KAGERA JAMES MWANGI

BSM/18/18

BSc. STRATEGIC MANAGEMENT

ENTREPRENEURSHIP

1. a) DISTINGUISH THE TERMS ENTREPRENEUR AND

ENTREPRENEURSHIP

An entrepreneur is an individual who creates a new business, bearing most of the risks and

enjoying most of the rewards.

Entrepreneurship is the discontinuous process of combining resources to produce a new good

or service and bearing the risks involved between the seller and buyers.

b) EXPLAIN FIVE PATHWAYS TO ENTREPRENEURSHIP

Challenges such as unemployment and poverty:

The unemployment rate in Kenya as at 2014 was 40% of the total population, with a large

percentage comprising youth and women. This has led to innovations and entrepreneurial

activities with the aim of improving their standards of living, especially in the informal

sector. The inability of a large proportion of school leavers to secure jobs has left many to

come up with their own businesses as a means of livelihood.

Economic growth:

The Kenyan economy is expected to continue growing strongly given the high infrastructural

developments, which provide ample opportunities for entrepreneurial developments. Kenya

being a developing nation, the opportunities for entrepreneurship brought about by economic

growth are large and far-reaching ranging from technology to agriculture, manufacturing to
service, education to finance and real estate to infrastructure.

Technological advancements: Global technological advancements and local innovations such

as M-Pesa have greatly enhanced convenience and the ease of doing business.

Government initiatives:

The government has come up with several initiatives aimed at promoting entrepreneurship in

the country, with the most recent being the Uwezo Fund, which targets the youth, women and

the physically disabled.

Education levels

We have seen a lot of growth in the tertiary education sector with a lot of new campuses

being opened up. This will definitely lead to a lot of growth in the knowledge base and is

bound to improve the rate of discovery in the country.

Technological advancement

New emerging technologies has enabled people to think outside the box. This has lead to the

development of new enterprises.

2. a) PROVIDE YOUR UNDERSTANDING OF THE FOLLOWING CONCEPTS

BUSINESS PLAN. This is a formal written document containing business goals,

methods on how these goals can be attained and the time frame within which these goals

needs to be achieved.

BUSINESS MODEL. It is an outline of how a company plans to make money with its

product and customer base in a specific market.

FINANCIAL MODEL. A financial model is simply a tool that’s built in spreadsheet

software such as MS Excel to forecast a business’ financial performance into the future.
 BUSINESS CANVAS MODEL. This is a strategic management tool that lets you

visualize and assess your business idea or concept.

b) WITH THE HELP OF AN ILLUSTRATION OF AN ENTERPRISE OF YOUR

CHOICE, EXPLAIN THE CONTENTS OF A GOOD BUSINESS PLAN

i. Title page

This captures the legal information of the business which includes the registered

business name, physical address, phone number, email address, date and the company

logo

ii. Executive summary

It provides a summary of the entire business plan. It should be short and to the point

also it should capture the reader’s attention.

iii. Industry overview

Provides information about the specific industry that the business operates in.

Information provided includes major competitors, industry trends and estimated

revenues. Also shows company’s position in the industry and how it will compete in

the market against other major players.

iv. Market analysis and competition

Details the target market for company’s product section confirms that company

understands market and has analyzed existing market to determine that there is

adequate demand to support its proposed business model. Market analysis includes

information about target demographics, geographical location, customer behavior and

market needs.
 v. Sales and marketing plan

Details how the company plans to sell its product to the target market. It details

company’s advertising and promotion activities, pricing strategy sales and distribution

methods and after sales support.

vi. Management plan

Provides an outline of company’s legal structure its management team and external

human resource requirements.

vii. Operating plan

Provides an overview of company’s physical requirements such as office space,

machinery, labor, suppliers and inventory.

viii. Financial plan

It determines whether business will obtain required financing from financial

institutions investors. It should demonstrate that the proposed business is viable and

will return enough revenues to be able to meet its financial obligations.

ix. Appendices and exhibits

Includes any additional information that banks and investors may be interested in or

that adds credibility to business.

c) JUSTIFY THE NEED FOR BUSINESS PLANNING

1. To prove that you’re serious about your business. A formal business plan is necessary

to show all interested parties — employees, investors, partners and yourself — that you are

committed to building the business. Creating your plan forces you to think through and select

the strategies that will propel your growth.

2. To establish business milestones. The business plan should clearly lay out the long-term

milestones that are most important to the success of your business. To paraphrase Guy
Kawasaki, a milestone is something significant enough to come home and tell your spouse

about (without boring him or her to death). Would you tell your spouse that you tweaked the

company brochure? Probably not. But you’d certainly share the news that you launched your

new website or reached $1M in annual revenues.

3. To better understand your competition. Creating the business plan forces you to analyze

the competition. All companies have competition in the form of either direct or indirect

competitors, and it is critical to understand your company’s competitive advantages. And if

you don’t currently have competitive advantages, to figure out what you must do to gain

them.

