Course : 4.2 & 4.

1 Groups
Class: Bsc Civil Engineering & Bsc Civil
Engineering
Unit Title: Principles of
Entrepreneurship & Marketing
Unit Code: BCM2240

Facilitator: Dr. Rosemary Kagondu

1
HOMEWORK
• Class exercise 1: Write down the following
i) some of the technology you think we will be dealing
with in the future in the next 20 years
ii) Close your eyes and write down one newspaper
headline you expect to read in the print media 10 years
from now on any area of your life
•

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 We are in a situation where there are rapid changes in
society driven by technology in all respects of our
spheres of life
 Class question: Think of at least 2 gadgets that were
part of your parents /grandparents life that is not part
of your life but the function it served remains today

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Difference between entrepreneur and manager

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HOW DO ENTREPRENEURS CONTRIBUTE TO
NATIONAL DEVELOPMENT

1) Effective utilization of resources

 Entrepreneurship is all about putting to better use the
resources with an aim of earning income. The Kenyan sisal
plant is, for example, being used by small scale
entrepreneurs to weave quality bags such as “ciondo”, table
mats, lamp shades etc. These items sell internationally.
 2) Increase in per capita income of a country
Economic growth is measured in terms of a sustained
increase in real income. It is the entrepreneurial communities
who complement and supplement the economic growth
increase per capita income by identifying and establishing
profitable business venture
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3) Employment creation
 The role of entrepreneurs in establishing micro, small and
medium enterprises is perceived as a powerful medium to
address several socio-economic issues - the key issue being
the generation of employment opportunities.
Entrepreneurial development gives rise to economic
independence through self-employment.

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4) Conservation agent
Entrepreneurship allows for maximum utilization of natural
resources. E.g cow waste can be turned into a profitable
venture by producing biogas through utilization of cow dung
produced by dairy herd. Biogas can replace all kinds of
energy sources like LPG, firewood, charcoal and electricity.
Entrepreneurship promotes environmental friendly
technologies like biogas digesters, energy saving stoves which
use less firewood and also save time and money for the user,
solar-powered LED lantern.
5) Contribution to National Income
Entrepreneurs generate income from their businesses locally
and overseas. The amount of money generated can be used
for more investment or to provide citizens with goods and
services
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6) Facilitate growth of new technology in production
Through their creativity and innovation entrepreneurs device
different methods of production and provision of services.
They are quick to adopt new and efficient operation methods.
To survive in a competitive market, they may continuously
engage in research on ways to improve production and ensure
customer service and profitability.
7) Improvement in quality of life
Entrepreneurs supplement the economic growth by enhancing
the physical quality of life. Establishment of enterprises leads
to increase in employment avenues both directly and
indirectly. Consequently, poverty is alleviated as per capita
income grows. This results in improving the physical quality of
life which is an indicator of economic growth.
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8) Contribution to Capital formation
Entrepreneurship facilitates increase in the rate of capital
formation so that the economy accumulates a large stock of
machines, tools and equipment which can be geared for
production. capital formation may be brought about by the
formation and up-gradation of skills of human capital which
can be utilized to raise the level of productivity.
9) Increase government revenue
Entrepreneurs contribute to government revenue through,
various forms of taxes.
10) Growth of infrastructural facilities
They help in the growth of infrastructural facilities such as
roads, bridges, buildings, factories, etc. which are the
cornerstones of economic growth. Establishment of factories
and industries in a particular locality presupposes the growth
of infrastructural
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Entrepreneurial Skills

11) Entrepreneurs make markets more competitive and

thereby reduce both static and dynamic market inefficiency
12) Entrepreneurs stimulate a redistribution of wealth, income
and political power within societies in ways that are
economically positive without being politically disruptive.
13) Entrepreneurs make markets more competitive and
thereby reduce both static and dynamic market inefficiency
14) Entrepreneurs play a critical role in the restructuring and
transformation of economy.

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Successful Entrepreneur Personality Traits

1. Discipline: "It is disciplined execution that makes

people successful entrepreneurs."
2. Creativity:Though creativity is often associated with
artistic output, it is an important trait for all
entrepreneurs to have. Creativity doesn’t only apply to
visual elements or branding. Entrepreneurs who are
able to creatively solve problems and think outside of
the box when facing everyday business challenges, they
are able to quickly pivot and implement necessary
solutions that lead to business growth.

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3. Self-Awareness
Entrepreneurs who have a sense of self-awareness that they
are able to apply professionally to achieve business success.
When an entrepreneur is self-aware they are able to own
up to their strengths and weaknesses related to running
their business.
4. Resourcefulness
Many entrepreneurs are faced with tasks and challenges
they have never faced before. The ability to be resourceful
is a mindset that helps entrepreneurs reach lofty goals
without a clear way to achieve them. Entrepreneurs must
have a "willingness to outwork and outlearn everyone."

