INTRODUCTION TO ENTREPRENEURSHIP

Entrepreneurship relates to the pursuit of risky and innovative business ventures to

capture new opportunities.
Learning Objective
• Define entrepreneurship within the context of standard activities and organizational
support and various terms used in entrepreneurship
• Explain the contribution of entrepreneurship towards national development

• Explain the difference between self and salaried employment.

Key Points
• Entrepreneurs are innovators, willing to take risks and generate new ideas to create
unique and potentially profitable solutions to modern-day problems. Entrepreneurship is
not so much a skill as a habitual state of mind.
• When entrepreneurship describes activities within a firm or large organization, it is
referred to as intrapreneurship and may include corporate venturing, when large entities
spin off organizations.
• Entrepreneurship employs what Schumpeter called the gale of creative destruction to
replace wholly or partly inferior innovations across markets and industries. This
destruction simultaneously creates new products and new business models.
• Entrepreneurship ranges in scale from solo projects (even involving the part-time
entrepreneur) to major undertakings that create many job opportunities.
• Entrepreneurial activities can be incremental or disruptive. Incremental innovations are a
number of small changes that transform process flows while disruptive innovations are
entirely new approaches.

Terms
• Entrepreneurship
The art or science of innovation and risk-taking for profit in business. Entrepreneurship
is the process of starting a business or other organization.
• Entrepreneur
A person who organizes and operates a business venture and assumes much of the
associated risk. The entrepreneur develops a business model, acquires the human and
other required resources, and is fully responsible for its success or failure.
Entrepreneurship operates within an entrepreneurship ecosystem.
Entrepreneurs
Entrepreneurs are innovators, willing to take risks and generate new ideas to create unique and
potentially profitable solutions to modern-day problems. This innovation may result in new
organizations or revitalize mature organizations in response to a perceived opportunity. The most

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obvious form of entrepreneurship is starting a new business (referred as a startup company). In
recent years, the term has been extended to include social and political forms of entrepreneurial
activity, which are often referred to as social entrepreneurship.
Entrepreneurial activities differ substantially depending on the type of organization and
creativity involved. Entrepreneurship ranges in scale from solo projects (that can even involve
the entrepreneur working only part-time) to major undertakings that create many job
opportunities. Many high-value entrepreneurial ventures seek venture capital or angel funding
(seed money) to raise capital for building the business.
Definition Business
• The definition of business is an occupation or trade and the purchase and sale of products
or services to make a profit.
• The activity of making, buying, or selling goods or providing services in exchange for
money.
• An organization or economic system where goods and services are exchanged for one
another or for money.
Definition Entrepreneurship
The art or science of innovation, new ideas and risk-taking to create unique products
and services and for profit in business. Potentially profitable solutions to modern-day
problems.

To simplify, the main focus for Business men is:

•  Administration of business
• Search for truth, Short-term
• Logical, Linear, Utility, Incremental
• Features
• Facts, Verbal, Measure
• Minimal Risks, Predictable, Smaller Rewards
• Profit
While, on the contrary, the main focus for Entrepreneurs is:
• Invention of business
• Search for what is interesting, Intuitive, Long-term
• Holistic, Significance & Meaning, Leap forward
• Benefit
• Emotion, Visual thinking
• Risk, Uncertainty, Potentially High Rewards
• Value
10 Differences between a Businessman and Entrepreneur

