QUESTION 1:
Evaluate the effort of the government towards the promotion
and development of entrepreneurship in Nigeria.
SOLUTION:
Government is a constituted body designed to take care of the
general welfare of the people governed. State of the economy is one of the ways by
which a government measures how well his citizens are living. If the economy is buoyant, this translates to
good living habits and vice versa. Due to
slow nature of the rate of economic growth in the greater number of developing
countries like Nigeria, the government has been known to assume the role of
entrepreneurs by going directly into business enterprise in order to accelerate
the slow rate of economic activities.
The Federal, State and Local governments are involved in
almost all kinds of enterprise ranging from manufacturing, banking to
transportation.
It is general believed that one of the major reasons for
government participation in all kinds of business enterprise is the relative
shortage of innovators and risks takers known as entrepreneurs in Nigeria. In support of this view, the former President
of the World Bank once indicated in his speech.
The flow of sound, economically viable projects coming forward form many
developing countries, today, is not enough to enable these countries to realize
the growth rate within which it is in her capacity to attain.
It is not that good investment opportunities are lacking but
what is lacking is the initiative and proper organization to enable those
opportunities to be realized. It could
be deduced after comparing the statement with what operates in Nigeria today
that this country suffers distinct shortage of industrial entrepreneurship. Another reason for their involvement is the
huge capital outlay that is characteristic of some industries like the steel
industry. Yet, security reasons have
also been advanced. Provision of
essential services, even development of different parts of the country,
prevention of resources wastage when efforts are duplicate, control of the
exploitative nature of entrepreneurs, provision of employment are further
reasons adduced to their establishment, ownership and control of enterprises
which sometimes would have been better managed by the private sector.
However, there is a renewed interest in the entrepreneur and
entrepreneurship since the present democratically elected government came into
power. The government has now realized
that the private sector can be well positioned to perform and achieve the same
goals for government’s involvement in enterprises. The government believes that
friendly environment with adequate infrastructure facilities and incentives are
what the private sector really need to be able to achieve most of these goals
except where national security is at stake.
Therefore, this is why the government is handing off most of the
enterprises formerly established by her through the privatization exercise
being carried out by the Bureau for Public Enterprises and National Council on
Privatization. Thus, making the
government to assume the role of facilitator.
QUESTION 2:
An entrepreneur does not operate in a vacuum. Analyze the
external environmental factors likely to affect the entrepreneurship practice
in Nigeria.
SOLUTION:
The external environmental factors are not under the direct
control of an organization. Such factors
can affect an organization’s activities and an organization can also influence
such factors. These factors are enumerated
thus:
a. Government policies and legislation:
In an attempt to control the
activities of various participants in businesses and to protect the interest of
all parties, government makes some rules and regulations. Such legislations could be on fiscal and
monetary policies, industrial safety, labour relations, environmental
protection, wages, price and employment and consumer protection. These
legislations affect businesses one way or the other but the laws are expected
to be obeyed. To enforced compliance
with government legislations, various agencies have been established. Examples
are NAFDAC, Customs and Excise, the Police Force, Standards Organization of
Nigeria and Corporate Affairs Commission.
It is the responsibility of
individuals and organizations to familiarize themselves with the various
legislation and comply with them.
Failure to comply has resulted in those concerned being penalized. Recall the experience of JECON, a
manufacturer of electrical bulbs which
fail to meet the standards set for such products and the closure of the
premises of the firm by government agencies.
The inability to meet the required
capital base for banks is one of the reasons for the withdrawal of the
operating licenses of some banks.
Educational and health institutions and factories are expected to meet
certain condition before they can operate.
b. Technology:
As a result of advancement in science
and technology, radical changes have taken place either in the machinery and
equipment used or in the technique of doing certain things. It is necessary for business operation to be
abreast of latest developments in technology.