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5) Process-Oriented
Having solid processes in place is essential for any
successful entrepreneur. In the world of business, a process
is a repeatable series of steps that help those working
within a business to complete necessary tasks
6) Empathetic
Empathy is an essential trait for entrepreneurs. Whether a
business owner manages a large team of employees or
works directly with their customers as a high-performing
solopreneur, they must be able to connect with others.
7) Communicative
The top three communication skills for leaders are effective
listening, getting a message across clearly and providing
feedback in a supportive manner. These skills can put
entrepreneurs at a competitive advantage.
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8) Self-Motivated
To be your own boss you have to keep yourself motivated
to work effectively & consistently. Entrepreneurs must be
able to work through creative ruts & points of feeling
uninspired to keep their businesses going
9) Confident : Confidence is important even in the face of
failure. "We fail our way to success. It means you must
have the courage to try and there's no way you can get to
success without confronting failures
10) Flexible : Whether it is reformulating a product to make
it better, or revising a business strategy to remain
competitive, entrepreneurs who are too rigid and afraid to
embrace change are at a disadvantage.

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11) Risk-Taker
• The ability to take a calculated risk is one of the most
valuable skills an entrepreneur can have. When business
owners are willing to take risks, they are able to learn
valuable lessons in business that can help their company
in the long run.

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 BENEFITS OF ENTREPRENEURSHIP

 Be your own boss

• If you’re someone who likes to be in control, this is the
career for you. You will make all the key decisions in the
running of your business. You can have colleagues and
advisors but ultimately, the running of the business is
your responsibility. It’s a chance to practise great
leadership and get the best out of others too.
 Potentially unlimited income
• when you run your own business, your income is
decided by you alone. If you work hard and the business
is a success, you can reward yourself. Being an
entrepreneur is high risk, high reward – you could make
millions, or you could make nothing at all.
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 Choose when and where you work
• Being an entrepreneur is one of the most flexible jobs
that exists. You set your own timetable, judging when to
work hard and knowing when to take a break. It’s a real
gift to be able to fit a job around your lifestyle, and not
the other way around.
 Make a living doing what you love
• Start-ups are some of the most exciting and fast-moving
places to work. Things are constantly changing, so you
won’t get bored. You will enjoy the challenge of
competing against other companies to provide the best
service or product to your customers. You may also be
able to create a successful business out of something you
are truly passionate about.

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 Constant growth and development
• Being your own boss is not easy and neither is running a
business. You will need to be brave, take risks and
believe in yourself. You will also need to be able to solve
problems and admit when something has gone wrong.
Staying positive, thinking creatively and being solution-
minded are all valuable skills that will serve you well in
life, as well as business.
 Choose who you work with
• When you run your own business, you build your own
team. You can surround yourself with people who share
your vision and work the way you want them to. Being
able to nurture new talent and get the best out of your
colleagues is one of the most rewarding things about
being an entrepreneur.
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 Create a positive impact
• Starting and running a business gives you the
opportunity to make a positive impact. Whether it's
uplifting society, creating jobs in your local community
or leading the way in sustainable business and showing
others how to protect the environment.
 Fulfilling and rewarding
• Building your own successful business is a big
achievement. It will always have challenges, but this
makes it more rewarding when things go well. You will
be able to look at your achievements and know that they
were due to your own hard work.

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Potential Drawbacks of Entrepreneurship

 Uncertainty of income
 Risk of losing your entire investment
 Long hours and hard work
 Lower quality of life until the business gets established
 High levels of stress
 Complete responsibility
 Discouragement

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ROLE OF ENTREPRENEURSHIP TO DEVELOPMENT

