________________ 175
9.10 ______ Summary _________________________________________________ 176
_________ References ________________________________________________ 177
Unit Ten: Entrepreneurial Business Management
10.0 ______ Introduction ______________________________________________ 179

10.1 ______ Unit Objectives ____________________________________________ 180
10.2 ______ Conceptualising ‘Entrepreneurial Business Management’ __________ 180
_________ Activity 10.1 ______________________________________________ 181
10.3 ______ Managerial Skills __________________________________________ 181
_________ Activity 10.2 ______________________________________________ 182
10.4 ______ Managerial Roles and Functions ______________________________ 182
_________ 10.4.1 Managerial roles _____________________________________ 183
_________ 10.4.2 Managerial functions __________________________________ 183
_________ Activity 10.3 ______________________________________________ 185
10.5 ______ A Glimpse at the Manager’s Operating Environment _____________ 185
_________ 10.5.1 Organisational culture _________________________________ 186
_________ 10.5.2 The specific environment ______________________________ 186
_________ 10.5.3 The general environment ______________________________ 187
_________ 10.5.4 The global environment _______________________________ 188
10.6 ______ Social Responsibility and Ethics ______________________________ 189
_________ 10.6.1 Scope of social responsibility____________________________ 189
_________ 10.6.2 Corporate ethics ______________________________________ 190
_________ Activity 10.5 ______________________________________________ 192
10.7 ______ Relevance of Entrepreneurial Business Management to Education __ 192
10.8 ______ Summary _________________________________________________ 193
_________ References ________________________________________________ 194
Unit Eleven: Engendering Entrepreneurship in Education
11.0 ______ Introduction ______________________________________________ 197

11.1 ______ Unit Objectives ____________________________________________ 198
11.2 ______ Revisiting Some Strategic Approaches for Engendering _______________
_________ Entrepreneurship __________________________________________ 198
_________ 11.2.1 The Vocational Training Approach _______________________ 198
_________ 11.2.2 Life Long Incremental Learning Approach ________________ 199
_________ Activity 11.1 ______________________________________________ 200
11.3 ______ Teachers in Industry for Educational Support (TIES) Curriculum __ 200
_________ 11.3.1 Some specifics of the TIES Curriculum ___________________ 200
_________ 11.3.2 Common characteristics of models _______________________ 201
_________ Activity 11.2 ______________________________________________ 202
11.4 ______ Requirements for Successful Incorporation of ______________________
_________ Entrepreneurship in Education _______________________________ 202
_________ 11.4.1 Government _________________________________________ 202
_________ 11.4.2 Manpower ___________________________________________ 203
_________ 11.4.3 Financial resources ___________________________________ 203
_________ 11.4.4 Complementary support _______________________________ 203
_________ Activity 11.3 ______________________________________________ 203
11.5 ______ Strengths and Benefits of Engendering Entrepreneurship in Education203
_________ 11.5.1 Strengths of programmes ______________________________ 204
_________ 11.5.2 Benefits of engendering entrepreneurship in education ______ 204
11.6 ______ Shortcomings of Programmes of Engendering Entrepreneurship ______
_________ in Education ______________________________________________ 205
_________ 11.6.1 The Tanzanian case study ______________________________ 205
_________ 11.6.2 Other general weaknessesOther Research findings _____________
_________ generally point to following weaknesses: ________________________ 206
_________ Activity 11.4 ______________________________________________ 207
11.7 ______ Summary _________________________________________________ 207
_________ References ________________________________________________ 208
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Module Overview
W elcome to one of your Post Graduate Diploma in Education (PGDE)

modules entitled ‘Entrepreneurship in Education’. This important
module is meant to provide you with appropriate resource material for
reference in the study of the course. The module broadly focuses on
entrepreneurship in the context of education. In addition to the utilisation of
this module, you are at this level expected to supplement your reading with
additional readings as indicated on the reference list of each unit.
Entrepreneureship in Education PGDE 215
The broad aims of this course are to:

introduce you to the concept of entrepreneurship in the context of
education
familiarise you with fundamental concepts and applications in
entrepreneurship as well as their relevance to education
develop your entrepreneurial ideas and interest in order to foster a
sense of entrepreneurial development
analyse strengths and weaknesses in engendering entrepreneurship in
education
Having looked at the broad aims of the Module, we now move on to present
a synopsis of the whole module by means of walking you through each of the
units that constitute the module. In the process, more important details of the
constituencies of each of the units are highlighted. This is meant to give you a
general impression of what the unit ahead of you is all about. Structurally, this
Module is organised into 11 distinct units, where each unit begins with an
introduction which is enhanced by the expected learning outcomes or
objectives.
In Unit 1, we conceptualise ‘entrepreneurship’ and begin by defining

an‘entrepreneur’, ‘entrepreneurship’and ‘intrapreneurship’ before exploring
the scope of ‘entrepreneurship’.Benefits and challenges of entrepreneurship
as well as its relevance to education are also considered.
In Unit 2, we look at ‘Theories of Entrepreneurship’. In the unit we look at

differententrepreneurship theories and models and ends by considering their
relevance to education.
In Unit 3, we explore ‘Entrepreneurial Characteristics for Business Success’.

In the unit we further consider entrepreneurial skills and characteristics of an
entrepreneur and ends by looking at their relevance to education.
In Unit 4, we look at ‘Vocational and Technical Education and

Entrepreneurship. The unit kicks off by defining vocational and technical
education as well as looking at its scope. Benefits and challenges of vocational
and technical education are also considered.
In Unit 5, we consider the issue of ‘Entrepreneurial Business Idea Generation’

and begin by looking at sources of business ideas before considering a guide
to choosing business ideas. The business idea generation model and the
relevance of business idea generation to education are also explored.
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2 Zimbabwe Open University
Module Overview
In Unit 6, we look at ‘Entrepreneurial Strategy Formulation’. In the unit we

begin by defining ‘strategy’ and ‘strategy formulation in the context of
entrepreneurship’. It further explores phases in strategy formulation, the
‘business plan’, the choosing of best strategy alternatives in entrepreneurship
as well as resource utilisation in strategy formulation. We end by talking about
the importanceand relevance of entrepreneurial strategy formulation to
education.
In Unit 7, we look at’ Marketing in Entrepreneurship’. In the unit we look at

the marketing concept. Marketing mix variables, services marketing and
relevance of entrepreneurial marketing to education are also looked at.
In Unit 8, we explore the issue of‘Selling in Entrepreneurship’. We begin by

defining the personal selling concept before exploring its scope. Principles of
personal selling, functions and profile of sales persons and the relevance of
entrepreneurial personal selling to education are also looked at.
In Unit 9, we look at‘Financial Accounting in Entrepreneurship’. The meaning

and scope of financial accounting as well as accounting concepts and principles
are considered. Recording financial transactions, depreciation accounting,
financial accounting reports and their analysis as well as the relevance of
financial accounting to education.
In Unit 10, we consider‘Entrepreneurial Business Management’. In the unit

we conceptualise ‘entrepreneurial business management’ before moving on
to look at managerial roles and functions. The unit also briefly looks at the
manager’s operating environment and ends by looking at the relevance of
entrepreneurial business management to education.
In Unit 11, we look at ‘Engendering Entrepreneurship in Education and begin

by revisiting some strategic approaches for engendering entrepreneurship.
Requirements for successful incorporation of entrepreneurship in education
as well as strengths and shortcomings of engendering entrepreneurship in
education are explored.
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Zimbabwe Open University 3
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1
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Unit One
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Conceptualising
‘Entrepreneurship’
1.0 Introduction
W elcome to your first unit on entrepreneurship in education. In this unit,

we lay the theoretical framework of the concept of entrepreneurship.
This framework helps you to have a clear understanding of the concept and
to give you a greater appreciation of the practical relevance and importance
of the entrepreneur to economies in general, our lives and to education in
particular. We also hope that the entrepreneurial spirit within you is encouraged
to grow.
Entrepreneurship in Education PGDE 215
In the first section of this unit, we define the term ‘entrepreneur’ and other
related concepts. We then go on to explain the meaning and scope of
entrepreneurship in some detail. An analysis of the challenges faced in
entrepreneurial development is also given in the unit. The final section of the
unit shows the role and relevance of entrepreneurship to education.
1.1 Unit Objectives

By the end of this unit, you should be able to:
define the terms ‘entrepreneur’, ‘entrepreneurship’ and
‘intrapreneurship’
describe the scope of entrepreneurship
identify factors that influence entrepreneurship
explain the benefits and challenges to entrepreneurial development
analyse the relevance of entrepreneurship to education
1.2 Definition of Terms

In our study of entrepreneurship in education, we will come across various
key terms and concepts. We specifically define entrepreneur, entrepeneurship
and intrapreneurship below.
1.2.1 Entrepreneur
Basically, the entrepreneur is a person engaged or involved in
entrepreneurship.There are divergent views on what entrepreneurship is. There
are, therefore, many theories and perspectives on entrepreneurship as will be
discussed in detail in Unit 2.
The Oxford University Press English Illustrated Dictionary (1975) defines an

entrepreneur as ‘one who undertakes an enterprise, especially contractor,
acting as intermediary between capital and labour’ (p 280).
The Dictionary of Small Business (1990) defines the entrepreneur as a person

who undertakes the risk of starting a new business, most often involving a
new product or new service. He/she is one who usually carries connotation of
creativity, vision, self-starting or venturesome.
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Unit 1 Conceptualising ‘Entrepreneurship’
Drucker (1985) views an entrepreneur as ‘one who always searches for

change, responds to it and exploits it as an opportunity’. Nayab (2010) quotes
a 19th century view of the entrepreneur as ‘the plucky individual who relies on
wits, energy and daring to rise in the world.’The Oxford English Dictionary-
Political, Economical (1995) describes an entrepreneur as ‘one who
undertakes an enterprise; one who owns and manages a business; a person
who takes the risk of profit or loss’.
From the above definitions and related literature, we can conceptualise an

entrepreneur as a person who takes the risk to start and operate a business
with the hope of making a profit from the enterprise. It is also evident that the
entrepreneur is endowed with certain personality and attitudinal attributes
including daring, perseverance, innovativeness, not afraid to take a chance
and is energetic.
1.2.2 Entrepreneurship
Entrepreneurship simply means that which entrepreneurs are engaged in
and many scholars and economists have offered their definitions of this
concept.Robbins and Coulter (1999) define entrepreneurship as a process
by which people pursue opportunities, fulfilling needs and wants through
innovation without regard to resources they currently control. As early as
1959, Colehad described ‘entrepreneurship’ as the purposeful activity
(including an integrated sequence of decisions)of an individual or group of
associated individuals, undertaken to initiate, maintain or aggrandise a profit
orientated business unit for the production or distribution of economic goods
and services.
Airing similar sentiments, Marshal in Nayab (2011) viewed entrepreneurship

as ‘the factor that drives and brings together the four factors of production.’
He identified the four factors of production as land, labour, capital and
organisation (Marshal in Nayab, 2011).
From the foregoing discussion, we can simplify entrepreneurship to mean the

combined processes and activities undertaken to identify and exploit a business
opportunity to make and/or sell goods and services for a profit.
1.2.3 Intrapreneurship
Some literature has made a distinction by defining ‘intrapreneurship’ as a
separate concept from entrepreneurship.The White Rose Centre for Enterprise
(WRCE, cited in Marshal in Nayab, 2011) defines intrapreneurship as ‘process
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or product innovation management.’ According to this distinction,

entrepreneurship involves the establishment and management of a business
venture, whereas intrapreneurship is about product or process innovation within
an established enterprise. Most of the scholars however make no special
distinction between the terms and emphasise instead that product and process
innovations are part and parcel of entrepreneurship (Schumpeter, 1949).
Activity 1.1
1. Define the term ‘Entrepreneur’ in your own words.
? 2.
3.
Differentiatethe concepts of ‘Entrepreneurship’ and‘Intrapreneurship’.
Mathew (24) inherits his father’s small general dealer store after the
father’s death. Is Mathew an entrepreneur? Why or why not?
4. Kundai buys 1000 Econet wireless P/L shares from a broker on the
Zimbabwe Stock Exchange. Explain whether or not Kundai has
engaged in entrepreneurship.
1.3 The Scope of ‘Entrepreneurship’

We have described entrepreneurship to mean the combined processes and
activities that are involved in identifying and exploiting business opportunities
to make and sell goods and services for a profit. This definition implies that
entrepreneurship is a broad area of study covering many diverse topics. These
topics form the basis of study of this module. Asynopsis of the scope of
entrepreneurship is given below.
1.3.1 The general scope of entrepreneurship

Identification of viable business ideas
The identification of a viable business idea is the starting point of

entrepreneurship. This involves scanning the environment for business
opportunities, carefully assessing these opportunities and selecting the one
business idea to pursue. It cannot be over emphasised that an entrepreneur
can only succeed after following through on a profitable idea. This crucial
topic is discussed in detail in Unit 5 of this module.
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Business management
Entrepreneurs are of necessity managers. They have to perform the typical

managerial functions of planning, organising, controlling and leading. It is
important to note here that whilst entrepreneurs are necessarily managers,
traditional managers are not necessarily entrepreneurs. This distinction is
considered later in this unit while the topic of business management is discussed
in detail in unit 10 of this module.
Marketing and sales management
The entrepreneur will only realise a profit after a ‘sale ’has been made. Sales
are the source of revenue andtherefore profit, in a business. Entrepreneurs
therefore, need an understanding of how to tailor their products, services,
(and how they are presented) to the needs of their identified customers. They
also need to sharpen their personal selling skills. These important topics are
covered in Units 7 and 8 of this module.
Financial accounting
It is critical that an entrepreneur accurately captures all transactions made by

his business, summarise these into financial reports and analyse the reports to
make important decisions for the business. This is the only way that the
entrepreneur will know how the business is performing. It is not only prudent
to do so, but it is also a statutory requirement thatcertain financial accounts be
produced and submitted to government. The topic on financial accounting is
studied in detail in Unit 9 of the module.
Business planning
Making business plans for an enterprise is a critical requirement in

entrepreneurship. The entrepreneur is expected to make several plans for the
business including human resources plans, marketing plans, promotional plans
and budgets. Of particular importance is the business plan or proposal that
will have to be produced when financing is required from the bank or an
outside investor. A strategic plan is also needed as it sets the direction that the
business will follow. These concepts are examined in Unit 6 of this module.
1.3.2 Skills needed in entrepreneurship

Over and above the business and management skills mentioned so far in this
unit, entrepreneurs also need some skills related to their attitudes and
personalities. Berry (2009) argues thatthere are some characteristics and traits
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that define a successful entrepreneur. Some of these characteristics and traits

include self motivation, daring, perseverance, self -discipline, good time
management and creativity.These personality skills, attitudes and characteristics
also separate the entrepreneur from the traditional manager. It has already
been noted that entrepreneurs are necessarily managers but traditional managers
are not necessarily entrepreneurs. Robbins and Coulter (1999) identify several
differences between typical managers and entrepreneurs. These differences
have been summarised inTable 1.1 below.
Table 1.1: Differences between Entrepreneurs and Traditional Managers
Entrepreneurs Managers
• Seek change by exploiting • Tend to seek stability. Are custodial in nature.
opportunities • Insulated by bureaucracy from personal wagers.

Rewarded for minimising risk.
• Put own personal financial security at risk
• Avoid risk
• Accept risk.
• Motivated by career promotions and other
• Motivated by independence and possible
corporate rewards like power.
personal financial gain.
• Oriented towards short term goals
• Oriented towards long term goals
• Delegate operational activities to lower level
• Involve themselves directly in operational
staff like supervisors.
activities of the business
• Afraid of mistakes. Avoid situations that would
• Accept mistakes as part of doing business
expose them to making mistakes.
Source: Robbins and Coulter (1999)
The skills needed in entrepreneurshipare dealt with in greater detail in Unit 3

of this module.
1.3.3 Theories on entrepreneurship

It has already been stated that there are divergent views on entrepreneurship.
Many theories and perspectives have been put forward mainly by economists
and sociologists to reflect these divergent views. The various theories and
models that relate to entrepreneurship are described in Unit 2 of this module.
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Activity 1.2
1. List the various skills that an entrepreneur needs to be successful in
? business. Explain the importance of any two of these skills to
entrepreneurship with reference to education.
2. Mr. Gatsi is an ‘A’ level MOB teacher at a high school in Chitungwiza.
He decides to start and run a school poultry project to be manned by
the school students’ business club. Mr. Gatsi discusses the idea with
the school Headmaster. The Headmaster agrees after consulting with
the school SDA.
(a) Who is the entrepreneur in this case, Mr Gatsi, the Headmaster or
the SDA?
(b) Identify the potential beneficiaries from this entrepreneurial project
and explain how they will benefit.
We have explained that entrepreneurship covers an entrepreneur’s motivation

and capacity toidentify an enterprise opportunity and to pursue it in order to
produce new value or economic success. It is this entrepreneurship that drives
economic growth in a country. Longenecker et al (1997) actually describe
entrepreneurship as ‘the energiser of small business.’ These small businesses
come with numerous benefits.
1.4 Benefits and challenges of entrepreneurship

There are several benefits and challenges that have to do with entrepreneurship.
We begin by looking at the benefits.
1.4.1 Benefits of entrepreneurship

There are several benefits of entrepreneurship, and below we look at some of
the more important ones.
Personal rewards to entrepreneur

Longenecker et al (1997) identify three main rewards, namely:
financial gain in the form of profit
Independence. Satisfaction of being one’s own boss
Satisfying way of life plus feeling of achievement.
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Growth of small business

Statistics in the USA show that there are well over 5 000000 small businesses
in that country. These have been defined to mean those that employ less that
100 people and with annual turnover of not more than $3 500 000
(Longenecker et al, 1997). These small businesses offer the following benefits
to countries.
Providing new jobs in the economy

Introducing innovation. In fact some of the well known innovations have
been created by small firms. These include the photocopier, the
helicopter, insulin, power steering and automatic transmission, colour
film and the ball point pen
Stimulating economic competition. Small companies come into the
market attracted by potential profit. From economic theory, when supply
increases, prices decrease and operating efficiencies improve.
Aiding big businesses. This is done through offering to distribute their
products, supplying them some raw material and providing some
commercial services like repairs and maintenance.
Producing efficiently. This is related to their lower overhead costs and
direct involvement in operational activities (Longenecker et al, 1997:
29).
The benefits described above can only accrue where entrepreneurship is
allowed and encouraged to flourish. This is true where the factors that influence
entrepreneurship are favourable and there are no down right barriers to
entrepreneurship.
1.4.2 Factors that influence entrepreneurship

Nayab (2010) identifies several factors that influence entrepreneurial
development. These include socio-cultural, political, economic, technological
and global factors.
Socio-cultural factors
The social system and culture can influence entrepreneurship in several ways.
These include:
People traditionally engaged in business have a pro-business attitude

and disdain working for other people. Thus, the tradition of business
encourages entrepreneurship.
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People in formal employment tend to encourage or even pressure their

children to also find secure jobs. This tends to discourage
entrepreneurship
The culture of consumerism encourages entrepreneurship as there will
be greater returns from going into business than from being employed.
Some education, particularly vocational and business related has the
potential to engender entrepreneurship. Education will also ensure the
availability of trained and skilled manpower to support entrepreneurial
efforts.
A culture where people are risk averse does not
encourageentrepreneurship. By contrast, where people are not risk
averse, great importance is attached to hard work and persistence,
which are some of the critical attributes of successful entrepreneurs.
Political factors
Politics can influence entrepreneurship in several ways. These include:
Government policies that have a bearing on the security of investors’
assets and investments will encourage or discourage entrepreneurship.
Government fiscal polices, in particular the levels and types of taxation
will act to encourage or discourage entrepreneurship.
Political stability, including peace, encourages entrepreneurial
development.
Degree of economic freedom allowed to citizens by government is a
critical factor in influencing or discouraging entrepreneurship. Classical
economists like Max Weber (1864-1920), argue that ‘the spirit of
capitalism, which highlights economic freedom and private enterprise’
is a major driver of entrepreneurship.
Bureaucratic rigidities in the form of complex and endless requirements
for registering and operating businesses tend to stifle and discourage
entrepreneurship.
Economic factors
The economy can influence entrepreneurship in several ways. These include:
Income levels and economic prosperity in a country determine the
purchasing capabilities of the people therein. This in turn, influences the
success of entrepreneurial ventures.
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Economies with a significant proportion of the population still engaged in

subsistence agriculture and based in rural areas tend to offer fewer
entrepreneurial opportunities.
The availability of natural resources like minerals and tourist attractions

offer entrepreneurial opportunities related to the exploitation of the
available resources.
Economic instability in the form of rampant inflation discourages
entrepreneurial growth (for example, what Zimbabwe experienced
mainly during the period 2007-2008).
A stable financial sector, with banks and other financial institutions tends
to encourage entrepreneurship by ensuring that capital is made available
to willing and suitable investors
The existence of physical infrastructure and public utilities like roads,
rail, ports electricity, water and radio and telecommunications will
encourage entrepreneurial development.
Technological factors
Technology can influence entrepreneurship in several ways. These include:
The rapid developments taking place in the technological field,
particularly in computerisation and transport and communications
encourages entrepreneurship. This is through the many business
opportunities made possible by the developments. Information availability
is made cheaper and easier and travelling faster and cheaper.
It is important to note that the same technological developments can
‘overtake’ some businesses to the extent that they remain operating
with obsolete equipment and systems at higher costs.
Global issues
The technological improvements noted above have turned the world
into a ‘global village.’ This means goods, services and information
available anywhere in the world, can be accessed quickly and
economically from anywhere else in the world. Investors are, therefore,
faced with a potentially unlimited market for their products. This
encourages entrepreneurship.
We must again point out that this globalisation has opened up economies
to the extent that some businesses have been overwhelmed by
competition from foreign products and services.
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Entrepreneurial skills set and attitude
All the factors discussed above may well turn out to be favourable for
entrepreneurship but to no avail if the potential entrepreneurs are deficient
in the skills.
The entrepreneur, as the driver of the entrepreneurial venture, must
possess the business and management skills as well as the personality
and attitudinal orientation that are the prerequisite for entrepreneurship.
1.4.3 Barriers to entrepreneurship

The question of barriers to entrepreneurship can be discussed by making
reference to specific countries. In this case, we however discussed the topic
in general terms by making reference to countries with low levels of
entrepreneurship. As a general guide the factors discussed above present
serious barriers to entrepreneurship if they are unfavourable. It is important to
point out the specific barriers to entrepreneurship that have been observed by
some writers to be common in countries with poor records of entrepreneurship.
In his working paper on entrepreneurship (2006), Charles Ocici, Executive
Director of ‘Enterprise Uganda’, identifies several of these barriers after
studying entrepreneurship in Uganda. Below we look at them in brief.
Educational challenges
When levels of education are generally low, potential entrepreneurs

lack the business and management skills that we now know to be
necessary for entrepreneurship.
Entrepreneurship is also not part of the education curriculum. Very few
institutions of higher learning have entrepreneurship as part of the
curriculum. The spirit of entrepreneurship is, therefore, not be nurtured
from early ages. As Ocici (2006:6), observes: ‘the education system
still produces skilled and semi-skilled labour which is oriented towards
entry into white-collar employment, academia and the civil service where
it is thought that a sustainable livelihood can be obtained’
Financial barriers
Entrepreneurship requires start-up capital. When banks and other
financial institution are neither willing nor able to provide this capital,
entrepreneurship cannot grow. Most such institutions view potential
entrepreneurs as ‘high risk’ investments that they are not prepared to
take. You need to analyse if this is what is obtaining in your country!
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Business registration and licensing challenges

Where business registration and licensing is bureaucratic, costly and time
consuming, potential entrepreneurs will simply give up. Those that persevere
will simply not bother with the licenses and operate ‘illegally’ in the informal
sector. It is, however, very difficult to monitor and quantify informal sector
operations.
Information challenges
Entrepreneurs require a wide variety of information to be able to start and run

a business. This includes information about business registration and licensing
procedures, taxation regulations, available support services and market
information. The non availability of such information is a serious barrier to
entrepreneurial growth.
Corruption
A high level of corruption within the civil service is a major barrier to

entrepreneurship. Corruption not only increases the cost of doing business,
but also presents serious bottle necks to business operations. There is therefore
a negative relationship between corruption levels and the level of business
investment.
Skills challenge
When a currently active entrepreneur has little or no skills in management,

marketing, sales and accounting, it is very difficult for him to develop the
business any further. The business will remain small and uncompetitive. Such
businesses will fail to stand up to the challenges of globalisation as already
discussed. Thus, the possession of inadequate skills by entrepreneurs is another
significant barrier to entrepreneurship.
Political instability challenge
Where there are wars, civil unrest, violence, crime and lawlessness in general,
entrepreneurship cannot thrive. These forms of political instability pose a threat
to the very lives of the potential entrepreneurs and the continued existence of
their investments
Inadequate infrastructural facilities
Business operations depend on well developed and efficiently operating

infrastructure and utilities like roads, rail, ports electricity and communications.
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If these facilities are not there or are significantly inadequate, business operations
become difficult and costly. This discourages investment, including
entrepreneurship. The lack of infrastructural facilities is therefore, a serious
barrier to entrepreneurial development
Activity 1.3
1. ‘The world has become a global village.’ Discuss this statement and
? explain how globalisation has affected entrepreneurship.
2. Examine the role that education can play in entrepreneurial development.
3. The national vision of the Ministry of Education, Sport, Arts and Culture
is ‘to emerge as a united, strong, democratic, prosperous and egalitarian
nation with a high quality of life for all Zimbabweans by the year 2020.’
Explain how entrepreneurship can help towards the attainment of this
vision.
1.5 Relevance of Entrepreneurship to Education

The fundamental role of education is to equip the learner with the necessary
information, skills and attitudes that prepare him or her to successfully cope
with the challenges of life. The educated person is able to fend for oneself, but
more importantly should be a responsible citizen who also contributes to the
economic development of his country and the general good of mankind. We
agree with Cury (2007) that, after receiving quality education, our students
will graduate with quality intellectual functions and emotions that are trained in
the art of having an entrepreneurial spirit. Our contention here is that
entrepreneurship is the catalyst that ensures that these noble ideals of education
are realised.
As noted by Cury (2007), entrepreneurship is important and relevant to

education in a number of ways including:
Helping to inculcate the spirit of entrepreneurship within our teachers

and students. The future welfare of the students and the development
of the school and indeed the country depend on this spirit.
Entrepreneurship skills and attitudes will encourage SDAs, headmasters,
school administrators, teachers and even students to view their school
institutions as business enterprises. There are certain benefits and
efficiencies that accrue when schools are managed as businesses.
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The worthiness of technical and vocational institutions is enhanced as

technical skills learnt are more likely to be developed to business
ventures.
Teachers may be stimulated to start income generating projects in
schools with the assistance of students. The schools benefit from
generated income whilst students benefit from practical knowledge from
the business operations.
Entrepreneurship encourages personal prosperity and national economic
growth. Prosperity and a high quality of life by 2020 are part of the
vision of the Ministry of Education, Sport, Arts and Culture.
These benefits and practical applications to education continue to be referred
to and explained throughout this module.
Activity 1.4
1. Discuss the benefits that will accrue to the school if it is viewed and
? 2.
managed as a business.
Describe how you would incorporate entrepreneurship intothe
secondary schools curriculum in Zimbabwe.
1.6 Summary
In this unit we gave you an overview of the concept of entrepreneurship. We
looked at the definitions and explained the meaning of ‘entrepreneur’ and the
related terms. We then gave you a glimpse of the scope of the area of study of
entrepreneurship by simply noting the business and management skills as well
as the personality attributes required in entrepreneurship.We then analysed
the benefits of entrepreneurship and discussed the factors and barriers that
may affect effective entrepreneurship. We ended by discussing the practical
relevance of the concept of entrepreneurship to education. We now move on
to Unit 2 where we give you the theoretical foundation on which the concept
of entrepreneurship is built. We do this by discussing some of the theories and
models on entrepreneurship.
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References
Berry, T. (2009). Article: 35 Common Characteristics of Successful
Entrepreneurs: on www.paloalto.com
Browne, D.J. (1995). Economics: Theory and Practice. London: Edward
Arnold.
Cole, A. H. (1959). Business Enterprise in its Social Setting: Harvard:
Harvard University Press.
Cury, Q. (2007). Educating the Emotions: Nairobi: Pauline’s Publishing.
Dictionary of Small Business (1990): on: www.small-businessdictionry.org
Drucker, P. F. (1985): Innovation and Entrepreneurship: Oxford;
Butterworth.
English Illustrated Dictionary (1990) London.: Oxford University Press;
Longenecker, J. G., Moore, W. M. and Petty, J. W. (1997). Small Business
Management: An Entrepreneurial Emphasis Cincinnati; South-
western College Publishing.
Morrison, A., Rimmington, M. and Williams, C. (1999). Entrepreneurship
in the Hospitality Tourism and Leisure Industries. Oxford:
Butterworth- Heinemann.
Nayab , N. (2010). Article: ‘Factors that Influence Entrepreneurship’
on: www.brighthubnet
Nayab, N. And Marshal, J. (2011). Research article ‘What is
Entrepreneurship? A Look at Theory’ on: www.brighthub.net
Ocici, C. (2006). ‘A working paper on Entrepreneurship’: Commission of
Legal Empowerment of the Poor.
Oxfod English Dictionary (1995) London. Oxford University Press;
Robbins, S. P. and Coulter, M. (1999). Management: Boston: Prentice Hall.
Ward, A. (2007). Research article: ‘An integrated Model of
Entrepreneurship and Intrapreneurship’ on: www.york.ac.uk
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Unit Two
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Theories of Entrepreneurship
2.0 Introduction
I n Unit 1, we outlined the concept of entrepreneurship. This has given you

the basic foundation on which the rest of the course is built. It is also
considered that your understanding of the rest of the units is going to be
easier. In this unit, we continue with the examination of the concept of
entrepreneurship by reviewing theories of entrepreneurship. We describe the
various theories on entrepreneurship, from the early theories by classical
economists like Cantillon (1680-1734) to the contemporary views by writers
like Deakins (1999). We also review models like Timmons’ (2004) that attempt
to conceptualise the whole entrepreneurial process. We end the unit by
showing the practical relevance of these theories and models to education.
2.1 Unit Objectives

describe the various economic theories of entrepreneurship
explain the various sociological and idiosyncratic theories of
entrepreneurship
outline the Timmons model of the entrepreneurial process
describe the integrated model of entrepreneurship
discuss the relevance of theories and models of entrepreneurship to
education
2.2 Entrepreneurship Theories

There are several theories on entrepreneurship. As already noted in Unit 1,
these divergent views on the concept give rise to the many definitions of
entrepreneurship as already discussed. The theories have been classified into
perspectives according to their main thrust. The three perspectives are the
economic, sociological and idiosyncratic, which we now discuss in some detail
below.
2.2.1 Economic Perspectives

The focus of these theories is on the role of the entrepreneur in the business
and in the economic development of the area or country. In this section, we
look at the Economic Agents theory, Alertness to Opportunity Theory, Cole’s
Economic Historian Perspective, Frank Knight’s Risk Bearing theory, Mark
Casson’s Economic Factors theory, Joseph Schumpeter’s Innovation theory
and Alfred Marshal’s Economic theory.
Economic Agents Theory
Cantillon cited in Nayab (2010) classified all economic agents into three groups,
namely, landowners, hirelings and entrepreneurs. The entrepreneur is the agent
that is involved in buying the means of production at certain prices to combine
them into new products. He or she then takes the product to the market, thus,
also acting as the connection between producers and the customers. JB Say
cited in Casson (2003) concurred with this ‘economic agents’ idea but
emphasised that the critical role of the entrepreneur in the production process
is his ability to bring a varied group of people together to build a productive
item.
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Unit 2 Theories of Entrepreneurship
Alertness to Opportunity Theory

Kirzner in Nayab (2010) builds up on the’ economic agents’ theory above.
Kirzner, however, emphasises that the most important role of the entrepreneur
in production is ‘being alert’ to profitable opportunities for exchange and
exploiting them. According to this theory, entrepreneurship involves:
The entrepreneur scanning the competitive environment and discovering

an opportunity to earn money by buying resources or producing a
product and selling it.
The entrepreneur sourcing the funds to finance the venture, including
borrowing from a capitalist.
The entrepreneur using the funds for the entrepreneurial venture.
The entrepreneur paying back the capitalist, including interest and
retaining the pure entrepreneurial profit
(Kirzner in Nayab, 2010).
Kirzner also recognised the imperfect nature of knowledge and inadequacy

of information in the market and the opportunities that can ensue from this.
Thus, according to Kirzner, the entrepreneur is the person who possesses
information that others do not have. This adds value to his or her intermediary
role. The entrepreneur is therefore continuously looking out for information.
In fact, Kurzner believes spontaneous learning and alertness as two major
characteristics of entrepreneurship and that entrepreneurship is the
transformation of spontaneous learning to knowledge, motivated by prospects
of some gain.
Cole’s Economic Historian View
Cole cited in Nayab (2010) focuses on how economic players and their
behaviours affect change and economic growth through history. He sees
entrepreneurship as being ‘the purposeful activity (including an integrated
sequence of decisions) of an individual or group of associated individuals,
undertaken to initiate, maintain or aggrandise a profit orientated business unit
for the production or distribution of economic goods and services.’
This perspective of roles and behaviours of economic actors is echoed by

Harbison and Myers (1990) when they commend on the complexity of the
entrepreneurial function thus,“The task of directing production so that a given
effort may be most effective in supplying human wants is so difficult under
complex conditions of modern life that it has been broken up and given into
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the hands of a specialised body of employees, or to use a general term, of

businessmen, who ‘adventure’ or ‘undertake’ its risks; who bring together the
capital and labour required for the work; who arrange or engineer its general
plan and who superintend its minor details.”
The entrepreneur is also seen as ‘a catalytic agent in the process of

industrialisation’ (Harbison and Myers, 1990). For the entrepreneur to be
able to carry out the described roles and functions successfully and to ensure
business longevity and growth, it is implied that they should possess certain
skills. These include having a purpose (strategic vision), innovation and creativity,
activity planning and management (project management), decision making,
directing others and delegation.
Frank Knight’s Risk Bearing Theory
Knight cited in Drucker (1985) adopts the ‘economic agents’theory discussed

above but adds the dimension of risk to the concept of entrepreneurship. He
contends that uncertainty is a factor of production which is just as critical to
production as any other factor like labour. He further states that the
entrepreneur’s main function is to take or bear this risk, acting in anticipation
of future events. This theory brings to the fore the distinction between risk and
uncertainty. Risk is the quantifiable probability that an adverse event will occur.
This forms the core of the insurance business and insurance companies generally
accept to carry this risk.
Uncertainty on the hand is the kind of risk that cannot be quantified or

determined. Insurance companies are generally not willing to accept it. This is
the risk that the entrepreneur is said to be willing to take. The entrepreneur is
paid a profit as reward for bearing this risk of uncertainty.
Mark Casson’s Economic Factors Theory
Casson (2003) put forward an economic factors theory with three basic tenets,
the principal one being that it is the nature of the economy that impacts on
how well entrepreneurship will flourish. He identified several economic factors
which he said encouraged or discouraged entrepreneurship. These include:
Taxation policy
Industrial policy
Availability of raw materials
Access to finance and favourability of terms
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Access to information, especially about market conditions