Organizations have to know the new developments in technology acquire
the new machinery and equipment and should also endeavor to train and retrain
their workers in the modern ways of doing things. Failure to do these may result in the organization
being branched old fashioned and therefore rejected by its customers or the
organization may not be able to produce efficiently and compete effectively
with other producers. For instance, with
the introduction of the computer in banking operations, banks that are unable
to computerize their operations stand the risk of losing some of their
customers.
c. Competitors
Producers of goods and services
compete for materials, personnel, market and funds. The scope of the market in which these
competitors operate, the size and complexity of the market are of concern to
the individual operators. If the
competition is very keen, the likelihood is that only the strong actors will
survive. Many manufacturing industries
and financial institutions are adversely affected by competition in those
sectors. Consider the completion in the
beer and soft drinks industries.
Organizations are concerned about the present share of the market they
are enjoying and the desired placement in the future. In an attempt to protect its present share of
the market, a competitor may increase its after sales services, improve its
distribution channels and offer discount to its customers. All these are aimed at working the
competitors have an edge over his rival.
d. The economy
The economic system under which a
firm is operating and the state of the economy are important factors to be
considered. The economic system could be capitalist, socialist or mixed. In the each of these systems; investment,
earnings and therefore profits and ownership of business will differ. Also, the economy could be in a healthy or an
unhealthy state. During the periods of economic boom, income levels are high
and so the demand for goods and services make a lot of profits. The reverse will be the case during a
recession.
e. Political Environment:
This has to do with the political
system and the type of government that is in power. The degree of stability in the political
environment is also to be considered.
When there is political stability, there is continuity in the leadership
and therefore in government policies.
This makes it possible for
organizations to be able to plan ahead for their future operations. If however if there is political instability,
there will be frequent change in leadership and in government policies. To
predict the future and make plans ahead will be very difficult. The investment climate will be unfavourable.
f.
Socio-Cultural Environment:
Organizations operate with some
socio-cultural environments. The
beliefs, norm, values and customs of the community within which an organization
is operating have to be taken into account if the organization is to operate
successfully. The product is services to
offer to the consumer in a particular locality and the overall activities of
the community.
g. Ecological Factors:
These have to do with the climate,
geological and other natural occurrences in the area where an organization is
located. Such features as the occurrence
of earthquakes, cyclones, erosion, or drought will affect the types of products
and services to offer in such area.
Extra precautionary measures may be required for locating and
establishing a business in area where the geophysical factors are unfavourable.
QUESTION 3:
What are the major functions and characteristics of
entrepreneurs?
SOLUTION:
Functions of
Entrepreneurs
1. Identification of Investment Opportunities
Since the Entrepreneur is the
originator of a business enterprise, he has to understand the needs and want of
potential consumers which are not being fulfilled but which he can
satisfy. On the other hand,
identification of these opportunities is difficult because of the complex and
dynamic environment he finds himself.
Therefore, a sound entrepreneur must be able to choose projects that are
technically and economically viable.
2. Establishment Of Business Enterprise
It is imperative for him to know which
form of business he wants to establish, whether a sole proprietorship,
partnership, private or public limited liability company. This depends on amount and availability of
capital, degree of control needed, government laws and regulations etc.
3. Effective Utilization of Scare Resource
Resources are scare in nature and a
good entrepreneur should be able to allocate and combine the factors of
production proportionately to maximize profit.
Hence, he must be a good resource allocator because this plays a vital
role in the survival, growth and continuity of the business.
4. Organization And Management Of Human Resources
Being the head and the crew master,
he should be able to plan, organize and control his employees. Coordination of activities, motivation of
employees and effective leadership should be provided by the entrepreneur.
5. Risk Bearing
Risk is the probability that an
anticipated or expected outcome may turn out to be wrong. Since all business are futuristic and an entrepreneur
cannot fully predict the course of the business, he must be able to bear some
risk before success can come his way.
Business with high risks tends to give high returns.
6. Innovation
SCHUMPTER has described the role of
innovation to the entrepreneur i.e. the man who undertake new combination of
factors of production. Innovation is
here used in the most encompassing meeting of the word to include new products
and new techniques of production, the upgrading of the quality of labour force,
the appearance of new skills and the improvement in the quality of management.
Modern technology affects, alters and modifies every facet of human
existence. Entrepreneurs should be
concerned not only with technology per se but with innovation (technological
changes) and its accelerated pace.
Innovation involves changes in the actual production function of a given
enterprise so that it permits more products for the same resources or the same
amount of products for less resource.