 Entrepreneurship is crucial to the growth of a country’s

economy. The world’s largest economies have mainly
grown as a result of a national entrepreneurial culture.
An example of such a country that embraced the
entrepreneurial culture is Singapore.
 Singapore is a good example because of some
similarities with Kenya. Both countries gained
independence at about the same time, Kenya in 1963 and
Singapore in 1965, and each had total GDP of about $1
billion at independence.
 Charles Dickens classic novel, ‘‘A Tale of Two Cities’’
exemplifies Kenya & Singapore
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 Lee Hsien Loong is the son of the 1st prime minister of
Singapore is the current Prime Minister of Singapore and
has been in office since 2004. Prior to being PM, he
served, among other positions, as Member of
Parliament, Minister of Finance and Deputy Prime
Minister.
 His famous dad—Lee Kuan Yew was the first Prime
Minister of Singapore, who passed away recently.
 On the other hand , Kenya’s former president Uhuru
Kenyatta was the son of the first president of the
republic of Kenya who ruled Kenya at the time dad—
Lee Kuan Yew was the first Prime Minister of Singapore
 H.E Uhuru Kenyatta likewise served among other
positions, as Member of Parliament, Minister of Finance
and Deputy Prime Minister.
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 Many in Kenya would have wished that given the
reflective dynasty-like political parallels in the almost
reflective story of Kenya and Singapore, the same could
be said of the economic story of the two countries.
 True, the two stories are very much alike at the start. But
the resemblance lasts only as far as the beginning. As
they progressed, the two stories diverge as far from each
other as night from day
 The stories of Lee Hsien Long and Uhuru Kenyatta
could be said to be from the pages of Robert Kiyosaki’s
bestseller financial advisory book, ‘‘Rich dad, and Poor
dad’’.

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• Mr Hsien was lucky to have had a rich dad who
bequeathed a rich country with one of the highest GDP
per capita in the world.
• Meanwhile, Mr Kenyatta unfortunately was left fighting
the exact same wars that his father started fighting over
half a century ago unsuccessfully; poverty, illiteracy and
disease.He even has to deal with more wars that his
father started, a case in point being the fight against
corruption.
• When Mr Hsien announced to Singapore the demise of
his father in the country’s general hospital, the whole
world took a pause to mourn with him one of the
greatest statesmen who ever lived in the recent years

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• At around the same time, Mr Kenyatta was reading a
state of the nation address to inform Kenyans what we
have known all along, the endemic corruption.
• When their fathers had started ruling the respective
countries, Kenya and Singapore had almost equal GDP
(with Kenya actually marginally richer).
• In 1963, when Kenya got independence, and Singapore
merged with Malaysia, Kenya’s GDP was $926.6 million
while Singapore’s was $917.2 million.
• In 1978, when the founding president of Kenya died,
Kenya’s GDP had grown to $5.3 billion, but had been
surpassed by Singapore whose GDP then had grown to
$8.06 billion.

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• By 1990, when Kuan Yew stepped down from PM’s
office (and Kenya on the verge of multiparty
democracy), Singapore’s GDP was $38.9 billion
compared to Kenya’s $8.57 billion.
• Recent figures are more embarrassing. By 2013, as Mr
Kenyatta was taking over the reins of Kenya’s
leadership, he was managing an economy of only $55.24
billion while his counterpart Mr Hsien was managing a
whopping $297.9 billion economy.

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• The Singapore story is more amazing if you think of the
GDP supporting this massive economy of a tiny
population of barely five million people against Kenya’s
massive 50 million plus.
• The small population of Singapore means that when
measured on GDP per capita, Singapore ranks amongst
the richest countries in the world.
• For instance, in 2013, Singapore’s GDP per capita was
$55,182.To put this in perspective, Japan’s was only
$38,663 while the USA’s was $53,041 at the same time.
By comparison, Kenya’s was dismally low at only
$1,245.5.

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• It is also noted that Singapore may have borrowed a lot
from Kenya's 1965 sessional paper (Note this!!!!)
• However, the 2 countries took different trajectories and
Singapore ended up being a developed state with high-
income levels whereas Kenya is still a developing state
with a middle-income level.
• So let's first clarify things, Kenya had a slightly bigger
GDP as shown, but Singapore's GDP grew faster.
• Kenya GDP (1963) : $ 926.6 M vs Singapore GDP
(1963): $917.2M -Kenya’s economy was bigger !!
• Kenya GDP (2021) : $110B vs Singapore GDP
(2021): $396B
• Kenya GDP Growth (117X) vs Singapore GDP Growth
(430X)

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Kenya versus Singapore GDP in graphics

Kenya Singapore

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• Kenya in 2021 is actually not even close to where Singapore
was in 1963 as far as GDP per Capita is concerned.
• Something interesting from this information is Singapore's
GDP per Capita grew by a massive 1,460% (14.6X) between
1963 and 2021, while Kenya's GDP per Capita has only
grown by 150% (1.5X) within the same period

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 The question one asks is, given the parallels in the
Kenya-Singapore story, when did the rain start beating
Kenya? The simplest scapegoat is to argue that Mr
Kuan’s benevolent dictatorial tendencies were partly to
explain Singapore’s rise to the top.
 The reality is that this explanation is too weak. Kuan
Yew was no less dictatorial than Jomo Kenyatta and his
successor Daniel arap Moi. Both were successful in
laying down powerful dynasties.