Availability of technology and infrastructure
Marketing opportunities
(Casson, 2003:49)
If the above factors are favourable, then entrepreneurship will flourish.
The other basic tenet of Casson’s Theory is that entrepreneurs need great
judgement in deploying resources for production. This judgement can be
enhanced by greater control over the immediate society around the venture.
Finally, Casson makes the observation that the availability of personal equity
is important in entrepreneurship growth, which is his third tenet.
Joseph Schumpeter’s Innovation Theory
As early as 1949, Schumpeter cited in Drucker (1985), emphasises the role

of innovation in entrepreneurship declaring that an entrepreneur is ‘one who
carries out new combinations only whilst they are actually performing the
action of enterprise.’ In other words, according to Schumpeter, an act of
entrepreneurship only takes place after the business has already been
established, and some operational innovation takes place. He clarifies this
assertion by saying that entrepreneurship takes place when one or more of
the following occurs through the entrepreneur’s action:
creation of a new product

introduction of a new way to make a product
discovery of a new market for a product
finding a new source of raw materials
finding new ways of making products or doing things.
Schumpter then says for the above kinds of entrepreneurial actions to happen,
the entrepreneur must be endowed with the characteristics of innovation,
foresight and creativity. We want to remind you that from what we have said
in Unit One, this innovation that takes place within an already established
enterprise has been defined as intrapreneurship. However Schumpeter does
not make that distinction.
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Alfred Marshal’s Economic Theory
The main tenet of Marshal’s theory is that the principal role of the entrepreneur
is to bring together the four factors of production to produce a product. The
four factors of production are land, labour capital and organisation. Later
theories have modified Marshal’s theory by replacing organisation with the
entrepreneur as the fourth factor of production. This theory is the basis of the
current economic theory on production. Browne (1995) for example, has
described the four factors of production (land, labour, capital and enterprise)
‘the basic ingredients of production.’ The entrepreneur is paid a profit as
reward for his efforts. Marshal also identifies the characteristics which he
believed made the entrepreneur successful in the function noted above. These
include:
thorough understanding of the industry

good leadership skills
foresight on demand and supply changes and the willingness to act on
such risky foresights.
Activity 2.1
1. Compare and contrast Cantillon’s and Kirzner’s economic theories of
? 2.
entrepreneurship.
Describe Mark Casson’s economic factors theory of entrepreneurship
and explain how the identified factors may have influenced
entrepreneurship in Zimbabwe.
3. Analyse the relevance of entrepreneurship theories and models to
education.
2.3 Sociological Perspectives

The sociological perspective views entrepreneurship as a product of societal
pressures and influences. The spectrum of society is very wide, from the family
through schools, clan, tribe, country, religion and others. Theories within this
category contend that the entrepreneur, being a member of a social system, is
influenced by the social environment and he or she in turn influences the social
environment through his entrepreneurial activities. We now discuss some of
these theories.
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2.3.1 Max Weber’s Sociological Theory

Max Weber (1864-1920) cited in Browne (1995), argued that social cultures,
particularly religion, were the driving forces of entrepreneurship. The
entrepreneur was just a role player in conformity with role expectations of
society. These role expectations were based on religious beliefs, taboos and
customs. Weber emphasised the role of capitalism in driving entrepreneurship.
Capitalism is a key element of the protestant work ethic that promotes the
social values of economic freedom and private enterprise. In other words, it
is the protestant religion which promotes the spirit of capitalism, which in turn
promotes entrepreneurship. Entrepreneurship is, therefore, less a product of
the individual than the societal influences that impinge on the individual. Weber,
however, points out that these societal influences will need to be complemented
by the right combination of discipline and an adventurous free spirit within the
entrepreneur.
2.3.2 Collins’ Entrepreneur Typology

Collins cited in Casson (2003) identifies five categories or types of
entrepreneurs, based on the source of or major societal force that will have
moulded them. These include: craftsman’, ‘like father like son’, ‘off the farm’,
‘opportunistic’ and ‘trained’ entrepreneurs.
‘Craftsman’ entrepreneurs: are individuals who follow the footsteps

of family relations or role models who would have given them early
exposure to the craft they decide to follow as entrepreneurs. An example
isthe person who starts and operates a boutique and interior decor
business after being influenced by an aunt who runs a tailor’s shop.
‘Like father like son’ entrepreneurs: are individuals who enter a
business with the parents as role models. An illustration is the man who
grows the parents’ small fleet of commuter omnibuses into a big transport
business with haulage trucks and a large fleet of luxury cross border
omnibuses.
‘Off the farm’ entrepreneurs: are individuals with a strong dislike for
their upbringing or some aspect of it. This dislike motivates them to
breakaway from the mould and be different. For instance, a large scale
farmer’s son may not like the loneliness of farm life and grows up to
establish a travel and tours agency in the city.
‘Opportunistic’ entrepreneurs: are the individuals who grab
opportunities as they arise. Thus, they capitalise on available and
emerging entrepreneurial opportunities.
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‘Trained’ entrepreneurs: are individuals who have undergone training

in some skills of business. People who hold technical and practical
subjects qualifications are more inclined to be entrepreneurial.
The above entrepreneur typology supports the generally accepted
sociological notion that exposure to role models during one’s formative
years can influence the disposition to entrepreneurship. An examination
of Collins’ typology and related ones by other socio-economists can
reveal the sociological factors that influence entrepreneurship.
McClelland cited in Casson (2003) identified the following: dependency,
role model culture: tradition, failure/success culture and societal safety
net. Below we explain these aspects in brief.
Dependency culture: People who generally depend on others for
livelihood are most unlikely to be entrepreneurs in their own right.
Role model culture: People are influenced into entrepreneurship by
family or relations that they can emulate.
Tradition culture: If entrepreneurship has been a family, clan or even
tribal tradition over the years, then that tradition will perpetuate in future.
Many of us have heard the tag of ‘traditional businessmen’ that is put
on people of Indian descend in Zimbabwe and elsewhere.
Failure/success culture: Cases of business success in society will
motivate and encourage other people within the community to also go
into business
Societal safety net: Many people fear the possibility of financial ruin,
abject poverty, shame and criminal charges that may come with the
failure of a business venture. They, therefore, do not venture into
business. This fear isgreatly reduced if there is a ‘safety net’ in the form
of unemployment benefit payouts for citizens. This societal safety net
will therefore encourage entrepreneurship.
The point to note here is that it is generally the sociological influence that
moulds an entrepreneur.
2.3.3 Idiosyncratic Perspective

The postulate of this school of thought is that some individuals have unique
combinations of personal characteristics and beliefs that favour them to
succeed as entrepreneurs. These ‘idiosyncrasies’ form the personality attributes
and characteristics that we have already alluded to above as a necessary
component in entrepreneurship. Whilst the sociological perspective discussed
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above is emphasising the role of sociological influences in moulding

entrepreneurs, this idiosyncratic view says the personality of the entrepreneur
is more powerful in entrepreneurial development. We now discuss some of
these theories in detail below.
2.3.4 Leibenstein’s ‘Gap-fillers’ Theory

Leibenstein (1922-1994) viewed entrepreneurs as gap fillers. They analyse
the market to identify areas where there are market failures and deficiencies
in supply. They then act to fill up these identified ‘gaps’ with the required
goods and services. Leibenstein explained this ability to identify and fill market
gaps in terms of the personality characteristic or traits of the entrepreneurs.
He said these entrepreneurs should have the following traits:
Ability to recognise market trends

Ability to develop new goods or processes in demand but not in supply
Ability to determine profitable activities.
2.3.5 McClelland’s Achievement Motivation Theory

McClelland in Casson (2003:66) identified several personality competencies
for successful entrepreneurship. These are pro-activity, initiative, assertiveness,
commitment to others and a strong achievement orientation. With specific
reference to achievement inclination, McClelland pointed out that people have
three motives for accomplishing things. These are need for achievement, need
for affiliation and need for power. Of these, he said the needs for achievement
and power drive entrepreneurship. He further made the assertion that the
dream for big achievements is greater than the motivation for money and
other external incentives. Shackle cited in Nayab (2011), also alludes to
personality characteristics in entrepreneurship. He contends that the key
attributes of successful entrepreneurs include creativity and innovation. These
help the entrepreneur to be able to imagine opportunities from the competitive
environment.
2.3.6 Peter Drucker’s Theory

Drucker (1985) also added his views on the personality attributes that influence
entrepreneurship. He asserts that entrepreneurship is a function of three things,
namely, innovation, resources and entrepreneurial behaviour.
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2.3.7 Other personality attributes

Many other writers have added to the list of personality attributes that influence
entrepreneurship. The basic argument is still that entrepreneurship is a function
of the individual idiosyncrasies of the entrepreneur. Deakins (1999:78) says
entrepreneurs need to be people of the following character:
Achievement orientated
Calculated risk takers
Seekers of high internal locus of control. ‘Internal locus of control’ is a
phrase to describe the attitude or belief that one’s success is dependent
on one’s own ability and effort. The opposite is ‘external locus of control’
Innovative
Tolerant of ambiguity
Visionary.
Timmons in Timmons et al (2004:89) has also added to the list by including
the following attributes:
Self- confidence
Flexibility
Desire for independence
Energetic
Emotional stability
Ability to inspire
The personality characteristics implied by the above theories is not exhaustive.
We also cannot make the inference that these attributes are equally endowed
to different entrepreneurs. However, by just looking and reflecting on them, it
can be concluded that they are desirable in an entrepreneur.
2.4 Marxist Perspective

A discussion of the theories of entrepreneurship cannot be complete without
mention of the Marxist perspective. We give below a brief description of the
Marxist philosophy and its perception of the entrepreneur.
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2.4.1 Marxist philosophy

The Marxist philosophy was founded by Carl Marx, a German born
philosopher in the 19th century. Carl Marx coined the phrase ‘scientific
socialism’ to refer to his philosophy (Chung and Ngara, 1985). Working with
his colleague, Frederick Engels, the two developed the model of scientific
socialism based on 3 fundamental theories, namely theory of surplus value,
class struggle and historical materialism.
Theory of surplus value
Marx and Engels observed that in any production process under capitalism
or the earlier forms of economic relations, labour was undervalued. They
believed the worth of any product produced was the sum of the raw materials
that make up the product and the worth of labour effort that went into its
production.
Labour is therefore the ultimate creator of wealth. They saw the wages paid
to labour as being way below the value of the wealth that the labour would
have created. In other words, when workers are at work employed by
someone else, they spend more time there than they really need to maintain
themselves and their families. During the rest of the time that they continue to
work, they will be creating surplus value that will be expropriated by the
capitalist as a profit. The workers are, therefore, working for the capitalist for
most of the time that they are at work. This exploitation of labour by the
capitalist leads to discontentment within labour, resulting in social upheaval.
Theory of class struggle
Marx viewed society as being made up of groups with varied interests and
aspirations. The pursuit of these opposing interests by members in the different
classes leads to conflicts which Marx and Engels called ‘class struggles’. They
made the observation that the classes can be categorised as those of ‘exploiters
and oppressors’ on the one hand and those of the ‘oppressed and exploited’
on the other. Thus,in a capitalist setting, the struggle would be between the
workers and the capitalists or owners of the means of production.The result
of such struggles is the transformation and development of society.
Theory of historical materialism
According to Marx and Engels, the development of societies through history

has been shaped by the economic or ‘materialistic’ relations between the
social classes in society. They postulated that any society can be viewed as
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havinga ‘base’ or ‘foundation’ made up of these economic or material relations.

On this base is built the superstructure of social relations that are discernible
including religion, education, judiciary system and other social institutions.
These two structures influence and support each other. Changes in the
economic relations of the sub-structure or foundation will inevitably lead to
changes in the superstructure of social relations and institutions.
Marx and Engels assert that changes have been taking place through history
caused by the class struggles discussed above. According to them, all societies
have developed through the stages from simple communalism, slavery,
feudalism, and now capitalism. They believed there would be further
development to socialism and ultimately communism, which Marx believed
would be the most advanced, fairest and most acceptable form of economic
and social relations.
2.4.2 Marxist view of the entrepreneur

From the Marxist philosophy summarised above, the basic views of Marxism
on entrepreneurship can be inferred as follows:
Ownership of ‘the means of production’ by individuals is not acceptable

as it leads to the exploitation of labour.
The government should be the custodian of the means of production,
holding them in trust for the people. Alternatively, the producers
themselves can own the means of production through a cooperative
union.
The entrepreneur, as an individual is not necessary. His inclusion in the
production equation only serves to drive up costs of production through
the ‘profit’ element which benefits only a few individuals at the expense
of every one else.
The entrepreneurial function is necessary, but need not be individualised.
It is possible to dissolve this function into the various labour functions,
with government playing a supervisory role for the benefit of the people.
The government, therefore, decides on the answers to the economic
questions of:what to produce, how to produce, when to produce, and
for whom to produce (Chung and Ngara, 1985).
It remains to be seen whether or not the prediction by Carl Marx of the
coming of a just, productive and prosperous dispensation under communism
will be realised. We can only comment that for the time being, the progress
towards that ideal has been grossly hampered by several factors including:
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The recent collapse of the Union of Soviet Socialist Republics under

the armpit of Russia which was held to be the bastion of socialism up to
the 1980’s.
The general poorer economic performance of the countries whose
leaders claimed that they are socialist.
The general disillusionment by people of political leaders who
championed socialism in hypocrisy but were dictatorial and oppressive
and were busy accumulating vast amounts wealth themselves.
The reforms that have taken place within capitalism, including
involvement of workers in management decisions, employee share
participation schemes and generally acceptable working conditions and
hours (Chung and Ngara, 1985).
Activity 2.2
1. State the basic tenets of the sociological and the idiosyncratic
? 2.
perspectives of entrepreneurship.
Outline Deakins’ theory on personality attributes of entrepreneurs and
explain how the identified characteristics drive entrepreneurship.
3. Comment on the Marxist perspective of entrepreneurs.
2.5 Entrepreneurship Models

Some scholars have tried to conceptualise entrepreneurship by designing
models that summarise all the factors and processes that are related to the
concept. Here we describe one such model in this section, the Timmons model
of entrepreneurship.
2.5.1 The Timmons Model of Entrepreneurship

Jeffrey Timmons developed the model of the entrepreneurship process for his
doctorate thesis at Harvard University. He believes his model is ‘normative’,
meaning that it is a standard or guide that a potential entrepreneur can follow
and expect to succeed in an entrepreneurial venture. The key factors in the
Timmons model are the founder or entrepreneur, the founding team, the
opportunity and the resources.
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The key responsibility of the entrepreneur is to identify, bring together, and

coordinate the other three factors. The basic elements of the model have
been simplified diagrammatically as shown below in Fig 2.1.
Communication
Opportunity (2) Resources (4)
Business Plan
Ambiguity Exogenous Forces
Creativity Leadership
Team (3)
Uncertainty Capital Market Context
Founder (1)
Adapted from: Timmons JA et al (2004)
Fig 2.1: The Timmons Model of the Entrepreneurial Process
The basic philosophy of the Timmons model is that entrepreneurship is ‘a way

of thinking, reasoning and acting that is opportunity obsessed, integrated and
holistic in approach and leadership balanced’ (Timmons, et al 2004). The
model depends on the fit and balance among the three factors of
entrepreneurship, namely the opportunity, the team, and the resources.
The opportunity factor
According to Timmons, entrepreneurship starts with the discovery of an

opportunity in the market. This is after a deliberate search for opportunities in
the environment by the entrepreneur. The opportunity usually starts off as a
business idea that is tested for viability against market demand. An idea becomes
viable when it remains anchored in products or services that create or add
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value to customers and remains attractive, durable and timely. The opportunity
is then shaped or refined until it becomes ‘a high potential venture.’A business
plan is then drawn and financing sought. According to the model, if the
opportunity is high potential, the business plan will be ‘failure proof’ and
financing guaranteed.
The team factor
Once the opportunity has been identified, a lead or founding team has to be
established. The success of the venture depends on the effectiveness of this
team. Only a good team can unlock the full potential of the opportunity and
manage the pressures related to growth. The team achieves this by removing
ambiguity and uncertaintyof the opportunity by applying creativity. The team
also provides leadership to manage the available resources in the most effective
manner by interacting with exogenous forces and the capital market context
that keeps changing constantly.
The resource factor
Once the team has been set, the required resources are then sought. The
model emphasises on the necessity of starting off with the barest minimal
requirements as a strategy of attaining competitive advantage. This
‘bootstrapping’ has several advantages including driving down market and
operating costs, instilling financial discipline and leanness in the organisation
and encouraging creativity through the need to achieve more with minimal
resources. The required financial resources are provided by the entrepreneur,
either from savings or from borrowings.
Role of the entrepreneur
The entrepreneur hascritical responsibilities throughout the entrepreneurial

process described in the model above. He first identifies the opportunity and
shapes it into ‘a high potential venture.’ He then conjures up the great team
required and provides coaching to team members as and when needed.He
then provides the financing for the venture, risking career, personal cash flow
and his net worth in the process. The entrepreneur must also draw up the
business plan that balances available resources with the opportunity and the
potential of the team.
The entrepreneur must keep abreast with business operations. This ensures
that he maintains a match or balance of the three factors of entrepreneurship.
Changes in any one need to be counter-balanced by changes in the other
factors. To achieve this, the entrepreneur needs to apply creativity and
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leadership and to maintain effective communication.One of the basic tenets of

the Timmons model is that the entrepreneur will be rewarded in the end for
successfully playing the role just described. The quantum of the profit reward
will be commensurate with the risk and effort involved in starting, financing
and building the business.
Activity 2.3
1. State the four principle factors in the Timmons model of
? 2.
entrepreneurship.
Discuss the role of the entrepreneur in the context of the Timmons
model of entrepreneurship.
3. With the aid of a diagram, describe the entrepreneurship process as
proposed by the Timmons Model.
2.6 Relevance of Entrepreneurship Theories to

Education
The role of the theoretical background to a concept is to consolidate
understanding of the concept. In this case, our understanding of the concept
of entrepreneurship has been consolidated by the theoretical premise on which
the concept is built. The relevance to education of the theories presented
above, therefore, lies in the confirmation and consolidation of our understanding
of the concept of entrepreneurship and its relevance to education as already
discussed in section 1.5 above. Over and above this, the theories and model
described in this unit are of practical relevance to education in a number of
ways.
The sociological perspective to entrepreneurship discussed emphasised

the influence that societal forces can have on entrepreneurship.
Educational institutions are a major societal institutions. Schools can
therefore have a phenomenal impact on entrepreneurship if managed
well. The teachers and other staff manning these institutions are also
influential role models to students. We know that role models are an
important societal factor in entrepreneurship. The point we make here
is that leaders of educational institutions and teachers need to appreciate
the potential that they wield in influencing entrepreneurial development
among students and the need to use it to maximum effect.
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The same argument given above can be repeated with respect to the
idiosyncratic perspective. The role of education in this case is to draw
up educational training and learning tools that will instil and nurture those
idiosyncrasies that have been said to encourage entrepreneurship.
The Timmons model, as a normative model, can also act as a practical
guide on how educational heads, administrators and responsible
authorities can actually manage their institutions as businesses. The
suggested concept of ‘bootstrapping’, for example, would be beneficial
to schools if adopted.
2.7 Summary
This unit has consolidated your understanding of the concept of
entrepreneurship by discussing various theories that form the theoretical
foundation on which the concept is built. We described the various theories,
from those with an economic perspective, through some with sociological
and idiosyncratic biases to the Marxist perspective. We also described the
Timmons model of entrepreneurship. We now move on to Unit 3, where we
examine the characteristics of a successful entrepreneur.
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References
Browne, D.J. (1995). Economics: Theory and Practice. London: Edward
Arnold.
Casson, M. (2003). The Entrepreneur: An Economic Theory: Cheltenham;
Edward Elgar.
Chung, F. and Ngara, E. (1985). Socialism, Education and Development:
A Challenge to Zimbabwe: Harare; Zimbabwe Publishing House.
Deakins, D. (1999). Entrepreneurship and Small Firms' New York;
McGraw-Hill.
Drucker, P. F. (1985). Innovation and EntrepreneurshipOxford;
Butterworth.
Harbison, F. and Myers, C. A. (1990). Management in the Industrial World:
New York; McGraw.
Kirzner, I. M. (1973). Competition and Entrepreneurship: Chicago;
University of Chicago Press.
Nayab, N. (2011). Research article ‘What is Entrepreneurship? A Look
at Theory’ on: www.brighthub.net
Nayab, N. (2011). Research Article: ‘Understanding the Timmons Model
of Entrepreneurship’ on: www.brighthub.net
Timmons, J. A., Zacharakis, A. and Spinelli, S. (2004). Business Plans that
Work: A Guide for Small Business: New York; McGraw-Hill.
Ward, A. (2007): Research article: ‘An integrated Model of
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Unit Three
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Entrepreneurial Characteristics
for Business Success
3.0 Introduction
I n Unit 2, we described and discussed the various perspectives, theories

and models of entrepreneurship. We explained that such theories give a
foundation for a greater understanding of the concept of entrepreneurship. In
this unit, we further explore the concept of entrepreneurship. However, this
time we focus on the driver of entrepreneurship, the entrepreneur himself/
herself. Here we try to develop an ‘identikit’ or profile of a successful
entrepreneur. Entrepreneurs have been studied at length by economists,
anthropologists, management academics, psychologists, sociologists,
historians, finance experts and organisational scholars.
We try in this unit to amalgamate the findings of all these scholars by answering
the questions asked of entrepreneurs by people such as Baskerville and
Flanagan when they said ‘Who are these creatures? Why do these persistent
people never know when to give up? What drives them to take risks that
ordinary folk find overwhelming? Where do they get that energy? How do
they create value from nothing and most importantly, what are the
characteristics that define them as entrepreneurs?’ (Baskerville and Flanagan,
2009). Some of the characteristics of entrepreneurs have already been alluded
to in units 1 and 2 above in the contexts of the definitions and theories of
entrepreneurship. We now revisit and expand on those characteristics in the
context of successful entrepreneurship.
3.1 Unit Objectives

describe the entrepreneurial self assessment tool
list the common characteristics of successful entrepreneurs
describe the various factors that influence entrepreneurship
explain the basic skills in entrepreneurship and how they influence
entrepreneurship
outline the ‘A to Z model’ of entrepreneurial characteristics
examine the relevance of entrepreneurial characteristics to education
3.2 The Entrepreneurial Self-Assessment Tool

(ESAT)
The Ethiopian Business Development Services Network (EBDSN) designed
a tool that can be self administered by any potential entrepreneur to help
decide whether or not he or she is likely to succeed as an entrepreneur in his
or her present state and circumstances. The tool consists of a number of
entrepreneurial characteristics that are known to influence entrepreneurship.
The characteristics are grouped by category, including skills, personal attributes
and situation and financial situation. The potential entrepreneur critically
considers each characteristic and determines whether he or she has a’ strength’
or a ‘weakness’ with respect to that characteristic.
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Unit 3 Entrepreneurial Characteristics for Business Success
The number of characteristics scored as ‘strengths’ and ‘weaknesses’ are

recorded and compared. When the strengths are greater than the weaknesses,
the entrepreneur can feel comfortable to start the business. Where weaknesses
have been noted, plans must immediately be put in place to eliminate them
orimprove them. The advice from the results of the self assessment tool is not
to go into business when the characteristics that determine business success
are significantly unfavourable. The assessment tool is shown in Table 3.2 below.
Table 3.1 Self- Assessment Tool of Entrepreneurial Characteristics
Characteristics Strength Weakness
1. Skills
• Practical ability to produce the product _____ _____
• Business management skills ______ ______
• Knowledge of your line of Business: ______ ______
market, competitors, suppliers
2. Personal characteristics and situation
• Commitment ______ ______
• Motivation
• Readiness to take risk ______ ______
• Making decisions ______ ______
• Family situation ______ ______
3. Financial situation ______ ______
Total number of strengths and weaknesses ______ ______
Source: Kidane, T. (2004)
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Activity 3.1
1. Describe the entrepreneurial self assessment tool and comment on its
? 2.
significance to entrepreneurship
Mr. Gatsi in Activity 1.2 above decides to assess his entrepreneurial
potential by applying the Self Assessment tool (SAT). How should Mr.
Gatsi go about the exercise and how should he interpret the findings?
3.3 Basic Entrepreneurial Skills

In addressing the question of the characteristics that make a successful
entrepreneur, one cannot escape the matter of skills. Baskervilleand Flanagan
(2009) note that one of the key characteristics of a successful entrepreneur is
‘possession of basic business, management and technical skills.’ We briefly
discuss these skills in this section of the unit. Some of these skills are dealt
with in greater detail in later units in this module.
3.3.1 Technical skills

Technical skills are also referred to as trade or industry skills. They refer
to the practical abilities required to produce the service or product to be
offered to the market. If, for example one has decided to be an entrepreneur
in the dress making business, one has to be able to measure and cut clothes
and fabrics. Whilst we acknowledge that it is possible to hire someone to do
the technical part of the work, we believe it is the entrepreneur with ‘savvy’
who has a better chance of success.
3.3.2 Marketing and sales skills

We have already stated in Unit 1 that the aim of business is to make a profit
and profits come from sales. Sales can only be made consistently when the
entrepreneur has an understanding of marketing and sales principles. These
topics are dealt with in greater detail later on in the module.
3.3.3 Financial accounting

The entrepreneur who cannot keep track with the financial performance of
his business will simply not succeed. Successful entrepreneurs accurately record
transactions, summarise transactions into reports and analyse the reports to
make decisions about the business. This is the function of financial accounting
and this important topic is dealt with later on in this module.
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3.3.4 Business management

We have also stated in Unit 1 that entrepreneurs are managers by necessity.
They have to carry out basic management functions like planning. In addition,
they have to do or oversee the performance of office management and general
administrative functions like stock takes. The management of business will be
dealt with more fully later in the module.
3.3.5 Leadership
This is generally accepted to mean the process by which the entrepreneur
influences other people to work to the best of their abilities to achieve business
objectives. The assumption made here is that the business is not the very
small ‘one man operation’ that is now very rare. The entrepreneur needs
power to be able to influence other people to behave in certain ways. Handy
(1993) identifies the sources or bases of this power to include: physical,
resource, positional, expert, personal and negative power. Below we briefly
describe these aspects.
Physical power: This is power of superior force. Very unlikely in

businesses.
Resource power: This is the power one wields by virtue of one’s
control over desirable resources. The entrepreneur has discretion to
reward some people with the resource and deny others the same.
Positional power: influences one can exercise by virtue of one’s position
in the organisation. It is also called legitimate or legal power.
Expert power: this is the power possessed by virtue of superior
knowledge or expertise.
Personal power: this is the power possessed by virtue of one’s
personality or charisma.
Negative power: This is the abuse or illegitimate use of power to disrupt,
delay or distort operations.
Thus, successful entrepreneurs are those that exercise their power responsibly.
We must also make the statement that successful entrepreneurs exercise good
leadership in the following ways:
They built mutual trust between themselves and the people they work
with.
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They show good balance by being concerned with both operational results
and the people that produce the results at work.
They change their management style as necessary to suit the prevailing

circumstances of the nature of the task to be performed and the nature
of the persons who will perform the task.
They are good team member identifiers and builders.
They are good motivators of the people they work with
They are good communicators
(Handy, 1993)
3.3.6 Communication
One of the key characteristics of successful entrepreneurs is their ability to
communicate effectively. We have defined communicationto mean the
creation and exchange of meaning and understanding between people through
the use of language or other means. The language can be verbal or non-
verbal. As a guide to potential entrepreneurs, we give below, a few notes on
the communication process.
The Communication Model. The process of communication starts

with the transmitter of the message encoding and sending a message.
Encoding is done in a way such that the message is comprehensible by
the receiver. The message is sent through a medium. When the message
arrives, the receiver first decodes the message to draw meaning from
it. The receiver then sends a reply message to the initial sender as
feedback and the process repeats.
In an organisational setting, communication can be ‘up’ or ‘down’ the
hierarchy.
Communication can be initiated for primary purposes like supplying or
requesting information, explaining or requesting explanations and to
initiate some action. It can also be done for secondary purposes like
building trust, overcoming resistance to change, reconcilling conflict,
persuading some people and co-ordinating some activity.
Effective communication can be hampered by some barriers which
include fear created by excessive use or show of authority, culture of
rewarding only the good news, stifling dissent- usually in the name of
teamwork, concern with winning arguments, reacting defensively to
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negative feedback and some communication ‘noises’ within the

communication process itself
(Baskervilleand Flanagan, 2009).
3.3.7 Delegation
One of the tools used by successful entrepreneurs to empower, develop and
motivate their subordinates is delegation. The ability to delegate is therefore
another characteristic of successful entrepreneurs. Robbins and Hunsaker
(1996) have given a few pointers on the delegation activity.We have simplified
the meaning of delegation to the assignment by a leader, of authority to perform
tasks and make decisions
Delegation must for a once off and clearly specified task or assignment
The range or scope of the subordinate’s decision making limits
Subordinate must be allowed to participate in delegation planning
The leader must inform the other staff that delegation has occurred
Feedback channels must be included in the delegation plan,
Delegation must not be confused with abrogation of responsibility that
is done by some lazy leaders
(Robbins and Hunsaker, 1996:74)
3.3.8 Negotiating
There is always a need for negotiation in a business situation. Bazerman and
Neale (1992) define negotiation as the ‘process of bargaining in which two or
more parties who have different preferences must make joint decisions and
come to an agreement. This is a serious activity in entrepreneurship and success
at the negotiating table is normally associated with successful entrepreneurship.
Bazerman and Neale (1992) also give some guide and advice on how to go
about negotiating.
Research your opponent

Begin with a positive overture, it will most likely be reciprocated
Address or focus on issues and not personalities
Emphasise ‘win-win solutions. Let the opponent see ‘victory’ in your
solution
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Pay little attention to initial offers as they tend to be ‘idealist and extreme’
Create an open and trusting environment
(Bazerman and Neale, 1992:87)
3.3.9 Decision making

The entrepreneur will from time to time be called upon to make decisions. We
have defined decision making as the process that leads to choosing one
alternative choice amongst several in a problem solving situation. The quality
of decisions that one makes will contribute to determine the degree of one’s
success as an entrepreneur. Robbins and Coulter (1999) have broken down
decision making into an eight step process activity, which we present here:
Identify the problem

Identify decision criteria. These are the factors that are to be considered
in solving the problem. For example, in a problem that will involve
buying, the criteria may include cost, reliability of supplier and durability
of product
Allocate weights to criteria above. These weights will give the relative
importance of the criteria to the solution of the problem
Develop alternative or possible solutions
Analyse the possible solutions or alternatives
Select an alternative
Implement selected solution
Evaluate the solution to the problem and review if possible and restart
the cycle
(Robbins and Coulter, 1999: 68)
3.3.10 Time management

One of the often quoted ‘must have’ skills for entrepreneurs is ‘time
management’. This is particularly true of the self employed entrepreneur who
does not have to submit to the forced discipline of organisational schedules.
Time can easily be wasted in such situations. Time has to be looked at as finite
or ‘perishable’. It has to be used now or it is lost for ever. Mackenzie (1975:96)
gives a guide on how time management may best be done.
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Start with your organisation’s goals.

Prioritise the objectives
List all the activities that have to be carried out in order to achieve the
objectives identified and record the activities as a ‘to-do list’.
Prioritise the listed activities using the criteria of importance and urgency.
The prioritising will result in a number of sub-categories of activities
including ‘must do’, ‘should do’, ‘will do when I can’ and ‘can be
delegated.’
Make a schedule with 5-7 tasks for the day, starting with the ‘must do’
activities.
Monitor the schedule through out the day, crossing what has been
achieved and review as necessary.
3.3.11 Change management

The world is in a constant state of change. Organisations have to keep up
with these changes. The entrepreneur has to lead his business through the
change process as the change agent. This explains why leadership has
sometimes been described as the management of change. The ability to manage
change is therefore a success characteristic in an entrepreneur. Kotter (1988)
has contributed the following insights into the concept of change: forces of
change, type of change, failure to change, resistance to change and some
strategies to deal with resistance to change. Below we elaborate these aspects
in brief.
Forces of change: there are both internal and external forces of change.
Internal forces may include a management decision to adopt a operations
software. External forces will include things like demographic changes,
technological advances, market changes, political pressures and social
challenges like worsening crime. All these forces of change will make it
imperative that the business implement some changes to its structures,
systems, and relationships.
Type of change: that is occasioned by the noted forces can vary from
the simple adaptive to the complex radically innovative changes.
Failure to change: comes about when sometimes change efforts by
leaders do not produce the desired result, that is, change does not
occur. This is caused by many reasons including a low sense of urgency
for the change, lack of vision to guide the process and lack of short
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term wins to motivate people involved. The biggest problem is, however,
resistance to change by members of the organisation.
Resistance to change is the result of many causes including, surprise
and fear of the unknown, fear of failure, protection of current status
and benefits and personality conflicts.
Some strategies have been suggested for dealing with resistance to
change. The Six ‘paired’ strategiesinclude: education and
communication; participation and involvement; facilitation and support;
negotiation and agreement; manipulation and cooptation, as well as
explicit and implicit coercion.
Activity 3.2
1. List the management and business skills that are characteristic of a
? 2.
successful entrepreneur.
Identify five circumstances in which the Headmaster may find himself
in a situation for negotiation. Choose one of the situations and describe
how the negotiation techniques discussed in this unit will help the
Headmaster in the negotiations.
3. The Ministry of Education, Sport, Arts and Culture has directed that
the payment of teachers’ incentives be discontinued with immediate
effect. Explain whether this policy direction is an internal or external
force of change for a school. What would be the likely causes of
resistance to change and how would the Ministry deal with this
resistance to change?
3.4 Personality Characteristics/Attributes

In Unit 2, we discussed the idiosyncratic perspective to entrepreneurship.
We stated then that, the contention of the perspective is that entrepreneurship
is a function of personality attributes within the entrepreneur that give them the
natural predisposition to succeed as entrepreneurs. Here, we look at some of
these attributes.
3.4.1 Personality traits

As stated above, the personality traits have already been noted. We revisit
them for a more critical examination within the context of successful
entrepreneurship.
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Self- motivation
Self-motivation basically means having the mental drive to achieve some goal.
This is particularly true for entrepreneurs as they do not have leaders above
them who would inspire them as in a typical organisation. The whole enterprise
is the responsibility of the entrepreneur, from discovery of the viable idea,
conceptualising it into a business venture, the starting of the business and its
management. Self- motivation means one is a self starter with clear goals in
mind and the self- confidence that the goals will be achieved by self. Self
motivation also means one has the self- discipline to wake up early, for example,
to do what has to be done. Self- motivation is also driven by the hope of
achievement. Napoleon Hill, one of the greatest motivational writers and
speakers and successful entrepreneurs who ever lived had this to say about
hope: ‘The greatest of all forms of happiness comes as the result of hope of
achievement of some yet unattained desire. Poor beyond description is the
person who cannot look to the future with hope that he will become the person
he would like to be, or with the belief that he will attain the objective he has
failed to reach in the past’ (Hill, 1982:103).
Persistence
Persistence or perseverance is the mental attitude of refusing to give up in the

face of challenges met. Persistence is deeply mooted in motivation and hope.
It is the vision of what can be achieved in future that drives successful
entrepreneurs to persist by pushing forward in the face of failure and challenges.
Persistence is about finding new paths when current ones seem blocked instead
of surrendering. Finally, persistence is about taking heed of what the great
philosopher Confucius once said, that ‘greatness is not achieved by never
falling, but by rising every time we fall’ (Williams and Armitage, 1995:79).
Visionary
Successful entrepreneurs have a clear vision of what they want to achieve

where they want their company to be in future. It is this mental vision that
motivates them and drives them to persevere. Over and above this, the
entrepreneur must be able to articulate this vision and communicate it to the
people who work for him in an exciting manner that they also become
motivated. The entrepreneur’s vision is basis for the organisation’s mission
statement and then organisational objectives.
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Risk takers
Entrepreneurship is by definition a risky activity. There is a real possibility of

loss of one’s investment in any entrepreneurial undertaking. Thus, for the
entrepreneur, it is like taking the proverbial great leap of faith, when he goes
into any business. The entrepreneur risks career, personal cash flow and some
or all his net worth and sometimes criminal liability and possible imprisonment
if the business fails. History is replete with examples of small and big businesses
that have failed. In fact, the centre for Small Business Administration estimates
that approximately 50 percent of small businesses fail within the first five years
of operating (Nuri, 2010). This is possibly a result of succumbing to some
risks beyomd one’s control.
Entrepreneurs, however, try to minimise risk by careful vetting of business

ideas as we will discuss later in the module. They also pass on some of the
insurable risk to insurance companies. Whatever they do, there will always
be an element of uncertainty in entrepreneurship, and not many people are
prepared to bear that.
Creativity
Entrepreneurs bring into existence many products and services that are of
value to consumers. That is the essence of entrepreneur creativity. The scope
of creativity starts with finding the business idea, converting it into an enterprise,
designing structures and drafting methods of operation and production, produce
desirable goods and services and offer them to the market.
Flexibility
Being flexible means being able to adapt to change. Successful entrepreneurs

understand that the world and the environment in which they operate are
constantly changing. They, therefore, have to keep on adapting their strategies
and product offerings to meet the changing market conditions. Entrepreneurs
who fail in this regard will be overtaken by events and perish.
Focus
Successful entrepreneurs ‘keep their eyes on the ball’ so to speak. Being

focused goes beyond setting the vision. It is about ensuring that the vision is
achieved by ensuring that distractions and challenges are dealt with in such a
way that the end result or vision is achieved.
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Passion
Successful entrepreneurs have passion with their work. They have strong
enthusiasm for and a strong emotional attachment to the work they do. Being
passionate helps in being persistent.
Ethical and moral
Ethics and morals are the foundation of good entrepreneurship. Entrepreneurs

must set for themselves the moral standards that guide their operations and
make conscious efforts not to violet them. Profits that are immorally and
unethically sought are short lived. Unethical activities will give the business a
bad name. Besides, business success based on immoral and unethical practices
does not give the entrepreneur as much feeling and satisfaction of success as
that achieved through hard work.
Positive mental attitude
A positive mental attitude is the mental inclination to believe that good things
will happen for the individual in spite of current circumstances. This attitude
acts as a strong motivational force in influencing behaviours that lead to the
achievement of goals. In his discussion of the concept, Hill (1982) starts by
distinguishing between the physical self (the body) and the two personalities
housed within the physical self. He identified the two as ‘the negative self’ and
‘the positive self’ and said the two are in eternal conflict with each other. The
negative self thinks and moves and lives in an atmosphere of doubt, fear,
poverty and ill health. He ‘expects failure and is seldom disappointed. It dwells
on sorry circumstances of life - poverty, greed, superstition, fear, doubt, and
physical sickness (Hill, 1982).
The other self is positive and thinks in dynamic affirmative terms of wealth,
sound health, love, friendship, personal achievement,creative vision, service
to others, and one that guides you unerringly towards the attainment of these
blessings. Successful entrepreneurs have been able to suppress the negative
self in their minds. They have also trained themselves to make the positive self
dominate their thoughts. This positive mental attitude is the basis of all
achievement, including entrepreneurial success.
3.4.2 Effective habits

Some habits and usual practises have been argued to improve the effectiveness
of people. This also contributes in the making of successful entrepreneurs.
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The possession and practise of such habits is therefore another characteristic

of successful entrepreneurs. In his world renowned book,’The Seven Habits
of Highly Effective People’, Steven Covey, cited in Tanner (2010) describes
what he believes are the habits that would ensure effectiveness in whatever
people attempt.
Being proactive
It is the habit of effective people to be proactive as opposed to being reactive.