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Are you a businessman or an entrepreneur? Have you ever wondered what’s the difference
between the two? Business people and entrepreneurs have many similarities. They both provide
jobs for the unemployed, give solutions to the consumers, and help in developing the economy of
a certain nation. However, they are not the same kind of people. The following are 10 differences
between a businessman and an entrepreneur:
1. On the originality of idea
A businessman can make a business out of an unoriginal business or product idea. He enters into
existing businesses, such as franchising and retailing. He chooses a hot and profitable business
idea regardless of whether it is his original idea or borrowed from someone else.
An entrepreneur is an inventor and the first creator of a product. He invests time, energy and
money on his own idea. He doesn’t start a business from an unoriginal idea. That is why he starts
on a startup while a businessman starts on a business.
2. On the purpose of doing
Most businessmen are doing business for profit, livelihood, for reaching their financial goals, and
for becoming their own boss. Though, there are some business people who are not profit-oriented
but people-oriented, that is, they are more concerned on the welfare of their workers and the
satisfaction of their customers.
Entrepreneurs are more concerned on changing the world. They want to pursue their passion and
achieve an ultimate goal. They are not keen on financial returns, rather they are focused on what
they can offer to the world. Their purpose for entrepreneurship is simply to make a difference in
this world.
3. On the degree of risks taken
Businessmen take calculated and managed risks. They cannot afford to lose money and suffer
from bankruptcy. That is why they always do the Math when it comes to business.
Entrepreneurs are like sky divers. They take crazy risks. They often don’t care of losing time and
money just to pursue their passion. But since they do it with love, joy and passion, they often
gain extraordinary rewards. Entrepreneurs, since they do the things they love the most, they do it
with the best of themselves, resulting to greater success.
4. On how he treats employees
A business owner is an employer and a manager. He hires employees and workers to help his
business grow.
An entrepreneur is a friend and a leader. He finds peers and PEOPLE, whom he will never treat
as machines. He invites them to help them grow.
5. On how he treats customers
A business owner usually sees customers as his source of sales and revenues. For him, customers
are the lifeblood of his business.
An entrepreneur sees customers as his source of duty and fulfillment. For him, customers are his
own life blood.
6. On how he sees the competition
A business owner tries hard to beat his competitors and win the competition. He also considers
cooperation rather than competition to achieve certain goals.
An entrepreneur tries hard to beat his worst competitor – himself.

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7. On what he thinks of money
Losing money is one of the biggest worries of businessmen. Most business owners rely on a
good economy to start, operate and attain success in business, especially in the retail, franchising
and financing industry.
Entrepreneurs do not worry a lot about money since they can always start from a scratch. Some
entrepreneurs don’t really care about money at all.
8. On how he deals with time
A businessman doesn’t waste time. He always check the clock and doesn’t want any work or
output to be delayed out of schedule. He is fast and always on the go.
An entrepreneur works like an artist or a scientist in a lab. His product is his masterpiece. That is
why he can be slow and could spend a longer period of time to finish and perfect his product.
9. On how he sees the world
A businessman sees the world as an opportunity. He sees it as an opportunity to make a living.
An entrepreneur sees the world as a duty rather than an opportunity.
10. On how he defines success
A businessman defines success as the success of his business and its stakeholders. Its
stakeholders include himself, co-owners, employees, customers, investors, and even his
community.
An entrepreneur doesn’t define success. He simply does his job and let history defines the
success that he accomplished.
Remember that this list is only according to my own opinion, and I don’t mean to put one of
them on top of the other. Both businessmen and entrepreneurs are supposed to be the kind of
people that our world needs. A businessman needs an entrepreneur. An entrepreneur may also
need a businessman. There can also be a person who is partly a businessman and partly an
entrepreneur.
Fostering Entrepreneurship
When entrepreneurship describes activities within a firm or large organization, it is referred to as
intrapreneurship and may include corporate venturing, in which large entities create spin-off
organizations. Corporations have become aware of the potential advantages of internal
entrepreneurial activity and often have innovation specialists in their organizations to develop
creative solutions for complex problems. Google has become well known for allowing all
employees to dedicate 20 percent of their time to any new project of their choosing.
Entrepreneurs have become an integral part of business.
Many kinds of organizations now exist to support would-be entrepreneurs, including specialized
government agencies, business incubators, science parks, and some non-governmental
organizations. More recently, the term entrepreneurship has been extended to include elements
unrelated to business formation activity. Concepts of entrepreneurship as a specific mindset have
emerged, resulting in initiatives like social entrepreneurship, political entrepreneurship, and
knowledge entrepreneurship.
Disruptive and Incremental
Joseph Schumpeter describes an entrepreneur as "a person who is willing and able to convert
a new idea or invention into a successful innovation." Entrepreneurship employs what

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Schumpeter called the gale of creative destruction. Schumpeter's idea encompasses more than
single innovations, as he further explains how innovative thinking allows for a sustainable and
long-term economic growth for societies that enable it. Creating new goods and new ways of
doing things allows for consistent job growth, more consumption, and more economic
dynamism. Innovative thinking allows for so-called disruptive innovations—innovations which
make leaps and bounds over existing products. One classic example is the iPhone.
Schumpeter's view is not the only one, however. Incremental innovation is also largely
recognized as a vital entrepreneurial pursuit. The idea of incremental innovation is simple: large
change is a byproduct of small innovations compounded with others. Incremental innovators find
ways to improve the efficiency of established processes to drive efficiency. An example of this
kind of innovation is Toyota's just-in-time inventory management. Incremental innovations are
often process-based, while disruptive innovations are usually new goods or processes
themselves.