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 what went right with Singapore vs what didn't go well
with Kenya in reference to their founding socio-
economical policies:
• On corruption:
• Lee Kuan Yew: He forged a highly effective, anti-corrupt
government and civil service.
• Jomo : Under Kenyatta, corruption became widespread
throughout the government, civil service, and business
community

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• On inclusivity:
• Lee Kuan Yew: Lee eschewed populist policies in favour
of long-term social and economic planning,
championing civic nationalism through meritocracy and
multiracialism as governing principles.
• Jomo Kenyatta: Despite his attempts at wooing white
support, he did not do the same with the Indian
minority. Like many indigenous Africans in Kenya,
Kenyatta bore a sense of resentment towards this
community. Conversely, his rule was criticized as
dictatorial, authoritarian, and neocolonial, of favouring
Kikuyu over other ethnic groups.

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• On investment:
• Lee: Globalized approach. Attracted foreign investments
from multinational corporations (MNCs) by establishing
First World infrastructure and standards in Singapore,
the new nation could attract American, Japanese and
European entrepreneurs and professionals to set up base
there. Workers were frequently retrained to familiarise
themselves with the work systems and cultures of
foreign companies.
• Jomo: Africanization approach. Kenyatta's government
putting pressure on Asian-owned businesses, intending
to replace them with African-owned counterparts.
Between late 1967 and early 1968, growing numbers of
Kenyan Asians migrated to Britain

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• On National Identity
• Lee: Together with efforts from the government and
ruling party, Lee tried to create a unique Singaporean
identity in the 1970s and 1980s—one which heavily
recognised racial consciousness within the umbrella of
multiculturalism.
• Kenyatta: "no national culture emerged during the
Kenyatta era", most artistic and cultural expressions
reflecting particular ethnic groups rather than a broader
sense of Kenyanness, while Western culture remained
heavily influential over the country's elites.

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• The difference has always been that the two founding
fathers were worlds apart in strategic vision of where
they wanted their countries to be— and only one of
them discovered in time that the only pathway to
economic progress —lay not in resource wealth or
agriculture (or fully implementing advice from World
Bank and IMF without first thinking through
ramifications), but in education and smart trade

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 Entrepreneurship received attention when Singapore
suffered its first recession in 1985. An economic committee
was established to chart a new direction for Singapore’s
economy.
 It identified local entrepreneurship as an important
ingredient for Singapore’s continued growth. This led to
the first Small and Medium-Sized Enterprise (SME) Master
Plan in 1989 that introduced an entrepreneurial
infrastructure to assist SMEs to grow.
 In addition to entrepreneurship, Singapore has focused on
other pillars of development such as good governance &
the result is that the Singaporean economy has grown
rapidly to become one of the highest GDP per capita in the
world
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• Singapore has grown from a GDP per capita of USD 516
at independence in 1965 to a GDP per capital of USD
396.99 billion US dollars in 2021 & Kenya’s GDP per
capita at independence was around USD 104 million
and today is USD 110.35 billion US dollars.
• Had Kenya’s economic growth been similar to Singapore
since independence, our GDP per capita would today be
more than 396.99 billion.US dollars

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REASONS FOR SLOW GROWTH OF
ENTREPRENEURSHIP IN KENYA
• a) Lack of Entrepreneurship Skills: This is attributed to
several reasons such as:
 Available entrepreneurship training emphasizes
theoretical aspects
 Many of the entrepreneurship trainers lack competence
and dedication towards training
 Potential entrepreneurs do not value training and
consider it a waste of time and money
• b) Financial Problem: The problem is attributed to
certain reasons; among them:
 Many banks do not offer credit facilities to many
entrepreneurs
 Other
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• c) Reluctance to Assume Risks: This is attributed to the
fact that many people prefer formal employment to self-
employment
• e) Lack of Infrastructure: Exemplified in terms of lack of
power, roads, communication and even banking facilities
• f) Insecurity: People fear setting up business in some
areas due to insecurity. Other areas are unfavorable to
certain groups of people due to their ethical, tribal or racial
backgrounds

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• g) Laws and regulations: These have greatly
undermined the growth of businesses in the country. This
is so due to high-interest rates on returns imposed on the
businesses by the government. For a business that has no
deep roots in the business world, this directly affects its
performance undermining its growth.
• h) Poor business support systems-Due to corruption,
wrong perception of the government machinery. Poor
business culture

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FACTORS INFLUENCING ENTREPRENEURSHIP
DEVELOPMENT

(A) Personal factors

Gartner et al. (1991) maintained that the valence of
outcomes related to becoming an entrepreneur is related to
individuals’ motivational levels. Rauch and Frese (2000)
found that people are motivated to become entrepreneurs
because :
 They have a desire for economic wealth and high needs
for achievement or autonomy (McClelland, 1987).
 Of an individual’s self-efficacy (effort to performance
expectancy).