This means such people take action before circumstances act upon them.
Proactive people act on the understanding that they have to act on the things
that they can do something about. Reactionary people on the other hand
worry about things over which they have no control. They focus on the
weaknesses of other people, problems in the environment. This leads into
their development of poor attitudes like blaming others, reactive language and
increased feeling of victimisation. The proactive habit enlarges a person’s circle
of influence reducing his circle of concern. The opposite will be taking place
for reactionary people, that is their circle of influence is reduced as the circle
of concern expands’
Begin with the end in mind
This simply means to start with a clear understanding of one’s destination.

Effective people therefore start with a vision or goal that has to be achieved.
All other activities are designed to achieve the goal. Beginning with the end in
mind is based on the principle that all things are created twice, first in the
creator’s mind then physically, as in the factory.
Put first things first
This means they know how to prioritise. Things that matter most are therefore
not put to the mercy of things that matter least.
Think win/win
This is a frame of mind that constantly seeks mutual benefit in all human
interactions. A win/win solution in a negotiation for example, is mutually
beneficial and mutually satisfying. The parties in the transaction therefore feel
committed to action plan that derives from the agreement. Win/win also views
life as co-operative as opposed to competitive. Win/win is clearly a philosophy
that comes from a character of integrity and maturity and grows out of high
trust relationships.
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Seek first to understand then to be understood
This is a key principle in effective interpersonal communication. It is based on

the ancient Greek philosophy of ‘Ethos, Pathos, and Logos’. Ethos is basically
the trust that one inspires based on the integrity and competency or more
simply a person’s personal integrity. Pathos is about empathy; that is feeling
for others. Logos is the logic or reasoning part in an argument, for example.
The sequence of the terms guides us in communication, that our character
comes first, then the relationship and finally the reasoning in the argument.
Synergise
We say there is synergy in a relationship when the ‘whole is greater than the
sum of the component parts’ or symbolically when 1+1>2. The essence of
synergy is to recognise the differences between individuals; build on the
strengths and compensate for the weaknesses. The harnessing of peoples’
differences can create a ‘gestalt’, or a whole that is more powerful than the
sum total of the individual competencies.
Sharpen the saw
This is about preserving and enhancing you, including all the 4 dimensions of
a human being. Ignoring any one of these dimensions results in a weak and
unbalanced person. The 4 dimensions of human nature include the physical
being, the spiritual being, the mental being and the social or emotional being.
The physical being is maintained and enhanced by appropriate exercises,
good nutrition and effective stress management. The spiritual being can be
maintained by being religious. The mental dimension can be sharpened by
mental exercises like reading, visualising, puzzles and planning. Lastly, the
emotional dimension can be sharpened by engaging in social interactions
and building relationships.
Network
In addition to the seven habits identified by Covey above, networking can

also be added as a habit of successful entrepreneurs. Networking goes beyond
socialising in that one links up with kin for mutual benefit as the adage ‘iron
sharpens iron’ says. In an entrepreneurial network, partnerships are forged,
skills developed, ideas and strategies shared and opportunities uncovered
and analysed.
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Activity 3.3
1. Enumerate the characteristics of a successful entrepreneur.
? 2. Identify the habit characteristics that define a successful entrepreneur
and show how networking can improve a school headmaster’s
effectiveness in the administration of the school.
3.5 The A to Z of the Characteristics of an

Entrepreneur
We have taken the liberty to revisit yet again the characteristics of an
entrepreneur, but this time from a slightly different angle. The A to Z of the
characteristics of an entrepreneur is an exhaustive and holistic way of looking
at the unique and distinguishing aspects, skills and mind-sets of the
entrepreneur. The ‘A to Z’ approach can be argued to be a model in that it
gives us a framework to identify and understand the main characteristics of an
entrepreneur. The A to Z guide is also important in that it tells us that the
successful entrepreneur is multi-faceted and multi-skilled. Those who aspire
to be successful in entrepreneurship must therefore be ready to take up the
challenges and effort that must be put into the enterprise.
It is important to note that there are several ‘A to Z’ models of the characteristics

of an entrepreneurin literature which talk of basically the same things but in
different ways. All the models find suitable descriptions for the characteristics
of an entrepreneur. Here we, however, consider Baskerville and Flanagan
(2009)’s model, which we summarise below.
3.5.1 Baskerville and Flanagan’s A to Z model of the

characteristics of an entrepreneur
A is for Ambiguity: the entrepreneur can cope with and take advantage of
the ambiguities of changes that are caused by forces within the environment.
B is for Beachhead strategies. This is the entrepreneur’s ability to adopt

the Beachhead war strategy to gain market share and customer acceptance.
They do this by first identifying a niche market, use penetration pricing and
grow from the identified niche.
C is for Commitment. This is long- term commitment to start the business

and to see it through, risking all as necessary.
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D is for Destiny. Successful entrepreneurs consider entrepreneurship to be a

calling or destiny, going beyond accumulating material wealth. It is about living
a life of significance, influencing and serving mankind.
E is for Effectual reasoning. Entrepreneurs are capable of effectual

reasoning. They start from the premise of the resources, capabilities and unfair
advantages that they control and then progress to identifying the opportunities
that fit in with what they control.
F is for Focus. Entrepreneurs have the ability to concentrate their energies

and efforts on desired outcomes. This concentration or focus can break down
barriers to the achievement of desired goals.
G is for Global. Today’s entrepreneurs now have a global vision. They no

longer accept the tag of local SME. Instead they view themselves as GOS,
‘Global Opportunity Start-ups’.
H is for Health. Good health is a requisite in entrepreneurship. Creating

products that add value for consumers is the reason why entrepreneurs exist.
Innovation is applied in the design, production and presentation of the goods
and services.
J is for Just do it! Entrepreneurs are action takers who refuse to get bogged
down by the intricacies of complex planning and decision making.
K is for Keep it real. Entrepreneurs are truthful and honesty. They are more
concerned with ‘what is’ more than with ‘what should be’.
L is for Leadership. Leadership is part and parcel of entrepreneurship.
M is for Meaning. Entrepreneurs go into business mostly because they also

want to make meaning that is, making the world a better place.
N is for Never giving up. Entrepreneurs are driven by faith and hope. They
are driven by the guide that “never give up on the hope that ‘your time will
come’.”
O is for Opportunistic. A synonym for opportunist should actually be

entrepreneur!
P is for People. Entrepreneurs are fair and respectful managers, and tend to
form strong associations and relationships.
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Q is for Quirky. Being quirky helps entrepreneurs make their products stand
out. Quirkiness creates a fond and lasting impression in the minds of the
customer. Entrepreneurs are guided by the principle that “‘the same’ is never
recorded and the quirky never forgotten.”
R is for Risk. Entrepreneurs view risk as inevitable. They view the so called
risk free existence as unacceptable to them. To them, it is a kind of death.
They believe it is losing one’s soul to live a risk free life of irrelevance.
S is for Subjective margins. Entrepreneurs avoid price competition by

focusing instead on satisfying customer needs. When a customer receives
value and satisfaction, price ceases to be all important. Entrepreneurs can,
therefore, sell their products at higher margins.
T is for Timing. Success is all about timing. Entrepreneurs know this and
they practise good timing.
U is for Under the radar. This refers to the strategy entrepreneurs are capable
of using of entering and penetrating the marketquietly or with minimum notice
from established competition. They only show their hand after they have
consolidated their positions. V is for Value-add. Entrepreneurs go into
business primarily to add value for consumers. To do that, they often exploit
opportunities. The typical commercial businesses however aim at making profit
by extracting value away from others. They typically exploit weaknesses.
W is for Work and Play. Entrepreneurs do what they enjoy. There is therefore
no distinction between work and play. One is the other and vice versa. This
explains why they enjoy good health and there is never serious talk about
retiring.
X is for X factor. The X factor is the inborn attitudinal characteristic within

entrepreneurs that make them who they are. They believe the other commercial
actors simply do not have this X factor, whatever it is.
Y is for You. Entrepreneurs tend to be so engaged in doing their work that

they fail to pay attention on themselves as people and human beings. They
need to understand and accept what makes them tick.
Z is for Zest. This is the passion that is the life blood of the entrepreneur
(Baskerville and Flanagan, 2009:93).
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We hope you have noted why this approach is called the A to Z, as each of
the letters of the alphabet has something to offer to the characteristics of an
entrepreneur.
Activity 3.4
1. Identify any ten major characteristics of an entrepreneur from the A to
? Z model that you are familiar with. Explain how each of them affects
the entrepreneurer.
2. ‘Entrepreneurs are born, not made’. Critically examine this statement
with respect to the characteristics of an entrepreneur.
3.6 Relevance of Entrepreneur Characteristics to

Education
The entrepreneurial characteristics just described are of practical importance
to education. This is so in a number of ways that stem from our conviction that
educational institutions need to be viewed as businesses, albeit without the
profit motive as its key objective. Here we look at some specific relevant
aspects of entrepreneurial characterisctics to education.
School administrators need to determine their suitability as leaders of

schools. They can do that by adapting the assessment tool of
entrepreneurial characteristics. Corrective action, including training and
coaching need to be taken to address areas of weaknesses.
Some business and management skills were identified as characteristic
of successful entrepreneurs. These skills need to be developed within
staff manning educational institutions. Such skills include marketing,
decision making and change management. This ensures that the
concerned employees are themselves able to fully and effectively perform
their functions.
The characteristics also guide educational planners on how to restructure
learning programmes to assist in the moulding of students into responsible
people with entrepreneurial characteristics.
The skill characteristics identified can be adopted for emulation by
educational leaders. Such habits like networking and thinking win/win
can be used just as effectively in an educational setting.
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Activity 3.5
1. Discuss the relevance of entrepreneurial characteristics to education.
? 2. How can networking be implemented in school set up? Explain how
the participants will benefit from the habit.
3.7 Summary
In this unit, we gave a detailed examination of the characteristics of a successful
entrepreneur. We described the skills characteristics, the trait characteristics
and the habit characteristics of successful entrepreneurs. We finally implied
that knowing these characteristics is important for educational managers as it
gives a framework for designing teaching and learning programmes that
endeavour mould entrepreneurs of the character to help develop this country.
We now progress to Unit 4 where we focus on vocational and technical
education and how the effectiveness of these institutions can be enhanced by
entrepreneurship education.
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References
Baskerville, P. and Flanagan, N. (2009). Characteristics of an Entrepreneur:
The A to Z of the Characteristics of an Entrepreneur Boston: Knol
Publishing Guild.
Bazzerman, M. H. and Neale, M. A. (1992). Negotiating Rationally: New
York Free Press.
Hamlin, K. (1988). How to Talk so that People Listen: New York; Harper
and Row.
Handy, C. (1993). Understanding Organisations: Penguin.
Hill, N. (1982). The Master-key to Riches New York: Ballantine Books.
Kidane, T. (Editor: 2004): Toolkit: Start and Improve your Business' Addis
Ababa; Ethiopian Business Development Services Network.
Kotter, J. (1988). The Leadership Factor: New York: Free Press.
Mackenzie, R. A. (1975). The Time Trap. New York: McGraw- Hill.
Robbins, S. P. and Hansaker, P. L. (1996). Training in Interpersonal skill:
Tips for Managers: New Jersey: Prentice Hall.
Robbins, S. P. and Coulter, M. (1999). Management: Boston; Prentice Hall.
Tanner, M. (2010). The A to Z of Entrepreneurship: on www.lifedestiny.net
Williams, G. and Armitage, A. (1995). Social Speeches: Surrey: Clarion.
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Unit Four
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Vocational and Technical

Education and
Entrepreneurship
4.0 Introduction
I n the last unit, we discussed the characteristics of successful entrepreneurs.

We examined the skills, personality, attitudes and habits that make up an
effective entrepreneur. It is effective entrepreneurs who drive the
entrepreneurship movement that leads to the economic development of a
nation. In this unit we examine one of the potential drivers of economic growth
in a country, vocational and technical education. We discuss briefly the concept
and scope of vocational education and more importantly, how entrepreneurship
can add value and revitalise vocational and technical education
4.1 Unit Objectives

By the end of the unit, you should be able to:
define vocational and technical education
describe the scope of vocational and technical education
enumerate the benefits of vocational and technical education
explain the challenges of vocational and technical education
suggest how entrepreneurship education can be incorporated into
vocational and technical education programmes
explain how entrepreneurship can improve on the outcomes of
vocational and technical education programmes
4.2 Defining Vocational and Technical Education

Vocational and technical education also referred more fully as technical and
vocational education and training (TVET) has great potential to help in the
development of a nation. This is why TVET is on the development agenda of
practically all countries in the world, including Africa. This potential to be an
effective tool for economic development was recognised by the UNESCO
meeting of TVET experts on ‘learning for work, citizenship and sustainability’
in Bonn, in 2004 when they made the declaration that: “Since education is
considered the key to effective development strategies, technical and vocational
education and training (TVET) must be the master key that can alleviate
poverty, promote peace, conserve the environment, improve the quality of
life for all and help achieve sustainable development”
4.2.1 Definition of technical and vocational education and

training
The 1997 UNESCO International Standard Classification of Education defined
the term TVET as education and training to ‘acquire the practical skills, know-
how and understanding necessary for employment in a particular occupation,
trade or group of occupations or trades.’ Thus, in TVET, trainees are being
prepared for jobs that are based on manual or practical activities and
traditionally non –academic. TVET can also be looked at as teaching
‘procedural knowledge’. This is in contrast with the mainstream type of formal
education which is teaching of ‘declarative knowledge’ in a usually broader
scientific field, which might concentrate on theory and abstract conceptual
knowledge. The logical necessity of TVET is quite clear in an environment
where the labour market is changing and there has arisen the need for higher
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Unit 4 Vocational and Technical Education and Entrepreneurship
levels of skills within industry and commerce. TVET will be able to come in
and design training courses that relate to the demands of the new job
requirements. This is where the potential developmental role of TVET comes
in, to train the skilled and entrepreneurial workforce that is required in industry
and commerce to create wealth and reduce poverty.
4.2.2 Objectives of TVET

The policy document of the African Union (AU) ‘Strategy to Revitalise
Technical and Vocational Education and Training in Africa’ (2007) has defined
four clear objectives of TVET programmes in Africa. These are: the acquisition
of relevant knowledge, practical skills and attitudes, ‘flexibility, adaptability
and life-long learning’, ‘economic empowerment and social mobility as well
as promoting good governance and regional integration. Below we briefly
look at these objectives.
The acquisition of relevant knowledge, practical skills and

attitudes for gainful employment in a particular trade or occupational
area. This is the primary aim of TVET programmes. There is a clear
challenge of linking the training offered to employment by meeting the
labour specifications of industry and commerce.
‘Flexibility, adaptability and life-long learning’ is the second most
important objective of TVET. This has been necessitated by the rapid
changes in technology and globalisation. TVET programmes must be
able to respond quickly to supply the changing manpower requirements
that result from these changes
Economic empowerment and social mobility. The people of Africa
will be empowered when they are successfully trained and have become
skilled. They will be able to find jobs and even decide to be self employed
using the acquired skills.
Promoting good governanceand regional integration. This comes
from an acknowledgement that ‘the history of conflicts in Africa points
to a gaping lack of appreciation of basic democratic principles of political
tolerance and respect for human rights. ’AU TVET in Africa strategy
document: 2007; 33. The recommendation is therefore that all vocational
training programmes incorporate the teaching of ‘political and citizenship
skills such as participatory democracy, political awareness, attitudes to
authority, the rule of law, respect for human rights, social cohesion and
national reconciliation’ (AU TVET in Africa strategy document, 2007).
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Activity 4.1
1. Explain the concept of ‘technical and vocational education and training’.
? 2.
3.
Discuss the objectives of TVET programmes in Africa.
Examine the relationship between TVET and entrepreneurship.
4.3 The Scope TVET

Vocational education has diversified over the years to cover all areas of human
endeavour. Any vocation or trade has some education of some kind going on
to train people who can fill up different occupational positions. Traditionally,
vocational education was limited to: crafts like blacksmiths, motor mechanics,
steel and iron fabrication, electrical engineering and building; and cottage
industries like pottery, tailoring, basket weaving, baking and handicrafts. The
scope has since widened to include such vocations as retail, tourism, information
technology, funeral services, cosmetics, architecture and agriculture. In fact
the AU TVET strategy for Africa is to prioritise the following areas for TVET
programmes:
Agriculture and rural development: for countries like Zimbabwe,

agriculture is the backbone of the economy and, therefore, key to
economic development. Skills are, therefore, required for the application
of improved agricultural techniques and technologies to traditional
farming, improving soil fertility, agro-processing, food preservation and
storage.
Public health and water resources: TVET programmes in basic
healthcare, traditional medicine and public hygiene are necessary to
improve public access to healthcare, good drinking water, disease
prevention, sanitation and nutrition.
Energy and environmental management: training covers skills in
the development and use of alternative sources of energy (mainly
renewable), natural resources management and land development.
Information and communication technologies: emphasis is on basic
computer literacy skills, basic programming; network and data
management and computer hardware maintenance.
Construction and maintenance: vocational skills needed in such areas
as building and construction, electrical installation and maintenance, car
maintenance, welding and fabrication as well as agricultural
infrastructure.
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Indigenous and cottage industries. A diverse TVET system should

be able to accommodate structured vocational training programmes to
cover the traditional cottage industry activities. Skills acquisition should
be complemented by basic business management skills.
Good governance. Appropriate goverenance is quite critical for peace,
stability and, therefore, development in most African countries.
TVET is offered at various levels of education and by a variety of institutions
and sources. In general students enter the vocational education track after
primary school that is from secondary school right up to university. Formal
educational providers of TVET programmes include secondary schools,
vocational schools, polytechnics, apprenticeship training centres and private
enterprises offering apprenticeship programmes. Vocational training is also
offered in the informal sector. In Zimbabwe such skills are recognised after
the ‘graduate’ passes a trade test with the responsible government ministry.
Government efforts in TVET are complemented by private organisations
offering vocational education and training. In Ghana for example, in 2006, the
Catholic Church was the single biggest provider of TVET programmes with
58 institutions and over 10 000 students enrolled (AU TVET Strategy
Document; 2007).
Activity 4.2
1. Describe the scope of vocational and technical education with reference
? 2.
to examples from Zimbabwe.
Explain why ‘good governance’ has been included by the AU as a
priority area for TVET programmes in Africa.
4.4 Benefits and Challenges of Vocational and

Technical Education
Vocational and technical education has many potential benefits. However,
there are some challenges which have worked against the realisation of most
of these potential benefits. Here we look at both the benefits and challenges
of vocational and technical education.
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4.4.1 Benefits of vocational and technical education

The benefits of TVET can be determined from the objectives of the
programmes. In general TVET offers the following benefits:
Provision of skilled and ‘experienced’ manpower to industry and

commerce. This skilled labour will produce wealth that will develop the
country.
Closely related to the above benefit is the benefit of making available a
mechanism to respond quickly to the changing skills and labour
requirements during periods of economic change.
The graduates from TVET programmes can decide to start small
businesses, thus contributing to economic production and employment.
The social standing of the graduates themselves will also be enhanced
by the qualifications and the earnings they get from formal or self
employment. This is basically economic empowerment and social
mobility.
The current thrust of including ‘good governance’ on the TVET
programmes agenda also encourages peace and stability within African
countries. This encourages both domestic and foreign investment
(1997 UNESCO International Standard Classification of Education)
4.4.2 Challenges in technical and vocational education and

training
As we have noted above, the benefits of technical and vocational education
have remained largely elusive in most African countries. This is because of a
number of weaknesses and challenges which we now discuss:
Weak national economies characterised by low economic growth,

low per capita incomes, high population and labour force growth and
high unemployment rates. The poor economic performance and the
high growth rate in population and labour force create the problem of
serious unemployment. This means graduates from TVET programmes
cannot be absorbed anywhere in formal employment. Most take their
chances in informal employment where the incomes are generally low.
World Bank estimates put the annual number of young people joining
the labour force in Africa at between 7 and 10 million (Johansson and
Adams, 2004).
Shrinking or at best stagnant employment opportunities in the
formal sector
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Huge numbers of poorly educated, unskilled and unemployed

youths.
Educated but unemployed college graduates
Uncoordinated and fragmented TVET delivery systems. In most
African countries TVET programmes fall under different ministries
including Ministries of Labour, Industry and Commerce and Education.
Resources are, therefore, not shared and the programmes are poorly
coordinated and articulated
Poor quality training. The quality of training is generally low with
undue emphasis on theory and certification rather than on skills
acquisition and proficiency testing. The problem is compounded by
inadequate instructor training and motivation, obsolete training equipment
and insufficient instructional material.
Geographical, gender and economic inequities. The paradox that
arises is that the communities and people that most need the TVET
programmes for development have no access to them by reason of
prohibitive costs and geographical distance.
Poor public perception of vocational education. The perception that
TVET is for the academically inferior and ‘dropouts’ means that there
is general lack of support for programmes by parents and communities.
This perception has been perpetuated by low pass entry requirements
and the high levels of unemployment among the TVET graduates.
Programmes are ‘supply’ driven as opposed to ‘demand ’driven.
What this means is that no one is monitoring the skills requirements of
industry and commerce before designing training programmes. The result
is that some of the graduates are unemployable after training.
Inadequate funding. TVET programmes are of necessity expensive.
Few governments are willing and able to fully fund such programmes.
Ghana for example only spends 1% of its educational vote to fund
TVET programmes (AU TVET strategy document: 2007).
Poor management and ill-adapted organisational structures. The
diverse TVET management structures and the sharing of supervisory
responsibilities by various government bodies and ministries account
for some of the inefficiencies in the system like duplication and
segmentation of training and the absence of a common platform for
developing coherent policies and joint initiatives.
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Disruptions of TVET programmes by wars and political

instabilities. This would explain why good governance is now
prominent in AU programmes in general, including TVET programmes.
You will do well as a scholar to think of any other weaknesses and challenges
that may have faced vocational and technical education in Africa in general
and in your country in particular.
However, it is important to note previous initiatives such as the F2 Ssytem of

education in Rhodesia (pre-independent Zimbabwe) well focused on vocational
and technical education and training, offering practically and technically oriented
skills. Today, many graduates of the F2 System of education have since started
and excelled in different areas of business in Zimbabwe and beyond; operating
as entrepreneurers.
Activity 4.3
1. Discuss the benefits that can accrue from effective TVET programmes.
? Explain why most of these benefits have not been realised in most
African countries.
2. Examine the challenges of TVET programmes discussed above and
suggest how the challenges may be addressed.
3. What do you envisage to have been the major strengths and challenges
of the F2 System of Education in Rhodesia?
4.5 Enhancing TVET Programmes Through

Entrepreneurial Education
The role of the entrepreneur in the economy is amply demonstrated by some
telling statistics from the United Kingdom and the United States of America.
In the UK, for example, of the 3700000 enterprises that were operating in
1999, only 7000 were large firms (employing more than 250 employees) and
24000 were medium sized (employing 50 to 249 employees). The rest were
small businesses (employing up to 50 staff), created by entrepreneurs. These
small businesses accounted for 38% of national income (Hawkins, 2001).
This importance is most probably the result of deliberate efforts made within
that country of encouraging entrepreneurship growth. One way was
entrepreneurship education as it was felt that there was ‘justification for
exposing all students to the components of enterprise skills and to provide
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those who wish to explore related areas in greater depth with support and
encouragement to do so’ (Ward, 2007).
Entrepreneurship education was also gaining momentum in the USA at a about

the same time as Solomon et al (2002) commented: ‘entrepreneurial education
has become one of the hottest topics in the U.S business and engineering
schools. The number of schools teaching a new-venture or similar course has
grown from a few or so dozen 20 years ago to more than1600 at this time’.
We believe the numbers are even higher now. The results of those efforts are
that many new small firms are being registered each year. In 1995 for example
807000 new firms were registered to operate businesses in the USA (Reynolds
et al, in Kuratko, 2003). We believe these programmes to teach
entrepreneurship can be adopted and adapted and applied by educational
institutions in general and to vocational programmes in particular. Business
educators and professionals now agree that entrepreneurship can be taught.
They have evolved beyond the myth ‘that entrepreneurs are born and not
made’.
We agree with Peter Drucker’s contention when he said ‘the entrepreneurial

mystique? It’s not magic, it’s not mysterious, and it has nothing to do with
genes. It is a discipline, and like other disciplines, it can be learned’ (Drucker,
1985). The European Union has adopted a coordinated approach to
entrepreneurship education in all educational institutions. A communiqué from
the Commission of the European Communities titled ‘Implementing the Lisbon
Programme: Fostering Entrepreneurial Mindsets through Education and
Learning’ reveals some possible approaches that can be adopted and adapted
to engender entrepreneurship education in TVET programmes. Some of the
general strategies and approaches include:
Entrepreneurship competence should be acquired through ‘lifelong

learning’. It must, therefore, be taught from elementary school right up
to university, including and in particular vocational and technical
institutions.
In Poland, ‘Basics of Enterprise’ is a compulsory subject in all secondary
and vocational schools.
Entrepreneurship and self-employment are adopted as the key aims of
vocational secondary education.
In Austria, entrepreneurship is part of the curriculum of secondary level
technical and vocational education. The students run a fictitious company
as part of their learning.
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An open mindset towards entrepreneurship is promoted through the

following practical and ‘hands-on methods; working on projects, doing
simple case studies, role games and visits to local enterprises.’
Students are expected to take part in the ‘Young Inventers Competition’
were students use creativity to generate ideas and develop them and
enter them into the competition. Prizes are awarded for great ideas.
Specific training on ‘how to start a company’ is given for all vocational
secondary education.
In Germany, vocational training runs on a ‘dual system’ where training
takes place both in the classroom at school and at an operating enterprise.
Entrepreneurship training is systematically integrated in all scientific and
technical studies at universities and technical colleges. This enables
innovative business start-ups.
Deliberate efforts are made to support schools and teachers and to
incentivise them.
National plans need to be put in place to guide entrepreneurship
education in the country and the plan must be coordinated by one
supreme body or organ
(Drucker, 1985).
The approaches discussed and suggested here for adoption and adaptation
are ‘tried and tested’ so to speak. We believe they can be used to enhance
the effectiveness of TVET programmes in Africa. In countries such as
Zimbabwe where Management of Business in one of the high school subjects,
we recommend that the subject be expanded to start from primary school
right up to university education.
Activity 4.4
1. Describe how entrepreneurship education can be used to enhance the
? effectiveness of TVET programmes in Zimbabwe. Use relevant
examples in your narration.
2. Discuss the kind and form of support that should be rendered to
institutions and instructors involved in vocational and technical
education.
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4.6 Case Study: How Entrepreneurship Can Be

Incorporated into a Study Programme
We end this unit by showing how entrepreneurship education can be
engendered in education. We take the case of the University of York where
the electronics department has successfully incorporated entrepreneurship
education in its four year electronics engineering degree programme. The
programme is being funded by the White Rose Centre for Enterprise (WRCE).
The WRCE is a British organisation to the development of entrepreneurship
in Britain. It was working on this project in collaboration with the three
universities of Leeds, Sheffield and York. The aim of this particular case study
was to support the general York University desire to develop entrepreneurship
competence within undergraduate students by introducing 100% of the students
to the foundations of entrepreneurship. The course was structured as follows:
First year: general introduction through an experimental approach. The

students do a course called ‘transferrable skills and laboratory practice’.
Under the course, students undertake a group project to foster team
work. They also get instruction and practise in report writing, public
speaking, information searching, and creative problem solving and
working in teams. The students also make a business plan to launch a
new product. Students are expected to apply these to support their
main degree programme.
Second year: two courses taken, Business Economics and Engineering
Design and Quality.
Third year: courses in marketing, accounting and finance, people and
quality and information and e-commerce. Master of Engineering students
also do another group project with a high degree of business orientation.
Fourth year: advanced courses in managing change, manager and the
law and information and people.
From this case study, it can be seen that the WRCE objective of embedding
entrepreneurship into the core subjects within each academic department is
quite feasible. TVET programmes can adopt and adapt this general model.
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Activity 4.5
1. Describe how entrepreneurship can be incorporated into an education
? 2.
study programme.
Describe how you would incorporate entrepreneurship education in
the vocational curriculum of a 4 year course in motor mechanics.
4.7 Summary
In this unit, we discussed vocational and training education. We pointed out
that vocational and technical education has the potential to help towards the
economic development of the country. We discussed the challenges with TVET
that were observed by AU in its strategy report on TVET. We then stated
that some of the challenges can be addressed by introducing entrepreneurship
education into TVET programmes. We gave some pointers on how European
Union countries are carrying out their own educational programmes. We ended
with the case study of how the electronics department at York University has
adopted entrepreneurship education in its electronics degree programme. We
go on to Unit 5 where we discuss how entrepreneurs can find new business
ideas and develop them to potentially profitable ventures.
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References
African Union Conference of Ministers of Education (May 2007). Report on
‘Strategy to Revitalise Technical and Vocational Education and
Training (TVET) in Africa’. Addis Ababa.
Commission of the European Communities: Communiqué on ‘Implementing
the Community Lisbon Programme: Fostering Entrepreneurial
Mindsets through Education and Learning’ on: www.europa.eu.int
Drucker, P. (1985): Innovation and Entrepreneurship' Oxford: Butterworth.
Hawkins, L. (2001). Fundamental Productivity Improvement Tools and
Techniques for SMEs: Loughborough; Pera House.
Kuratko, D. F. (2003). Research article: ‘Entrepreneurship Education:
Emerging Trends and Challenges for the 21st Century’: Coleman
Foundation white paper series.
Solomon, G. T, Duffy, S. and Tarabishy, A. (2002). Article ‘the state of
Entrepreneurship Education in the United States: A National Survey
and Analysis’ in: International Journal of Entrepreneurship Education
1 (1).
Ward, A. (2007. Research article; ‘An Integrated model of Entrepreneurship
and Intrapreneurship’: on www.york.uk
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Unit Five
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Entrepreneurial Business Idea

Generation
5.0 Introduction
I n the last unit, we discussed vocational and technical education. We

described the nature, aims and potential benefits of vocational education
and gave examples from Zimbabwe and elsewhere. We also examined the
challenges of vocational education in general and made some specific references
to Zimbabwe. We presented the argument that vocational and technical
education can be enhanced by entrepreneurial skills development within
vocational training programmes. We gave an example of how entrepreneurship
has been integrated into degree programmes at York University in the UK
and expressed our conviction that the model can be adopted and adapted in
our schools, teacher training colleges, vocational training centres and
universities. Our general argument still remains that our country needs to
stimulate, encourage and nurture the spirit of entrepreneurship.
The economic development of the country and a high quality of life for its
citizens may well depend on that. In this unit, we go practical. We assume that
our educational institutions have done their work well and produced graduates
with entrepreneurial skills who are geared to go into business as entrepreneurs.
The question is how do they move forward? We provide part of the answer
to that question in this unit by saying that they have to find a viable business
idea. In this unit we focus on how and where to find business ideas, how to
vet the ideas and how to evaluate and test the business ideas to minimise
chances of business failure in future. We also give a general pointer on what to
do with the tested business idea.
5.1 Unit Objectives

list the possible sources of entrepreneurial business ideas

discuss the ways business ideas can be sourced and chosen
describe the business idea generation model
explain how business ideas can be evaluated
state the possible ways a potential entrepreneur can actually go into
business with his viable idea
discuss the relevance of business idea generation to education
5.2 Sources of Business Ideas

The basis of idea generation is to see how one can provide value to consumers
by supplying a product that will satisfy aneed within the market. Naturally, the
business idea should come from the people themselves. Potential entrepreneurs
should therefore pay attention whenever they interact with people. They should
listen when people talk, when they complain, wish, commend and when they
marvel. It is from this talk that their needs may be expressed and an idea
born. In an article written for Lifedestiny.net, Tanner (2010) identifies four
principal sources of business ideas that we now consider: external market
opportunities, employees, customers and mastermind groups.
5.2.1 Employees, external market opportunities