WHAT IS THE ROLE OF AN ENTREPRENEUR

You’re doing it right when you generate positive returns.
Your role as #entrepreneur is to anticipate, plan and take action, roles as; (promoter, share
holder,
Director).
Rather I would argue that the role of an entrepreneur is to generate a positive return on invested
capital.
Noted that entrepreneurs need to be able to answer five key questions, the most important of
them has to be: “Do you understand the concept of return on capital employed (ROCE)?”
I often hear that the role of an entrepreneur is to “disrupt” or “create jobs” but I strongly disagree
with these sentiments. These may be spinoffs of what an entrepreneur does, but I don’t believe
that it is their “role”.
You may be in business but you are not a business until you are delivering a return on capital.
Contributions of entrepreneurship and SMEs towards developing countries
Africa is world's second-largest continent with abundant natural resources. Despite of this, many
countries remain poor and underdeveloped. With the impact of globalization these
underdeveloped and developing countries are emerging out of economic doldrums and meeting
the challenge of becoming potential economic powerhouses. This positive drive has enabled
potential indigenous people to open up micro, small, medium and large enterprises.
These enterprises have immensely contributed to the economic growth of both developed as well
as developing countries. Most of the SMEs operate in countries that have low to middle level of
income, thus the development of SMEs has gradually increased the rate of employment and
income in many countries.
What is the role of an entrepreneur in economic development?
Entrepreneur’s contribution to the economy is of immense value. He or she is indispensable to
the economic growth of the country. His or her products are valuable to the overall development
of the society. People need their products. They simply cannot do without them.

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Ours is a consumer society now. Even in the developing countries consumerism is gaining
ground. Developed countries anyway thrive on consumerism. Naturally, the role of an
entrepreneur is of much significance in generating products valuable for the com forts and
luxurious living of the people of a particular country.
An economy is much dependent upon the performance level of its entrepreneur. He or she plays
a vital role in the growth of the national income as well as raising the per capita income of the
people.
How does an entrepreneur stimulate the economy?
The entrepreneur is essential for the economic development of a country. The progress of a
country will depend upon his skill and talent as well as hard work to deliver necessary goods and
services required by the citizens of his or her country.
The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering
economic growth and development. Entrepreneurship is one of the most important input in the
economic development of a country. The entrepreneur acts as a trigger head to give spark to
economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the
development of industrial sector of a country but also in the development of farm and service
sector. The major roles played by an entrepreneur in the economic development of an economy
is discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ
their own as well as borrowed resources for setting up their enterprises. Such type of
entrepreneurial activities lead to value addition and creation of wealth, which is very essential for
the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic
problem of underdeveloped nations. With the setting up.of more and more units by
entrepreneurs, both on small and large-scale numerous job opportunities are created for others.
As time passes, these enterprises grow, providing direct and indirect employment opportunities
to many more. In this way, entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards economic development of the
nation. An entrepreneur by setting up various businesses and establishments is generating
employment in the economy. People need jobs. This is a major contribution that an employer can
make to provide income to an employee who can meet his or her needs.
(3) Promotes Balanced Regional Development:
Entrepreneurs help to remove regional disparities through setting up of industries in less
developed and backward areas. The growth of industries and business in these areas lead to a
large number of public benefits like road transport, health, education, entertainment, etc. Setting
up of more industries lead to more development of backward regions and thereby promotes
balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial
development normally lead to concentration of economic power in the hands of a few individuals