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 Shinnar and Young (2008) found that entrepreneurs are
motivated by both “push” and “pull” factors. Pull factors
emphasize the positive aspects of self-employment, which
are often associated with economic independence and job
satisfaction. Some research found that self-employed
workers were more satisfied than wage and salary
workers (Bradley and Roberts, 2004). Push factors focus
on entry into self-employment as a last resort. For
example, researchers argued that people often start a new
business because they are excluded from the job market
by unfair discrimination or lack of career options
 Cultural values. Considerable research indicates people
are motivated by needs for achievement, autonomy, or
desires for wealth
g
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 Education and skills. Two other factors that may influence
motivation to pursue entrepreneurship are their educational
and skill levels.
 Social networks. Baron and Henry (2011) model found
social networks play an important role in an individual’s
motivation to pursue entrepreneurship. For example,
research showed that social networks, especially family
enclaves
 Family members- Family members who play key role as
role models. Children of self-employed parents are more
likely to become self-employed than those whose parents
are not self-employed. Self-employed parents often convey
entrepreneurial roles to their children and increase their
self-efficacy levels

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B) Economic Factors
The economic factors that affect growth of entrepreneurship
are the following:
Capital
 Increase in capital investment in viable projects results in
increase in profits which help in accelerating the process of
capital formation. Entrepreneurship activity too gets a
boost with the easy availability of funds for investment.
 Availability of capital facilitates for the entrepreneur to
bring together the land of one, machine of another and raw
material of yet another to combine them to produce goods.
Capital is therefore, regarded as lubricant to the process of
production.

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 Labor
Easy availability of right type of workers also effect
entrepreneurship. The quality rather than quantity of labor
influences the emergence and growth of entrepreneurship
entrepreneurship is encouraged if there is a mobile and
flexible labor force.
 Raw Materials
The necessity of raw materials hardly needs any emphasis for
establishing any industrial activity and its influence in the
emergence of entrepreneurship. In the absence of raw
materials, neither any enterprise can be established nor can
an entrepreneur be emerged

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 Availability of Market
The fact remains that the potential of the market constitutes
the major determinant of probable rewards from
entrepreneurial function. If the proof of pudding lies in
eating, the proof of all production lies in consumption, i.e.,
marketing
 Supportive Economic and business environment:
Economic stability, Competition, trade cycles, prices,
income levels, investments and savings position of the
market, Market completion, and monopoly, imperfect
completion, capital market, transportation, and
communication awareness, towards the environment,
quality of entrepreneurs and innovations, consumers,
suppliers, workers, employees, investors and debenture
holders etc
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 Availability of supporting Institutions: marketing,
management, machinery, training, exports, modernization,
and other matters, Surveys, Technical counselling, business
counseling, machine designing, product development,
research projects, development, and investigation, etc.
 Money supply, interest rates , tax regimes, licensing
procedures etc

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c) Socio –Cultural factors
 Socio-cultural environment in broad terms consists of both
the social system and the culture of a people.
 It refers primarily to man created intangible elements
which affect people's behavior, relationship, perception
and way of life, and their survival and existence.
 The social-cultural environment consists all elements,
conditions and influences which shape the personality of
an individual and potentially affect his attitude,
disposition, behavior, decisions and activities.
 Such elements include beliefs, values, attitudes, habits,
forms of behaviour and life styles of persons as developed
from cultural, religious, educational and social
conditioning

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 social-cultural environment, in relation to
entrepreneurship, can be defined as consisting of all the
elements of the social system and culture of a people which
positively or negatively affect and influence
entrepreneurial emergence, behaviour and performance,
and entrepreneurship development in general. Some
factors include:
 Legitimacy of Entrepreneurship: The degree of approval or
disapproval granted by norms and social values of the
system influence the emergence of entrepreneurship and
its character. Schumpeter recognizes the importance of
such legitimacy in terms of appropriate social climate for
entrepreneurship. According to him, norms and social
values of society are the reasons for the origin of
entrepreneurship.
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 Religion
• Religion plays a vital role in influencing the emergence of
entrepreneurship- Religion takes birth in the society,
remains in the society and continues in the society. It
imbibes some values to people who follow it. A few
religions have spread over a large area in the world. The
Protestants influence is dominant in the USA, Canada and
Australia with regard to production and distribution.
• Islam dominates North Africa, Middle East, Malaysia etc.,
Hinduism and Buddhism in most part of Asia. They
preach their followers differently and build ethics and
morals of their own. Thus religions play a significant role
in creating entrepreneurs.