This means importing an idea from a market external to yours. A potential
entrepreneur may visit abroad and see a product or service that is being offered
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Unit 5 Entrepreneurial Business Idea Generation
in the foreign country. He/she can then adopt the idea and replicate it in his
own market. Some adaptations may need to be made to the product to suit
local circumstances. The logic of this approach is that if the product has been
accepted and is doing well in another market, there is high likelihood that it
will also be accepted in another market. The principle of innovation diffusion
also implies that the idea of importing ideas and adopting them in other markets
will work. An innovation cannot start everywhere at the same time. An
innovation starts from one place and then spread to other places within the
country and indeed abroad through various channels and methods. Importing
a working idea from another market is therefore only speeding up the
innovation diffusion process. Entrepreneurs therefore need to very observant
as they move in foreign markets. They may well find a gem of an idea they will
be first to bring home and develop it to a profitable business.
5.2.2 Employees
Another useful source of business ideas is employees. If a potential entrepreneur
is employed, he/she can pay attention when fellow workers talk and besides
expressing their wishes and aspirations as individuals, workers will also talk
about work related matters. They may talk about product shortcomings which
the entrepreneur can work on and offer as an improved product from his own
business. Workers also complained about production methods and systems.
The entrepreneur can make improvements to the systems and methods and
supply the same product to the market, only this time the product will be
superior or cheaper or both. Getting ideas from workers is not only applicable
to fellow employees who are looking for opportunities to go into business for
themselves. Even the employer can also benefit. As a current entrepreneur,
he/she can listen to the ideas, get suggestions on how they can be solved and
offer better products to the market after that. In fact, progressive entrepreneurs
should have a mechanism within their businesses of taping into employees’
ideas. This ensures constant improvements to products and processes for the
business.
5.2.3 Customers
Customers are perhaps the biggest potential source of new business idea.
They are actually the buyers, so what they say they want will most likely be
supported by their purchasing might. Like employees, customers hint on
business ideas when they complain or comment about products, service, prices
and even where they are getting the product. As a worker with ambitions to
become an entrepreneur, one must listen carefully, seek clarifications from the
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complainants and see if improvements can be made and better products offered
to the market in competition to your previous employer. As already noted
above, current entrepreneurs also need to listen to their customers to find out
what they need and how they want to be served. There may be opportunity
for additional services or products to be added to the current portfolio. It
may even lead into a whole new sector business for you to start. The customers
who complain or comment need not be related to you or your company. One
canlisten to comments and complains made by other suppliers’ customers.
This may be in a bank queue or supermarket queue. The point we make is
that potential entrepreneurs must keep their ‘antennae’ tuned for possible
business ideas wherever they are.
5.2.4 Mastermind groups

An entrepreneur seeking business ideas can put together a mastermind group
for the purpose of discussing perceived needs and how they can be met. In
this age of the internet, the mastermind group need not even meet face to
face. Social media facilities which make use of the internet, like ‘face book’
and ‘twitter’ can be used for such purposes. It is quite conceivable that new
business ideas will come up that can be explored for development into viable
business.
It is opportune to mention at this juncture that all ideas generated from the
above four sources can be classified into three types of ideas. Longenecker,
Moore and Petty (1997) referred the three groups as types A, B and C ideas.
Type A ideas are those that concern providing customers with a product or
service that does not exist in their market but already exists somewhere else.
Type B ideas relate to the development of completely new products, usually

using new technology.
Type C ideas are those that relate to the supply of the same old products and
services but in much improved forms and using improved methods. These are
sometimes referred to as ‘me too’ products and services.
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Activity 5.1
1. List the four principal sources of business ideas. Explain how employees
? 2.
are a source of business ideas.
Identify the ideas related to the ‘business’ of education that a school
head can glean from interacting with his ‘customers’. Discuss how the
ideas can be used in the school to improve the ‘services’ it offers and
the ‘products’ the school produces.
5.3 Guide to Choosing Business Ideas

Cobweb Information (2007) has produced a comprehensive guide for
entrepreneurs to use in finding and choosing business ideas. The ideas presented
in this guide are meant to help our minds to identify opportunities as we explore
the four principal sources discussed above. The ideas also help in selecting
the business ideas to consider for further examination from the plethora that
can come to the attention of the entrepreneur. We remind students again that
all businesses must satisfy a customer need or provide a solution to a customer’s
problem. The suggestions in this guide may help entrepreneurs in thinking
practically about the products or services they can offer.
Use your existing skills and experienceThe skills and work

experience that we have can guide potential entrepreneurs to possible
business ideas. The viable way to use these personal assets would be
to supply an adapted product or service to niche market. Thus, for
example, an experienced and skilled dressmaker can focus on making
and selling wedding and party dresses. By serving an adapted product
to a niche market, one avoids direct competition with established
businesses and also concentrates energies and resources to a
manageable scale of operation.
Consider your personality Some personalities suggest certain business
options. A sociable person who likes dealing with people may consider
going into retailing, whilst a talkative and persistent person may consider
becoming a free lance sales person for some other company.
Examine your hobby There is scope to turn hobbies into viable business
ventures. This makes your work enjoyable. This blends in perfectly
with the general entrepreneurial characteristic of ‘doing what they love
and loving what they do’. Thus, for example, the person who enjoys
making cakes as a hobby can instead start a specialist cake-making
business for weddings, anniversaries and company celebrations.
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Think of what is missing in the local market Think of products and

services that people complain about or some inconveniences that you
go through because of the absence of some product or service. With
the incessant power cuts in Zimbabwe for example, some enterprising
entrepreneur may be considering the aggressive marketing of solar
lighting and energy solutions to urban dwellers.
Study social trends Some current social trends may create business
opportunities.For example, the general increase in the number of single
people may suggest the business idea of establishing a social forum for
singles to meet and form relationships.
Look for opportunities in tourism and leisure Where incomes are
improving, there tend to arise business opportunities within tourism and
leisure. Coffee shops, curio and artefacts, stands and outdoor activity
centres come to mind.
Exploit new technology Some modern consumer habits lend
themselves for exploitation by astute entrepreneurs. For example, the
cell phone ‘crazeness’ has created business opportunities to offer
information, ringing tones, jokes, music and even news through cell
phone networks. The internet invasion on the other hand, also presents
its own opportunities in the form of services to design web pages for
instance.
Supply to large companies, municipalities and other institutions
There are always business opportunities to supply goods and services
to large companies, municipalities and social institutions like churches,
hospitals and school. An enterprising entrepreneur can find ways of
breaking into such huge markets as a supplier. Dealing with such
organisations obviously requires that the business be properly registered
and licensed and be competent to follow laid down tender procedures.
Think of becoming a free lance sales person or distributor for
some companies There is great scope for being a distribution agent
for both foreign and local companies. An enterprising entrepreneur
approaches the sales department of large local companies to negotiate
such deals. Information on foreign companies which may require similar
services can be obtained from the local embassies of the
countriesconcerned. Besides the distributorship agency, some local
manufacturer may require delivery services for their orders to their
customers. This is another opportunity area available to deal with large
companies.
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Watch the news Newspapers, magazines, discussion forums, blogs

and e-zines are all fruitfulsources of new and emerging trends and
problems that need solutions. Also, study the classifieds section of the
newspapers for products and services that are on offer whose ideas
can be adopted and adapted.
Cash in on current trends. Consumer tastes and needs are changing
all the time due to changing demographics, advertising influences and
globalisation. Some trends that come up create opportunities for the
provision of goods and services. Concern withhealth has created a
market for health foods, organically produced fruits, vegetables and
animals and exercise and weight loss equipment. A potential
entrepreneur must get his share of such opportunities.
Copy business ideas that have succeeded elsewhere
Keep up with changes in the law. New laws tend to create business
opportunities. This is through the administration and compliance
procedures that will normally be required. Opportunities come in the
form of consultancy services to explain and implement new requirements
and the supply of equipment that may then be required. The change
over from sales tax to VAT created many consultancy opportunities in
2003 when the changeover was introduced. We also have arecent law
that requires retailers to install new point of sale equipment that enables
the tax department to know what VAT has been collected by the retailer
at any one time. The supply of such equipment is a possible business
opportunity.
Consider buying an existing business There are always some
businesses that are being offered for sale. Newspapers are good source
of information of this nature. Due diligence, however, needs to be
exercised before committingoneself. It is particularly important that the
entrepreneur carries out due research to find out why the business is
being offered for sale and a status of assets and liabilities.
Consider joining a franchise There are opportunities for joining a
business franchiseof one’s choice and enjoying potential instant business
success. The entrepreneur, however, needs to balance the benefits
against the possible constraints on independence and innovation. We
have already noted that independence and innovation are key elements
of entrepreneurship.
Use extensive research An entrepreneur may also use all available
sources of information to find ideas and gaps in the market that will
need fulfilling. Surveys carried out by Government agencies and private
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bodies can supply this information. Networking and attending business

exhibitions also provide information on what products and services need
to be supplied.
Provide a service that builds the community The entrepreneur can
also look for opportunities within the communities in which they live by
co-ordinating community work programmes. Organised groups can
engage in drain clearing, refuse removal, community sports teams and
choirs. Such community services may, however, need to be
supplemented by a donor or sponsor.
Look out for potential labour shortages The current trend where
today’s youth shun manual trades in preference for white collar
employment is another source for opportunities for business ideas. The
shortage of skills is of the traditional trades like plumbers, electricians,
farm labourers and motor vehicle mechanics. An enterprising
entrepreneur can explore the possibility of starting a business that can
fill this skills shortage challenge. This kind of opportunity is, however,
more applicable to fairly affluent economies with reasonable rates of
unemployment.
Cash in on the ‘time poor’ The demand on time of modern existence
has made some people so busy that they fail to find time to service
themselves and their families. This creates possible business ideas for
the astute entrepreneur who wants to cash in on this lack of time. All
sorts of business ideas come to mind, including simple ones like dog
walking, shopping, and picking up children from schools, baby sitting
and more complex ones like child day care centres.
Consider inventing something new There is always scope to create
something new inresponse to needs on the market. Statistics from South
Africa, for example, show that on average 80 patents are issued every
month by the Companies and Intellectual Property Registration Office.
This is a reflection of the number of potential new products being
invented. In trying to invent something new, one can be guided by existing
products to make different ones that perform the same functions.
Trust to serendipity Longenecker et al (1997) make an interesting
addition to the list by including‘accidental discovery’ as a source of
business ideas. Some business ideas are seemingly just thrust into the
laps of some entrepreneurs. The entrepreneur must, however, be tuned
to identify the opportunity as an opportunity and accept is as such.
‘Search the dark cloud for the silver lining’ To the list, we add our
own, opportunities that come hidden in business and social catastrophes.
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In bankruptcies, retrenchments, liquidations, divorces and even

accidents, some vital needs always arise which have to be satisfied by
the supply of a service or some goods. Some vigilant entrepreneurs are
aware of this and they cash in on such opportunities.
Activity 5.2
1. Identify the new technological innovations taking place within the
? educational sphere and explain how they present entrepreneurial
opportunities.
2. ‘Every dark cloud has a silver lining’. Using illustrations and examples,
discuss this statement in the context of sources of entrepreneurial ideas.
5.4 The Business Idea Generation Model

We have given above, a long list of sources that can be used by a potential
entrepreneur to get business ideas. This has laid the foundation for the next
critical stage of actually identifying a business idea that one feels comfortable
with to pursue as a business venture. The Ethiopian Business Development
Services Network (EBDSN) with the support of the German Technical
Cooperation (GTZ) has developed a comprehensive model for business idea
generation (EBDSN, 2004). This is the model we discuss for most of the
remaining part of this Unit. According to EBDSN, idea generation should
pass through four stages, each following the other sequentially. It is not feasible
to proceed to the next stage until the results of the previous stage have come
out satisfactorily. The stages, which we will discuss below, include:
Screening of viable business ideas. This involves assessment of

entrepreneurial skills and characteristics, brainstorming of business ideas
and selecting of three business ideas.
Selection of one business idea. This involves the screening of the three
business ideas from the previous stage and selecting the seemingly best
idea.
Test of selected idea against relevant critical success factors (CSF’s)
Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis
of the selected business idea.
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5.4.1 Self- assessment of entrepreneurial skills and

characteristic
Before the entrepreneur selects a business idea, he has to be reasonably satisfied
that he possesses the relevant entrepreneurial skills and characteristics needed
for the venture. He can do that self administration of the self-assessment tool
described in Unit 3 above. The assessment tool is given below.
Table 5.1: Assessment of Entrepreneurial Characteristics
Characteristics Strength Weakness
Skills
• Practical ability to produce the product _____ _____
• Business management skills ______ ______
• Knowledge of your line of Business: ______ ______

market, competitors, suppliers
Personal characteristics and situation
• Commitment ______ ______
• Motivation
• Readiness to take risk ______ ______
• Making decisions ______ ______
• Family situation ______ ______
Financial situation ______ ______
Total number of strengths and weaknesses ______ ______
Are Your Strengths Greater Than Your Weaknesses? Yes _____ No______
Source: Robbins and Coulter (1999)
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Where weaknesses have been noted, plans must immediately be put in place
to eliminate them or to improve them. This can be through training, seeking
help from friends and family, referring to relevant literature or observing a
successful entrepreneur. The advice from the results of the self assessment
tool is not to go into business when the characteristics that determine business
success are significantly unfavourable. Only after the entrepreneur has taken
the necessary steps to strengthen himself and feels comfortable to go into
business will he proceed to the next stage of brainstorming.
5.4.2 Brainstorming
Brainstorming is a business idea generating process that has been described
as encouraging alternatives while withholding criticism (Robbins and Coulter:
1999). In this case, the entrepreneur chooses up to 10 business ideas through
a brainstorming exercise. The entrepreneur just picks ideas that appear viable
and feasible from his personal point of view. A typical brainstorming exercise
would involve 6 to 12 participants. In this case, the entrepreneur may do the
exercise alone. It is, however, permissible to work with family and friends if
possible or the mastermind group referred to above. The entrepreneur is guided
on what ideas to include in the selection by the sources of business ideas
described above. After this brainstorming exercise, the entrepreneur critically
examines the 10 business ideas and selects what he believes are the best
three ideas in terms of profitability and feasibility.
5.4.3 Screening the three ideas

This screening stage is more technical as it involves comparing the three selected
against set parameters. The parameters may include availability of demand,
personnel, tools and equipment, raw materials and the strength of available
competition. A system of scoring is designed to rate each idea against each of
the defined parameters. The strength of competition will logically have a negative
score. The net scores for the three ideas are compared and the one with the
highest score is deemed selected for further testing, screening and refinement.
It is easier to make the comparison of the scores of the three business ideas in
tabular format as shown in Table 5.2 below.
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Table 5.2: Second Stage Screening of Ideas.
Ideas Idea No. 1 Idea No. 2 Idea No. 3
Parameters
Availability of: Demand

(+) ______ ______ ______ Personnel (+) ______ ______
______ Tools/equipment(+) ______ ______ ______ Raw
materials (+) ______ ______ ______ Sub-Total ______
______ ______ Competition (-) ______ ______ ______
Net score ______ ______ ______
Scoring system: 5-very high, 4-high, 3-average, 2-fair, 1-poor, 0-absent
Source: Cobweb Information (2007)
5.4.4 Evaluation against Critical Success Factors (CSF)

The screening stage process above gives the entrepreneur what can be
considered to be a very good idea. A good idea is, however, not necessarily
a good investment opportunity. The idea now needs to be tested against
relevant critical success factors to see if it is a good investment opportunity. A
critical success factor, as the name implies, is a factor that is very important
for the success of that particular business. It, therefore, means that if the
factor is missing or inadequate or is not properly taken into account, the result
can be total failure of the envisaged business. The critical success factors
included by the EBDSN relate to the market, supplies, infrastructure,
management, financial matters and social and political matters. We have,
however, adopted the factors used by Timmons (1994). Timmons
recommended that the start up business venture be evaluated by five criteria.
We have summarised the criteria in the Table 5.3 below.
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Table 5.3: Evaluation Criteria for a Start up Venture
CRITERION (CSF) ATTRACTIVENESS
Favourable Unfavourable
Marketing Factors
• Need for product well defined unfocused
• Customers reachable, receptive unreachable, not loyal
• Value creation significant not significant
• Life of product long short
• Market structure Emerging industry mature or declining
• Market size Large. Above min. Small. Below min.
• Market growth rate High.> 30%/annum low or contracting.<10%
Competitive Advantage
• Cost structure Low cost producer no cost advantage
• Control over price average to strong nonexistent
• Barriers to entry moderate to high. nonexistent
• Contacts & networks well developed limited
Economics
• Return on inv. Durable. >25% fragile. <15%
• Inv. required small to moderate Large.
• Time to B-E Profit Less. <2years High. > 3years
Management skills Skilled &experienced little
Fatal flaws none one or more
Adapted from: Timmons (1994: pp93/94)

The critical success factors are listed in the table. The venture is measured
against each CSF to determine whether it is favourable or unfavourable. If for
instance most of CSF’S are favourable (including the ‘fatal flaw’), then the
idea has passed the test and now be subject to a SWOT analysis, the final
stage in the idea generation process.
5.4.5 SWOT analysis evaluation

A SWOT analysis; an acronym for Strengths, Weaknesses, Opportunities
and Threats of the business proposal is the final test and last stage of the
business idea generation model. A SWOT analysis compels the entrepreneur
to critically examine both the external environment of the business as well as
the internal aspects of the business itself. From the examination of the external
environment of the business, opportunities and threats are identified. The
strengths and weaknesses are identified from an analysis of the internal aspects
of the business. A SWOT analysis examines all the factors that were used in
the CSF analysis of the project as well as some other qualitative elements.
The business is analysed against all these factors to determine the strengths,
the weaknesses, the opportunities and the threats.The following factors are to
be considered in carrying out the analysis.
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Table 5.4: SWOT analysis checklist
Financial Aspects Physical Aspects
• Capital of owner • Buildings
• Projected cash flow • Workshop and machinery
• Access to additional resources • Technology/incubator parks
• Investment required • Location
• Profitability • Transport facilities
• Risk • Infrastructure and utilities
Monument and Operator Capabilities Market
• Management competency • Profile of target market
• Age/experience • Competitor’s marketing Strategy
• Skills availability • Market share
• Technical know-how • Product features/ quality
• Management contacts/network • Expanding or contracting?
• Salesmanship of owner/staff • Demand/supply situation & history
• Personnel Management Supply of Raw Material
Information • Are sources adequate and good
• Is necessary info available • New material available?
• Is info available on time to be used? • Future supplies?
Social Environment Production Process
• Are people accepting the product • Mass production?
• Any prejudices for product? • Labour intensive?
• Job order or continuous production?
Source: Timmons, J.F., 1994
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After the examination and the identification of the strengths, weaknesses,

opportunities and threats, action needs to be taken for each of the identified
elements of the SWOT, particularly weaknesses and threats. An example
of‘strength’ would be: Owner has sufficient financial resources from
investments on the money market. An example of a ‘weakness’ would be:
Owner has no technical knowledge of industry of interest. Corrective action
may include intensive training and exposure and employing experienced
assistant. An example of an ‘opportunity’ would be: the market for a product
is set to grow with the establishment of 500 new residential stands in the area
soon. The action to take may be to establish the business and consolidate the
business before other operators come. An example of a ‘threat’ would be:
the sole supplier of the major raw material is citing viability problems and
wants to increase prices significantly. The action to take would be to consider
importing and even selling the excess of requirements to other producers. We
must point out here tha, if the threats and opportunities from the analysis
cannot be addressed, then it is advisable to abandon the project idea and
start the process all over again with another set of ideas. If on the other hand,
the weaknesses and threats can be addressed satisfactorily, then an idea will
have been successfully generated and the entrepreneur ready to pursue it to
implementation. Whilst the implementation of successfully generated ideas is
beyond the scope of this unit, it is important to make the following pertinent
statements about the exercise.
The idea is further tested and refined in a feasibility study. External

consultants may be called in if it is necessary. The extent and intensity
of this feasibility study depends on the value of investment involved.
Implementation is generally through four approaches. These are: start-
up of a completely new business, buying an existing business, entering
a franchise relationship or entering into a family business with the idea.
However, the typical entrepreneurship route would be starting a new
venture for the project.
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Activity 5.5
1. Outline the various stages in the idea generation model and discuss the
? 2.
particular importance of the brainstorming stage.
A Secondary School Head decides to do a school project to make
and sell school uniforms. He now wants to do a SWOT analysis. State
the factors he should consider. Describe a brief SWOT analysis that
the Headmaster may produce and make some practical
recommendations of how the weaknesses and threats can be addressed.
5.5 Relevance of Business Idea Generation to

Education
The contents of this unit are of practical relevance to education in a number of
ways. The following are some of the more important ones.
School administrators are presented with a practical guide on what

skill and knowledge need to be passed on to students if we are to
develop a culture of entrepreneurship in Zimbabwe.
The school administrators can themselves apply the tools and models
given in their work at school. The assessment of the viability a school
income generating project for example will draw from information given
in this unit.
The unit also serves as a constant reminder that our educational institutions
need to be viewed and managed as business units. Any information and
knowledge on business is therefore important.
5.6 Summary
In this unit, we described how business ideas are generated. We started off
by giving a guide on where the ideas can be sourced. We then went on to
describe how these ideas can be vetted and tested before they are accepted
as worthy of pursuing as a business venture. We also showed how the
knowledge of business idea generation can be relevant to education. We now
move on to look at the strategic topic entrepreneurial strategy formulation. An
overall business strategy is what the entrepreneur now needs to go into business
with the viable idea he/she has just generated.In Unit 6 we, therefore, discuss
business strategy formulation and the related concepts.
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References
Cobweb Information (SA: 2007). 20 Tips to Help You Choose a Business
Idea; on: www.cobwebinfo.com
Kidane, T. (Editor: 2004). Toolkit: Start and Improve your Business: Addis
Ababa; Ethiopian Business Development Services Network (EBDSN).
Kotler, P. (1999) Marketing Management: Analysis, Planning,
Implementation and Control. New Jersey: Prentice Hall.
Longenecker, J. G., Moore, W. M. and Petty, J. W. (1997). Small Business
Management: An Entrepreneurial Emphasis Cincinnati: South-
Western College Publishing.
Robbins, S. P. and Coulter, M. (1999). Management: Boston; Prentice Hall.
Tanner, M. (2010). Article: ‘How to Find Viable Business Ideas.’ On:
www.lifedestiny.net
Timmons, J. F. (1994). New Venture Creation Homewood: Irwin.
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Unit Six
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Entrepreneural Strategy
Formulation
6.0 Introduction
I n the previous unit, we looked at the generation of a business idea and its
relevance to education. This unit introduces you to ‘entrepreneurial strategy
formulation’, which is a broad subject in entrepreneurial practice. In the fast-
growing business world and fast-moving markets in which the hospitality,
tourism and leisure industries operate, organisations and independent
entrepreneurs need to formulate and select effective strategies. They also
need to constantly review them and to look to the future as well as take care
of present entrepreneurial circumstances.
In this unit, we begin by defining strategy formulation, in order to lay a

foundation for your understanding of its importance in entrepreneurship and
relevance to education. We first of all define the term ‘strategy’ and move on
to ‘strategy formulation’ as the two basic concepts are key to our
understanding of the study field of entrepreneurial strategy formulation. In
entrepreneurial strategy formulation, the need to identify and spell out how
human, financial, material and other resources are utilised as well as the business
plan is also very critical, hence, we explore these issues in this unit.
6.1 Unit Objectives

define the concepts of ‘strategy’ and ‘strategy formulation’

discuss the relevance of strategy formulation to organisations
describe the three aspects of strategy formulation
analyse the significance of resource utilisation in entrepreneurial strategy
formulation
outline the business plan and its relevance to education
examine the broad relevance of entrepreneurial strategy formulation in
organisations with special reference to the education enterprise
6.2 Defining ‘Strategy’ and ‘Strategy Formulation in

Entrepreneurship’
In order to conceptualise strategy formulation better, there is need to first
look at what strategy entails. According to Porter (1985), strategy is generally
defined as a plan that prescribes resource allocation and other activities for
dealing with the environment and helping the organisation attain its goals. It
can also be viewed as a road map or guide by which an organisation moves
from a current state of affairs to a future desired state. Strategies can both be
‘patterns from the past and plans for the future’ (Mintzberg, 1989). Mintzberg
goes on to say that the concept of strategy can not be isolated from the people
whose commitment is needed to carry out the plans and the business
environment within which the strategy is to be applied. For Williams (2002),
a strategy can also be viewed as a source from which organisational decisions
are made and a tool from which long-range future plans and courses of action
are constructed.
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Unit 6 Entrepreneural Strategy Formulation
Strategy formulation entails a set of decisions and actions used to formulate

and implement strategies that will provide a competitively superior fit between
the organisation and its environment so as to achieve organisational goals
(Daft, 2007). It is important to note that strategy formulation is an aspect of
strategic management which entails the stage of strategic design that involves
the planning and decision making. It is also seen as the process of determining
appropriate courses of action for achieving organisational objectives and goals.
According to Porter (1985), strategy formulation is the task of analysing the
organisation’s internal and external environments and selecting an appropriate
strategy that instrumental in achieving organisational goals.
The entrepreneurial strategy formulation school prescribes strategy formation

as a visionary process which focuses on a business concept attainment in a
person’s head (Minzberg, 1989). The idea of entrepreneurial strategies is all
about making intelligent and risky judgments as to the best way forward from
amongst an infinite number of entrepreneurial alternatives. Entrepreneurs also
need to consider from the onset, the strategy of operating outside of the
traditional organisational structures in collaborative relationships.
6.3 Importance of ‘Strategy Formulation in

Entrepreneurship’
Basically, the broad process of strategy formulation is vital to the well-being
of an organisation. Formulating a strategy allows an organisation to position
itself effectively within its environment to reach the maximum potentials, while
constantly monitoring the environment for changes that can affect it. It allows
an organisation to define where it is, where it is going and how it is going to get
there.
The formulation of a sound strategy facilitates a number of actions and desired

results that would be difficult without the process otherwise. Strategy
formulation generally leads to the development of a strategic plan, which,
when communicated to all members of an organisation, provides employees
with a clear vision of what the purpose and objectives of the organisation are.
The formulation of a strategy forces organisations to examine the prospect of
change in the foreseeable future and to prepare for change rather than to wait
passively until market or other environmental forces compel it. Williams (2002)
contends that a strategy is needed to cope with and manage uncertainty in
decision making process as well as providing a way to anticipate future
problems and opportunities. It is also important to note that strategy provides
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employees with clear objectives and directions for the future of the organisation
as well as enhancing better performance.
Strategy formulation would, thus, increase employee motivation, give faster

and better decision making process as well as allow for the identification of
and exploitation of opportunities. It is necessary to take note that strategy
formulation involves performing a situational analysis as well as crafting
statements (long term view of a possible future), and mission statements (the
role that the organisation gives itself in the larger society). Also, it states the
organisation’s objectives (both financial and strategic). What it means is that
all these objectives should suggest a strategic plan which should, in essence,
provide the details of how to achieve the objectives.
It is also important to note that entrepreneurial strategies or approaches do

not need to be prescribed for entrepreneurs. This is because there is no simple
formula which leads to entrepreneurial success, and that circumstances differ
(Daft, 2007). This, therefore, implies that what is important is the idea of
strategic fit, which takes into account the entrepreneur, organisation and the
market context in which the strategies are being deployed. Thus, entrepreneurial
strategies are devised and implemented to fit the interface represented by the
entrepreneur, organisation and environment.
Activity 6.1
1. Define the concept of ‘strategy formulation’ in the context of
? 2.
entrepreneurship.
With reference to entrepreneurship, describe the major aspects of
strategy formulation.
3. What do you envisage to be the relevance of entrepreneurial strategy
formulation to education?
6.4 Phases in Strategy Formulation

The process of strategy formulation basically involves three phases, namely,
diagnosis, formulation and implementation. We now briefly look at what each
of these phases entails.
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6.4.1 Diagnosis
Generally, diagnosis is a fundamental process that involves performing a
situational analysis, that is, analysis of the internal environment of the
organisation, including identification and evaluation of current mission, strategic
objectives, strategies and results, plus major strengths and weaknesses. Porter
(1985) notes that diagnosis also involves analysing the organisation’s external
environment to ascertain external threats as well as establish their magnitude.
The process of diagnosis, therefore, identifies the major critical issues, whose
situational analysis prepares the groundwork for matching the company’s
strategy to its external market circumstances and to its resources and
competitive capabilities.
Among other critical questions, diagnosis should address these:
To what extent is the present strategy formulated before functional

What strengths, weaknesses, opportunities and threats exist for the
organisation?
Is the organisation competitive in out look and performance?
How is the organisation’s competitiveness relative to competitors?
What strategic issues and challenges does the organisation face?
In order to solve these and other critical questions, there is need to formulate
and employ analytic techniques. Thus, after having done a thorough diagnosis
that involves situational analysis, the organisation then does the second phase
of strategic management which is the actual formulation.
6.4.2 Formulation
The process of formulation produces a set of recommendations, with
supporting justification, the mission and objectives of the organisation. In
addition, these recommendations also supply the strategies for accomplishing
them. Porter (1985) says that formulation entails the modification of the current
objectives and strategies in ways that make the organisation more successful,
which includes trying to create “sustainable” competitive advantages.
Formulation of any strategy should be time framed, cost-effective, not overly
disruptive, and acceptable to key “stakeholders” in the organisation (Porter,
1985).It is important to consider “fits” between resources plus competencies
with opportunities, and also “fits” between risks and expectations.
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Porter (1985) echoed by Daft (2007), indicate that the following are the
primary steps in this phase:
Reviewing the current key objectives and strategies of the organisation.

These would usually have been identified and evaluated as part of the
diagnosis process
Identifying a rich range of strategic alternatives to address the three
levels of strategy formulation, including but not limited to, dealing with
the critical issues
Doing a balanced evaluation of advantages and disadvantages of the
alternatives relative to their feasibility plus expected effects on the issues
and contributions to the success of the organisation in dealing with,
particularly external competition
Deciding on the alternatives that should be implemented or
recommended.
The foregoing processes lead us to the last phase in the strategy formulation
process, namely, implementation of the strategy.
6.4.3 Strategy implementation

Basically, in all formal businesses and organisations, as well as the practice of
strategic management, strategies must be implemented to achieve the intended
results (Daft, 2007). The most wonderful strategy in the history of the business
world is useless if not implemented successfully. This stage also involves
developing and implementing a plan and then doing whatever it takes to make
the new strategy operational and effective in achieving the organisation’s goals
and objectives. It is important to note that even though many entrepreneurs or
organisations may craft impressive strategies for conquering the market, if a
strategy fails to take the right steps, the strategy becomes meaningless and,
therefore, worthless.
Activity 6.2
1. Describe the major phases of the strategy formulation in the context of
? 2.
entrepreneurship.
Analyse the relevance of these strategic formulation phases to the
educational enterprise.
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6.5 The ‘Business Plan’

One of the most important aspects of entrepreneurial strategy formulation is
the development of a business plan or business strategy. Mescon, Bovee
and Thill (1999) define a business plan as a written document that provides
an orderly statement of an organisation’s goals and how it intends to achieve
those goals. It is important to note that if one is starting out business on a small
scale and using one’s money, the business plan may be relatively informal.
However, as noted by Mescon, Bovee and Thill (1999:147), ‘at a minimum,
the entrepreneur should describe the basic concept of the business and outline
specific goals, objectives and resource requirements. Although a simple
business plan has a straight forward purpose, it still requires some great deal
of thought and commitment. As an example, before an entrepreneur even
starts any enterprise, he or she has to make important decisions about issues
involving personnel, marketing, facilities, suppliers, and distribution. Thus, a
written document (business plan) forces the entrepreneur to think about such
critical factors, and to develop programmes that will help him or her to succeed.
As a scholar, you may ask what a standard or formal business plan is like. A
formal business plan, suitable for use with banks or investors, should mostly
cover the following important points:
i. Summary: In one or two pages, the business plan should describe

important aspects of the plan such as its purpose, objectives, the product
or service as well as its market potential.
ii. Organisation and industry: The plan should give full background
information on the origins and structure of the venture and the
characteristics of its industry.
iii. Products and services: The plan should give a complete but a concise
description of the enterprise, focussing on the unique aspects of the
products and services and how customers will benefit from using them.
iv. Market: Fundamentally, the plan should provide data that is convincing
that the entrepreneur understand his or her market and can achieve
sales goals.
v. Management: The plan should summarise the background and
qualifications of the principals, directors, management and key personnel
in the organisation.
vi. Marketing strategy: The plan should give project projections of sales
and market share, and outline a strategy for identifying and contacting
customers, setting prices, servicing customers, advertising and so on.
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vii. Design and development of plans: If the organisation’s product or

services require design or development, the plan should describe the
nature and extent of what needs to be done, including costs and possible
problems.
viii. Operations plan: The plan should precisely provide information on
the facilities, equipment and labour needed.
ix. Overall schedule: The plan should show development of the
organisation in terms of completion dates for major aspects of the
business plan.
x. Critical risks and problems: The plan should identify all possible
negative factors and discuss them honestly.
xi. Financial information: The plan should include a detailed budget of
start up and operating costs, as well as projections for income,
expenses, and cash flow for a reasonable period, such as the first three
years of business.
xii. Exit strategy: Finally, the plan should explain how investors will be
able to cash out or sell their investment, such as through a public stock
offering, sale of the organisation, or buyback of the investor’s interest
(McCall and Kaplan, 1990, Mescon et al, 1999).
What is also crucial in entrepreneurial strategy formulation is to appreciate
what distinguishesa good business plan from others. As noted by Mescon et
al (1999:148), a good business plan must explain what the organisation expects
to accomplish in say, three to seven years in the future, show how the user will
benefit from the organisation’s products and/or services, present hard evidence
for the demand of the organisation’s product or services, portray the partners
as a team of experienced managers with complementary business skills, and
show how investors can earn a substantial profit. In addition, a winning business
plan must present both the organisation’s strengths and anticipated
weaknesses, as well as be realistic in its projections for growth.
Thus, preparing a business plan helps entrepreneurs to decide how to turn a

business idea into reality, and outside financing, the plan will also help in the
persuasion of lenders and investors to back one’s business (Mescon et al,
1999:148).
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6.6 Choosing Best Strategy Alternatives in

Entrepreneurship
In entrepreneurship, just like any other enterprise, decision making is a complex
subject which is worthy of a chapter or book of its own. A unit section such
as this one can only offer a few suggestions. Here are some factors to consider
when choosing among alternative strategies:
It is important to get as clear as possible about objectives and decision

criteria in what makes a decision a “good” one.
The primary answer to the previous question, and, therefore, a vital
criterion, is that the chosen strategies must be effective in addressing
the “critical issues” the organisation faces at the time of planning.
The strategy must be consistent with the mission and other strategies of
the organisation.
The strategy needs to be consistent with external environmental factors,
including realistic assessments of the competitive environment and
emerging trends.
The strategy must fit the organisation’s product life cycle position and
market attractiveness or competitive strength situation.
The strategy must be capable of being implemented effectively and
efficiently, including being realistic with respect to the organisation’s
human, financial, material and other resources.
It is important to match strategy to the other aspects of the situation,
including, things like the size, stage, and growth rate of organisation,
the organisation characteristics, including fragmentation, importance of
technology, commodity product orientation, international features and
organisational position.
It is necessary to consider stakeholder analysis and other people-related
factors, such as internal and external pressures, risk propensity, and
needs and desires of important decision-makers.
Sometimes, it is helpful to do scenario construction, for example, cases
with optimistic, most likely, and pessimistic assumptions.
The risks and challenges must be acceptable and in line with the potential
rewards
(Williams, 2002:137).
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Activity 6.3
1. Describe critical points to consider when developing a business plan.
? 2. Discuss the key factors you would consider when choosing the best
strategy alternative for organisational success.
6.7 Resource Utilisation in Strategy Formulation

In all business enterprises, it is considered very critical for organisations to be
able to identify and use their resources strategically; that is, in line with their
strategic plans. There are quite a number of resources that organisations must
use, and among them are human, financial and material resources. We now
briefly look at these resources in some detail.
6.7.1 Human resources