This may be in form of a new product yielding more utility rather than
just a change in the amount of an old product.
Such changes may also involve variations in physical capital, in the
quality of labour or in the organization of given resources. In effect, an entrepreneur should be seen as
a change agent, a catalyst that is highly innovative both in thought and
action.
7. Creation of employment
Opportunities
An entrepreneur should be an employer
of labour. Being his own boss, he should
have people to work with him in attaining the objectives of the enterprise,
thereby creating employment opportunities.
General Characteristics of Entrepreneurs
1.
Leadership
– understanding of what motivates people
2. Result and task oriented
3.
He
must be will to take reasonable risk 4.
He must be innovative and creative
5. He must be self-confident,
optimistic and hopeful in his view
QUESTION 4:
Discuss the various financing and support windows available
to an entrepreneur
SOLUTION:
Financing The Business Enterprise
Having good business idea does not guarantee the
establishment of such a business enterprise.
Therefore, for a wonderful business idea to be translated into physical
manifestation, the financing of such idea is accomplished with some combination
of equity capital and debt capital. Equity and ownership are synonymous. But, a small business, which forms majority
of the entrepreneurship business, is often short of equity capital and is
forced to resort to extensive use of debt capital. This, most times, forms the
bulk of financing his business enterprise.
Considering the two major sources motioned above, it could further be
sub-grouped under the following methods.
1.
Owners and Originators of the Company
To start a new business enterprise, it
is often difficult to source fund through any other means apart from the
personal funds offered by the owners of such business. This could be in the form of personal
savings, personal fixed assets either acquired or inherited. It could also be by buying shares of the
corporation stock.
2.
Manufacturers of Original Equipment
The cost of equipment is so high
because of the foreign exchange that need to be sought since these equipment
need to be imported from countries.
Where they are being produced here, an entrepreneur finds it difficult
to purchase equipment for its production process. This invariably leads to low
sales volume of this equipment by the manufacturer. As the manufacturers of equipment produce for
sales, and the entrepreneurs need these equipment for use but are unable to get
these equipment due to the high cost, manufacturers of these equipment sometimes
sell them on hire purchase to make it easier for an entrepreneur to own such
equipment. They also lease the product
they manufacture e.g. Tractor, Computer etc.
3. Venture Capitalist:
This is small investor or group of
investors who contributes capital money to a new or small enterprise in return
for an equity position in that firm. A venture capitalist is also called high
risk capital and it is usually used to provide funds for a new firm. However, a venture capitalist is neither a
conventional banker nor a lender.
4. Commercial Banks
The other sources so far mentioned
provide initial capitals to start off a new firm; they prefer to provide
Working capital loan term loans and long-term real estate loans.
Working capital loans are to provide
the business with cash necessary to care of seasonal peaks or to meet any
unusual cash needs of a period less than 12 months duration. Terms loans range
in length from 1-6 years being funds used to purchase a fixed asset, while real
estate loans are-secured if accurate appraisals are done.
5. Relatives and Friends:
Relatives and friends will
occasionally make an investment in a company through donations, gifts or other
means. The advantage of this source is
the relative ease and informality of security funds while the disadvantage
could be in the conditions attached to such funds. For instance they may require that their son
or a brother-in-law be hired as a part of the deal. This person may either be incompetent or lack
the necessary skills for the position.
Moreover, they may feel that they have the right to constantly advise
the founder of the business.
QUESTION 5:
(a)
Who
is an entrepreneur and how is the entrepreneur different from a businessman and
manager
(b)
What
is entrepreneurship
SOLUTION:
An Entrepreneur,
Businessman and Manager
The entrepreneur has been described as a person who perceives
business opportunities and takes advantages of the scare resources to use them
efficiently. He has the zeal and ability
to find and evaluate opportunities, gather necessary resources, take sequential
and systematic steps towards utilizing the advantages of such
opportunities. Moreover, entrepreneurs
are individuals who create some sort of innovative economic activity that did
not previously exist. They perceive the
world optimistically. As one successful
entrepreneur states “success comes to those who see the glass as half-full not
half-empty”.