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which results in the growth of monopolies. In order to redress this problem a large number of
entrepreneurs need to be developed, which will help reduce the concentration of economic power
amongst the population.
(5) Wealth Creation and Distribution: Investment
It stimulates equitable redistribution of wealth and income in the interest of the country to more
people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial
activities also generate more activities and give a multiplier effect in the economy. Then
entrepreneur has to invest in what is required for the economy. Economic progress will much
depend upon his or her contributions. Any entrepreneur will invest in products and services
which the people need. More goods and services will be at their disposal.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the people in a country, is a sign of
economic growth. An entrepreneur makes much contribution to the national exchequer and to the
national economy as whole. The GNP of the country is calculated based upon the total number of
products and services available in a respective country. The more products and services available
the higher the GNP. It indicates the economic prosperity of the country.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of living of
the people by adopting latest innovations in the production of wide variety of goods and services
in large scale that too at a lower cost. This enables the people to avail better quality goods at
lower prices which results in the improvement of their standard of living.
(7) Promotes Country's Export Trade: International trade
Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of
economic development. They produce goods and services in large scale for the purpose earning
huge amount of foreign exchange from export in order to combat the import dues requirement.
Hence import substitution and export promotion ensure economic independence and
development. An entrepreneur promotes international trade by selling his or her products abroad.
Any entrepreneur would like a wider market. If there are more consumers to purchase his or her
products, the higher his profits.
(8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximise profits by
innovation. When an enterprise is established in accordance with the changing technology, it
induces backward and forward linkages which stimulate the process of economic development in
the country.
(9) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an
enterprise is established, the process of industrialisation is set in motion. This unit will generate

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demand for various types of units required by it and there will be so many other units which
require the output of this unit. This leads to overall development of an area due to increase in
demand and setting up of more and more units. In this way, the entrepreneurs multiply their
entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus
for overall development of the area.
(10) Diversity in products and services – An entrepreneur can provide various types of goods
and services to the consumer. The latter has much to choose from. A consumer after all would
like to have a good bargain, and if his or her choices are more than he or she can get these
products or services at reasonable rates. Also personal desires are met if there are products and
services to choose from. A person may like a particular type of tie and he can perhaps locate it in
his local market. His desire to purchase a tie of his choice is thus met.
Five tough entrepreneur questions
Have you asked yourself these questions lately?
Having carved out a bit of a niche in the small business sector over the last few years, I am often
invited by entrepreneurs to come to coffee to ‘brainstorm’ ideas for their small businesses. Over
time, I’ve realised there are plenty of similarities between these discussions and a few of the
themes I’ve found repeating themselves on a regular basis.
For the purposes of this article, I will lay out the typical ‘entrepreneur’ who comes to one of
these coffee meetings. Typically they are one- or two-person businesses that are horribly under-
capitalised, there is very little that is unique in their business and, they are working incredibly
hard to get ahead but just can’t find this mythical ‘break’ which would change their business into
an asset of value.
I will unpack this in follow-up pieces but here is the mental checklist I tend to go through:
• Do they understand the concept of return on capital employed (ROCE)?
This is a really harsh one for the entrepreneur who pours every spare cent and every waking hour
into their business, but at some point they need an external set of eyes to remind them of
Einstein’s definition of insanity: doing the same thing over and over again and expecting a
different result.
I thought Moneyweb editor Ryk Van Niekerk highlighted the issues perfectly in his recent
column entitled: “Nobody wants to touch SMEs.”
• Do they REALLY have paying customers?
This is one of the most useful questions to ask. Many will quickly respond that so-and-so is
“interested” or they have a ton of proposals out in the market, but is somebody actually buying
what they are selling?
US billionaire Mark Cuban has an excellent quote: “Customers want to see that you have other
customers”. If they are not obsessed with providing a product or service that somebody wants
and needs, then they are on a hiding to nothing.
• What is it you actually do?
As an entrepreneur this is a great question to ask yourself every single day because it focuses you
in a way that no other question will. When the entrepreneur is rattling off everything they ‘could’
do, you know that they don’t know what it is that they ‘do’.