4. To better understand your customer. Why do they buy when they buy? Why don’t they

when they don’t? An in-depth customer analysis is essential to an effective business plan and

to a successful business. Understanding your customers will not only allow you to create

better products and services for them, but will allow you to more cost-effectively reach them

via advertising and promotions.

5. To enunciate previously unstated assumptions. The process of actually writing the

business plan helps to bring previously “hidden” assumptions to the foreground. By writing

them down and assessing them, you can test them and analyze their validity. For example,

you might have assumed that local retailers would carry your product; in your business plan,

you could assess the results of the scenario in which this didn’t occur.

6. To assess the feasibility of your venture. How good is this opportunity? The business

plan process involves researching your target market, as well as the competitive landscape,

and serves as a feasibility study for the success of your venture. In some cases, the result of

your planning will be to table the venture. And it might be to go forward with a different

venture that may have a better chance of success.

7. To document your revenue model. How exactly will your business make money? This is

a critical question to answer in writing, for yourself and your investors. Documenting the

revenue model helps to address challenges and assumptions associated with the model. And

upon reading your plan, others may suggest additional revenue streams to consider.

8. To determine your financial needs. Does your business need to raise capital? How

much? One of the purposes of a business plan is to help you to determine exactly how much

capital you need and what you will use it for. This process is essential for raising capital for

business and for effectively employing the capital. It will also enable you to plan ahead,

particularly if you need to raise additional funding in the future.

9. To attract investors. A formal business plan is the basis for financing proposals. The

business plan answers investors’ questions such as: Is there a need for this product/service?

What are the financial projections? What is the company’s exit strategy? While investors will

generally want to meet you in person before writing you a check, in nearly all cases, they will

also thoroughly review your business plan.

10. To reduce the risk of pursuing the wrong opportunity. The process of creating the

business plan helps to minimize opportunity costs. Writing the business plan helps you assess

the attractiveness of this particular opportunity, versus other opportunities. So you make the

best decisions.

11. To force you to research and really know your market. What are the most important

trends in your industry? What are the greatest threats to your industry? Is the market growing

or shrinking? What is the size of the target market for your product/service? Creating the

business plan will help you to gain a wider, deeper, and more nuanced understanding of your

marketplace. And it will allow you to use this knowledge to make decisions to improve your

company’s success.
12. To attract employees and a management team. To attract and retain top quality talent,

a business plan is necessary. The business plan inspires employees and management that the

idea is sound and that the business is poised to achieve its strategic goals. Importantly, as you

grow your company, your employees and not you will do most of the work. So getting them

aligned and motivated will be key to your success.

13. To plot your course and focus your efforts. The business plan provides a roadmap from

which to operate, and to look to for direction in times of doubt. Without a business plan, you

may shift your short-term strategies constantly without a view to your long-term milestones.

You wouldn’t go on a long driving trip without a map; think of your business plan as your

map.

14. To attract partners. Partners also want to see a business plan, in order to determine

whether it is worth partnering with your business. Establishing partnerships often requires

time and capital, and companies will be more likely to partner with your venture if they can

read a detailed explanation of your company.

15. To position your brand. Creating the business plan helps to define your company’s role

in the marketplace. This definition allows you to succinctly describe the business and position

the brand to customers, investors, and partners. With the industry, customer and competitive

insight you gain during the business planning process, you can best determine how to

position your brand.

16. To judge the success of your business. A formal business plan allows you to compare

actual operational results versus the business plan itself. In this way, it allows you to clearly

see whether you have achieved your strategic, financing, and operational goals (and why you

have or have not).

17. To reposition your business to deal with changing conditions. For example, during

difficult economic conditions, if your current sales and operational models aren’t working,

you can rewrite your business plan to define, try, and validate new ideas and strategies.

18. To document your marketing plan. How are you going to reach your customers? How

will you retain them? What is your advertising budget? What price will you charge? A well-

documented marketing plan is essential to the growth of a business. And the marketing

strategies and tactics you use will evolve each year, so revisiting your marketing plan at least

annually is critical.

19. To understand and forecast your company’s staffing needs. After completing your

business plan, you will not be surprised when you are suddenly short-handed. Rather, your

business plan provides a roadmap for your staffing needs, and thus helps to ensure smoother

expansion. Importantly your plan can not only help you understand your staffing needs, but

ensure your timing is right as it takes time to recruit and train great employees.

20. To uncover new opportunities. Through the process of brainstorming, white-boarding

and creative interviewing, you will likely see your business in a different light. As a result,

you will often come up with new ideas for marketing your product/service and running your

business. It’s coming up with these ideas and executing on them which is often the difference

between a business that fails or just survives and one that thrives.

3 WRITE A BRIEF OF THE SCHOOLS OF THOUGHT. BE GUIDED BY

CLASSICAL, PSYCHOLOGICAL; SOCIAL, ENTREPRENEURIAL

MANAGEMENT, LEADERSHIP, CONTINGENCY AND GREAT PERSON

THEORIES.
•The great person school of thought regards an entrepreneur as being the great person. The

focus is mostly on the career path and the success stories of famous entrepreneurs. The

presented image is that of an individual charged with energy, power, and success.