Human resources are arguably the most critical in the entire process of
formulation and implementation strategies, including entrepreneurial strategies.
It is widely believed that perhaps the changes and developments that
organisations have experienced in the last few decades have been a result of
the growing realisation that people are an organisation’s primary source of
competitive advantage (Baird and Meshoulam, 1988). It has also widely been
accepted that any business enterprise or an organisation success is determined
by decisions employees make and behaviours in which they engage. Successful
strategy formulae are mainly a function of good organisational behaviour.
Managing people as an organisation’s primary asset has inspired human

resources personnel to become increasingly more effective at developing
programmes and policies that leverage talent to align with organisational
competencies and at executing organisational strategy (Ruona and Gibson,
2004). It is important to note that the contemporary field of human resource
management has recently seen the human resources that it selects or trains
move from a supportive to a strategic role in most developing organisations.
This has been so mainly because, in strategy formulation, sources of competitive
advantage were and are no longer sought in external but within the internal
environment of an organisation, namely its resources, particularly its human
resources. Recent works on business strategy formulation have indicated that
organisations’ competitive advantage is mainly generated from the
organisation’s human resources (Wielemaker and Flint, 2005).
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Environmental factors such as technological innovation and demographic

changes have been noted to affect human resource strategy and numerous
environmental characteristics have been investigated to determine how they
constrain human resources in particular and strategy formulation in general
(Lengnick-Hall and Lengnick-Hall, 1988). In the same vein, Miles and Snow
(1984) note that by their effect, human resource planners started to learn the
language and techniques of strategic planning, assumed a more proactive stance
in promoting strategic thinking in the human resources area and extended the
personnel function well beyond the limits of its traditional human resource
boundaries and activities.
According to Golden and Ramanujam (1987), modern human resources should

play a more central and proactive role by becoming more involved in the
formulation of strategy. From an entrepreneurial perspective, human resource
staff need to be business oriented, aligned with the business and effective as
consultants and business partners. The integration of human resources with
the business requires a paradigm shift for managing human resources in an
organisation (Walker, 1994). It is of great value to integrate human resource
management and business to enhance reciprocity in integrating human resources
and strategic concerns. This generally limits the subordination of strategic
considerations to human resource preferences and the neglect of human
resources as a vital source of organisational competence and competitive
advantage. As noted by Andersen, Cooper and Zhu (2007), strategy
formulation implies the need for organisations to have direct contact with
employees and generate a capacity to understand, motivate, control and
respond quickly to employees’ needs and expectations.
Furthermore, formulation of strategies entails that human resource practices

be designed in consistency with the strategies of the organisation, taking into
consideration the essential human resources needs. According to Schoonover
(2010), there is need to encourage the human resource factor to exercise
more initiative, autonomy and accountability by providing tools and techniques
that improve their effectiveness and enabling the acquisition of critical
competencies through continuous learning opportunities. In addition, it is
important that managers recognise the significance of top human resource
talent and provide mechanisms to enhance the leveraging of human capital to
innovate business products and services that create value. In today’s world, it
is notable that knowledge is the primary means of wealth creation and about
50% of the GDP in developed countries is based on intellectual assets and
intangible people skills (Schoonover, 2010).
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It is also important to appreciate that for any business enterprise or organisation

to be successful, it must recruit talented people with the proper sets of skills
and capabilities, values and attitudes. Attracting, recruiting, and hiring the ‘best
and the brightest’ staff is a critical step in the process of building intellectual
capital, meaning that organisations must develop employees at all levels and
specialties to fulfil their full potential in order to maximise their joint
contributions. Furthermore, strategy formulation dictates that organisations
must also provide the working environment in which both extrinsic and intrinsic
rewards can retain their ‘best and brightest’ employees.
Intrinsic motivation is important, for example, the motivation to work on

something because it is interesting, exciting, satisfying or personally challenging.
One way organisations keep highly mobile employees motivated and challenged
is through an internal market for opportunities, to lower the barriers to an
employee’s mobility within the organisation.It is vital to remind human resources
in any business enterprise or organisation to start playing a strategic role in
organisations, also considering that all human resource functions should be
integrated with the mission, vision and strategies of the organisation.
6.7.2 Financial resources

Financial resources entail the business enterprise’s monetary resources.
Financial resources also include cash account and cash equivalents; the
organisation’s borrowing capacity and its ability to raise equity. Generally,
business enterprises or organisations’ whole range of activities largely depend
on sound management and informed utilisation of its financial resources. Human
resource utilisation, technology development, procurement of anything that
has to do with the strategic development of an organisation all hinge on financial
resources. Financial resources are critical when issues to do with procurement
of resources, infrastructural development, recruiting, hiring, training,
development and compensation of personnel are considered.
The organisation’s general procurement, repairs of the organisation’s worn

out physical resources, equipment and machinery undoubtedly also draw from
the organisation’s financial resources. Financial resources are also critical in
the establishment of quality work environments in which workers feel safe
and protected to maximise employee performance and reward them through
incentive programmes that motivate all employees.
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6.7.3 Material resources

Material resources denote all matter or the physical assets that an organisation
has that make things happen including determining business success. Material
resources include among other things: buildings, machinery, computers, books,
calculators and so on. In fact, anything that can be pointed at as belonging to
the organisation is part of the business enterprise’s material resources. It is
very important to be able to use these important resources strategically for
the development and success of the organisation.
Activity 6.4
1. Discuss the importance of the human resource factor in strategy
? 2.
formulation.
When designing strategy, there is need to appreciate that there is an
intricate relationship among human, financial and material resource
utilisation in organisations. Discuss.
3. To what extent do you agree with the assertion that, strategy formulation
is the backbone of organisational success?
6.8 Relevance of Entrepreneurial Strategy

Formulation to Education
Strategy formulation and its implementation are of paramount importance in
organisations, including educational institutions. There are a number of benefits
of this strategic approach to management. Through strategy formulation:
Managers are alerted to the winds of change, opportunities and threats

Rationale is provided for evaluating competing budgets, requests and
steers resources into results producing areas
Strategy- related decisions are unified, ensuring coherence in strategy
direction
Desired results are specified, hence it becomes much easier to move
forward
Proactive management is created
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Educational institutions express priorities best through goals and

objectives, which are some of the most fundamental aspects of strategy
formulation
Thus, educationists, as much as other organisational leaders, need to utilise
the strategy formulation process in order to define the roadmap of educational
institutions as well as positively influence organisational behaviour in order to
foster higher organisational performance.
6.9 Summary
This unit addressed the concept of strategy, delving more on issues to do with
strategy formulation in organisations. We made an attempt to make you
conceptualise strategy formulation in which case we defined strategy first and
then went on to define strategy formulation in the context of entrepreneurship.
We identified and duly discussed aspects of strategy formulation in order to
give you a clear view of the process of strategy formulation. Hints on how to
choose the best strategy were also given to alert you to the dangers of adopting
strategies that are not well formulated. Resource utilisation has also been noted
to be crucial for strategy formulation in any organisation including educational
institutions.
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References
Andersen, K.K, Cooper, B.K and Zhu, C. (2007). “The effect of SHRM
practices on perceived performance: some initial evidence from
Australia”, Asia Pacific Journal of Human Resourses,Vol 45 No2
pp 168-179.
Baird, L.and Meshoulam, I. (1988). “Managing two fits of strategic human
resource management”, Academy of Management, Vol 13 No
1pp116-128.
Daft, R. (2007). Strategy Formulation and Implementation Management.
New York: Sage.
Golden, K.A. and Ramanujam, V.(1985). ”Between a dream and a nightmare:
On the integration of human resource management and strategic
business planning processes” Human Resource Management
Review,Vol,24, No4 pp 429-452.
Lengnick-Hall, C. A. and Lengnick-Hall, M.L. (1988). “Strategic human
resource management: A review of the literature and a proposed
typology”, Academy of Management. Vol 13No 3 pp454-470.
McCall, W., and Kaplan, K. (1990). Whatever it takes: The realities of
managerial decision making. Englewood Cliffs, NJ: Prentice-Hall.
Mescon, M.H., Bovee, C.L. and Thill, J.V. (1999). Business Today. New
Jersey: Prentice Hall.
Minzberg (1989).
Porter, M. E. (1985). Competitive advantage: Creating and sustaining
superior performance. New York: Free Press.
Ruona, W.E.A. and Gibson, S.K. (2004). “The making of twenty-first century
HR: An analysis of the convergence HRM, HR and OD”. Human
Resource Management, Vol 43 No1 pp 49-66.
Schoonover, S.C. (2010) Human resource competencies for the new century.
[online] Available: http://www.schoonover.com/pdf/HR
Walker, J. (1994). “Integrating the human resources function with the business”
Human Resource Planning, Vol17 No 2 pp 59-77.
Wielemaker, M and Flint, D. (2005). .”Why does HRM need to be strategic?
A consideration of attempts to link human resources and strategy” The
Business Review.Vol 3 No2 pp 259-264.
Williams, S. W. (2002). Making better business decisions: Understanding
and improving critical thinking and problem solving skills.
Thousand Oaks, CA: Sage.
.
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7
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Unit Seven
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Marketing in Entrepreneurship
7.0 Introduction
I n Unit 6, we discussed entrepreneurial strategy formulation. We described

the processes and components of a strategic plan and more importantly,
its functions. We also discussed the business plan or proposal and explained
how it is drafted and its importance. With a strategic plan, the entrepreneur is
almost ready to sell. Before an entrepreneur actually engages the consumer in
transactions, he needs a clear understanding of marketing. In this unit we visit
the marketing concept. We define marketing and outline the development of
the concept. We also examine the marketing mix variables and show how
entrepreneurs need to apply them. For those entrepreneurs who wish to
provide services as opposed to physical products, we also describe services
and the marketing mix variables involved and how they can be manipulated
by the astute entrepreneur. We wrap up with a short explanation of how
entreprenerurial marketing concepts as discussed are relevant to education.
7.1 Unit Objectives

define the term ‘marketing’

describe the development of the marketing concept
describe the marketing mix variables for products and services
design marketing strategies with respect to the marketing mix variables
describe services characteristics
explain how entrepreneurial marketing is relevant to education
7.2 The Marketing Concept

Before describing the marketing concept, it is first necessary to define some
key terms that will lay the basis for our understanding of the concept.
7.2.1 Definition of terms

The following key concepts need to be understood by entrepreneurs. Kotler
(1999) offers some clear definitions of the terms: need, want, demand, value,
exchange and transaction
Need: means a state of felt deprivation of some basic satisfaction. The feeling
of hunger for example is an expression of the need for food.
Want: is desire for a specific satisfier for a felt need. From the example above,
you may feel that you want to eat a steak pie with a drink of coke.
Demand: are wants that are backed by willingness and ability to buy or pay
for the product.
Value: is a consumer’s estimate of a product’s ability or capacity to satisfy

his needs. Exchange: the process or act of obtaining a desired product from
someone by offering something in return. Transaction: is the culmination of
an exchange, the physical trade of value between two or more parties
(Kotler, 1999:94).
There have been many definitions of marketing over the years. We give
below, three definitions by prominent scholars.
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Unit 7 Marketing in Entrepreneurship
Drucker (1973:119) sees marketing as’ the whole business seen from
thepoint of view of its final result, that is, from the customer’s point of
view.’
Rewoldt et al (1981:97) define marketing as ‘the process in a society
by which the demand structure for economic goods and services is
anticipated or enlarged and satisfied through the conception, promotion,
exchange and physical distribution of such goods and services’
Kotler (1999:103) views marketing as ‘a social and managerial process
by which individuals and groups obtain what they need or want through
creating, offering and exchanging products of value with others.’
To the above definitions, we must add what we now know to be
entrepreneurship: the combined processes and activities involved in
identifying and exploiting business opportunities to make and sell goods and
services for a profit.
From the above definitions, we deduce that marketing is closely intertwined

with business in general orentrepreneurship, that marketing is all about serving
identified customer needs, that whatever is produced within an organisation
must be in line with customer needs and that all business functions must,
therefore, be inclined to serving consumer needs. The above inferences have
resulted in what marketers now refer to as the marketing concept or
philosophy.
In other words, marketing is more than a department within an organisation

performing defined marketing activities. It is now a philosophy or way of
viewing and doing business and is transcending all business activities. Kotler
(1999) has defined this marketing concept thus: ‘the marketing concept holds
that the key to achieving organisational goals consists of being more effective
than competitors in integrating marketing activities towards determining and
satisfying the needs and wants of target markets.’
7.2.2 Evolution of the marketing concept

According to Kotler (1999),the marketing concept has evolved through a
number of stages to what it is today. Below, we discuss these stages in brief.
Production concept: is the earliest marketing philosophy held by
organisations. In this concept, organisations believed that consumers
would favour products that were cheap and widely available. The
strategic guideline was, therefore, mass production of goods at low
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cost and to make them widely available. We must, however,

acknowledge that in some developing economies, some companies are
still in this stage. Where there are supply constraints and demand is
high, the concern of such producers is just to put product on the market.
We must, however, make the further comment that consumers will be
buying out of desperation and not out of choice. Such companies may
well cry foul when economies are opened up and they have to face
competition from foreign products.
Product concept. The product concept holds that consumers will
favour those products that offer the most in terms of quality, performance
and innovative features. The focus of management was, therefore, to
make very good products and to improve them over time. The weakness
of this concept is its focus on only the physical product and not the
service embodied in the physical product. Thus, marketers call this
‘marketing myopia.’ We must emphasise here that, products are meant
to serve a need, that is, give a service. It is, therefore, not the product
that is most important, but the service that consumers expect from the
product. Service needs are determined by the customer. Most
organisations have passed this stage. Some companie, however, still
operate in this marketing mindset.
Selling concept. The selling concept, also called the sales concept,
holds that if left alone, customers will ordinarily not buy enough of the
organisation’s products. The organisation must, therefore, undertake
an aggressive selling and promotion effort. The assumption is that buyers
naturally show buying inertia or resistance. The problem with the concept
is that the focus is not what the consumer would like to buy but what
the company has made that must be sold. Whilst most companies have
evolved past this stage, there are some organisations that still operate
in this phase. The example of life insurance and funeral policy salesmen
come tomind. Even political parties use this approach when they try to
sell their presidential candidate to the electorate during the campaigning
period. Besides these organisations selling none sought after goods and
services, the generality of organisations are operating with the current
marketing philosophy.
Marketing philosophy. As stated already, this is the integrated
marketing approach in which the customer is the centre of all economic
activity in the organisation. We must clarify here that operating on the
marketing philosophy does not mean that managers are nolonger
concerned with production or with products and selling. The organisation
still looks after its production systems and its products. The only
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difference is that, whatever is done in production and to products, will

be in response to customer needs.
In commending about the need for selling under the marketing concept, Drucker
(1973:107) had this to say: ‘There will always, one can assume, be need for
some selling. But the aim of marketing is to make selling superfluous. The aim
of marketing is to know and understand the customer so well that the product
or service fits and sells itself. Ideally, marketing should result in a customer
who is ready to buy. All that should be needed then is to make the product
available.’
Table 7.1 below shows a comparison between the sales and the marketing
concepts.
Table 7.1 Selling and Marketing Concepts Contrasted
Aspect Selling Concept Marketing Concept
• Starting point Factory Products. Target Market Customer needs.

Selling and Promoting. Integrated Marketing profit
• Focus Profit through Sales Volume through customer satisfaction
• Means
• Ends
Source:Drucker (1973:109)
Many organisations have progressed even further to a more responsible
philosophythat recognises the interests of the consumers themselves and also
a concern for the environment. This current thinking has been referred to as
the societal marketing concept (Drucker, 1983). The concept holds that
the organisation’s task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more effectively and efficiently
than competitors in a way that preserves or enhances the consumer’s and the
society’s well being’. This concept is calling on marketers to build social and
ethical issues into their marketing practices.
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Activity 7.1
1. Define the terms, need and want and show how wants differ from
? 2.
demand.
Define marketing and explain briefly the meaning of ‘marketing concept’.
3. Suggest activities and practices that a school can carry out to reflect
the working of the societal marketing concept at the school.
7.3 The Marketing Mix Variables

We have stated that marketing is all about identifying the needs of target
customers and producing goods and services to meet those needs. The goods
will, however, have to exchange for cash in the market. The exchange may
take place in supermarket, for example. There is also need to inform the
consumer of the availability of the product and its price and where it can be
found. The above statements tell us the variables that the marketer uses to
meet consumer requirements whilst making profit for the organisation. The
variables are product and services, price, place or distribution (where to
make the goods available) and promotion or communication (about the other
three variables). Marketers refer to these four variables as the marketing mix
variables or the 4 P’s of marketing. The role of marketing is to make decisions
about these variables (and matters related to them) in such a way that the
consumer will be happy and sales and profits for the organisation will be
realised.
7.3.1 The product

Definition of product
A product can be defined as anything that can be offered to the market for
attention, acquisition, use or consumption that will satisfy a need or want
(Kotler, 1999). Products take many forms including physical products (like a
loaf of bread), services (like a legal representation by a lawyer), places (like
the Victoria falls) and ideas (like ‘no sex outside marriage’).
Product components
According to Kotler (1999), a product offering often has up to three

components, including a physical element, a service component and an idea
component. Achurch service, for example, includes all the three components
as follows: wine and wafers are physical, the sermon, singing, education and
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counselling are the service part and ‘salvation’ is the idea component. We
remind students again that it is marketing myopia to be fixated on the physical
product itself without focusing on the service that the physical product is meant
to offer. Physical products are only the embodiment of services.
The Five levels of a product.

According to Rewoldt, Scott and Warshaw (1981), any product can
be viewed as having a customer value hierarchy of five levels, as given
below:
Core benefit: is the first level and represents the service or need the
consumer is looking for. This is not tangible. Thus, for example, the
person who buys a pen is actually buying a ‘means to record’. The
other levels are built around this core benefit as consumer value features
are added.
Basic product: is the physical embodiment of the core benefit. A very
rudimentary product that would satisfy the need. From the example
above, a basic product could be a refill without the barrel to write with.
Expected product: is the third level of the product, and includes
additional features that the consumer would expect from that kind of
product. A refill in a barrel with a cap would be the expected product in
the example above.
Augmented product. At this level even more value is added to the
product by additional features beyond the consumer’s expectation. This
is the level at which most products on the market are set and are
competing.
Potential product. This is the product with all imagined features to
amaze the customer. It is not yet available to the market. It represents
work going in research to improve the organisation’s further growth
and remain ahead of competition.
The product mix
The portfolio of an organisation’s products constitutes the product mix
for the organisation. The product mix is therefore the set of all products
and items that a particular seller offers to the market. This product mix
or assortment can be looked at as being made up of product lines,
which are in turn made up of the individual items or brands. The product
line can be defined as that group of products which are related in terms
of their use, customer group or distribution channel. Thus, for example,
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‘flour’ is a product line within the National Foods product mix and
‘Gloria Flour’ a brand within this product line.
Generally, certain key concepts relate to or define the product mix of a
company.
Width: refers to the number of lines into which the product mix can be
grouped
Length: is the total number of items that make up the mix
Depth: is the number of variants or options on offer for each item
within the line. ‘Gloria flour’ may be packed in 5kg, 2kg and 1kg bags,
making adepth of three.
Consistency: is closeness in end use of the various product lines. The
role of marketers, therefore, includes making decisions about product
mix and product line widths, lengths, depths and consistency, all in
response to changes in consumer tastes (Kotler, 1999:51).
Product brands
The dream of all marketers is to be able to convert ordinary company products
into brands. In fact, branding has been called the art and cornerstone of
marketing. It is the power of the Colgate Brand for example that make some
consumers to refer to all other toothpastes as Colgate. Kotler (1999:53) defines
a brand as ‘a name, term, sign, symbol, or design or combination of them
intended to identify the goods or servicesof one seller or group of sellers and
to differentiate them from those of competitors’ Over and above identifying
and differentiating a organisation’s products, abrand also conveys several levels
of meaning. These include attributes, benefits, values, culture, personality
and type of user. Branding in general has some benefits for the organisation:
It gives products identity. Production and distribution queries are

therefore easier to track to specific items.
Brand name and trademark give legal protection to some product
features that some competitors may want to copy.
It has the potential to grow brand loyal consumers.
Market segmentation made, easier along brand lines
(Kotler, 1999:54).
The same author goes on to say that a successful brand offers additional
advantages for the organisation. These include:
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Satisfied, friendly and loyal customers who give high brand equity to
the product and, therefore, good will for the organisation.
Reduced marketing costs, particularly with respect to advertising and
promotions.
Greater leverage in bargaining with distribution channel partners.
Scope to charge higher prices than competition.
Scope for brand extensions.
Offers some defence against price wars with competitors.
Builds corporate image.
(Kotler, 1999:55)
Product packaging and labelling
All consumer goods come packaged and labelled. Packaging covers
all activities of designing and producing the container or wrapper for
the product. Packaging can be up to three levels including the primary
package (the plastic bag in which 2kg’s of sugar is put for example),
the secondary package (the bag holding 10 *2kg packets of sugar for
example) and the shipping package. Product packaging and the
associated labelling are useful in many respects:
They:
give identity to the product and brand
secure and preserve the product
give information to consumers
facilitate merchandising and displays
can convey some implied message about quality and status of the
product
can be used as a promotional tool
allow for innovativeness which can attract consumers and help build
brands
The product life cycle
Marketers have introduced the concept of the product life cycle (PLC)
to describe the development and growth of a product from its
introduction into the market. The brief summary of the PLC concept,
according to Churchill, Ford and Walker (1993) is that:
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All products have a limited life or existence on the market

All products pass through 4 stages, from introduction, through growth
and maturity to decline stages
Sales and profits fluctuate as the product passes through the stages
Products require different marketing, financial, technological and human
resources strategies over the stages of the life cycle. The diagram below
summarises the PLC concept.
$ Sales
Profit
Introduction Growth Maturity Decline
Time
Figure 7.1: Product life cycle graph
Source: Churchill, Ford and Walker (1993:47).
For marketers the PLC points to the need for various strategic decisions to
make as the product grows.
Strategic options to consider during the PLC
What promotional activities to use at the various stages

What pricing strategies to use at the various stages
What strategies to use to extend or rejuvenate the life of the product
on the market
Timing of introduction of replacement products to add to the product
mix before present products decline
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7.3.2 The price

The price variable is unique for the marketer. It is the only variable that directly
brings in revenue and, therefore, profit. All the other variables imply direct
incurrence of costs. The pricing decisions that an organisation has to make
are many and complex. We discuss more some of these challenges in this
section. Some of them include:
How to determine the initial base price for a product or service

How to adapt the initial price to suit the unique circumstances of different
markets
How to change price in the face of unavoidable forces
How to respond to price changes by competitors in the market.
Determining the initial product price
Determining the initial product price calls for the marketer to analyse a lot of
information before making a decision. Kotler (1999) has simplified the price
setting process into a six stage model. The steps in the price setting model,
include, selecting the pricing objective, determining demand, estimating costs,
analysing competitor costs, prices and offers, selecting a pricing method and
setting the final price. These are discussed in detail below.
Selecting the pricing objective
It is one of the six common ones, and the stages in the model are:
Survival: where survival is the objective, prices tend to be lower. The

company is satisfied with just covering its variable costs.
Maximising current profit: the company estimates demand and costs
associated with various price levels and adopts the price that maximises
current profit.
Maximising current revenue: this requires the estimation of the
demand for the product and setting a price that maximises current
revenue
Maximising sales growth: this normally calls for a lower price to
attract higher sales volumes
Market skimming: if skimming is the objective, then prices tend to be
set at higher levels
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Product quality leadership: product quality leadership usually result

in a higher level setting.
Determining demand
The firm tries to estimate the demand for the product at various prices following
the general law of demand that consumers buy more at lower prices than at
higher prices. The steepness of the demand curve so produced depends on
the price elasticity of demand of the product in question.
Estimating costs
The firm also estimates the total costs of production at various levels of output
given its present plant capacity. The total costs are then used to determine unit
cost which sets the minimum base price possible.
Analysing competitors costs, prices and offers

The firm needs to find out the cost and price structures of similar competitor
products. These are then used to benchmark its costs and possible prices.
Selecting a pricing method. From the information available after the research
carried above, the firm can charge a price guided by the three C’s noted: the
costs set the minimum base level, competitor prices of substitute products
and consumer assessment of product value from the estimated demand curve.
The actual price is worked using a pricing method guided by these three C’s.
Cost plus mark-up. This is the most elementary of the pricing methods.
Return on investment target pricing. This involves charging a price
that will yield the required rate of return on investment. A breakeven
analysis will have to be done to check that the estimated volumes of
sales needed to achieve the return required are at least above breakeven
sales volume.
Perceived value pricing. The price is set at the perceived value level
for the niche market target. Sales volumes are then set for that price
level as well as the investment required.
Value pricing. This is charging a fairly lower price for a relatively high
value offering. This presupposes that production costs have been
managed downwards.
Going rate pricing. This basically entails charging the going market
prices. The assumption is that they will be above cost.
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Selecting the final price

The method that has been selected from the above list gives a price guide.
Some adjustment may be made on it to arrive at the final price to be actually
set. Such adjustments may be necessitated by the need to respond to the
following factors:
Psychological pricing. Prices can be adjusted up to take advantage

of the belief that higher priced items are superior. Adjustments may
also be to round off figures or to have an odd number price like $9.99
instead of $10.00
Influence of the other marketing mix variables. The price may be
adjusted up if the brand is strong, advertising is high and distribution
channel to be used is exclusive.
Impact of price on other parties. Prices may have to be lowered if
distributors complain or sales representatives express misgivings.
Company pricing policy. Price has to be in line with company pricing
standards.
(Manning and Reece, 1998)
Adapting the price to suit varying circumstances
Companies are forced by circumstances to manage a price structure to
accommodate the varying markets and conditions under which they
will be doing business.
Geographical pricing. Markets in different geographical locations may
be charged different prices. Export markets may also involve unique
compensation deals including barter and countertrades.
Price discounts and allowances can be given for promotions, for
large quantity orders, to the trade and for off peak demand seasons.
Price discrimination may also be practised to accommodate
differences in customers, products, locations, and time
Product –mix pricing: where pricing is structured in a way to maximise
profit for the whole product mix or product line and not just the item in
question
(Manning and Reece, 1998).
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7.3.3 The place

The place variable places the product within access of the consumer. It is
about the distribution channels that the organisation can use to avail the product
to the consumer. These marketing or distribution channels are actually
independent businesses pursuing their own profit motives. Using them to
distribute for the organisation, therefore, takes some intense dealing and
negotiation. Organisations depend on the channel intermediaries because of
the important role they play in product distribution.
Role and functions of channel intermediaries

Channel intermediaries have different roles and functions. Below we look at
some of them.
They have superior resources and the geographical spread to reach

many consumers
They are efficient. It is cheaper to use their facilities than to invest in
parallel distribution channels.
They collect and disseminate marketing information.
They participate in product promotions.
They take risk of ownership of product before they sell it to the final
consumer.
Some provide financing and terms to consumers.
Channel levels
Channel levels refer to the number of intermediaries between the producer
and the final consumer in the distribution channel (Manning and Reece, 1998).
Consumer goods can have channel lengths that vary from zero intermediaries
to three. These are illustrated in Fig 7.2 below. Industrial goods also have
channel lengths that vary from zero to three levels. Most tend to make use of
specialised industrialdistributers. In addition, some manufacturers will have
manufacturer representatives and or sales branches as part of the distribution
channel.
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pproPP
Producer WholesalerJobber RetailerConsumer
(Source: Manning and Reece, 1998:73)

Figure 7.2: Possible Channel Levels for Consumer Goods
Channel marketing decisions

The marketer has to make key marketing decisions with respect the distribution
channel. The decisions relate to channel design and to channel management.
Channel design This is basically the plan of what the appropriate

distribution channel for the product is going to look like. The marketer
is guided by what is ideal, what is feasible and what is available. The
design depends on the analysis and evaluation of:
Customers’ desired service output. This is what the target customer
would want in terms of service. Thisis with respect to such matters as
minimum lot sizes, variety of product, spatial convenience and waiting
time. The marketer needs to balancethe need for higher service levels
and costs associated with that kind of service level.
Channel objectives and constraints. Channel objectives need to be
spelt out in terms of service output levels and cost rationalisation.
Identification of major channel alternatives. This is in terms of
types of intermediaries, numbers of intermediaries to be involved, and
the terms and responsibilities of the channel members. These decisions
depend on the product.
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Evaluation of major channel alternatives. The evaluation is against

economic, control and adaptive considerations
(Manning and Reece, 1998).
Channel management
This is basically implementing the design plan discussed above, evaluating

performance and reviewing over time as necessary. The channel
management activities, according to Rewoldt, Scott and Warshaw
(1981:78)include:
Selecting channel members. Some desired intermediaries may prove
very difficult to engage. Second best alternatives may have to be
engaged.
Motivating channel members. This can be through training,
supervision, encouragement, and a variety of incentives. With respect
to supervision,the relative bargaining strengths between the parties may
come to the fore. The manufacturer may also have to rely on the
conventional sources of power to ensure proper performance of
mandate.
Evaluating channel members. Evaluation is in terms of preset targets
and standards. These must include the issue of breakages and returns
as this can be very costly if not managed well
Modifying channel arrangements. This is basically reviewing and
making changes in line with performance and changes in customer needs.
7.3.4 Promotion
Promotion is the communication part of the marketing function. It is about
informing and persuading the consumer to buy the organisation’s product in
favour of those of competitors. Promotion is made up of five activities, namely,
advertising, sales promotion, public relations, personal selling and direct
marketing. Below we look at these aspects in brief.
Advertising.This is paid in the form of non-personal presentation and

promotion of ideas, goods or services by an identified sponsor.
Advertising can use several platforms including print and broadcast
media, packaging, motion pictures, brochures, billboards and posters,
point of sale displays and symbols and logos.
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Sales promotion. This consists of the diverse collection of incentive

tools that are offered for a short time and aimed at encouraging quicker
and greater purchase of identified products by consumers or the trade.
This can be through using contests, games, lotteries, coupons, samples,
exhibits, demonstrations, rebates, fairs and trade shows, road shows,
and tie-ins.
Public relations. This covers all activities carried to promote, repair
or protect the image of the company and its products. Such activities
include community relations, donations, sponsorships, publications,
counselling, speeches, lobbying, in house magazines and press releases.
Personal selling. This is the direct person to person contact between
the person selling the product and the consumer. It takes several forms
including sales presentations, sales meetings, incentive programmes,
samples and fairs and trade shows.
Direct marketing. This is interactive marketing whereby one or more
advertising media is used to target identified consumers in any location
with the aim of getting an order. Direct marketing can use catalogues,
mailings, telemarketing, electronic shopping and television shopping,
email and internet social media.
To use one or more of the above forms of promotion, the marketer needs a
clear understanding of communication in general and the elements and
processes in the communication process. As we have already stated, promotion
is about marketing communication. This topic has already been discussed in
Unit 3 above. In managing the communication activity, the marketer involves
himself/herself in eight activities. Kotler (1999) identifies these activities and
issues as follows.
Identifying the target audience
This is the logical starting point of any programme to develop effective

communication. The company needs to know who the promotion effort is
aimed at. This could be current users, potential users, or influencers of buying
decisions. It could also be groups, individuals, particular publics or general
publics. The decision of what to say and how, where and when to say it
depends on the receiver of the message. Efforts also need to be made to
gauge the target audience’s current perception or image of the organisation
and its products.
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Determining the communication objectives
This is basically the question of why you are promoting in the first place. The
objectives could be to seek cognitive, affective or behavioural responses
within the target consumer group. Cognitive changes relate to putting something
in the consumer’s mind. This can be awareness and knowledge about the
product. Affective changes relate to influencing the consumer’s attitudes to
liking the product, preferring the product or being convinced about the product.
Behavioural responses include buying the product or telling others about the
product.
Designing the message
The message is designed to suit the target audience and the communication
objectives. The marketer can be guided here by E.K.Strong’s consumer
decision making model. Strong (1985) stated that consumers pass through 4
stages as they make a buying decision. These are attention, interest, desire
and action (AIDA). The message should therefore be designed in such a
way that it gains attention, holds interest, arouses desire and elicits action.
The marketer needs to think carefully about message content (what to say),
structure (how to say it logically), format (how to say it symbolically) and,
source (who should say it).
Selecting the communication channels
This is the question of who or what should convey the message. The choice is
between personal channels (like celebrities, experts, community leaders,
company representatives, and word of mouth referrals) and non personal
channels like the media and ambience.
Establishing the total promotional budget
Companies have different ways of allocating promotional expenditure. The

more common ones are:
What finance believes is affordable

Percentage of sales
Competitive-parity
Objective-and-task approach. This method outlines what has to be
achieved, what then has to be done and what, therefore, must be spent.
This is the recommended approach as it relates what needs to be done
to the resources allocated.
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Deciding on the promotion mix
This involves saying what promotional or combination of tools to use in the

communication. The choices are from advertising, personal selling, sales
promotion, direct marketing and public relations. The marketer has to consider
all the factors discussed above to decide on the one (or more) tool to use.
Measuring the promotional results
This is about evaluating the promotional effort. The evaluation is made against
set targets and objectives. The measures being sought may be behavioural,
including product recall and recognition, trial and buying and recommending
it. Measurements may also be factual to include sales revenues and volumes.
Managing and co-ordinating integrated marketing communications
The current thinking is that marketing communications should be coordinated

and managed under one office umbrella to produce more message consistency
and greater sales impact. It also unifies the company’ brand images and
messages as portrayed through the various company activities.Thus, the
management and co-ordination of integrated marketing communications may
also be utilised in different educational settings.
Activity 7.2
1. Define ‘product’ as used in marketing and list the various forms of a
? 2.
product.
Give a brief analysis of ‘a school ’in terms of the five levels of a product.
3. There are rumours that the school head and the SDA of your school
are embezzling school funds and that the teachers are lazy and abuse
children. Describe a public relations programme that you would design
and manage to repair and build the image and reputation of your school.
7.4 Services Marketing

The discussion so far has generally been applicable to bothgoods and services.
Services, by virtue of their nature, require further consideration. This is
particularly true with respect todesigning strategies for their efficient provision.
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7.4.1 Defining the concept ‘service’

A service is defined as ‘any act or performance that one party can offer to
another that is essentially intangible and does not result in the ownership of
anything (Rewoldt et al, 1981, Kotler, 1999). Its production may or may not
be tied toa physical product. The classroom instruction to students by a school
teacher is a good example of a pure service. Most products however come
as combinations of both physical and service components. A restaurant visit,
for example, provides both food and service. In general terms, the following
can be said about services:
A service can be equipment based ( as a bank ATM) or person based

(as an operation in hospital)
Some services require the presence of the client and others do not.
Services differdepending on whether they are for personal or business
benefit.
7.4.2 Nature of services