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I didn’t realise it at the time but when I joined my dad’s software company shortly after leaving
school, I learnt a really good lesson. We used to spend a lot of time building bespoke software
for a variety of projects and the ultimate return wasn’t great. In time we crystalised that our area
of expertise was “building recipe handling software that interfaced to manual scales”. We could
roll the same solution out to the food, pharmaceutical and even panelbeating industries.
We could define what we did in 58 characters – can you?
• Will marketing money help?
As an entrepreneur who makes a profit encouraging people to take out advertising, it is probably
a bit self-defeating to say a red flag goes up when I hear people saying that they need to raise
money to “market their brand”.
A couple of us recently spoke at an entrepreneur’s forum and there were two great stories told.
One was by an entrepreneur from Limpopo who kick-started his business simply by hanging
around Transnet tender briefings and bizarrely got his first deal supplying screws and bolts
(which he knew nothing about) simply because he was the only person to rock up to the briefing.
The second was from Moneyweb contributor and finance sector entrepreneur Craig Gradidge
who told the audience that his business was launched in an Old Mutual auditorium when he
started fielding questions about Sasol’s BEE deal.
If the entrepreneur themselves is not the best marketing tool then no amount of marketing money
in the world is likely to be the answer.
• Can they add skills without spending much more?
This is always an interesting one because the debate tends to circle around why their business
needs capital to employ more people in the hope of drumming up additional business.
In all the years I have chatted to entrepreneurs, I can only recall one business where they really
needed an additional body and they ticked both the ROCE and paying customers boxes.
Interestingly the young lady who ran that business could quite easily have solved a lot of her
problems by offering unpaid internships. Ergo no capital outlay.
Remember these brilliant words from Amazon founder Jeff Bezos: “If you can’t feed a team with
two pizzas, it’s too large.”
Conclusion
The reality is that success in a small business often comes down to luck and timing. It could be
argued that these questions are too much along the lines of ‘play it safe’ but I genuinely believe
that if you can ask and answer these questions every few months, you will be a happier
entrepreneur.
Self-employment
Self-employment is the act of generating one's income directly from customers, clients or other
organizations as opposed to being an employee of a business (or person).
Generally, tax authorities will view a person as self-employed if the person (1) chooses to be
recognized as such, or (2) is generating income such that the person is required to file a tax
return under legislation that subsists in the relevant jurisdiction(s). In the real world the critical
issue for the taxing authorities is not that the person is trading but is whether the person is
profitable and hence potentially taxable. In other words the activity of trading is likely to be

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ignored if no profit is present, so occasional and hobby- or enthusiast-based economic activity is
generally ignored by authorities.
Self-employed people generally find their own work rather than being provided with work by an
employer, earning income from a trade or business that they operate. In some countries
governments (the United States and UK, for example) are placing more emphasis on clarifying
whether an individual is self-employed or engaged in disguised employment, often described as
the pretense of a contractual intra-business relationship to hide what is otherwise a simple
employer-employee relationship.
Salaried employee
An employee who is paid on a salary basis is paid a flat amount (i.e. $50,000 a year) rather than
an hourly wage. 
Many salaried employees are exempt from overtime pay requirements. Salaried employees are
paid their salary regardless of how many hours they work during a workweek.This means that
many high paying positions do not receive extra wages such as time and one-half for working
over 40 hours a week. However, some lower salary positions are still eligible for overtime pay,
based on state and federal laws. 
Salaried positions guarantee a dependable, exact, and expected amount on each paycheck. An
employee is considered paid on salary if the employee will regularly receive a scheduled amount
of restitution, which is often supplemented with paid vacation, holidays, healthcare, and other
benefits.
Salary
A salary is a form of periodic payment from an employer to an employee, which may be
specified in an employment contract. It is contrasted with piece wages, where each job, hour or
other unit is paid separately, rather than on a periodic basis. From the point of view of running a
business, salary can also be viewed as the cost of acquiring and retaining human resources for
running operations, and is then termed personnel expense or salary expense. In accounting,
salaries are recorded in payroll accounts.
Salary is a fixed amount of money or compensation paid to an employee by an employer in
return for work performed. Salary is commonly paid in fixed intervals, for example, monthly
payments of one-twelfth of the annual salary.
Salary is typically determined by comparing market pay rates for people performing similar
work in similar industries in the same region. Salary is also determined by leveling the pay rates
and salary ranges established by an individual employer. Salary is also affected by the number of
people available to perform the specific job in the employer's employment locale.
Comparison between salaried and self employment
There is no right answer to the question as to which is better. When it comes to weighing regular
employment against self-employment as an independent contractor, there is a whole host of
issues that come into play. And for each person the importance of these individual factors will
vary.
Below are some of the pros and cons of each type of work situation to aid in making decisions.
And keep in mind that you can even combine the two with one client contracting your services