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 Family System:
• The family system in a society plays a major role in
creating entrepreneurs. For instance in many Islamic
countries, women play a less significant role in the
economy and also in the family with limited rights.
However, women play a dominant role in European and
North American Countries.
• In addition to the above feature, joint families prevalent
in the Hindu religion is a dominating factor in the
emergence of entrepreneurship. There are instances
where joint families have produced prominent
entrepreneurs on account of their ancestral property
support.

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 Security:
• Some scholars have argued that entrepreneurial security
as an important facilitating factor of entrepreneurial
behaviour.

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 D) Political and legal factors
 It is concerned with general stability of the country in which
an enterprise is expected to perform and the political
philosophy of party in power towards business.
 Political forces define the business climate by the constraints
they impose and by the activities they permit. Political
factors include:
Political philosophy, Political atmosphere & Quality of
leadership
Some political factors affecting business include: Bureaucracy
Corruption level, Freedom of the press, Tariffs, Trade control, Education
Law, Anti-trust law, Employment law, Discrimination law
Data protection law, Environmental Law, Health and safety law,
Competition regulation, Regulation and deregulation, Tax policy (tax rates
and incentives), Government stability, Government involvement in trade
unions and agreements, Import restrictions on quality and quantity of
product, Intellectual property law (Copyright, patents), Consumer
protection and eCommerce, Laws that regulate environment pollution
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Legal Factors refers to the regulatory framework within
which an enterprise operates. Legal environment includes
flexibility and adaptability of the law and other legal rules
governing the business activities in a country. Factors
related with legal environment are:
 Regulation of entrepreneurial functions
 Regulating results of entrepreneurial activities

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E) Psychological Factors
• Many entrepreneurial theorists have propounded theories
of entrepreneurship that concentrate especially upon
psychological factors. These are as follows
 Need Achievement
• The most important psychological theories of
entrepreneurship was put forward in the
• early) 1960s by David McClelland. According to
McClelland ‘need achievement’ is social motive to excel
that tends to characterize successful entrepreneurs,
especially when reinforced by cultural factors.

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• He found that certain kinds of people, especially those
who became entrepreneurs, had this characteristic.
Moreover, some societies tend to reproduce a larger
percentage of people with high ‘need achievement’ than
other societies.
• McClelland attributed this to sociological factors.
Differences among societies and individuals accounted
for ‘need achievement’ being greater in some societies
and less in certain others. The theory states that people
with high need-achievement are distinctive in several
ways. They like to take risks and these risks stimulate
them to greater effort.

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• The theory identifies the factors that produce such
people.
• Initially McClelland attributed the role of parents,
specially the mother, in mustering her son or daughter
to be masterful and self-reliant.
• Later he put less emphasis on the parent-child
relationship and gave more importance to social and
cultural factors.
• He concluded that the ‘need achievement’ is conditioned
more by social and cultural reinforcement rather than by
parental influence and such related factors

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Motives
Other psychological theories of entrepreneurship stress the
motives or goals of the entrepreneur. A researcher named
Cole argues that besides wealth, entrepreneurs seek power,
prestige, security and service to society. Stepanek, another
researcher points particularly to non-monetary aspects such
as independence, persons’ self-esteem, power and regard of
the society

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ENTREPRENEURIAL PROCESS AND BUSINESS
OPPORTUNITIES

 Generating/identifying business opportunity

• Good business opportunities can be identified through
the following : observation of existing business sector,
interviewing local people, brainstorming, attending
shows etc.
• Other ways include; utilization of own skills or talent,
utilizing waste, utilizing ones assets and so forth.

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 Evaluating identified business opportunity
• Factors to consider when evaluating the viability of an
identified opportunity are:
 Availability of market and existence of competition;
 Adequacy of supply of inputs;
 capital requirements,
 The business location and availability of the required
labour.
 Ease of exit,
 Compatibility with the promoter etc.
• Other considerations include; consistence with
government policies, reasonableness of costs, business
location, cultural value, political conditions, status and
profitability.
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 Selection of Viable Business Opportunity
A good business opportunity must fulfil the following
criteria:
 There must be real demand for the product;
 It must provide durable, timely and have acceptable
returns;
 It must be equal to or better from the customer’s view
point;
 It must meet the goals and aspirations of the promoters a
 It must generate income which exceeds the cost.