Four characteristics distinguish services from physical goods. These
characteristics also point to some unique strategic options in managing service
provision.According to Strong (1985), these are: intangibility, inseparability,
variability and perishability. Below we discuss these aspects in brief.
Intangibility
This means that services cannot be seen, tasted, felt, smelt or heard before
they are bought. Consumers are, therefore, uncertain of the kind of service
thy will actually receive. They can only know after the service has been
delivered. Marketers have come up with some strategies to try and mange
this uncertainty and pre-service apprehension that is associated with the
intangibility of the services. This usually involves providing somephysical
evidence of possible good service. For example,many manned till points in a
supermarket indicate quick service for the consumer. The physical evidence
can be in various forms including clean and hygienic environment, prices
displayed, communication materials, good and working equipment and smart
and efficient looking staff.
Inseparability
This means that production or provision of the service and its consumption
cannot be separated. In other words, the service is consumed as it is being
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produced. The service provider cannot be separated from the service that he
provides. The service, therefore, depends on who is providing the service.
This normally creates a problem of demand exceeding supply when the service
provider is overwhelmed by consumers and he or she cannot pass them on to
someone else. Strategy solutions to deal with this kind of mismatch include
increasing prices so as to limit demand and be known as exclusive, working
faster and taking shorter time with clients, and attending to groups instead of
individuals. It can also be possible to train more serviceproviders and building
consumer confidence in them.
Variability
This means that the service quality is inconsistent. It varies with who has
performed the service, where, when and under what circumstances, both
mental and physical. The challenge of inconsistence of service can be managed
by investing more in staff selection and training, standardising service
performance, automating the service if possible and monitoring customer
satisfaction using customer suggestions and complaints.
Perishability
Services are said to be perishable because they cannot be stored. A service

cannot be stockpiled to be consumed during periods of slack supply or peak
demand. Services, therefore, are stretched during peak demand periods and
underutilised during periods of slack demand. Service quality tends to be
compromised during times of peak demand. There are several strategic options
available to the marketer to try and ‘spread’ demand evenly throughout service
provision times. The following are some of them.
Differential pricing, where higher prices are charged during periods of

peak demand than during other times.
Using reservation systems.
Employing efficiency routines whereby only essential services are
provided during peak demand periods. Staff from non direct customer
service may also be pulled to the front to help essential customer service
functions.
Encouraging consumers to perform some service activity for themselves
for example, packing own groceries at the till points.
(Rewoldt et al, 1981:79)
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7.4.3 Marketing mix variables for services

Fromthe discussion of the nature of services above, it is clear that the 4 P’s of
product, price, place and promotion are not sufficient to provide a complete
arsenal of marketing strategies for the marketer. Three additional P’s have
been suggested by marketers to cope with the nature of services. This means
the marketing mix for services is generally accepted as having 7P’s. Some of
theadditional marketing mix elements, according Rewoldt, et al (1981) are:
physical evidence, people and processes. Below we look at these aspects in
brief.
Physical evidence
These are the tangible things that customers see and can allude to the quality
of service that can be expected. Such tangibles are varied anddepend on the
nature of service offered. It is an example of good and secure parking outside
a supermarketalludes to security and convenience. Marketers must
continuallythink of suitable physical evidence indicators to differentiate the
services offered by their organisations from those of the competition.
People
Services are performed by people. Investment in people is, therefore, alogical

strategy for service providers. Staff should be carefully selected in the first
place. They should then be trained in such matters as customer service. Staff
should be smart, knowledgeable, friendly, willing and able to help. The question
of service in a service industry cannot be overemphasised.
Processes
These are the service systems and procedures within the service industry.
These need to be streamlined, made customer friendly, non bureaucratic, and
fast. Automation and computerisation may have to be employed.
Activity 7.3
1. How would you define ‘a service’ in your own words?
? 2. Describe the characteristics of services with specific reference to
education as a service.
3. Explain how the 3 P’s of physical evidence, people and processes can
be used to define a school as ‘a preferred school that offers quality
education.’
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7.5 Relevance of Entrepreneurial Marketing to

Education
Marketing principles the world over are gaining acceptance and adoption in
government departments and educational institutions. This is because of the
clear resonance of educational objectives and the marketing philosophy. More
specifically, marketing is relevant to education in the following ways:
Marketing is a philosophy that believes the customer is the basis of all

organisational activities. Organisational objectives are achieved by this
focusing on the customer. This philosophy needs to be adopted by
educational institutions, as organisations with set objectives and
identifiable customers. Educational institutions need to be reminded that
as we go into the future, there will be intense competition for students,
and only those institutions with a reputation of focusing on the customer
will carry the day. Schools have to adopt the marketing concept now
to be ahead or at least abreast of the competition.
Educational institutions are service providers. Marketing principles have
special guidelines for such institutions. There are clear and implied
strategies for managing service organisations like school, particularly
on how to create the required impressions of excellence in service
provision.
The knowledge imparted is also useful to teachers and students. They
can be stimulated to apply it in school income generating projects now
and/or in future when they become entrepreneurs, an objective we hope
this course will achieve.
7.6 Summary
In this unit, we gave you the marketing framework that you need to get started
as an entrepreneur. We introduced the marketing concept and showed how it
evolved over the years. We then dwelt at length on the marketing mix variables
of price, promotion, place and product and showed how entrepreneurs can
manipulate them to achieve their objectives. We finally discussed services
and the marketing mix variables that can be used to manage them. We ended
the unit by showing the relevance and importance of marketing principles to
education. We move on to Unit 8 where we discuss in some detail, the subject
of personal selling. We also explore the principles of personal selling and the
nature and functions of sales persons.
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References
Churchill, G. A., Ford, N. M., and Walker, O. C. (1993). Sales Force
Management: Planning, Implementation and Control.
Homewood: Irwin.
Drucker, P. (1983). Management: Tasks, Responsibilities, Practices: New
York: Harper and Row.
Kotler, P. (1999). Marketing Management: Analysis, Planning,
Manning, G. L. and Reece, B. L. (1998). Selling Today: Building Quality
Partnerships. New Jersey: Prentice Hall.
Rewoldt, S. H., Scott, J. D. and Warshaw, M. R. (1981). Introduction to
Marketing Management: Text and Cases Homewood: Irwin.
Strong, E. K. (1985).The Psychology of Selling. New York: Prentice Hall.
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8
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Unit Eight
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Selling in Entrepreneurship
8.0 Introduction
I n the last unit, we discussed marketing in entrepreneurship. We explained

that marketing has evolved to the present philosophy that focuses all
organisational functions on serving the customer. We stated that only by
focusing on customer needs will an entrepreneur achieve his/her organisational
goals. We also discussed how the 7 P’S that make up the marketing mix can
be strategically manipulated by the entrepreneur in the successful marketing
of both goods and services.
In this unit, we continue with our examination of marketing activities, focusing

specifically on the promotional mix element of personal selling. We further
define personal selling and examine its general scope. We also discuss the
various personal sellingprinciples, activities and techniques including negotiation
and relationship marketing. In the discussions, we show the functions of sales
persons and how the success of the organisation including educational
organisations may well depend on personal selling.
8.1 Unit Objectives

By the end of this unit you should be able to:
define ‘personal selling’
identify the various forms of personal selling
describe the sales force design process
explain the concept of sales professionalism
define negotiation and its basic techniques
define relationship marketing
show the relevance of personal selling to education
8.2 Conceptualising the Personal Selling Concept

In order to conceptualise the personal selling concept, we consider the definition
and scope of personal selling below.
8.2.1 Definition of personal selling

Manning and Reece (1998) express personal selling as ‘a process of
developing customer relationships, discovering customer needs, matching the
appropriate products with these needs and communicating benefits through
informing, reminding or persuading through person -to-person communication
with prospects.’ They view personal selling as a philosophy with success
depending on its marketing philosophy foundation and the assumption of the
attitude that selling is about solving problems for customers as they make
buying decisions. Rewoldt, Scott and Warshaw (1981) add the dimension of
purpose to personal selling. They say the purposes of this person to person
contact include:
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Unit 8 Selling in Entrepreneurship
Ultimately to get an order or ‘sale’ for the product

To get retailers to actively promote and display the product at the point
of purchase
To get wholesalers to cooperate with the manufacturer by selling the
product actively or by encouraging retailers to tie in at the point of
purchase with the seller’s advertising and promotional efforts
Educate those who may influence purchase to favour the company and
its products.
8.2.2 Scope of personal selling

Personal selling covers a broad range of participants. Anyone who is involved
in talking to customers to influence purchasing of a product is a sales person.
Sales persons are not unique to profit oriented businesses. Even public
institutions, schools, hospitals and churches make use of sales persons. Thus,
for example, the Methodist Church or Anglican Church ‘Mubvuwi’ is basically
involved in personal selling. Rewoldt et al (1981:114) distinguish several kinds
of personal selling activities:
In store retail salesperson, including those who sell from behind the
counter
Automobile salesman who meets contacts outside the dealer’s shop
Manufacturer’s sales representatives who make house to house calls
Manufacturer’s salesperson making contact with buyers of industrial
goods
Manufacturer’s sales representative who calls upon the wholesaler
Manufacturer’s sales representative who calls directly upon the retailer
Wholesaler’s sales representative calling upon the retailer for orders
‘Missionary’ sales persons who do not get direct orders
McMurry cited in Kotler 1999:97, classifies sells representatives into 6 types
as given below:
Deliverer: the bread delivery man is an example

Order taker: the person who just receives orders from customers and
processes them. He can be internal (counter salesperson) or outside
order taker (sales representative who calls on the store manager for an
order)
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Missionary: this is the person who visits to build goodwill and/or

educate the potential customer. He/she does not take orders
Technician:is the highly knowledgeable sales representative who acts
as consultant for client companies
Demand creator: the creative and smooth talker who persuades people
to buy durable goods
Solution vendor: One who solves clients’ problems by using the
products that he represents
The entrepreneur needs to make use of personal selling to make sales ahead
of his competitors. He adopts one or more of the forms noted above although
ofcourse, the more sophisticated ones yield better results. Whilst it is possible
that the entrepreneur can manage as the sole sales representative of his/her
business, it is prudent to think ahead to the growth of the business and plan
for a sales force. In general, the responsibilities of the entrepreneur with respect
to personal selling sale team are three fold:
Designing or making a sales force plan

Managing the sales force
Improving the sales force performance and effectiveness
(Kotler, 1999).
Designing the sales force
The plan should include a careful consideration of the following:
Sales force objectives. include securing orders, solving problems for
customers, relationship marketing, information gathering and
dissemination and allocating scarce products
Sales force strategy: is the plan of how they are going to approach
and work with customers. The approach may be of sales rep
communicating with buyer or buyer group, or sales team dealing with
buyer team, or conference selling or seminar selling. A decision then
has to be made on whether to use full time sales representatives or use
a contractual sales force.
Sales force structure: depends on the consistency of the product mix
and the geographic spread of the customers. The sales force can,
therefore, be structured along territorial, product or market lines.
Sales force size: is guided by the workload that can reasonably be
carried by one person related to the actual workload to be covered by
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the whole sales force. Planning for an unnecessarily large force is

expensive.
Sales force compensation: should strike a balance between the need
to be competitive on the labour market and the need to control costs.
Besides the basic salaries, commissions and allowances, incentives
canalso be included in the compensation package
(Manning and Reece, 1998:99).
Management of the sales force

This is basically making the sales force design operational, actually getting
sales representatives on the ground and doing their work. Several activities
need to be executed.We briefly discuss some of them below.
Recruiting and selecting the sales representatives. The initial selection

has to be done properly to select qualified and experienced people
with the right attitude.
Training sales representatives. This includes induction and in-service
training to improve performance.
Supervising the sales representatives. This ensures reps continue to
perform to the expectations of their responsibilities. Administrative
controls like checking against set action standards and also soliciting
comments from clients. Supervision must, however, be done in such a
way that integrity and morale are not threatened.
Motivation of the sales force. Most sales representatives require
encouragement and special incentives to maintain their best level of
performance. Personal problems and the frustrations of the job
sometimes take their toll on work performance.Churchill, Ford and
Walker (1993) developed a sales representative motivation model that
can guide entrepreneurs in motivating the selling team.
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Motivation Effort Performance Rewards Satisfaction
Source: Churchill, Ford and Walker (1993)
Figure 8.1: Sales representative motivation model
From the model above, the entrepreneur can offer an initial incentive which
motivates the sales representative. Once motivated, greater effort is exerted
which leads to higher performance. The entrepreneur needs to recognise and
reward this higher performance. The reward gives satisfaction to the sales
representative which then self- motivates the sales representative and the cycle
repeats.
Evaluating sales representatives. This is measuring the performance
of the representatives against set performance standards and reports
from the trade and supervisors. Performance can also be against prior
year performance and performance offellow representatives in similar
circumstances.
Activity 8.1
1. Define ‘personal selling’ in your own words.
? 2.
3.
State the various forms that sales representation may take.
Describe with suitable illustrations, the forms of personal selling that
may take place in a school situation.
8.3 Principles of Personal Selling

Personal selling principles are aimed at improving the performance of the
sales team engaged in personal selling for the entrepreneur. In this respect, we
look at three skills that will greatly improve the effectiveness of sales people
involved in personal selling. They are sales professionalism, negotiation and
relationship marketing. The trained sales person depends on more than inborn
instincts to get the sale when they interact with potential customers.
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8.3.1 Sales professionalism

This is basically the professional guide to salesmanship. The sales
representative trained in this art of selling develops from being a mere order
taker to an order getter. Order getters are of two kinds. There is the sales
oriented sales person and the customer oriented sales person. The sales oriented
approach uses hard selling and slick presentation to get the order. His arsenal
of methods may border on the unethical, including exaggerations and denigrating
competitor products. Offers of immediate discounts may also be made to get
the sale. The customer oriented salesman on the other hand, is more problem
solving in approach. The approach shows how expressed and implied problems
for the customer are addressed by the products that the sales representative
can supply. Whilst this approach is more in line with the marketing concept, it
may be necessary to use the other approach on occasion. Kotler (1999) has
simplified the professional approach to effective selling into aseven step model.
Prospecting and qualifying This is the first step in professional selling
and it involves the identification of prospects or potential customers by
the sales representative. Several approaches can be used to develop
such leads or prospects. Information can be obtained from current
customers, trading partners like suppliers, transporters and banks, the
press, trade shows and exhibitions and trade associations. Once a list
has been made, the prospects are screened to remove the clearly ‘not
hopefuls’. The remaining ones are the categorised into ‘cool’, ‘warm’
and ‘hot’ prospects. The hot leads are tackled first.
Pre-approach
Pre-approach is the second step and it involves gathering information
and intelligenceabout the identified leads. With the gathered information,
the sales representative then decides what he wants to achieve on the
first contact with the prospect, which may be to quality the prospect, to
gather more information or to get an order. He/she should also decide
on the best approach, which may be a letter or on email, a call or a
personal visit.
The approach The approach is the creation of ‘first impressions part’.
The sales representative needs to be smart, well groomed and courteous.
He should avoid irritating mannerisms and downright uncouth behaviour.
Presentation and demonstration This is the stage where the sales
representative makes his sales pitch. He/she needs to be knowledgeable
about the product, articulate and tactful. Emphasis should be placed
less on the features of the product and more on the benefits of the
product and how it solves the prospect’s problems. The AIDA model
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already referred to above of getting attention, arousing interest and

desire and eliciting action should guide the salesman in his presentation.
The salesman should encourage the participation of the buyer. His
presentationcan also be enriched by the use of visual aids,
demonstrations, samples and booklets.
Overcoming objections The sales representative should be prepared
and ready for objections. Resistance can be psychological or logical.
Psychological resistance is not based on any fair assessment of the
product or its presentation by the sales representative. Instead it relates
to plain resistance to interference, reluctance to give up established
source of supply, some predetermined ideas held and dislike to make a
decision. Logical objections relate to the nature of the product being
sold, price, some terms and some company characteristics. Objections
are handled by seeking further clarity on the objections, further
explanations or asking the buyer for preferred options and negotiating
on those. It is possible sometimes to actually turn an objection into a
reason for buying. Negotiating skills come in handy at this stage.
Closing Closing is getting to the conclusion of the presentation and
negotiation and securing the order. The sales representative must learn
to recognise the physical actions, comments and statements from the
buyer that indicate that it is time to close the sale. The salesman can
close the sale by doing one or more of the following: directly asking for
the order, reemphasise areas of agreement, indicating what buyer will
loose if he does not order now, asking how many of each of the options
he would like for trial, offering some inducement to buy – like a discount,
extra quantity at no charge or a token gift.
Follow up and maintenance Follow up and maintenance is important
for ensuring customer satisfaction and repeat business. It is also part of
building a long- term relationship with the customer. The sales
representative should make a personal call after the order has been
delivered to check to see if everything is all right and to establish himself
as a caring salesman.
8.3.2 Negotiation
Manning and Reece (1998) define negotiation as ‘the way to reach a common
understanding of the essential elements of a transaction’.This, therefore, means
that parties can negotiate over many aspects of a transaction, including price,
purchase volumes, responsibility for financing, product safetyand risk taking.
Negotiating requires certain skills and attributes that include preparation and
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planning, knowledge of issue under discussion, ability to think clearly and

rapidly under pressure and uncertainty, being articulate in speech, listening
skill, general intelligence, integrity as well as ability to influence others. Sales
representatives should be able to identify situations where there is scope to
negotiate and do so skilfully such that they do not make deals that hurt
profitability. It is said that there is scope for negotiating when there is ‘a zone
of agreement’. A zone of agreement is said to exist when there is a simultaneous
overlap of acceptable outcomes of the negotiating parties.
The aim of each party would be to push the agreed outcome as further away
from his minimum acceptable outcome as possible.It is, therefore, beneficial
to have prior knowledge of the other party’s minimum acceptable outcome.
The marketing approach to negotiating has been described by Fisher and Ury
(1992) as ‘principled negotiation’. This is in contrast to the ‘hard’ or ‘soft’
approaches to negotiating. The basis of this principled approach is honesty
and seeking win/win outcomes. In particular, the approach gives the following
guidelines to negotiators:
that they must separate people from the problem; that they must focus on
interests and not positions, that they must create options for mutual gain and
that they must insist on objective criteria.
In using this approach, according to Manning and Reece (1998),the sales

person needs to define or know his/her organisation’s best alternative to a
negotiated agreement (BATNA).Thus, the BATNA would be like the minimum
acceptable offer in the bargaining. If the sales person is being pushed by a
more powerful party or unethical tactics, the solution is to compare the offer
against the BATNA and withdraw temporarily from bargaining if it is below
the BATNA standard set. There are many other bargaining tactics that have
been developed over the years.
Classic bargaining tactics

According to Fisher and Ury (1992), one party to the negotiation can use one
or more of the following tactics during the bargaining process.
Acting ‘crazy’. This involves putting up a show that expresses emotional

commitment to your position. This increases your credibility.
The big pot. This means starting from a demand that is way above
your minimum acceptable position. This leaves you a lot of room for
negotiation and creating the impression of one willing to cooperate.
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Getting a prestigious ally. This refers to the tactful reference to important

and well known persons or projects that you hint that you deal or are involved
with. This may intimidate the other party.
‘The well is dry’. This means taking a position and saying you have no
latitude to negotiate beyond that.
Limited authority. This refers tomaking reference to checking with
headoffice.
Whipsaw or auction. This means negotiating with more than one party
at the same time and letting all involved know about it.
Divide and conquer. This works where the other party is a team and
involves negotiating with one member of the party in advance of the
negotiation meeting.
Get lost/stall for time. This is temporary withdrawal from the
negotiation
Wet noodle. This means not responding or ignoring threats and pressure
from the other party.
Be patient. This simply means out-waiting the other party
Trial balloon. This involves ‘leaking’ your position to the opposition
well before the negotiation to gauge their reaction.
Surprises. This means preventing the opponent from anticipating your
moves by making drastic and unpredictable actions.
8.3.3 Relationship marketing

Manning and Reece (1998) have described a relationship strategy as a well
thought out plan for establishing, building and maintaining quality relationships
that are essentially long term and ‘double win’. This is a shift from the focus
on the transaction oriented marketing of personal selling and negotiating that
we have discussed so far. Relationship marketing goes beyond the single
transaction here and now to thinking of future long-term business relationships.
Personal selling plays a key role in relationship marketing. The process starts
from the first contact with a prospect to servicing the sale once the prospect
becomes an established customer. Establishing long-term mutually beneficial
relationships with customers is a long term process requiring several related
activities. We discuss three of these below.
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Developing prospects from first- time customers to partners
Griffin (1995) developed a model that describes the customer development

process. This model is shown in the diagram in Fig 8.2 below.
SUSPECTS
PROSPECTS First-time Repeat Clients Advocates Partners

customer customer
DISQUALIFIED Inactive or
PROSPECTS ex-customers
Adapted from Griffin (1995:89)
Figure 8.2: The Customer-Development Process
The customer developmentprocess starts with some identified suspects. Some

of these are vetted into prospects. Some of the prospects are approached
and closure is achieved and they become first time customers. Some prospects
are disqualified for various reasons. With continuous visits and nurturing, some
first-time customers develop to repeat customers. The process repeats with
hard work on the part of sales representatives assisted by the total marketing
effort and customers develop through the stages of clients, advocates and
ultimately partners. Partners not only speak well of your organisation, but
also actively works with your organisation in mutually beneficial long- term
relationships. The organisation works with the partner customer to discover
ways to effect savings and better performance.Throughout the stages, some
customers drop to become inactive customers. Customer win-back strategies
need to be instituted to win them back wherever possible. As an education
scholar, you need to consider how this can best be applied to education.
Developing stronger customer bonding and satisfaction
During the customer development process some customer-value adding

strategies may be implemented. Some of these are:
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Adding financial benefits to transactions. This can be through frequency

marketing programmesor customer affinity groups or clubs. Frequency
marketing programmes reward customers for frequent and continuous buying
of the product. Customer clubs or affinity groups are made up of customers
and they benefit from discounts and the prestige of association.
Adding social benefits. In this case, company personnel increase social

bonds with customers by individualising and personalising their customer
relationships.
Adding structural ties. This activity involves assisting clients with
equipment and computer software that helps the customer manage their
businesses. In some cases the software allows the company access
into the customer’s system.
Establishing a relationship marketing program in the
organisation This basically involves institutionalising the relationship
marketing by setting an organisation for it. Skilled and experienced
relationship managers are assigned to oversee one or more key accounts
or key customers who will have been earmarked for relationship
marketing. The key functions of the relationship managers are to ensure
total satisfaction of the customer and long term planning for the
relationship.
Activity 8.2
1. Explain the meaning of relationship marketing. Examine the customer
? value- adding strategies that a school can adopt in managing a
relationship marketing programme.
2. Outline the customer development model. Explain the significance of
inactive or ex-customers to marketers.
8.4 Functions of Sales Persons

The functions and roles of salespersons have been referred to throughout the
discussion. Some of the reference has been very specific, as when we discussed
‘negotiating’as an example. In some cases, the roles and functions have been
implied. For your convenience, we summarise in point form the various roles
and functions of sales people. We make no distinction of their functions by
level of salesmanship.
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Thus, from the discussion above and as consolidated by Churchill, Ford and
Walker (1993:75), salespeople can be seen to perform the following roles
and functions.
Getting the sale. This is the ultimate responsibility

Market analysis
Prospecting for new customers
Communication: carries vital information between customers and the
organisation
Intelligence gathering
Servicing current customers
Developing customers until they become partners
Maintaining customers
Negotiating
Problem identification for customers
Problem solving for customers
Time management
Supervision
General administration
Human resources management
Resource allocation
Self- improvement
Relationship marketing
It is important for you to note that the list is by no means exhaustive.
Activity 8.3
1. List the functions of salespersons. From your list, identify the roles that
? 2.
a sales manager performs.
Define prospecting and describe how it takes within the context of
personal selling.
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8.5 Profile of Salespersons

We wrap up this unit on personal selling by drawing up a profile of a successful
salesperson. By this we are referring to the characteristics, qualities, attributes
and traits of the sales person. In this effort, we are guided by the writings of
Garfield (1986), Manning and Reece (1998) and Kotler (1999). We also
draw from our discussion of the characteristics of successful entrepreneurs in
Unit 3 above. As we have already stated, the entrepreneur may well be the
lone salesman inhis business, particularly when it is starting off. From the
sources above and related literature, we surmise the successful salesperson
to be of the following character: the list once again cannot be exhaustive.
McMurry cited in Kotler (1999:91) describes the salesperson as: a

habitual wooer, with a compulsive need to win. He/she holds deep
affections for people and has high levels of energy. They have high
levels of self confidence and a strong hunger for money. He/she also
says they have a well established habit for industry and consider all
forms of objections and resistance as challenges.
Garfield (1986:103) in his ‘Super achievers’ model describes successful
salespeople as: risk-takers with a powerful sense of mission. They are
problem solvers and take great care of their customers. They are also
careful call planners.
Greenberg cited in Kotler (1999:72) says salesmen are empathetic and
have a highego drive.
Manning and Reece (1988:87) say that successful salespersons have
the following qualities: good image in terms of grooming, inflection,
posture and dress; good attitude in terms of sincere respect for the
customer; highly knowledgeable, especially on their products and
industry; sensitive to the needs and reactions of their customers;
enthusiastic about their products and work; and mature with respect
to their ability to handle disappointments and setbacks. They also
emphasise that successful salespeople are ethical, that is, they behave
along acceptable moral standards of wrong and right. This is particularly
true with respect to the following ethical challenges: disclosing
confidential information; reciprocity in business; defaming competitor
products and staff; receiving and giving business inducements like gifts,
entertainment and downright bribery.
To the above we also add: honest, reliable and helpful, innovative, high
sense of responsibility.
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Activity 8.4
1. Outline the characteristics of a model sales manager.
? 2. Identify the ethical challenges that may impinge on the personal interface
of a school headmaster and the general publics. How would you handle
them?
8.6 Relevance of Entrepreneurial Personal Selling to

Education.
In the last unit, we stated that many public organisations are adopting marketing
as a model for carrying out their functions. Schools and other educational
institutions are no exceptions. According to Kotler (1999), personal selling is
particularly relevant to organisations including educational institutions in several
respects. Below we look at some of them.
Schools and other educational institutions find themselves faced with

increasing competition. The competition is being intensified by emerging
private colleges that see gaps in the educational services provided by
traditional institutions. Schools, therefore, soon find themselves in intense
competition for students who are able to pay fees and levies. There is
also competition for academically gifted children, particularly at Form
1 and Form 5 levels. Schools, therefore, need to adopt promotional
strategies, especially personal selling, to attract the wanted kind of
student.
Personal selling comes with a package of skills and models. These
models came to be applied in educational operations for better
achievement of the goals of educational institutions. Skills like negotiating
and building long term business relationships through relationship
marketing for example are particularly applicable and useful.
The unit on personal selling also serves as a reminder that school
administrators must start to view and manage these educational
institutions as businesses
The skills in personal selling must also be imparted to students at these
early stages in their development. They will reinforce the spirit of
entrepreneurship that we believe is important for the development of
the country
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8.7 Summary
In this unit, we have given you an appreciation of ‘personal selling’ and its
relevance organisations. We started by giving a definition of personal sellingand
a brief outline of its scope. We then discussed how entrepreneurs can develop
their personal selling effectiveness through sales professionalism, negotiating
skills, and relationship marketing. We ended by giving summaries of the
functions of salespeople and their characteristics before wrapping up with
ananalysis of the relevance of personal selling to education.
In the next unit, we discuss financial accounting. When sales are coming into
the business through marketing and personal selling efforts, the need for keeping
proper records of transactions and analysis of same comes to the fore.
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References
Churchill, G. A., Ford, N. M., and Walker, O. C. (1993).Sales Force
Management: Planning, Implementation and Control. Homewood:
Irwin.
Drucker, P. (1973). Management: Tasks, Responsibilities, Practices, New
York: Harper and Row.
Fisher, R. and Ury, W. (1992).Getting to ‘Yes’: Negotiating Agreement
Without Giving in: Boston: Houghton Mifflin.
Griffin, A. (1995).Customer Loyalty, How to earn it, How to keep. New
York: Lexington books.
Kotler, P. (1999). Marketing Management: Analysis, Planning,
Manning, G. L. and Reece, B. L. (1998).Selling Today: Building Quality
Partnerships. New Jersey: Prentice Hall.
Rewoldt, S. H. Scott, J. D. and Warshaw, M. R. (1981). .Introduction to
Marketing Management: Text and Cases: Homewood; Irwin
Strong, E, K , (1925). The Psychology of Selling: New York: Prentice Hall.
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9
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Unit Nine
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Financial Accounting in
Entrepreneurship
9.0 Introduction
I n the last unit, we discussed the topic personal selling in entrepreneurship.

We defined the concept and gave an outline of its scope. We explained
some principles of selling that we said enhanced the effectiveness of
salespersons.
In this unit, we explore the field of financial accounting. This is to giveyou a

basic understanding of the principles and practises within the field. We start
by describing the concept of accounting and outlining briefly its scope. We
then discuss some basic bookkeeping transactions, from the source documents
through to how the transactions are recorded using double entry book keeping.
The treatment of depreciation of fixed assets is also considered in the unit.
We introduce the principal accounting reports, the balance sheet and the trading
and profit and loss report by briefly describing their preparations and
interpretation.
We end the unit with an examination of cashflow statements, the information

that can be derived from them as well as relevance of financial accounting to
education.
9.1 Unit Objectives

define financial accounting
state the divisions of accounting and their functions
record financial transactions in the ledger
construct the trading and profit and loss report
outline the structure of the balance sheet and describe its preparation
explain how the cash flow statement is prepared and interpreted
calculate basic financial ratios and explain their meanings
show how financial accounting is relevant to education
9.2 Meaning and Scope of Financial Accounting

In this section, we look at what financial acconting entails, both in definition
and scope.
9.2.1 Meaning of financial accounting

For one to understand financial accounting, it is necessary that one first
understands the meaning of accounting in general. There is no universally agreed
and precise definition of accounting in literature. The Accountant’s Handbook
(edited by Wixon, 1986:88) defines accounting as ‘the art of recording,
classifying and summarising, in a significant manner and in terms of money,
transactions and events, which are, in part at least, of a financial character,
and interpreting the results thereof.’We have simplified the meaning of
accounting to mean the processes and activities that relate to the capturing
and recording of financial transactions, summarising them into reports and
communicating and interpreting the reports. There are clearly many functionaries
involved inthis complex set of activities, from the simple book keeper to the
financial controller and financial director of an organisation. The practise of
accounting is performed in all fields of financial activity.
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Unit 9 Financial Accounting in Entrepreneurship
In general the fields of accounting practise can be classified into 5,

which are:private, independent public, government, fiduciary and national
income accounting. Below we describe these fields in brief.
Private accounting: is the common type of accounting where the work
is being done within and for a private business.
Independent public accounting: is the professional accounting and
auditing services that are provided to other businesses and interested
publics by some other company or individual.
Government accounting: is accounting in government service. As there
is no profit motive to account for in government, the major focus
becomes that of checking to see if revenues and expenses are in line
with set budgets.
Fiduciary accounting: is basically accounting for estates and properties
that are under the hands of a trustee, administrator, or executor.
National income accounting: also called social accounting; is
accounting for national socio-economic analysis. It is concerned with
national or international incomes and balance sheets
(The Accountant’s Handbook, edited by Wixon,1986:96).
9.2.2 Scope of Financial Accounting

We have already stated that accounting is a wide field with many functionaries
carrying out accounting functions. To illustrate the scope of financial accounting,
we list below all the key activities that that are performed under the accounting
umbrella. Some writers have referred to these activities as constituting the
accounting cycle as they have to be performed periodically and in perpetuity.
Brockington (1995) says that these activities include:
Engaging in a financial transaction. Transaction recorded on a source

document like an invoice or receipt.
Sorting source documents by type and batch.
Recording transaction in the subsidiary books of accounts like the
journal.
Posting information from the subsidiary books to the ledger
Drawing up a trial balance for prima facie proof that recordings have
been done accurately and correctly
Producing financial reports like balance sheet
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Analysing and interpreting information from reports

Making management decisions for the business.
Activity 9.1
1. Define accounting in your own words.
? 2. Describe the financial accounting activities that take place in a school
environment.
9.3 Divisions, Function and Purpose of Accounting

Accounting is a common denominator for all business activities, enabling
comparisons of performance and condition to be made across different kinds
of businesses. It is indeed the common language of business. Accounting has
several branches or divisions. The branches are all closely related and in some
cases two or even more are performed by the same office.
9.3.1 Divisions of accounting

The major divisions of accounting are: financial accounting, financial
management, cost and management accounting, auditing, tax accountingand
budgeting.
Below we dicusss these divisions in brief.
Financial Accounting. This is the foundation of accounting in that the

bulk of information needed and used in accounting comes from this
division. As already seen from the scope of financial accounting, it
involves the capturing of financial transactions (like sales), recording
the transactions (in the ledger for example), summarising the transactions
into reports (the profit and loss report for example), and analysing the
reports (using financial ratios for example). The work of the other
divisions depends on what has been produced in financial accounting.
These are the skills that we discuss for the entrepreneur in this unit.
Financial Management. Brockington (1995) aptly describes financial
management as the strategic management of funds within an organisation.
It is the responsibility of the financial manager to source the cheapest
funds at the right time and for the right length of time. The financial
manager also advises on the most effective use of available funds in line
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with the objectives of the organisation. The use includes making both
internal and external investments. The balance sheet that the financial
accountant produces at the end of a specified period, in fact, shows
how well the financial management function is working within the
organisation. Indeed the main responsibility of financial management is
to ensure ‘a healthy balance sheet’.
Cost and Management Accounting. This division concerns itself with
operational costs within the organisation. The scope covers the activities
that are required to capture costs, analysing them and controlling them
in the best interest of the organisation. The main objective of cost and
management accounting is efficiency in operations and usage of materials
that reflects in lower unit costs. This gives the organisation greater scope
to compete on the basis of price. In fact, the gross profit on the
manufacturing report that the financial accountant produces reflects how
well the cost and management accounting function is working within
the organisation.
Auditing. This is about ‘checking for compliance’, reporting to
management and recommending improvements to safeguard company
resources. It is the responsibility of auditing to check all accounting
systems and reports for compliance with set standards and to detect
possible frauds. Auditing also checks on compliance with all set systems
and procedures, both internal and external.
Tax Accounting. This is preparing accounts for purposes of determining
the tax due to be paid to government in the various forms including
VAT, corporate tax and employee income taxes. It is sometimes
necessary to make adjustments to the financial reports prepared by the
financial accountant to arrive at the actual taxable profit that the
government recognises. One such adjustment is made with respect to
depreciation accounting.
Budgeting. This is another important accounting function. It involves
the preparation of operating budgets and the subsequent analysis of
actual performance against the budgets. Budgeting encourages financial
discipline in that people think carefully about costs before spending.
Budgeting is most prominent in government accounting as already noted.
9.3.2 Function and purpose of accounting

The function of accounting has long since been recognised. As early as 1989,
Paton had this to say about accounting: ‘in a broad sense accounting has one
primary function: facilitating the administration of economic activity’ (Paton,
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1989:78). This function has two closely related phases; measuring and arraying
economic data and communicating the results of this process to interested
parties. ’ The function of accounting is to record financial transactions,
processing the transactions into reports, analysing the reports and
communicating the reports. The purpose of accounting is determined from
the reason why accounting information is required. It must be emphasised
that accounting does not exist for itself alone but for the services it provides to
interested parties. Herein lies the purpose and role of accounting: ‘to furnish
financial data concerning a business enterprise, compiled and presented to
meet the needs of management, investors, government and the public’ (Paton,
1989:81). Some of the users and beneficiaries of accounting information and
reports include:
Internal users: employees (for collective bargaining and determination

of fringe benefits like profit sharing.); shareholders (to see how well the
businessis performing and what profit can beshared); management (to
see how well the business is performing against forecasts and what
strategies and controls are needed going forward)
External users: government (to determine sales volumes and profits
for tax determination); legal fraternity (accounting records are frequently
needed in court cases); banks and financiers (to decide if the company
is a safe investment for both loans advanced and those to be advanced);
creditors (to decide if the amounts they are owed are reasonably safe
and will be repaid); public (to determine if the company is a possible
safe investment opportunity).
It is important for you to note that the lists are far from exhaustive.
Activity 9.2
1. List the divisions of accounting and examine how financial accounting
? 2.
relates to financial management.
The purpose of accounting is to furnish financial data and information
to various interest groups. Identify the financial information that is
produced by a school accounting system and explain how the school’s
stake holders benefit from the information.
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9.4 Accounting Concepts and Principles