True entrepreneurs are more than small business owners; they
build a firm and are constantly seeking outlets for their energies. Hence,
it is common for those individuals to be involved in several innovative
activities simultaneously. Most
entrepreneurs have a high degree of integrity.
Their words become a bond – a personal commitment. This allows the flexibility needed for
success and the ability to hire others who can supplement the entrepreneur’s
weak points.
The entrepreneur’s philosophy is that success is nothing more
than picking an opportunity and then working it. The entrepreneur initiates the firm and
maintains it. However, if the firm is to
survive, the owner must supplement entrepreneurial enthusiasm with managerial
skills to handle routine activities.
Thus, the successful small business owner is both the entrepreneur and a
manager. The entrepreneurial side of
this owner is innovative with respect to the external environment and this
ability tends to initiate many projects.
On the other hand, the managerial side must constantly act as the
mediator between what the entrepreneur want to do and what can be done. To be successful, one must complement the
other. For instance, an entrepreneur
does not worry about disasters until they are imminent whereas the manager
begins planning for contingencies ahead of time.
Hence, the entrepreneur ends with such plans. Again, as the entrepreneur works best under a
high degree of pressure, a manager attempts to reduce ambiguity and
pressure. Therefore, a successful small
business owner must combine both characteristics very well.
WHAT IS
ENTREPRENEURSHIP?
Entrepreneurship is the first step taken for
industrialization to take place. It is
term used in connection with the innovative modern business. Innovative in the sense that it is different
from a similarly existing product.
Entrepreneurship has gained universal recognition as an academic
discipline and significant force in the generation large employment. It takes place in any field of social
endeavour, business, education, social activities, agriculture etc.. therefore, entrepreneurship is the institution
involved in changing the value or satisfaction derived from resources by the
consumer. Moreover, it could be defined
as doing things that are already been done in a new way.
Furthermore, it should be stressed that a business enterprise
should not be entrepreneurial in nature
because it is new and small. A large
business organization which has been in existence for long could also be
practicing entrepreneurship. An example is Lever Brothers Nigeria Limited.
QUESTION 6:
Write explanatory notes on each of the following 1. Rewards
and hazards of entrepreneurship 2. Attitudes of Nigerian Entrepreneurs 3.
Methods of generating new business ideas
SOLUTION:
Rewards and Hazards of Entrepreneurship
These are the benefits, gains or advantages derivable from
practicing entrepreneurship:
(1)
Profit:
When an entrepreneur sets a business enterprise, he expects to get some
returns on what has been invested.
Profit is therefore the excess of income over the amount invested. Reasonable
profit means adequate financial recovery on investment i.e. total income less total cost.
(2)
Job Security: this is the insurance that the
employment has secured cannot be lost at any time if he is not willing to quite
the job. Hence, the fear of being
retrenched or sacked is absent in entrepreneurship. However, the business can
continue as long as he is alive and doing what is right in the business.
(3)
Independence:
Since an entrepreneur is the originator of the business enterprise; he
can make his own decision and the way he wants without waiting for a directive
from someone else. He is the master of himself.
(4)
Personal Satisfaction:
An entrepreneur produces goods and services from his own
initiative. If these products are well
received by the consumers, he will feel happy, important and satisfied because
those he has produced for have appreciated his, efforts. Hence a sense of accomplishment have been
realized.
(5)
Family employment: In Nigeria, there is widespread
unemployment. A situation whereby a
father has spent a lot to train his child up to the University level and the
child graduates into the unemployment market, roaming the streets for
white-collar jobs. If the father has a business enterprise, he will prefer the
child working in enterprise to roaming the streets – it gives the opportunity
to test personal commitment and ability to face challenges.
HAZARDS OF ENTREPRENEURS
These are the factors that discourage
people from going into entrepreneurship
1.
Financial Risk: Most people fear to dabble into the
unknown and since the end product of any business is not very sure, people are
scared of going into entrepreneurship.
Moreover, this is because business involves some financial commitments
which could either be lost if not adequately managed or recouped even with
profit (if adequately managed).
2.
Emotional/Social Problems
Every
entrepreneur is a decision maker in his enterprise and all the personal
matters, production matters and all others will eventually come to his table
for solution. So, most entrepreneurs could be stressed or tensed up when these
matters need attention urgently. Hence
the emotional problem.