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 Developing a Business Plan: This is a written document
which explains business goals and the strategies that will
be used to achieve the set goals. It spells out the future
direction of the business and it helps a firm exploit the
identified opportunity.

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 Identifying and Sourcing Start-Up Business Resources
Before a business plan designed is implemented, one must
always consider the resources that are needed to
accomplish the goals of an organization. Resources may
include the following:
 Labour; in terms of skills needed to perform given tasks.
Skills could be technical, managerial or
entrepreneurship.
 Capital: Money needed to start & run business. Can be
sourced from different institutions and individuals.
 Equipment: Tools of trade required to accomplish goals
Premises: Space required for operating or conducting a
business. Others include: Licenses, taxation laws, zoning
law etc.
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 Implementing the Selected Business Opportunity.
 After resources have been identified and acquired, the
entrepreneur must employ them through the
implementation of the business plans.
 At this juncture the entrepreneur must examine carefully
the problems of growing enterprises. This involves
implementing a management style, and structure as well
as a determining the key variables for success.

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Causes Of Success And Failure Of Entrepreneur:

There are some causes of such success and failure. They are
noted below:
1. Selection of business: It is an important aspect. That
means an entrepreneur has to determine what type
business he is going to start. Form various points of view
the feasibility of the business should be tested.
• Proper planning: Proper planning is also important. For
planning, planning premises like political, economic,
social premised should be considered first. The steps of
planning should be followed properly.

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3. Initial capital: if the initial capitals are not an optimal
level the organization would fall. So whether the enterprise
is big or small the initial capital should be sufficient
enough.
4. Determination of market demand: Through research the
demand in the market should be identified. Both for long
term and short term it should be considered.
5. Marketing of product: If the promotion policy, channel
of destitution, transportation is not good the enterprise
would fall.

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6. Education and experience: One of the important tasks of
the entrepreneurs is to select right person for the right post
because the success of an enterprise depends on the right
selection of employees.
7. Challenges of Joint initiative: One may have much
money and another may have more merit. Through joint
initiative it can be balanced. But sometime for joint
initiative misunderstanding arise, or sometimes
corruption occur which may result in fall of enterprise.

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8. Employment: Recruitment and appointment should be
properly done. Those who have specialized skill should be
appointed to that specialized job. Inefficient, corrupted
employees may be responsible for fall of business.
9. Location of business: Site selection is an important
factor. While starting a new business, an entrepreneur
should think about the location of the business. In this case,
many factors should be considered such as availability of
raw materials, proper communication system, availability
of labor, marketing facilities and so on.

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• 10. Qualities of management: The management must
have a minimum quality to success otherwise it would
fall.

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How To Avoid The Pitfalls

1. Know your business in depth

2. Develop a solid business plan
3. Manage financial resources
4. Understand financial statements
5. Learn to manage people effectively
6. Set your business apart from the competition
7. Maintain a positive attitude

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Entrepreneurial Motivation
• The term ‘motivation’ has its origin in the Latin word
“movere” which means to “move”. Thus, motivation
stands for movement.
• One can get a donkey to move by using a “Carrot or a
stick”, with people one can use incentives, or threats or
reprimands.
• However, these only have a limited effect. These work
for a while and then need to be repeated, increased or
reinforced to secure further movement

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Entrepreneurial Motivation

 Entrepreneurship is the process of adding something

new [creativity] and something different [innovation] for
the purpose of creating wealth for the individual and
adding value to society.
 An entrepreneur has to be creative and innovative in
order to have a sustainable growing business.
 Entrepreneurs are considered as one of the main
contributors to country economy growth.
 Entrepreneurial activities benefit community and society
as they create job opportunities, income, products and
services.