The work of accountants is guided by various codes of conduct. Thus, as the
financial accountant records, prepares reports and presents reports he/she
followstheseguidelines. These guidelines are called conventions or principles.
As Anthony, Reece and Hertenstein (1995) state, principles refer to ‘the
general laws, conventions, or rules adopted or professed as a guide to action
or a settled ground or basis of conduct or action’. The principles are in turn,
founded on certain concepts. Concepts can be looked at as postulates or
necessary assumptions or conditions upon which accounting principles are
based.
Accounting principles ensure that the final products of their use are reasonably
consistent and comparable over time and across companies and even countries.
Thus, for example, a balance sheet produced using the necessary principles
and conventions can be compared to the one produced by the same company
in the past and also to another produced by another company.Themain body
of accounting principles constitute what is called the General Accepted
Accounting Principles (GAAP). Several international accounting bodies
contribute to GAAP. They include the Financial Accounting Standards Board
(FASB) based in the USA, the International Accounting Standards Committee
(IASC) and in Zimbabwe, the Council of the Institute of Chartered Accountants
(CICA). CICA is a member and affiliate of IASC. As new principles are
suggested they are vetted and measured against a set of criteria before they
are accepted and added to GAAP, the criteria include: relevance, objectivity
and feasibility. These criteria are described in brief below.
Relevance: is basically the degree to which the principle results in

information that is useful and meaningful to the stake holders of the
organisation producing the accounts.
Objectivity: is the extent to which the principle is not influenced by the
personal biases or judgements of drafters and whether or not its
application results in reliable, trustworthy and verifiable information.
Feasibility: is the extent to which the principle can be implemented
without undue complexity, time and cost to the user.
(Anthony, et al, 1995:107)
As we go further in our discussion of financial accounting principles, we will

come across the various reports that GAAP require to be produced, the
structure of the reports and the content of the reports. Suffice is to say at this
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point tha, some accounting concepts relate to the balance sheet and some
relate to the trading and profit and loss report.
9.4.1 Concepts relating to the balance sheet

There are basically five concepts that guide the nature, structure and content
of the balance sheet.
Business entity concept. This is the requirement that financial accounts

be drawn and relate to a specific and identifiable business entity. Thus,
from an accounting point of view, the business is separate from the
owner. The owners are just the providers of capital as recorded on the
balance sheet.
Going concern concept. Accounts should be drawn with the
assumption that the business is not planning to close down any time
soon. This means the resources shown on the balance sheet are for
business use and not for sale. Current market values are, therefore, not
used to valuate asset or work in progress. Instead, original cost is used.
The exception is closing stock which uses the lower of current market
value or cost in compliance with another concept.
Money measures concept. The requirement with this concept is that
transactions and assets are only expressed in monetary units. In other
words, only items with a monetary value can reflect in account. Thus,
for example, the value of 15 hard working staff members cannot reflect
in the accounts.
Historical cost concept: is the requirement that assets be recorded to
reflect their cost. The exception will be closing which may be recorded
at market value if the market value is lower than cost.
Duality concept. Every transaction affects two accounts in opposing
ways.One account is debited and the other is credited. In the final
analysis the total of credits will be equal to the total of debits. The
duality concept requires that financial records should show this duality,
both in recording and on the balance sheet. The duality principle is
reflected in the accounting equation which is true for any business: that
DEBITS = CREDIT and therefore ASSETS = LIABILITIES. The
liabilities include both liabilities to third parties and the liability to the
owners, meaning the capital invested in the business. If we separate the
liabilities, the accounting equation is then expressed as: ASSETS =
CAPITAL + LIABILITIES.
(Anthony, et al, 1995:107).
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9.4.2 Concepts with respect to the income statement

According to the Accountant Handbook edited by Wixon (1986) the
following are six concepts to consider:
Accounting period concept: is the expectation that the income

statement should show results for a specified period of time. The period
can be anything up to a year. Companies are expected to produce
income statements annually by law for taxation purposes.
Prudence or conservatism concept: is the guideline that accountants
must be prudent in recording revenues and expenses. Thus, accountants
have to exercise discretion with respect to expenses and they should
act in such a way as to reduce profit on the income statement and,
therefore, assets on the balance sheet. This means expenses would
rather be overstated and revenues understated. In general the guideline
says revenue should only be recognised when it is reasonably certain,
and expenses to be recognised when they become reasonably possible
Realisation concept: is the requirement that revenue should only be
realised in the accounts when it is reasonably certain to be received by
the seller. The example of a sale on credit can be used to illustrate the
application of the concept. From the credit sale, it may become apparent
that part of the money is not paid to the seller. Only the amount that is
certainly received should be recorded as revenue. If it is reasonably
possible that some of the amount is not paid resulting in a bad debt, a
provision for bad debts, therefore, be recorded as an expense.
Matching or accrual concept: simply means that revenues and
expenses that relate to a particular transaction should both be recorded
or realised for the period to which they relate. This is regardless of the
actual cash payments made. Thus, for example, if rent for the period is
$1 000 but only $700 is actually paid, the whole amount of $1 000 is
realised in the period for which it was due. The idea is to match revenues
and expenses to the periods for which they are due.
Consistency concept: means that an accounting policy that has been
applied in one accounting should consistently be applied in subsequent
periods, unless there are compelling reasons to change. If for example
depreciation of motor vehicles is calculated at 20% of cost per annum
in one year, then the same formula should be applied the following year.
Materiality concept. The guideline here is that only significant
transactions should be recorded. It is not expected that time and effort
be wasted on attempting to record insignificant events.
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Activity 9.3
1. Define an accounting principle in your own words.
? 2. Enumerate the accounting concepts that guide the structure and content
of the balance sheet.
3. Explain the materiality concept in accounting. Identify examples of
transactions or events that can be considered immaterial for recording
in producing a school’s revenue and payments statement.
9.5 Recording Financial Transactions

In this section, we now consider the technical aspects of financial accounting.
We need to advise you that accounting is a practical subject. As such, it can
be best understood by doing a lot of practical work on the subject. Most of
the computations in financial accounting are now done by computer software
packages like Pastel. Transactions are just entered into the system as they
occur and a variety of reports are automatically generated for use by
management. Anthony et al (1995) identifies the following aspects:
9.5.1 Source documents

Transactions or financial events are first captured on source documents as
they occur. Every time that cash or value is exchanged, a document must be
raised to represent the particular transaction. There are several types of source
document that capture a variety of events. The key ones include: invoices,
receipts, credit notes and debit notes.
Invoices: give details about particular purchases and made by the

business. The till slips that we receive in supermarkets are examples of
simple invoices.
Receipts: give details about cash payments made and received by the
organisation.
Credit notes: are documents raised to reduce previously issued invoice
amounts for a variety of reasons. Conventionally printed in red.
Debit notes: are documents raised to increase previously issued invoice
amounts for a variety of reasons.
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9.5.2 Subsidiary books or books of original entry

Information captured on source documents is then transferred to subsidiary
books or books of original entry. This is the initial stage of processing accounting
and is usually done by a data capture clerk. Four kinds of subsidiary books
are traditionally used. They are:
Purchases day book, for recording trading stock purchases on credit

Sales day book, for recording trading stock sales on credit terms
Cash book, for recording all cash transactions, be they payments or
receipts
Journal, for recording all other transactions including purchases of assets,
payments of expenses, disposal of obsolete equipment, depreciation
records and so on
9.5.3 The ledger

This is the ultimate or principal book of accounting. All transactions are
eventually transferred to the ledger. Transactions are first summarised in the
subsidiary books above and periodic totals transferred to the ledger. In
transferring information to the ledger, the following principles are adhered to:
Only summarised totals are transferred.

The totals are recorded in the ledger under various accounts created
for the various accounts that are affected by transactions.
The recording in the ledger must follow the double entry book system
where each transaction is acknowledged to affect two accounts in
opposite ways. One account is debited and the other credited.
Transactions from the cash book are not transferred as the cash book
serves a dual purpose of also being an extension of the ledger.
The accounts towhich summarised totals are entered in the ledger are of three
kinds:
Personal accounts; that record dealings with legal personae, including

debtors and creditors
Real accounts; which are non-personal accounts that deal with tangible
thingslike motor vehicles, land and buildings
Nominal accounts; which are non-personal accounts that deal with
‘intangibles’ like expenses, income and profit or loss.
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9.5.4 Double entry book-keeping

We have stated that in posting summarised total to the ledger, the principle of
double entry must be followed in which one account is credited and the other
account is debited. The conventional is that the account ‘receiving the benefit
or some value’ is debited whilst the account giving the benefit is credited. The
traditional presentation of an account is the ‘T’ format with the left side being
the debit side for recording debit entries and the right side being for credit
entries. Cross referencing is done in each account by referring to the other
account that has also been affected. The principle of double entry is best
illustrated by a simple example.
Activity 9.4
1. Kundai starts a small business, Kundie’s boutique with $2000 cash on
? 01-01-2010. On 03-01-2010, she bought display rails on credit from
Display Mart for $200. She also bought $700 worth of stock to sell
for cash from Kumbirai Import and Export on the same day.
Required: Make entries to show these transactions in the ledger of
Kundie’s boutique.
Reasoning: We need first to determine how many accounting events or

transactions we are dealing with and for each, which two accounts are affected.
In each case, we need to determine the account receiving a benefit and the
account giving the benefit. The account receiving the benefit is debited and
the one giving the benefit is credited. In this case, there are three events or
transactions. The first concerns owner’s capital of $2000 being put into the
business. Theaccounts affected are therefore ‘capital’ account and ‘cash’
account. The cash account is receiving $2000 and the capital account is giving
$2000. The second event is to do with the purchase on credit of fixtures and
fittings. The 2 accounts affected are ‘Fixtures and Fittings’ which is ‘receiving’
and ‘Display Mart’ which is giving. The third accounting event is the cash
purchase of stock from Kumbirai Import and Export. The two accounts
affected are ‘cash’ account which is giving and ‘Purchases’ account which is
receiving.
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Solution: LEDGER OF KUNDIE’S BOUTIQUE
CAPITAL
Dr ($) Cr ($)
01-01-2010. Cash 2000, 00
CASH
Dr ($) Cr ($)
01-01-2010 Capital 2000, 00 03-01-2010 Purchases 700, 00
FIXTURES AND FITTINGS
Dr ($) Cr ($)
03-01-2010 Display Mart 200, 00
DISPLAY MART
Dr ($) Cr ($)
03-01-2010 Fixtures &fittings 200, 00
PURCHASES
Dr ($) Cr ($)
03-01-2010 Cash 700.00
As we have already stated, one will need to work out many practise examples
to get the full grasp of double entry book keeping.
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Activity 9.5
1. Explain what you understand by source document. Identify the specific
? source documents that are related to the accounting transactions that
take place at your school or any other school of your choice. Outline
the details that are recorded on each document.
2. Outline the accounting cycle.
3. A school buys stationery on credit from Zim Stationers for $2000 on
January 06, 2010. They also bought benches for $1000, 00 cash from
‘Chairs and Benches P/L on January 08, 2010. On 15 January 2010,
the school pays $750 to Zim. Stationers in part settlement of the amount
owing to the company. Required: Show these transactions in the ledger
of the school.
9.6 Depreciation Accounting

When a business buys an asset, it expects to use it over a long period of time.
The expenditure incurred is said to be of a capital nature, which is commonly
referred to as CAPEX. This is opposed to expenditure of a revenue nature
which does not result in the ownership of an asset. During the period in which
the asset is being used, the asset will be contributing to operations and revenue
generation. This means a part of the value of the asset has actually gone into
production or revenue generation. Following the matching concept, that portion
must be estimated and matched to the revenue that it helped to generate for
the period. This estimation is the essence of depreciation accounting.
9.6.1 Definition
In general terms, depreciation is the wear and tear that occurs to an asset as
it does its work over its useful life. In accounting, depreciation is the allocation
of the cost of an asset to expense in the periods in which services were received
from the asset. Depreciation is the result of wear and tear as already stated or
obsolescence or getting outdated.
9.6.2 Calculating depreciation

There are four common approaches to calculating depreciation. These are
the straight line method, the reducing balance method, the sum of the years’
digits method and the revaluation method. While all the four methods are
important and useful, we discuss below the first two methods as they are the
more commonly used ones.
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Straight line method

Here depreciation is assumed to occur evenly over the useful life of the asset.
The period depreciation (D) will be calculated as:
D = (cost of asset – scrap value of asset)/number of years of useful life.

Diminishing balance method
In this case, the depreciation is taken to a fixed percentage of the net book
value of the asset for each period. The amount of the depreciation actually
diminishes each year.
9.6.3 Accounting entries for depreciation

The current approach is now to create a ‘provision for depreciation’ account
in the ledger which is credited with the amount of the estimated depreciation.
The debit is posted to the profit and loss account. The asset account is left
intact with its original cost value. In the balance sheet, the standard practise is
to show the net book value (NBV) and how it has been arrived at from the
original cost less accumulated depreciation.
Activity 9.5
1. Define depreciation as used by accountants.
? 2.
3.
State four methods of calculating depreciation.
Kundie’s boutique bought a truck for $10 000, 00 for cash for use in
the business. The useful life of the truck is estimated at 3 years, after
which it can be sold for $1000.00. Kundie’s boutique is also advised
that a truck like theirs can be depreciated at a fixed rate of 30% of
NBV per annum. Required: calculate the depreciation of the truck
using both the straight line and reducing balance methods.
9.7 Financial Accounting Reports

One of the key responsibilities of financial accountants is to produce accounting
reports from information recorded in the ledger. Two such reports are the
income statement, also known as the trading and profit and loss report, and
the balance sheet. We now discuss these reports. However, before we go
into the reports, we need to review the trial balance.
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9.7.1 The trial balance

A trial balance is a statement showing all the debit and credit balances of the
ledger accounts arranged systematically to check the mathematical accuracy
of the ledger postings. Following from the double entry book keeping system,
it is clear that all credits must be equal to all debits. If the totals of the debit
balances and the credit balances are not equal it will be evidence that there
were some errors in making the accounts. The errors may have been from
wrong entries or from wrong addition. A through check must be made to
trace the error and correct it.If the totals agree, it is primae facie evidence
that the entries were correctly and accurately made.
It is, however, possible that the debit and the credit totals of the trial balance
will be equal when accounting errors have in fact been made. This means
there are some errors that cannot be revealed by a trial balance. The errors
include: error of omission, error of commission, error of principle, of original
entry, complete reversal of entry and compensating errors. Below we discuss
these aspects in brief.
Error of omission: occurs when a transaction has been completely
missed and therefore not included in the accounts.
Error of commission: ccurswhen an amount has been entered inthe
wrong account although the wrong account is of the same type as the
correct one. For example, entering a credit actually made to X on Y’s
account even though X and Y are both debtors.
Error of principle: occurs when an entry is made in the wrong account
of a different type. For example recording astationery purchase for
office use as a purchase instead of as an expense.
Error of original entry: is the error of recording an inaccurate figure,
for example wrongly recording a $100 transaction as $1000 in the
accounts.
Complete reversal of entry: means making a debit entry instead of a
credit entry and vice versa on the other account.
Compensating errors: involves making a credit entry of a certain
amount that is exactly off-set by another error of the exact amount.
Besides making the accountant reasonably sure that the entries were done
correctly and accuratelywhen the trial balance balances, the accounts balances
summarised on the trial balance are also used in the preparation of the trading
and profit and loss report and the balance sheet. We must also clarify that the
trial balance does not form part of the double entry system. It is just a statement
of balances used for the convenience of the accountant.
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9.7.2 Trading and profit and loss account

The trading and profit and loss statement is one of the most important reports
that the entrepreneur will need to prepare and analyse. The report is prepared
for a specified period, usually monthly or weekly for management control
purposes. Organisations are, however, required by law to prepare an annual
income statement for taxation purposes. The statement can be prepared straight
from the ledger by using the balances on the accounts at the end of the specified
period. Standard practice is, however, to use the balances already extracted
on the trial balance. The trading and profit and loss report has two main
sections, the trading section and the profit or loss section.
The trading section shows the gross profit from trading by subtracting from
sales the cost of the goods that were sold. The cost of the goods sold include
not only the purchase cost of the goods, but also other costs that were incurred
to make them available for sale, especially carriage inwards. The profit or
loss section shows the profit after subtracting from the gross profit all the
expenses and provisions that were matched to the revenues for the period. It
is now customary to add an appropriation section to the income statement to
show how the profit, if any is be used. This is mostly to pay owners of the
business by way of dividend and to allocate it to reserves. The income statement
is important in that is shows the results of trading for the specified period of
time. It tells the entrepreneur whether or not he has been successful in all his
efforts. We revisit this critical matter of the analysis of the profit and loss
statement in the next section after we examine the other critical report, the
balance sheet.
9.7.3 The balance sheet

The balance sheet is another statement of balances of accounts from the
ledger and income statement. It is, however, specially prepared and structured
to show the assets and liabilities of the business at a particular point in time. It
is, therefore, drawn to show the position or status of the company as on the
specified day. This is in contrast with the income report which shows how the
company has traded over a period of time. The modern presentation of the
balance sheet is in the form of a statement of source and application of funds.
The source of funds show the liabilities of the business whilst the application
of the funds will show the assets of the business. An examination of the balance
sheet also tells the entrepreneur a lot about the state of his business. The
analysis of the balance sheet is discussed below. Before we do that we,
however, need to consolidate our appreciation of the trial balance, the trading
and profit and loss report and the balance sheet by working through an example.
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The following is the trial balance of ‘Sorry trading P/L’ as at 31-12-2009.
TRIAL BALANCE Dr ($) Cr ($)
Stock on hand 01-01-2009: 10 000 Purchases

17 000
Credit sales 28 000
Cash sales 1200 Returns
inwards and outwards 343 300 Wages
1 500
Carriage inwards 750
Sundry expenses 600
Salaries 6 000
Rent received 4 000
Commission received 200 Discount
received 3000 Rates
and taxes 700
Discount allowed 500
Carriage outwards 1 000
Mortgage at 6% 100000
Loan at 5% 50000
Motor vehicles at cost 40 000
Machinery balance on 01-01-2009 80 000
Office equipment 30 000
Capital 100 000
Drawings 12 000
Bad debts 600
Debtors 14 000
Creditors 30 000
Cash at bank 91 700
Cash on hand 8 000
Insurance 2 007
Totals 316 700 316 700
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Additional information
I. Stock on 31-12-2009 was valued at $12 000
II. Rates paid in advance were $100
III. Wages owing 31-12-2009 were $320 and accountancy fees $400
IV. Pre-paid insurance was $50
V. Commission owing to the business on 31-12-2009 was $18
VI. Provide 15% depreciation on cost of motor vehicle and 10% on balance
of machinery as on01-01-2009
VII. Make a provision for bad debts of 5% of debtors and a provision for
discount allowable of 3%
VIII. Provide for a full year’s interest on loan and on mortgage
Required: Prepare a trading and profit and loss report for the year ended
31-12-2009 and a balance sheet as on closing date.
Solution:
a) Trading and profit and loss report of ‘Sorry Trading P/L’ for the year to 31-12-2009
($) ($)
Sales (total of cash and credit sales) 29200 less:

returns inwards 343
Net Sales 28857
Less: Cost of goods sold:
Opening Stock 10000
add: Purchases 17000
less: Returns outwards 300
less: closing stock: 12000
add: carriage inwards 750
15450
Gross Profit 13407
Add h i
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Gross Profit 13407

Add: other income:
commission received 218
rent received 4000
discount received 3000 Adjusted
Gross profit 20625 Less
Expenses:
Wages 1820
Rates and taxes 600
Sundry expenses 600
Salaries 6000
Discount allowed 500
Carriage outwards 1000
Bad debts 600
Provision for bad debts 700
Insurance 1957
Accountancy charges 400
Depreciation: Machinery 8000
motor vehicles 6000
Provision for discount 399
Interest on loan 2500
interest on mortgage 6000
37076
Net profit / (Loss) 16451
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a) Balance sheet of Sorry Trading P/L as at 31-12-2009.
Capital employed ($) ($)

Owner’s Capital 100000
Less: net loss for year 16451
Less drawings 12000
71549
Mortgage 100000
Loan 50000
Total long-term liabilities 150000
Total capital employed 221549
Employment of Capital
Fixed assets: Machinery as on 01/01/2009 80000
Less depreciation 8000 72000
motor vehicle at cost 40000
less depreciation 6000 34000
office equipment 30000
Total fixed assets
136000Add: Net current assets
Current assets:
Stock 12000
Debtors 14000
less provision for bad debt 700
less provision for discount 399 12901
cash at bank 91700
cash on hand 8000
prepaid expenses:
rates 100
insurance 50 150
commission owing 18
Total Current Assets 124769
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Less: current liabilities

Creditors 30000
Accrued expenses
Loan interest 2500
Mortgage interest 6000
Wages 320
Accountancy fees 400 9220
Total current liabilities 39220 Net Current
Liabilities 85549
Total capital employed 221549
Activity 9.6
1. Explain the concept of a trial balance. Explain how it is useful to
? 2.
accountants.
Describe the nature of a balance sheet. Use the information in example
9.1 above to construct a balance sheet for Kundie’s boutique.
3. Outline the nature of the income statement. Explain why the report is
useful to an entrepreneur.
9.8 Financial Reports Analysis

When financial reports are produced, the intention is to reveal the financial
position of the business. The entrepreneur would really want to know answers
to key questions which would include:
Has the business been profitable and can the business be considered a
profitable venture?
Is the business solvent, meaning can it pay its creditors and other
financial obligations from its own assets?
To what extent are operations financed by debt as opposed to owners’
equity?
How much cash did the business raise and how has it been used?
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The answers to some of these enquiries may be apparent from just looking at
the reports produced. In most cases, however, it is necessary to use some
financial analysis to analyse and interpret financial reports. We must make the
statement again that accounts are not only prepared for the entrepreneur but
for several other interest groups and individuals. All want to draw meaning
that is related to their interests. We give below a guide of what financial analysis
and interpretation tools are available to the entrepreneur.
9.8.1 Simple elementary analysis

One does not always need to be a financial wizard to tell if the business has
done well or badly by examining the trading and profit and loss statement.
Simple elementary analysis means just that, looking at the accounts and making
judgements. The judgements are based on what the entrepreneur was expecting
from the business in the first place. These expectations will most likely have
been expressed as a budget for the venture. There are budgets for all of
revenues, expenses and profits. The entrepreneur, therefore, is able to say if
the business has performed well or poorly by comparing actual performance
with budget.
9.8.2 Cash flow analysis

This is a fairly complex analysis that uses two consecutive balance sheets to
analyse how well the business performed during the period. The focus of a
cash flow analysis is cash, that is what cash has been raised and how it has
been raised and also what cash has been used and how it has been used. This
is done by monitoring the movements of balance sheet items over the period.
A fall in creditors for example, implies cash has been used up to pay creditors
during the period. This tool is of particular interest to financial management
practitioners.
9.8.3 Ratio analysis

Financial analysts have devised some financial ratios that they calculate to
reveal the financial strengths and weaknesses of a business. The ratios compare
various business performance indicators to key features of the business. The
ratios so calculated must be compared with acceptable performance standards
for the industry. Comparison can also be made with prior period performance
to determine trends. Other companies’ performances may also be used as
basis for comparison. We illustrate the interpretation of financial reports using
five key ratios.
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Return on capital employed (ROCE). This is a profitability measure.

It compares the profit realised to the value of investment made to
generate the profit. It is calculated as: ROCE = Profit/Capital. The
ratio is then expressed as a percentage. The general interpretation is
that if ROCE is low, as below money market investment rates, an
investor would rather invest on the money market where risks are lower.
There are obviously many measures of profit and capital. Whatever
measures are used, they have to be specified and consistently used.
Gross profit ratio (GP). This ratio compares the gross profit amount
to the sales and the ratio expressed as a percentage. The ratio tells the
entrepreneur how much each dollar in sales is contributing to gross
profit. GP is calculated as:
GP = gross profit/sale. This is another profitability indicator.
Current asset ratio (CAR). This is a liquidity measure that tells how
well prepared the business is to pay its liabilities. It is calculated as:
CAR=Current assets/Current liabilities. It is expressed as astandard
ratio. A CAR of around 2:1 is considered satisfactory. A CAR of less
than 2:1 may indicate some cash flow challenges.
Quick assets ratio or acid test ratio (QAR). This is another liquidity
indicator which takes cognisance of the fact that trading stock may be
difficult to liquidate when under pressure to liquidate to pay off creditors.
It, therefore, removes stock from the calculation. QAR= (Current assets-
stock)/current liabilities. A QARof 1:1 is generally described as
satisfactory.
Stock turnover ratio (TOR). This is an efficiency indicator that tells
the entrepreneur how many times the business has been able to turnover
the stock, or how many times stock has been bought and sold during
the period. It is expressed as a number of times. The higher the stock
turnover the more efficient the business. TOR is calculated as: TOR=
cost of goods sold/Average stock where average stock is calculated as
(opening stock +closing stock)/2.
(Sidique, 1984)
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Activity 9.7
1. State the ways in which accounting reports can be analysed and
? 2.
interpreted.
Explain the cash flow implications of changes in liabilities and fixed
asset in doing a cash flow analysis.
3. Refer to the balance sheet and the income report of ‘Sorry Trading P/
L’ in example 9.2 above. Calculate the turnover ratio, acid test ratio
and the gross profit ratio for the business. Commend on the findings of
your calculations.
9.9 Relevance of Financial Accounting to Education

It has been explicitly stated that financial accounting is the unifying factor of all
organisations in that it reduces the operations carried out in the organisations
to sets of accounting reports. All organisations, including those in education
must of necessity engage in financial accounting. The uses of accounting have
been well articulated above. Over and above what has been said above, we
feel this unit of entrepreneurial accounting will be especially useful to education.
Here we briefly look at the relevance of financial accounting to education.
The complex subject of accounting has been encapsulated into a brief

and easy to understand format. Educational administrators are now
able to show a greater interest in the accounting function at their
institutions. They can now even question the accounts normally prepared
for them by outside auditors.
Some practical skills in accounting were also given, including ratio
analysis. Educational administrators can now purposefully work out
some relevant ratios and make some strategic changes to improve the
performance of their organisations.
Finally, as we have stated throughout the units, each unit is part of a
larger whole that is contributing its bit to changing people in various
vocations from practitioners to entrepreneurs. Our students also need
to grow up with this value of entrepreneurship. Knowledge of
accounting also contributes towards this grand objective.
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9.10 Summary
In this unit, we summarised the subject matter of accounting for the benefit of
the entrepreneur. We described the key principles and concepts in financial
accounting and the practical activities that make up the discipline. We pointed
out that the ultimate goal of financial accounting is to produce accounting
reports, particularly the income statement and the balance sheet. We described
and illustrated how these key reports can be constructed by the entrepreneur.
We also explained how the entrepreneur can draw meaning from these reports
by the discussion of the interpretation of financial reports using the cash flow
and selected financial ratios. We concluded by showing how financial accounting
can be relevant to education.
In the next unit, we discuss general management of business organisations.

General management principles are an invaluable part of the successful
entrepreneur’s tool kit.
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References
Alexander, D. and Nobes, C. (2004). Financial Accounting: An
International Introduction. Essex: Prentice Hall.
Anthony, R. N. Reece, J. S. and Hertenstein, J. (1995). Accounting: Text
and Cases: Boston: Irwin.
Brockington, R . (1986). Financial Management: London: ELBS.
Lucey, T. (1984). A First Course in Cost and Management Accounting:
London: ISBN.
Paton, W. A. (1989). Essentials of Accounting: New York: MacMillan.
Sidique, A. N. (1984). Principles of Accounts, Vol. 1- Book keeping: Harare:
College Press.
The Zimbabwe Institute of Chartered Accountants (1997). International
Accounting Standards: Harare: ZICA.
Wixon, R. (Editor: 1986). Accountant’s Hand book: New York: Ronald
Press.
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10
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Unit Ten
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Entrepreneurial Business
Management
10.0 Introduction
I n the last unit, we discussed financial accounting principles. Financial

accounting is one of the key skills needed for entrepreneurial success. We
discussed the main concepts of the discipline, including creating financial
accounts in the ledger using double entry book keeping. We emphasised the
importance of the balance sheet and the income statement in as much as they
reveal to the entrepreneur how well the business has performed and how
financially stable the company is.
In this unit, we discuss general business management. Management skills are

also a prerequisite for entrepreneurial success. In the discussion, we first give
some background information on management, including the roles of managers
and evolution of management theory over the years. We then look specifically
at the management functions of planning, organising, leading and controlling.
We also analyse the role of the manager’s environment in influencing managerial
effectiveness and efficiency. We conclude the Unit by showing the importance
of these management principles to education.
10.1 Unit Objectives

By the end of this unit you should be able to:
explain the meaning of management
outline the management skills needed at the various levels of
management
enumerate the four traditional management functions
define business operating environment
define organisational culture and its influence on management
define business ethics and outline the ethical issues faced by managers
explain the relevance of entrepreneurial management principles to
education
10.2 Conceptualising ‘Entrepreneurial Business

Management’
Perhaps the best way towards an understanding of what entrepreneurial
business management’ entails is to redefine the concept of ‘management’.
Here, we do that as well as briefly look at what managers do. Stoner and
Wankel (1986:75) defined management as ‘the process of planning, organising,
leading and controlling the efforts of organisational members and using all the
organisational resources to achieve stated organisational goals’. Mary Parker
Follett had weighed in before that with her definition that management is the
‘art of getting things done through other people’ (quoted in Stoner and Wankel:
1986). Building on Drucker’s ideas, Robbins and Coulter (1999:63) defined
management as ‘the process of getting activities completed efficiently and
effectively with and through other people.
Thus, management is fundamentally the work of managers. For managers to

be able to carry out the management responsibility as spelt out above they
have to do and be several roles. According to Stoner and Wankel (1986),
managers:
work with and through people. The people include subordinates,

superiors, outside business partners, and peers
are channels of communication. This follows from their working with
people
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Unit 10 Entrepreneurial Business Management
balance competing goals and set priorities

are responsible and accountable
think both analytically and conceptually
are mediators and conflict resolvers and transformers
are politicians in as much as they build relationships and networks of
mutual obligations
diplomats in as much as they sometimes have to represent and organise
the organisation
symbols; they personify the organisation’s successes and failures
make difficult decisions
From the above, it is clear that the scope of management is wide and the
entrepreneurial manager, as much as other managers, has to be multi- skilled
and multi- talented. He or she has to be versatile to switch responsibility hats
frequently as the need for different roles arise.
Activity 10.1
1. Define an organisation in your own words and state the reasons they
? 2.
are important
Define management. Explain how managers are diplomats, mediators
and politicians with reference to examples from a school situation you
are familiar with.
10.3 Managerial Skills

All the managers enumerated above need at leastthree types of skills to be
able to discharge their duties. The level of understanding, competency and
application of each type of skill obviously depends on the level of management.
These skills are discussed below.
Technical skills: are the practical skills or ability to use tools,
procedures and techniques of the trade. All managers need an
understanding of these skills. The first line manager, however, needs
the greatest competency in this skill as his responsibility involves
supervising the people actually doing the work using the skills. He/she
may have to demonstrate to them or trouble shoot or even train new
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employees on the application of the skills. The top managers need an

appreciation of the skills as they do not have to use the skills in their
day to day work.
Human skills: are basically human relations skills including motivation,
communication, listening, empathising and so on. These skills are needed
by the managers since they will be interacting and working with people,
including subordinates, peers, customers, suppliers and so forth. These
skills are equally useful and applicable at all levels of the managerial
hierarchy.
Conceptual skills: are skills that relate to the ability to view the entire
or whole organisation in abstract and relate all its component parts.
Conceptual skills enable the manager to view the organisation as an
open system and how all the departments affect and are affected by
each other. Planning is the principal activity in applying these skills. It is
the top level managers who have the overall responsibility for the
organisation’s performance and as such, they have the greatest need
for conceptual skills. Their interests are not departmental as would be
with a departmental foreman. The first line manager only needs an
appreciation of conceptual skills to help him understand that he does
not operate in isolation but that his area of responsibility is part of a
larger whole.
Thus, the relative importance of each of the three skills for the three levels of
management may be given as technical, human and conceptual skills (Stoner
and Wankel, 1986).
Activity 10.2
1. Describe the three managerial levels. In which level would you place a
? 2.
secondary school head? Justify your assessment.
Explain the concepts of technical and human skills. Outline the reasons
why a school head requires both these skills.
10.4 Managerial Roles and Functions

Many scholars have written on the matter of the roles and functions of managers.
The pioneering writings of Henry Mintzberg and Henri Fayol have, however,
had the greatest appeal to researchers on the topic.
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10.4.1 Managerial roles

Henry Mintzberg’s contribution on the topic came from the results of a research
that he carried out on five Chief Executive Officers and scores of other
managers of various levels. He was investigating what the managers spend
their time doing. From the research, he made the following findings: firstly,
managers have formal authority over their own organisations from which they
derive status. The status so derived causes the managers to have interpersonal
relationships with subordinates, peers and superiors. The interpersonal relations
enable managers to acquire information which they use in decision making.
From the above, he concluded that managers have three kinds of roles. He
noted that the roles are largely about ‘doing’. Here we discuss the three roles
in brief:
Interpersonal roles: are the roles that keep the organisation running
smoothly, including; acting as figurehead by performing some
ceremonial activities; being the leader through motivating and
encouraging some staff; acting as liaison in dealing with people outside
the organisation.
Informational roles. The manger turns out to be the most well informed
person in the unit. His/her informational roles in this respect include:
being a monitor of information by constantly looking out for useful and
profitable information for the organisation; being a disseminator of
the information to interested parties; being a spokes person for the
organisation when dealing with outsiders.
Decisional roles: is basically making decisions using information
acquired from executing the informational roles above. His/her decisional
roles include: being entrepreneurial by acting on information to
revitalise his unit through innovation and development projects; being a
disturbance handler by coping with unpredictable incidents like strikes;
being the resource allocator of time, financial and material resources
among competing needs; being the negotiator by making profitable
deals and arrangements with outsiders.
10.4.2 Managerial functions

Basing from the early work of Fayolcited in Robbins and Coulter (1999),
management functions have been encapsulated into 4 activities that are
considered to be part and parcel of the management process. The activities
are planning, organising, leading and controlling. Below we look at these
functions in brief:
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Planning: is the thinking and conceptualising part of management.