•The psychological school of thought focuses on the distinctive traits, special psychological

characteristics of an entrepreneur, which can be values such as ethics, responsibility, attitudes

such as risk taking, initiatives, autonomy or needs such as independence, and

accomplishment.

•The classical school of entrepreneurship: It is interested in innovation and in the

identification of opportunities. The entrepreneur is viewed as mainly the source of innovation

and the introduction, in a given new environment, of new alternative means of production

•The management school of thought is focused on the pursuit and the materialization of

business opportunities. An entrepreneur is regarded as a person who perceives an opportunity

and creates an organization to pursue it.

•The leadership school of thought is interested in leadership: It states that entrepreneur are

leaders who assign objectives to and guide their employees towards attaining results.

Entrepreneurs are meant to provide support to partners in their personal development, and

such actions classify them as more than a “manager”, but a leader.

•The intrapreneurship school of thought focuses on intrapreneurship, which states that

corporates are deprived of innovation and they have less capacity to respond to the ever

changing global environment. Intrapreneurship is seen as a solution to these challenges

through focusing on opportunities, which can allow corporates to innovate, develop, and to

diversify this operation into new arenas.

4 EXPLAIN THREE BRANCHES OF ENTREPRENEURSHIP

1. Cultural Entrepreneurship
Cultural Entrepreneurship is where entrepreneurs are cultural change agents and resourceful

visionaries who organize cultural, financial, social and human capital, to generate revenue

from a cultural activity. Their innovative solutions result in economically sustainable cultural

enterprises that enhance livelihoods and create cultural value and wealth for both creative

producers and consumers of cultural services and products.

The term cultural entrepreneurship applies to the creation of any product or service that

primarily targets our tastes, whether it’s our taste in fashion, movies, music, stories, games,

cuisine, or opinions. A newspaper is part of media; but a magazine like People or Vanity Fair

would be part of the cultural industry.

Culture, more than almost any other industry, is almost always in the private domain; only in

very unfortunate countries, is culture significantly done by the public sector. So, culture is

produced by private individuals who spend effort creating it, marketing it, and try to make a

living by selling it.

These industries are well set, though most run on low margins and the companies involved

are primarily small, and universally cash-strapped. So, culture is a hotbed of

entrepreneurship.

2. Technopreneurship

Technopreneurship is a new breed of entrepreneurship. It involves coming together of people

who are intelligent, creative, technology savvy and passionate and have an appetite for

calculated risk. Unlike entrepreneurship, the success of technopreneurship depends on

teamwork.

A technopreneur is an entrepreneur who is technology savvy, creative, innovative and

dynamic, dares to be different and takes the unexplored path, and very passionate about his

work”. He takes challenges and strives to lead his life successfully. He has no fear of failure

and hence takes failure as a learning experience, a stimulator to see things differently.
A Technopreneur undergoes an organic process of continual improvement and tries to

redefine the dynamic digital economy. Technopreneurs make use of technology to come out

with innovative products through a process of commercialization. Potential technopreneurs

are equipped with both technical and business skills.

3. International Entrepreneurship:

International entrepreneurship is the process of an entrepreneur conducting business activities

across the national boundaries. It includes exporting, licensing or opening sales office in

another country. The main purpose of international entrepreneurship is to satisfy the needs

and wants of target markets.

International entrepreneurship is defined as “development of international new ventures or

startups that from their inception engage in international business, thus viewing their

operation domain as international from the initial stages of international operations”.

International entrepreneurship is beneficial when the sales of products of a company in the

domestic market, is declining and the demand arises for the products from international

market. Entrepreneur can sell his products it has reached the maturity stage of their life cycle

in domestic markets, in foreign market and earn profit by their sales.

Entrepreneur in the process of satisfying foreign customers have to produce products as per

their quality expectation. He will not only produce quality product in international market,

but also in national market. Thus, he can improve his entrepreneurial competitiveness and

enhance reputation.

5 DESCRIBE THE FOLLOWING FORMS OF BUSINESS OWNERSHIP

a) Sole proprietorship

It is a type of enterprise owned and run by one person and in which there is no legal

distinction between the owner and the business entity.

b) Partnerships

A partnership is an arrangement where parties, known as business partners, agree to

cooperate to advance their mutual interests.

c) Private limited companies

A Private Limited Company is a legal entity in its own right, allowing the business

owner to keep their assets separate from the business itself. This means that the

business owners aren’t subject to any personal liability, as their work is undertaken as

an agent for the company, rather than as an individual.

d) Public limited companies

A public limited company is a voluntary association of members that are incorporated

and, therefore has a separate legal existence and the liability of whose members is

limited. Public limited companies are listed on the stock exchange where it’s

share/stocks are traded publicly.

e) Cooperatives

A cooperative is a private business organization that is owned and controlled by the

people who use its products, supplies or services. It can also be defined as an

autonomous association of persons united voluntarily to meet their common

economic, social, and cultural needs and aspirations through a jointly-owned and

democratically controlled enterprise.