3.
Risk Of Failure And Competition
There is a
50/50 chance of a business either succeeding or failing. However; some
entrepreneurs are intimidated by the fear of failure and the fear of going into
a level of competition when a bright business idea is conceived.
ATTITUDES OF NIGERIAN
ENTREPRENEURS
The attitudes of most Nigerian entrepreneurs have not been
very encouraging and have been criticized along the following lines:
1.
They
devote most important part of their business time to family affairs, political;
meetings, settlement of community dispute and sometimes plain idleness.
2.
They
usually tend to extend their personal attitudes and behaviour to their business
operations.
3.
They
always worry to make quick returns rather than wait for a long-term benefits of
growth and expansion.
4.
They
are classified as risk averse, i.e. they tend to avoid risks most of the time
5.
They
always think of short-run rather than long-range goals.
SOURCES OF GENERATING
BUSINESS IDEAS
They key to entrepreneurship is the ability to generate,
pursue and capture the value from venture ideas. No one can call himself an entrepreneur until
he has generated and at least begun to pursue venture ideas. The idea could get granted either by accident
or design. It must be well conceived,
expected to be evaluated to determine whether it will be selected or subjected
to further modification before adoption.
Generating business idea is the beginning of business enterprise. There
are two major ways to generate business ideas.
GENERAL YOUR OWN IDEA
It is the act of conceiving and developing a business idea by
the entrepreneur without the help of anybody (one). This idea involves thinking techniques such
as visualization or brainstorming, diving inspiration and dreams.
DEVELOPING SOMEONE’S
IDEA
Developing someone’s idea is far more common because
virtually every successful business venture is developed form an earlier
business concept. This method could
involve the following:
1.
Suggestion
from members of his family or friends
2.
Agents
and experts in corporate creativity
3.
Trade
fairs
4.
Seminars
and workshop
5.
Research
findings from government agencies/research institutes
6.
Information
from mass media and business magazines
QUESTION 7:
What in your opinion are the peculiar problems with Nigerian
entrepreneurs
SOLUTION:
PROBLEMS OF NIGERIAN
ENTREPRENEURS
1. Political Instability:
Political instability has been
asserted to be one of the major factors militating against entrepreneurship. To this end, the political and socio economic
factors contribute to this factor. For example, where there are wars, the
displacement of entrepreneurs location could make the business crumble. It may involve relocation and in some cases
going through he same process it went though before establishment.
2. Capital Inadequacy:
In business capital is the life wire.
It also follows that without capital, a business cannot be established. This is because before establishing a
business, there will be the need for operational activities such as payment of
workers’ salaries, maintenance of the business and so many functions and
obligations of the business is expected to meet in future.
3. Inadequate Infrastructure:
Infrastructure is also necessary
ingredient for the success of entrepreneur.
This include the location and environment where the business is to be
situated or where it is established.
Some of the infrastructural features
to be put in place include power supply, building good road etc.. nearness to
market also is a necessary tool that propels the efficient factoring of
entrepreneur. In other words, it keep
the business going.
4. Unfavourable Competition with Imported Goods:
In business generally, importation of
goods cannot be eliminated. It also
creates an avenue for competition in the sense that it prompts the entrepreneur
to improve the quality of goods and services provided. But where the entrepreneur fails to improve in
order to favorably compete with imported
goods, the aim will become defeated. An entrepreneur is expected to be able to
compete with external environment.
5. Inadequate manpower and Management Skill:
Entrepreneurs are usually faced with
this problem. They are met with tasks
but there are no capable hands to accomplish these tasks. In most cases, there may be enough manpower
but they lack the skills to accomplish a task.
It is a different thing to have enough management and other thing for
them to have the skill for the job requirement.
6. Poor Administration of Government Assistance:
Entrepreneurs are usually left in
their own because the government does not give proper attention to them. In order words assistance from the government
is poor. This means that generation of
capital at times will be difficult if no band is willing to grant credit
facilities to them. At time, government
policies, calling the entrepreneurship determine whether it will continue or
not. Conclusively, where there is no
government assistance, the entrepreneur may not strive.
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