Planning basically is stating in advance what must be achieved and how
it isachieved, what resources are used and who has to do what. Planning
is important in that it unifies the whole organisation in the pursuit of the
stated objectives. It also enables resources to be marshalled for the
achievement of the plans. Above all plans give the organisation direction
and a sense of purpose. The planning process has several activities and
steps, the key ones being setting the objectives for the organisation and
the designing of the strategies to achieve the objectives. Effective planning
is an all inclusive exercise involving all management levels. All are
expected to make an input for purposes of participation during
implementation. This important activity is discussed in a little more detail
later in this unit.
Organising: is setting up the organisation to carry out the plans and
achieve the set objectives. The nature of the objectives determines the
nature of the organisation. Organising will start by determining the tasks
that need to be done in carrying out the plan. The tasks then need to be
aggregated into work units or departments. To ensure consistency and
predictability in carrying out activities within the organisation, the
specified tasks need to be standardised. The interrelationships between
the various work units then have to be decided on. This calls for a
coordination plan of the activities and functions of subunits. The question
of centralisation versus decentralisation then has to be addressed by
deciding on the location of decision making authority. Decisions also
need to be made with respect to the structure of the organisation, whether
be functional based or market or product based and the height of the
structure. Finally, decisions of staffing will be made where recruitment
and training of the necessary and suitable employees will be done.
Leading: is about getting the organisation set up above to actually
work to achieve the set objectives. Leadership is about motivating and
influencing the organisational players to work as required. The manager
needs to see what motivational tools and techniques he can use on the
different kinds of workers in the organisation knowing fully well that
different kinds of people are motivated by different needs. The manager
also needs to examine his leadership skills and strategies to see what
influencing approaches to apply. The general guide, however, is for
managers to learn to be situational leaders where they use different
approaches to suit the work situation and the nature of the employee.
Finally, the manager has to study and learn how to work and deal with
groups, motivating them, resolving conflicts and generally making them
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productive and effective. The manager has to sharpen and fine tune his
human skills, including skills like communication, delegation and group
decision making. Leadership is truly about dealing with people.
Controlling: is the function of ensuring that objectives set are being
achieved. The controlling function has three elements: the established
standard or objective, measuring actual performance and comparing
with the set standard, and taking the necessary corrective action. The
control function is also discussed later in the unit.
Activity 10.3
1. Describe the management roles according to Henry Mintzberg.
? Comment on the interpersonal roles that a school head carries as the
manager of the school.
2. Discuss the planning activities that teachers carry out in the course of
their work and explain how control takes place.
10.5 A Glimpse at the Manager’s Operating

Environment
Managers are responsible and accountable for organisational performance.
They get blamed and punished for poor results and they are praised and
rewarded for good performance. The assumption that is made is that the
manager has complete control of the organisation and the resources therein to
direct the organisation as he wishes. This perception is called the omnipotent
view of management.
We, however, know that sometimes managers have little influence over the
performance of the organisation. Influences stronger than the leadership
influences of the manager will be at play. This is the symbolic view of
management, that the manager is just a symbol or figure head. Entrepreneurs
need to note that these forces can make the manager fail to direct the
organisation to achieve the desired results. The answer lies in the environment
in which the manager and the organisation is operating. An understanding of
what the manger is up against is the best starting point of finding ways to deal
with the challenges.
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10.5.1 Organisational culture

The manager as an individual is operating in an organisation with its own
culture. If the culture is negative, the best of his/her intentions may come to
nought.
Culture refers to a system of shared meaning and perceptions held by members

that distinguishes the organisation from other organisations. These meanings
and perceptions determine how members act towards each other and towards
outsiders. The elements of organisational culture include systems and patterns
of values, symbols, rituals, myths, stories and practices that have evolved
over time (Robbins and Coulter, 1999).
Robbins and Coulter (1999) go on to identify seven standard dimensions of

culture. These are innovation and risk taking, people orientation, team
orientation, aggressiveness, attention to detail, outcome orientation
and stability. To these we can also add the dimension of allegiance and
relationships. Indeed, it is possible for allegiances to be more powerful than
hard work in getting managers promoted and rewarded in some organisations,
especially public, in some developing countries. The dimensions end up giving
the organisation its personality.
The single most important source of culture is the founder of the organisation.
His or her vision and mission and the personal biases within them are assimilated
into the organisation and with time one or more of the dimensions of culture
emerge and is consolidated. The other source is the informal leaders in the
organisation. Finally, culture can develop from past actions and successes
that the organisation has had.
Culture affects the manager’s performance in that all the managerial activities
of planning, organising, leading and controlling will be influenced by the culture
of the organisation. The lesson to entrepreneur managers is that t they should
nurture positive and productive cultures in their organisations.
10.5.2 The specific environment

The organisation itself operates under the influence of a number of forces.
Some of these have a direct bearing on the performance of the organisation
and affect the individual organisation directly. These forces make up the
immediate or specific environment of the organisation. It is important that the
manager does a thorough investigation and examination of the environment to
identify the threats that may be presented by these forces. Sometimes, the
very same forces may present opportunities for the organisation. The forces
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that make up the organisation’s direct action or specific environment

includeEmployees, customers, suppliers, competitors, pressure groups,
shareholders, financiers, government ministries and departments. Below we
look these aspects in brief.
Employees: can influence organisational performance through their

collective or ‘unionised’ actions like industrial actions. They can also
fail to perform to expectation due to poor motivation and moral and
inadequate training. Effective human resources management is the key
in addressing this threat.
Customers: may simply become more powerful than the organisation
and demand outrageous concessions. They may also just not be loyal
and shift their custom to other suppliers. The solution would lie in effective
relationship marketing
Suppliers: like customers, they can also become very powerful and
demand wild prices on strict terms. They may also be unreliable in
supplying. This is particularly true when the supplier is monopolistic
and supplies a critical input for the organisation. The solution may lie in
building solid relationships and to consider alternative sources, including
imports.
Competitors: can imitate your offering to the market and undercut on
prices
Pressure groups: are becoming increasingly influential, particularly in
developed economies. They can picket an organisation or damage the
reputation of the organisation or even bring legal charges against the
organisation. The solution may lie in social responsibility and being ethical
in doing business.
Shareholders: as owners, they can make demands that affect the
business.
Financiers: may act like suppliers as indeed they are also a supplier of
finance.
Government ministries and departments: are speficic ministries and
departmsnts within government which have a direct or indirect bearing
on entrepreneurial business management.
10.5.3 The general environment

The organisation also operates under the influence of forces in the general
environment. The general environmental forces do not directly affect the
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individual organisation but affect all players within the same operating
environment. The environmental factors, according to Wyburg (1998) include:
political factors, economic factors, sociological and technological factors.
Political factors: include all the factors that relate to government action.
Some of the factors include; taxation types and levels, business
registration and licensing bureaucracies, general legislations affecting
business, and presents or absence of peace, stability and a credible
judiciary system. The organisation can only depend on lobbying and
appeals to government and also make use of trade and industrial
associations.
Economic factors: relate to national economic indicators like inflation,
unemployment, level of interest rates, import and export controls and
investment incentives.
Sociological: relate to the social factors including levels of education,
population characteristics, effects of diseases like HIV and AIDS,
pressure groups and general social trends.
Technological factors: is basically the impact of computerisation and
the advances in transport and communications.
As already mentioned, a thorough SWOT analysis has to be made to examine
the environment to identify these threats and also exploit the opportunities
offered. Robbins and Coulter (1999) have proposed a matrix to describe the
uncertainty of the environment. The uncertainty of the environment is defined
as the degree of change and the complexity in the environment. The degree of
change is either high or low, in which case the environment is described as
‘dynamic’ or ‘stable’ respectively. The complexity of the environment refers
to the number of components in it and the degree to which the organisation
knows them. The number can be low or high, in which case the environment
will be described as ‘simple’ or ‘complex’ respectively. A matrix can be
made of these descriptions to give four kinds of environments: dynamic and
complex, dynamic and simple, stable and complex and stableand simple.
The entrepreneur needs to know what kind of environment he/she will be
operating in. The dynamic and complex one will obviously present greater
challenges.
10.5.4 The global environment

The fundamental global issue relates to the globalisation of the world economy,
with market opportunities now extending across national boundaries, and like
wise, the threat of competitor products. Thus, global issues are an
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environmental factor that can influence the performance of the organisation.

The global environment presents both threats and opportunities to the
organisation. There are several ways in which the organisation can decide to
exploit global opportunities. The approaches are incremental from simple
exports to the complexity of setting up a foreign subsidiary. The options and
stages are outlined below:
Stage 1: passive response to the opportunity by exporting to the target

country.
Stage 2: initial overt entry through hiring foreign representative or foreign
manufacturer
Stage 3: established international operation. This can be through licensing
or franchise agreements, joint ventures, or direct foreign subsidiary.
Further, growth in the pursuit of foreign investments may result in the
organisation attaining one of the three positions of Multinational Corporation,
transnational corporation or borderless corporation. Organisations that make
the decision to go global also have to analyse the legal, political, economic,
and cultural environments of the foreign countries they decide to set up business
in before they commit huge resources.
10.6 Social Responsibility and Ethics

In recent years, managers and organisations have also been subjected to
pressures from various stake holder groups to act ethically and behave in a
socially responsible manner. Whilst these pressures may not be obligatory
from a strictly legal point of view, they cannot be ignored and can have serious
consequences on the operations, profitability and the very existence of the
organisation.
10.6.1 Scope of social responsibility

Social responsibility may be looked at as the collective of all the efforts and
activities that the organisation does which go beyond the need to make a
profit and to obey the law. It is act of social responsibility, for example, for an
organisation to sponsor students to study at colleges and universities. For an
organisation, the opportunities to participate in acts of social responsibility
are many. Some of the areas of social responsibility, as noted by Wyburg
(1998:87) include the following:
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Joining in the fight to solve environmental problems. Such problems

include air and environmental pollution, land degradation, deforestation
and the destruction of the ozone layer.
Preservation of endangered species of both flora and fauna
Fighting rights abuses of all forms, including sexual, child, racial, political
and abuses of other vulnerable groups of people.
Joining in the quality of work life campaign. This is a special focus on
the needs of employees that go beyond the legal and contractual
expectations.
Adopting societal marketing as an operating philosophy. As already
discussed in Unit 7 above, this philosophy also includes the obligation
to safeguard the well being of society in the provision of goods and
services.
Social responsibility entails costs. In the final analysis, someone has to foot
the bill of social responsibility. This is the crux of the classical economic view
which is opposed to organisational involvement in social responsibility
programmes. The opposing socioeconomic view, however, justifies involvement
on the grounds that times have changed and organisations now have
responsibilities and obligations that extend beyond the shareholder. The view
actually sees some benefits for the organisation in social responsibility.
10.6.2 Corporate ethics

The Oxford English Illustrated Dictionary (1990) defines ethics as the science
of morals. It then defines morals as concerns with character, disposition or
with the distinction between right and wrong. The cultures to which
organisational managers are members have a general understanding and
agreement about certain values that relate to what is right or wrong. Even the
most corrupt public official will tell us that corruption is bad. These generally
agreed ethical values may not necessarily be held by the managers in
organisations. It is the ethical values that the managers hold that determine
how managers behave. Such behaviour, however, may be controlled by societal
pressures and internal controls within organisations. The ethical image or
personality is clearly a reflection of the founder’s or top managers’ ethical
values. Managers are daily faced with decisions and challenges that present
ethical challenges. Entrepreneurs and the managers they employ may face the
following ethical challenges and or temptations.
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Typical unethical practices. There are several examples of unethical

practices by managers and leaders in organisations. Some of them are:
corruption, where leaders misuse public or corporate office for power
and personal benefit; bribery, where people offer and receive payments
to expedite certain legal processes; business entertainment, where
excessive and expensive entertainment is offered to decision makers to
build personal relations that influence business decisions; abuse of
employees, where employees are underpaid, overworked and
generally abused; abuse of confidentiality; cutthroat pricing to drive
competitors out of business and hiking prices soon after; imitation of
or copycatting other organisations’ products; plagiarism in academia;
denigrating other companies’ products to common customers; and
intelligence gathering, including eavesdropping and taking photos of
employees and competitors.
Factors in making ethical decisions. Mockler (1995) has identified
five factors that affect decision making on ethical problems. These are:
the law, it clearly spells what is legally acceptable; government
regulations; ethical codes set up by the industryor the company;
social pressures; and tension between personal standards and
organisational needs.
In making ethical decisions, managers are also influenced by two fundamental
factors. These are the manager’s view or perspective on ethics and the
manager’s level of moral development.
Views of ethics. Robbins and Coulter (1999) identify four perspectives

of ethics. These are: the utilitarian perspective; whereby decisions
are made solely on the basis of their outcomes. This is another way of
saying the end justifies the means; rights view, whereby decisions are
made in such a way that the basic rights of individuals are respected
and protected; theory of justice view, where the decision maker seeks
to impose and enforce rules fairly and impartially; and the
integrativesocial contracts theory, which says decisions should be
made on the basis of both ‘what is’, that is, the empirical, and ‘what
should be’ that is, the normative. This basically means look outside
your organisation for what should be done in an ethical dilemma instead
of using only your organisation’s internal rules.
Stages of moral development. Kohlberg, quoted in Robbins and
Coulter (1999) states that people pass through three stages of moral
development. He identifies the stages as; pre-conventional stage,
when the individual sticks to rules to avoid physical punishment or follows
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rules only when it is in his personal interest; the conventional stage,

when the individual lives up to the expectation of the people around
him or only fulfils obligations because he has agreed to them; and the
principled stage ,when the individual values the rights of others and
upholds absolute values and rights regardless of the opinion of the
majority or the individual now follows self chosen ethical principles
even if they violet the law. People in different stages of this development
continuum respond differently to the same ethical dilemma.
It is the responsibility of the entrepreneur to behave ethically to lead by example
as hi/her conduct sets the ethical tone of the organisation. The entrepreneur
also needs to put in place strategies to encourage and uphold ethical behaviour
in the organisation. Several approaches can be tried in this respect.
Approaches to improving ethical conduct in organisations: A

combination of the following approaches can be used: careful selection
during initial recruitment, where efforts are made to only target people
of higher levels of moral development for employment; ethics training;
employing an ethics advocate at senior management level; setting up
and using a code of ethics; and instituting and encouraging ‘whistle –
blowing’ (Robbins and Coulter, 1999).
Activity 10.5
1. Define organisational culture and state its sources.
? 2. Identify the cultural elements that work against the best intentions of a
new teacher at a school.
3. Describe the environment of a business and explain how forces in its
specific environment can affect its operations.
4. Critically examine the arguments for and against the involvement of
organisations in social responsibility activities.
5. Describe a likely ethical dilemma that the headmaster may face in a
school. Explain how three people in the different levels of moral
development would resolve the challenge.
10.7 Relevance of Entrepreneurial Business

Management to Education
We believe business management is one the most critical skills that the
entrepreneur needs to ensure the survival and best performance for the
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business. Business management principles are applicable across the

organisational divide, meaning they are just as essential and applicable in an
educational institution as in a profit making organisation. For educational and
practitioners, the principles are helpful in the following ways:
Encourages planning. This is a critical activity in education for both

teachers and administrators.
The related activity of controlling will not only give teachers and
headmaster a frame work for monitoring and evaluating their planned
classroom activities, but for headmasters to start critically managing
their budgets and performances against budgets
The views on management, particularly the contingency approach to
managing give headmasters a guide on how to deal with day to day
challenges that are part of their work.
The need to be active in social responsibility programmes was
emphasised and school administrators can now design programmes to
take part. This not only assists the community but builds goodwill for
the school.
The need for ethical behaviour in organisations was also emphasised
and headmasters can now adopt one or more approaches to encouraging
ethical behaviour at their schools
10.8 Summary
In this unit, we discussed management principles that we felt are critical for
the successful management of entrepreneurial ventures. We started with a
brief discussion of the meaning of management and the various roles and
functions of management. We then examined the views of management and
recommended that modern day managers rely on the contingency view to
management. The question of organisational culture was also discussed as
part of the manager’s operating environment. The general argument was that
managers and organisations operate within certain environments which influence
their performance. The topic on manager and organisational ethics was
discussed and various ways of encouraging ethical behaviour were presented.
We concluded the unit by explaining how the management principles discussed
were most useful and relevant to education.
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References
Drucker, P. (1967).The Effective Executive: New York: Harper and Row.
English Illustrated Dictionary (1990) London.: Oxford University Press.
Mockler, R. J. (1995). The Management Control Process. New Jersey:
Prentice Hall.
Peters, T. J. and Waterman, R. H. (1982). In Search of Excellence: Lessons
from America’s Best Run Corporate. New York: Harper and Row.
Robbins, S. P. and Coulter, M. (1999). Management. Boston; Prentice Hall.
Stoner, J. A. and Wankel, C. (1986). Management. New Jersey: Prentice
Hall.
Wyburg, G. (1998). Competitive and Ethical issues. How business can
strike a path. New York: Harper: Harper and Row.
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11
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Unit Eleven
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Engendering Entrepreneurship
in Education
11.0 Introduction
I n Unit 10, we discussed general management principles as they relate to

entrepreneurship. As with all other units, we showed how the concepts
were relevant and applicable to education. In this unit, we wrap up our module
by focussing on the practical aspects of engendering entrepreneurship in
education. Elsewhere in the module, we discussed the benefits of
entrepreneurship to education, individuals, communities and the nation at large.
We stated over and over again that for these benefits to be realised, we need
a critical mass of citizens who become entrepreneurial. We also noted that
education has a critical role to play in this ‘entrepreneurial revolution’so to
speak.
The focus of this unit is, thus, to show how entrepreneurship can be engendered
in education and more importantly, the strengths and weaknesses as well as
challenges of engendering entrepreneurship in education and how some of the
shortcomings may be addressed.
11.1 Unit Objectives

By the end of the unit, you should be able to:
describe the broad approaches to engendering entrepreneurship
identify the requirements for successful incorporation of
entrepreneurship in education
describe one specific case study of an example of how entrepreneurship
is being taught
discuss the benefits of engendering entrepreneurship in education
analyse the strengths and shortcomings of engendering entrepreneurship
in education
11.2 Revisiting Some Strategic Approaches for

Engendering Entrepreneurship
As we have already noted from our previous units, entrepreneurship is an
extremely complex and multi-faceted concept. The approaches for engendering
entrepreneurship through incorporating the concept into education are varied.
In this section, we discuss four such approaches outlined by Byer and
Venkateswaran (2002), all of which relate to what we have discussed so far
in the module.
11.2.1 The Vocational Training Approach

As discussed in Unit 4, vocational education is meant to prepare students or
trainees for jobs that are based on manual or practical activities. The trained
person is, however, only an artisan and not an entrepreneur. We have discussed
in Unit Four that incorporating entrepreneurship into education along specific
models enhance the value of vocational training by creating entrepreneurs out
of artisans. This approach is based on the already strong potential and
tendency that is inherent in vocational school graduates to be self employed
and reliant, through utilising the skills acquired at vocational school.
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Unit 11 Engendering Entrepreneurship in Education
11.2.2 Life Long Incremental Learning Approach

The United States of America based Consortium for Entrepreneurial Education
(USA-CEE) is an organisation that promotes and supports entrepreneurial
education and development in the USA. The consortium sponsored a ‘think
tank’ group to investigate and get consensus about the outcomes for
entrepreneurship programmes at various levels of education. Whilst there are
a variety of programmes for entrepreneurship education in the United States
of America, most of them were found to be based on the philosophy that
entrepreneurship education is a life long learning process. The programmes
are, therefore, based on the concept of ‘incremental learning’.
Under this principle, entrepreneurship education starts as early as elementary

school and progresses through all levels of education, including adult education.
The teachers use the standards and performance of the students as a
framework to use in building appropriate objectives, learning activities,
assessments and evaluation for the students at the various levels. Using this
framework, students will have:
progressively more challenging educational activities

experiences that will enable them to develop the insight needed to
discover and create entrepreneurial opportunities; and
the expertise to successfully start and manage their own business to
take advantage of these opportunities
11.2.3 The White Rose Centre for Enterprise (WRCE) Approach
The WRCE is a British organisation with the principal objective of encouraging
and supporting entrepreneurship in the United Kingdom. One of the projects
undertaken by the centre had as its central objective, that of ‘embedding
enterprise into core teaching and learning activities across the Science,
Engineering and Technology (SET) subject areas’ (Ward, 2007). The WRCE
worked in collaboration with three universities, namely, Leeds, Sheffield and
York.
The approach, as already been discussed in unit 4, started with the construction
of a model on the entrepreneurial and intrapreneurial processes. The model
included all the processes and factors that affect entrepreneurship and
intrapreneurship. From the model, areas that need educational intervention
are identified. The areas so identified are then incorporated into a four year
educational programme that is part and parcel of the degree programme that
the student will be pursuing. We advise you to revisit Unit 4 of this module,
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where the WRCE case study was discussed in greater detail in relation to
vocational education and training.
Activity 11.1
1. Choose any one strategy for engendering entrepreneurship and discuss
? 2.
its significance in promoting entrepreneurial ideas.
Describe briefly the approaches that can be used by educational
authorities to incorporate entrepreneurship in education.
3. Explain using practical examples and illustrations, how the incremental
learning approach can be applied to engender entrepreneurship in
education.
11.3 Teachers in Industry for Educational Support

(TIES) Curriculum
In a project for Teachers in Industry for Educational Support (TIES), Byer
and Venkateswaran (2002) developed a curriculum for developing
entrepreneurship skills. ‘TIES’ is an association of teachers in Ohio who
strongly and passionanately support entrepreneurial education. The curriculum
can be taught to both high school and undergraduate students. The curriculum
and its teaching and administration to students provide another model for
engendering entrepreneurship in education. The curriculum covers the
disciplines of ‘technology and ‘marketing’ which the writers felt were most
important in successful entrepreneurial engendering.
11.3.1 Some specifics of the TIES Curriculum

Both of the subjects in the TIES Curriculum were split into 3 tasks described
as Authentic Learning Tasks (ALT), giving a curriculum of 6 ALTs shown
below:
Technology discipline
ALT 1: Research a topic on the World Wide Web; students will choose
a product or service and determine the industry to which it is associated,
they then use the internet to locate the industry SIC code, annual sales
of the industry, sales of competitors, and use a mapping site to locate a
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major city close to the place of location of the students’ business. ALT
activities in this category are to be covered in 5 hours.
ALT 2: Create a budget using Excel. Students will also learn the concept
of the income statement, including its preparation and interpretation.
ALT duration in this category should be about 4 hours.
ALT 3: Create a power point presentation. Students learn power point
presentations and create a slide show. ALT in this category is to be
covered in 5 hours.
Marketing module
ALT 1: Target market analysis; the students select a business and
determine their customers, the customer’s needs and strategic variables
to define the customers. This can be covered in 3.5hours.
ALT 2: Marketing research; students to conduct a survey as a group
project. The students will first brainstorm ideas for new products or
services and then design a questionnaire to assess customer or
beneficiary reactions. Activity to take 7 to 8 hours.
ALT 3: create a data base using Microsoft Access. Students learn
features of the programme and how to manipulate data. They then use
the skill to create a customer or beneficiaries’ database. This activity to
take about 8 hours.
The instructor in the programme should arrange to cover the other topics that
complement the ones above through a combination of class lectures, guest
speakers and site visits to existing businesses.
Byer and Venkateswaran (2002) argue that this curriculum if presented to

students in a ‘hands onconcentrated format’ as described above, will help
develop entrepreneurial skills in the students. Thus, the method presents another
alternative model to engendering entrepreneurship is education.
11.3.2 Common characteristics of models

Whatever approach may be used in engendering entrepreneurship, they all
seem to have something in common; the challenge of how best to help students
of entrepreneurship to develop their skills, knowledge and attitudes. Morrison
et al (1999:105) contend that the approaches have the following characteristics
in common:
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They link theory to practice

They raise awareness and put business concepts to use in the explanation
of practice
Encourage imaginative, creative and innovative interpretation of
conventional business practices
Examine the relationship between entrepreneurship, the support
environment and various providers of finance
Rejuvenate marketing and strategic management approaches
Activity 11.2
1. Describe the TIES curriculum and model.
? 2.
3.
Identify any two different management skill needed for entrepreneurship.
Split each management skill needed for entrepreneurship into 3ALTs.
Then draft a curriculum for engendering entrepreneurship in education.
11.4 Requirements for Successful Incorporation of

Entrepreneurship in Education
The successful engendering of entrepreneurship in education depends on a
number of interrelated factors. Here we categorise the requirements as
government, manpower, financial resources and complementary support.
Below we look at these aspects in brief.
11.4.1 Government
The government, particularly the executive arm needs to:
Show an appreciation of the importance of and a passion for

entrepreneurship development in Zimbabwe
Make an exclusive decision to formally incorporate entrepreneurship
in education
Give a policy framework on the format or approach to be used in
engendering (for example, through teaching) of entrepreneurship.
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11.4.2 Manpower
The manpower requirements relate mainly to the execution of the programme
in the various educational institutions.
A critical mass of ‘entrepreneurial teachers, who, among other attributes,

recognise the need to transmit the entrepreneurial culture in all areas of
education.
Educational administrators who are flexible and adaptive when faced
with demands to implement new programmes.
Outside consultant from a country with a long history of incorporating
entrepreneurship in education.
11.4.3 Financial resources

A national programme of this scale needs funding. The funding relates mainly
to employment costs as the teacher: pupil ratio will have to be reduced.
11.4.4 Complementary support

The programme, whilst strictly an education affair; requires complementary
effort and support from financial institutions, existing entrepreneurs, businesses
and other government departments.
Activity 11.3
1. Enumerate the requirements for a national programme to engender
? 2.
entrepreneurship in education.
You have been asked to co-ordinate the programme described in 1
above from a secondary school in the rural areas. Explain, using relevant
examples, the financial and complementary support you would need
for the programme to be successful.
11.5 Strengths and Benefits of Engendering

Successful programmes for engendering entrepreneurship in education are
built on several strengths and give rise to many benefits.
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11.5.1 Strengths of programmes

From the discussions above and related literature, the strengths of programmes
for engendering entrepreneurship in education may be summarised as follows:
They all link theory to practise. Entrepreneurship is about doing. It is

not feasible to learn about entrepreneurship exclusively from within the
four walls of a classroom and expect to successfully apply the lessons
in the real world. In commenting about the importance practical exposure
in entrepreneurship development Tony Martins (2010), a business
consultant and entrepreneur had this to say: “Whenever I am asked the
question; ‘how do I develop my entrepreneurial skills?’ I reply: Go and
start a small business. Real entrepreneurship skills are picked up on the
streets. Its a kind of practical thing.” Whilst it may not be possible for
students to start businesses to learn to be entrepreneurial, practical
exposure to the world of business actually helps.
Many are based on some theoretical model. The WRCE approach,
for example, is based on a clear understanding of the entrepreneurial
process and areas where education has to intervene in the process are
identified. The American model is based on incremental learning.
They are supported and sponsored by a wide range of stake holders
including government, business consultants, educational institutions and
operating entrepreneurs.
There are successful role model entrepreneurs to emulate. This is
particularly true in the UK where there were about 3700000 small
enterprises accounting for at least 38% of National turnover in 1999:
Hawkins (2001).
11.5.2 Benefits of engendering entrepreneurship in

education
These benefits accrue to both the students and the nation.
Benefits to students
The CEE sponsored ‘think tank’ referred to in 11.2 above made some
interesting observations on the benefits of entrepreneurship learning. Some of
these benefits include:
Increased attendance of lessons students. This is most likely a reflection
of excitement with and motivation from the programmes.
Higher academic achievement across all educational levels
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Improved student discipline as reflected by the reduced number of

‘discipline referrals’ to administration.
Development of an internal locus of control. This is an attitude necessary
for entrepreneurship
Generally improved knowledge and understanding of the varied subject
matter instructed.
Changed personal and career attitudes, including self worth, motivation,
teamwork problem solving, creativity, transfer of learning, ability to
control one’s own life and self-management. These, as we have
discussed in Unit 3 above are the critical attitudes that make a successful
entrepreneur.
Benefits to the nation
The benefits of entrepreneurship have already been discussed in full in Unit 1

above. You are advised to revisit the section for a recap of the benefits. All the
benefits discussed then will be within reach if the country can successfully
engender entrepreneurship in education. The big benefit to the nation therefore
will be the development of a critical mass of entrepreneurs who will be able to
contribute significantly to development of the country. We have made reference
to the sheer numbers of entrepreneurs in both the United Kingdom and the
United States of America. It is from these numbers that development can be
argued to come from.
11.6 Shortcomings of Programmes of Engendering

The opposite of what we stated in 11.5.1 above is true for unsuccessful
programmes to engender entrepreneurship in education. The programmes
will generally be poorly structured, not fully supported with little practical
content. In addition, some case studies have revealed a few other shortcomings
or weaknesses.
11.6.1 The Tanzanian case study

Severina Nkirina (2010) of the St Augustine’s University of Tanzania undertook
a research project entitled “The challenges of integrating entrepreneurship in
the vocational training system: An insight from Tanzania’s Vocational Education
Training Authority”. Her findings, reported in the Journal of European Industrial
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Training, included the following general weaknesses:
The time allowed for the programme was too limited for the content to
be completed in the prescribed time. This would imply that some of the
instruction became rushed theoretical crush programmes.
There were general budgetary and financial constraints. This may be
taken to mean lack of full support from stake holders
Few instructors with relevant skills and knowledge. The training becomes
a case of the biblical ‘blind leading the blind’
Stark lack of role models of successful former trainees who are practising
entrepreneurs to motivate the others.
She described the course as ‘too theoretical’. This is in direct contrast
to the requirement that courses should be practical.
Some of the students perceived the courses as boring.
11.6.2 Other general weaknessesOther Research findings

generally point to following weaknesses:
Teachers who are underprepared, inexperienced, inflexible, and
generally not willing to share knowledge.
Students who are unmotivated, passive, of low self esteem and who
are generally underachievers.
School administrations that are autocratic, reactionary, inflexible and
want to emphasise on administrative tasks.
Curriculum that is content and examination centred.
Local communities and complementary institutions which are
uninterested, uninvolved and unsupportive (Nkirina, 2010).
These weaknesses and short comings need to be appreciated and corrective
action taken avoids themiffuture efforts to engender entrepreneurship in
education are to be successful
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Activity 11.4
1. Discuss the benefits that may accrue to individuals and the nation from
? 2.
a successful programme of engendering entrepreneurship in education.
Enumerate the weaknesses and shortcomings of unsuccessful
programmes to integrate entrepreneurship in education. How can
weaknesses be solved by policy makers?
11.7 Summary
In this unit, we wrapped up our module by focusing on the practical aspect of
actually incorporating entrepreneurship into educational programmes. We
discussed the possible approaches to do that effectively and noted the
requirements necessary for successful programmes to engender
entrepreneurship in education. We finally considered the strengths, benefits
and weaknesses of successful and unsuccessful projects.
To end our module, we believe the full body of the eleven units on
entrepreneurship provides a framework for you as teachers and school
managers to not only think like entrepreneurs and use the skills and knowledge
proffered, but to also pass on the positive attitude, spirit, ideas and skills to
your students. We believe this will lay a strong foundation for a successful
revolution of entrepreneurship in Zimbabwe and elsewhere in the developing
world.
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References
Byer, L. and Venkateswaran, A. (2002). Research Article: ‘Developing
Entrepreneurship Skills; Curriculum Unit Overview’ Ohio:
TIES2002.
Hawkins, L. (2001). Fundamental Productivity Improvement Tools and
Techniques for SME’s. Loughborough: Pera Knowledge.
Longenecker, J.G., Moore, W. M. and Petty, J.W. (1997). Small Business
Management, An Entrepreneurial Emphasis. Cincinnati: South-
western College Publishing.
Martins, T. A. (2010). Research Article: ‘How to Develop or Improve Your
Entrepreneurial Skills’ on: www.strategicbusinessteam.com
Morrison, A., Remington, M. and Williams, C. (1999). Entrepreneurship in
the Hospitality, Tourism and Leisure Industries. Oxford:
Butterworth-Heinemann.
Nkirina, S. (2010). Research Article: “The Challenges of Integrating
Entrepreneurship Education in the Vocational Training System:
An Insight from Tanzania’s Vocational Education Training
Authority” Mwanza: Emerald Group Publishing.
Ward, A. (2007). Research Article: ‘An Integrated Model of
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Post Graduate Diploma

Module PGDE 215

Content Reviewer: Dr Wellington Samkange

Editor: Diana Mupunga

P.O. Box MP1119

The Zimbabwe Open University is a distance teaching and open

Year: March 2013

Reprinted: January 2014/April 2013

Cover design: T. Ndhlovu

I.S.B.N: 978 - 1- 77938 - 626 - 7

Printed by: ZOU Press, Harare

Typeset in Times New Roman, 12 point on auto leading

© Zimbabwe Open University. All rights reserved. No part of this

The six hour tutorials should be so structured that the

Session I (Two Hours)

Session II (Two Hours)

Session III (Two Hours)

Conclusion for this course, but also to prepare yourself to

Unit One: Conceptualising ‘Entrepreneurship’

1.0 _______ Introduction ________________________________________________ 5

Unit Two: Theories of Entrepreneurship

Unit Three: Entrepreneurial Characteristics for Business Success

4.0 _______ Introduction _______________________________________________ 61

Unit Five: Entrepreneurial Business Idea Generation

6.0 _______ Introduction _______________________________________________ 93

Unit Seven: Marketing in Entrepreneurship

7.0 _______ Introduction ______________________________________________ 109

8.0 _______ Introduction ______________________________________________ 133

Unit Nine: Financial Accounting in Entrepreneurship

Unit Ten: Entrepreneurial Business Management

10.0 ______ Introduction ______________________________________________ 179

11.0 ______ Introduction ______________________________________________ 197

W elcome to one of your Post Graduate Diploma in Education (PGDE)

The broad aims of this course are to:

In Unit 1, we conceptualise ‘entrepreneurship’ and begin by defining

In Unit 2, we look at ‘Theories of Entrepreneurship’. In the unit we look at

In Unit 3, we explore ‘Entrepreneurial Characteristics for Business Success’.

In Unit 4, we look at ‘Vocational and Technical Education and

In Unit 5, we consider the issue of ‘Entrepreneurial Business Idea Generation’

In Unit 6, we look at ‘Entrepreneurial Strategy Formulation’. In the unit we

In Unit 7, we look at’ Marketing in Entrepreneurship’. In the unit we look at

In Unit 8, we explore the issue of‘Selling in Entrepreneurship’. We begin by

In Unit 9, we look at‘Financial Accounting in Entrepreneurship’. The meaning

In Unit 10, we consider‘Entrepreneurial Business Management’. In the unit

In Unit 11, we look at ‘Engendering Entrepreneurship in Education and begin

W elcome to your first unit on entrepreneurship in education. In this unit,

1.1 Unit Objectives

1.2 Definition of Terms

The Oxford University Press English Illustrated Dictionary (1975) defines an

The Dictionary of Small Business (1990) defines the entrepreneur as a person

Drucker (1985) views an entrepreneur as ‘one who always searches for

From the above definitions and related literature, we can conceptualise an

Airing similar sentiments, Marshal in Nayab (2011) viewed entrepreneurship

From the foregoing discussion, we can simplify entrepreneurship to mean the

or product innovation management.’ According to this distinction,

1.3 The Scope of ‘Entrepreneurship’

1.3.1 The general scope of entrepreneurship

The identification of a viable business idea is the starting point of

Entrepreneurs are of necessity managers. They have to perform the typical

 Marketing and sales management

It is critical that an entrepreneur accurately captures all transactions made by

Making business plans for an enterprise is a critical requirement in

1.3.2 Skills needed in entrepreneurship

that define a successful entrepreneur. Some of these characteristics and traits

1.0 _ Introduction __________________________________________ 5

4.0 _ Introduction _________________________________________ 61

6.0 _ Introduction _________________________________________ 93

7.0 _ Introduction ________________________________________ 109

8.0 _ Introduction ________________________________________ 133

10.0 Introduction ________________________________________ 179

11.0 Introduction ________________________________________ 197

Marketing and sales management

Personal rewards to entrepreneur

Growth of small business

Providing new jobs in the economy

People traditionally engaged in business have a pro-business attitude

People in formal employment tend to encourage or even pressure their

The availability of natural resources like minerals and tourist attractions

When levels of education are generally low, potential entrepreneurs

Business registration and licensing challenges

Political instability challenge

Inadequate infrastructural facilities

Helping to inculcate the spirit of entrepreneurship within our teachers

The worthiness of technical and vocational institutions is enhanced as

Economic Agents Theory

Alertness to Opportunity Theory

The entrepreneur scanning the competitive environment and discovering

Cole’s Economic Historian View

Frank Knight’s Risk Bearing Theory

Mark Casson’s Economic Factors Theory

Access to information, especially about market conditions

Joseph Schumpeter’s Innovation Theory

creation of a new product

Alfred Marshal’s Economic Theory

thorough understanding of the industry

‘Craftsman’ entrepreneurs: are individuals who follow the footsteps

‘Trained’ entrepreneurs: are individuals who have undergone training

Ability to recognise market trends

Theory of surplus value

Theory of class struggle