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and another hiring you as a part-time employee. These two types of income will have to be
treated differently for tax purposes, though.
But first let's clarify exactly what each is:
Employees receive compensation on a regular basis (usually weekly or biweekly) for services
rendered. The employer directs both how and when an employee works. Pay can be a salary or
an hourly wage, or it can be paid on another basis, such as a per-call basis for call center agents
or commission for salespeople. However, it must be at least the minimum hourly wage in the
state where work was performed. Employer's pay half of employees' Medicare and Social
Security tax through payroll taxes, and at tax time issue a W-2 that outlines compensation and
taxes paid for the previous tax year.
Independent contractors are not as closely supervised as employees, usually setting their own
schedules. They often may receive work on a project basis and may or may not be paid hourly.
However, they are not subject to minimum wage laws. Independent contractors pay all of their
own Social Security and Medicare taxes when they file their income taxes, through the self-
employment tax, and they receive 1099-MISC at tax time.
Pros and Cons
Pros of Employment:
• Employer pays half Social Security and Medicare taxes. In an employment position,
employers are required pay half an employee's Social Security and Medicare taxes and
the employee pays half. The self-employed pay both halves, which together total 15.3
percent of compensation, through the self-employment tax.
• Employer collects payroll taxes in paycheck. While no one likes to see taxes taken out
of a paycheck, payroll taxes are convenient for the employee who does not have to
calculate amounts and send checks to the government, as when paying estimated taxes.
• Employees are protected by minimum wage laws. Independent contractors are not
protected by these laws and therefore may be paid less than minimum wage.
• Job security is likely better. While employment by itself is certainly no guarantee of job
security, employers invest more time and training in employees than contractors.
• Unemployment may not be available if you lose your job. Employers pay into
unemployment insurance, but typically contractors do not. So, if you lose your job as an
employee, you may--depending on the circumstances--be able to collect unemployment.
• Benefits may be offered. Certainly not all jobs include benefits like paid vacation, health
insurance and retirement plans, but contracting positions never do. This is one reason
companies hire contractors--to save money on benefits.
• Payments are made on a regular basis. Employees receive paychecks on a regularly
scheduled basis, usually biweekly or weekly. Independent contractors are often paid for
all work at the end of a project, which could go on for a month or longer.
• Employers absorb more costs related to work. While employees can incur some costs
(like uniforms and home office expenses), generally companies pay for the items
employees need to do their jobs. The self-employed must pay for these business
expenses.

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Cons of Employment:
• Employees enjoy less flexibility in scheduling and work. Employees are expected to be
at work (even if they work from home) at certain times. The work they do may be closely
supervised. Contractors enjoy significantly more freedom, working on their own schedule
until the tasks are complete.
• Positions are less likely to be work-at-home. While there are many work-at-home
employment positions, the freedom of schedule that comes with contracting makes
working from home more likely as a contractor.
• Compensation rate may be lower. Because companies pay for benefits and payroll
taxes, employees are generally more expensive. They may offset this by offering lower
per hour compensation.
• Regular compensation has payroll taxes taken out. That means the amount per
payment is less and the government is holding more of your money for taxes longer than
if you made estimated tax payments.
• Home office expenses are more difficult to deduct on taxes. However, it is possible for
an employee to deduct a home office, but there are more conditions, including that the
employee must work at home for the convenience of the employer.
When trying to decide if self-employment or regular employment is better for you, consider
these pros and cons of self-employment.
Pros of Self-Employment:
• More freedom in scheduling and performing work. Because the IRS defines an
independent contractor as someone that a company does not direct "the means and
methods" by which they work, they naturally have more freedom in their schedule.
Independent contractors are often given work on a project basis and paid upon
completion of the work.
• Work-at-home positions more likely. While independent contractors can work in an
office, because they are not as closely overseen as employees they are more likely to
work at home. In fact, it can be a benefit for a company to hire contractors because it
doesn’t need to provide office space for them.
• Tax-deductible business expenses. The self-employed can write off a number of
different business expenses on their income taxes. Among the self-employment tax
deductions work-at-home contractors enjoy is the home office deduction. Learn more
about both these deductions and self-employment income in The Independent
Contractor’s Tax Guide.
• No taxes taken out of payments. The checks that independent contractors receive from
clients are typically larger than they would as employees because not taxes are taken out.
That doesn’t mean they don’t own taxes but they get more money upfront.
• Compensation may be higher. Because hiring a contractor may be cheaper for a
company, it may be able to offer a higher rate of compensation. However, this is by no
means always the case.