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 THEORIES OF MOTIVATION
 The importance of motivation to human life and work can
be judged by the number of theories that have been
propounded to explain human’s behaviour.
 They explain human motivation through human needs
and human nature.
1. Maslow’s Need Hierarchy Theory :
 Prof A. H. Maslow developed a theoretical framework for
understanding human motivation which has been widely
acclaimed. According to him, a person’s effectiveness is a
function of matching his opportunity with the appropriate
position of hierarchy of needs. Process of motivation
begins with an assumption that behaviour, at least in part,
is directed towards the satisfaction of needs.
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Basic Physiological Need
The physiological needs relate to the survival and
maintenance of human life. These needs include such things
as food, clothing, air, water and other necessaries of life
which are biological in nature. These needs are primary
needs.
Safety and Security Needs
After satisfying the ‘physiological needs, people want the
assurance of maintaining a given, economic level. They want
job security, personal bodily security, security of source of
income, provision for old age, insurance - against risks, etc
Social Needs
Man is a social being. He is, therefore, interested in
conversation, sociability, exchange of feelings and
grievances; companionship, recognition, belongingness, etc.
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Esteem and Status Needs
These needs embrace such things as self- confidence,
independence, achievement, competence, knowledge and
success.
These needs boost the ego of individual. They are also
known as egoistic needs. They are concerned with prestige
and status of the individual.
Self-Fulfillment Needs
The final step under the need priority model is the need for
self-fulfillment or the need to fulfill what a person
considers to be his mission in life.
It involves realizing one’s potentialities for continued self-
development and for being creative in the broadest sense of
the word. After his other needs are fulfilled, a man has the
desire for personal achievement
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2. McClelland’s Acquired Needs Theory
• Each person tends to develop certain motivational drives
as a result of his cognitive pattern and the environment in
which he lives.
• David McClelland gave a model of motivation which is
based on three types of needs, namely, achievement,
power and affiliation. They are as follows:
• (i) Need for achievement (n-Ach): a drive to excel, advance
and grow;
• (ii) Need for power (n-Pow): A drive to influencing others
and situations;
• (iii) Need for affiliation (n-Aft): A drive for friendly and
close interpersonal relationships.

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• McClelland also suggests that these three needs may
simultaneously be acting on an individual. But, in case of
an entrepreneur, the high need for achievement is found
to be the dominating one. In his view, the people with
high need for achievement are characterized by the
following and have high desire for entrepreneurship:
• (i) They set moderate, realistic and attainable goals for
themselves.
• (ii) Prefer situations in which they can find solutions for
solving personal responsibility.
• (iii) They need concrete feedback on how well they are
doing.
• (iv) They have need for achievement for attaining personal
accomplishment.
• (v) They look for challenging tasks.
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Motives for starting enterprises

• Several researchers have carried out research studies to

identify the factors that motivate people to start business
enterprises. The findings of some of the studies are as
follows.
• In this pioneering study, R.A. Sharma classified all the
factors motivating the entrepreneurs into two types as
follows :
• Internal factors and external factors

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Motives for starting enterprises

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 Study by Murthy, Sekhar and Rao on entrepreneurial
motivation classified the factors behind entrepreneurial
growth into three categories as follows :
• (a) Entrepreneurial Ambitions
 To make money
 To fulfill desire to self/parents
 To continue family business
 To secure self-employment/independent living
 To gain social prestige
 To make decent living
 Desire to do something creative
 To create employment

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(b) Compelling Reasons
 Unemployment
 Dissatisfaction with the job
 Making use of the funds
 Making use of technical/professional skills.
 Maintenance of a large family
 Emergency

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(c) Facilitating Factors
 Previous association
 Previous employment in same or other lines
 Success story of other entrepreneurs
 Property inheritance
 Advice or influence from others

(d) Other factors that contribute to entrepreneurial

motivation are embedded in the theory of achievement
motivation such as desire to excel, strive for success etc.

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Demerits of Self Employment

a) Risks:
• An entrepreneur faces several risks such as:-
 Financial loss: In case the business fails
 Career risk: It may be impossible to get the formal job
one left again
 Family and social risks: As one spends too much time
in the business at the expense of the family and friends.
This may create a permanent emotional scar.
 Psychic risk: Business failure may cause psychological
impact on the entrepreneur.

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a) Stress – This may be caused by loneliness, need to
achieve and immersion in business. The problem of
stress can be solved in various ways such as:
 Networking for the purpose of sharing experiences with
other business persons
 Getting away from the business by going for holidays or
taking breaks etc.
 Delegating some responsibilities to others.

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a) Sacrifice of Guaranteed Income: Initially, a business
may operate at a loss to an extent of the owner not
making ends meet.
b) Increased Responsibility: An entrepreneur does
everything in the business. He performs all sorts of jobs.

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Personal Barriers to self-Employment

Many people refuse to venture into business due many

personal reasons such as:-
 Fear of failure: If one thinks he will fail the chances are
he will not go for entrepreneurship.
 Lack of drive: Lazy people fear to go into business
 Lack of sustained motivation
 Difficulty with ambiguity
 Inability to dream or lack of vision
 Impatience in solving problems
 Lack of clear perception
 Inadequate preparation including lack of knowledge,
skills or experience.
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External Barriers to self-Employment
• Among the external factors that make people fail to
venture into business are:
 Lack of capital in the society or nation
 Poor quality of labour
 Lack of access to raw materials
 Cultural block caused by fear to go beyond the cultural
norms
 Practical values e.g. some societies discourage certain
people from engaging in certain activities as such
activities may be considered childish.

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