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Cons of Self-Employment:
• Higher taxes. Employers pay half the cost of an employee’s Social Security and
Medicare taxes. Contractors pay all of these taxes through the self-employment tax.
• Tax payments. Employers collect income and payroll taxes through payroll deductions
and send them to the government. The independent contractor must take are of sending in
these payments and quarterly estimated tax payments may be required.
• Cost of running a business. While it’s nice that the costs of running a business are tax
deductible, it’s even nicer when someone else pays for your Internet connection, office
supplies and other business needs. Typically employers pay for these types of costs.
• No benefits. Benefits such as health insurance, vacation, retirement plans, etc. are offered
to employees only,
• Less job security. Companies hire independent contractors often because they have
short-term projects or an irregular work flow. Contractors work may come in feast or
famine stints.
• Payments often come on an irregular basis. Just as the work can be irregular, so too
does the payments. This can make personal budgeting difficult.
• Invoicing and collection is the responsibility of the contractor.Unlike a paycheck,
which comes on schedule with no action by the employee, a contractor must usually send
an invoice to be paid. And if the invoice is not paid on time, it is the contractor who must
follow up to ensure payment. And in a few cases clients may never pay at all, which
means it falls on the contractor to take legal action or accept being stiffed.
• Not required to receive the minimum wage. Because independent contract is often
done on a project basis, there is no guarantee what the hourly rate might be or whether it
is greater than the minimum wage.
What the Pros and Cons Mean to You
Each of the above pros and cons will factor in a little differently for each person and situation.
For instance, some companies may make up for the greater taxes paid by independent
contractors--and the lower costs the company incurs with contractors--by paying them a higher
rate than it does employees. Many others do not.
In fact some may take advantage of the fact that minimum wage is not required, and offer
payment for a project that when divided per hour is well below the minimum wage.
Though we often don't have a choice about whether to be an independent contractor or an
employee, knowing the benefits and drawbacks of each allows us compare different
opportunities.
When trying to decide if self-employment or regular employment is better for you, consider
these pros and cons of an employment situation.
Requirements For Entry Into Self Employment
-capital financing
-machinery and equipment / tools;& how to improve

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-premises; importance of premises and how to acquire
-requirements of skills; entrepreneurial, management and industrial/technical skills
-staffing, organization/structuring; (purpose, type, design)
Five tough entrepreneur questions
Have you asked yourself these questions lately?
Having carved out a bit of a niche in the small business sector over the last few years, I am often invited
by entrepreneurs to come to coffee to ‘brainstorm’ ideas for their small businesses. Over time, I’ve
realised there are plenty of similarities between these discussions and a few of the themes I’ve found
repeating themselves on a regular basis.
For the purposes of this article, I will lay out the typical ‘entrepreneur’ who comes to one of these coffee
meetings. Typically they are one- or two-person businesses that are horribly under-capitalised, there is
very little that is unique in their business and, they are working incredibly hard to get ahead but just can’t
find this mythical ‘break’ which would change their business into an asset of value.
I will unpack this in follow-up pieces but here is the mental checklist I tend to go through:
• Do they understand the concept of return on capital employed (ROCE)?
This is a really harsh one for the entrepreneur who pours every spare cent and every waking hour into
their business, but at some point they need an external set of eyes to remind them of Einstein’s definition
of insanity: doing the same thing over and over again and expecting a different result.
I thought Moneyweb editor Ryk Van Niekerk highlighted the issues perfectly in his recent column
entitled: “Nobody wants to touch SMEs.”
• Do they REALLY have paying customers?
This is one of the most useful questions to ask. Many will quickly respond that so-and-so is “interested”
or they have a ton of proposals out in the market, but is somebody actually buying what they are selling?
US billionaire Mark Cuban has an excellent quote: “Customers want to see that you have other
customers”. If they are not obsessed with providing a product or service that somebody wants and needs,
then they are on a hiding to nothing.
• What is it you actually do?
As an entrepreneur this is a great question to ask yourself every single day because it focuses you in a
way that no other question will. When the entrepreneur is rattling off everything they ‘could’ do, you
know that they don’t know what it is that they ‘do’.
I didn’t realise it at the time but when I joined my dad’s software company shortly after leaving school, I
learnt a really good lesson. We used to spend a lot of time building bespoke software for a variety of
projects and the ultimate return wasn’t great. In time we crystalised that our area of expertise was
“building recipe handling software that interfaced to manual scales”. We could roll the same solution out
to the food, pharmaceutical and even panelbeating industries.
We could define what we did in 58 characters – can you?
• Will marketing money help?
As an entrepreneur who makes a profit encouraging people to take out advertising, it is probably a bit
self-defeating to say a red flag goes up when I hear people saying that they need to raise money to
“market their brand”.

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A couple of us recently spoke at an entrepreneur’s forum and there were two great stories told. One was
by an entrepreneur from Limpopo who kick-started his business simply by hanging around Transnet
tender briefings and bizarrely got his first deal supplying screws and bolts (which he knew nothing about)
simply because he was the only person to rock up to the briefing.
The second was from Moneyweb contributor and finance sector entrepreneur Craig Gradidge who told
the audience that his business was launched in an Old Mutual auditorium when he started fielding
questions about Sasol’s BEE deal.
If the entrepreneur themselves is not the best marketing tool then no amount of marketing money in the
world is likely to be the answer.
• Can they add skills without spending much more?
This is always an interesting one because the debate tends to circle around why their business needs
capital to employ more people in the hope of drumming up additional business.
In all the years I have chatted to entrepreneurs, I can only recall one business where they really needed an
additional body and they ticked both the ROCE and paying customers boxes. Interestingly the young lady
who ran that business could quite easily have solved a lot of her problems by offering unpaid internships.
Ergo no capital outlay.
Remember these brilliant words from Amazon founder Jeff Bezos: “If you can’t feed a team with two
pizzas, it’s too large.”
Conclusion
The reality is that success in a small business often comes down to luck and timing. It could be argued
that these questions are too much along the lines of ‘play it safe’ but I genuinely believe that if you can
ask and answer these questions every few months, you will be a happier entrepreneur.
ENTREPRENEUR TEST
What is it?
The entrepreneurial questionnaire is designed to assess the personality traits associated with
entrepreneurial ability, in order to provide insight into the current qualities possessed by the candidate. It
has been suggested that some people are naturally predisposed to success in this kind of career, due to
characteristics of their personality which could affect decision making processes, attitude towards
achieving goals and whether they are able to remain optimistic during difficulties. However, once aware
of the key elements that accompany a successful entrepreneurial outlook, it is possible to improve upon
those qualities, whether they come naturally to the individual or not.
The personality traits identified by the questionnaire are considered to be compatible with a
prosperous entrepreneurial career are as follows:
• Achievement Striving, which refers to an individual’s intrinsic motivation and efficiency of
work completion. For example, it could be suggested that someone interested in this area of
career should be motivated by their desire to achieve goals and be able to use their time
effectively in order to progress further. Entrepreneurs will usually be responsible for their own
work hours and set their own deadlines meaning it would be easy to underachieve if they lack
initiative, as there is no one to answer to when tasks are not completed.
• Industriousness is considered to be an indicator of levels of persistence and hardiness, the ability
to overcome difficulties and to remain functional in stressful situations. It can also convey
willingness to work hard and to offer additional efforts when required. Due to number of
challenges and disappointments associated with building a successful business from the ground, it
is important that the individual is able to persevere with various efforts or attempts in order to
achieve success.

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 • Passion refers to one’s enthusiasm, personal commitment to achieving goals and extent to which
they will go in order to get ahead. Being passionate about a business proposal or career can
provide greater determination to accomplish objectives, as well as increasing the enjoyment
gained from it. More often than not, those who possess an emotional affinity with their career of
choice are more likely to succeed.
• Taking Control is linked to how far the individual believes themselves to have control over a
situation and its outcomes, thus affecting their perception of positive and negative events. This
idea originated from the psychological theory known as “Locus of control” which describes the
way in which someone might credit certain events to themselves or to other external factors. For
example, those who believe to have high levels of control are likely to attribute successes to their
own abilities as opposed to luck.
• Creativity is indicative of how effectively one might generate new ideas, which is vital to an
entrepreneur wishing to establish themselves within a niche market. The ability to continually
revolutionise and build upon pre-existing concepts may help to produce a vast number of
successful business models.
What are ten competencies of an entrepreneur?
Empirical evidence suggests that the competencies for entrepreneurial success are many and varied:
however, overall, there are probably 10 that appear most regularly:

10 COMPETENCIES FOR ENTREPRENEURIAL SUCCESS:

1. Integrity - the entrepreneur has a clear sense of values and beliefs that underpin the creative and
business decisions that they make; and that influence the actions they take, particularly when in difficult
or challenging circumstances
2. Conceptual Thinking - the entrepreneur is prepared to use fresh approaches; comes up with crazy
ideas that may just work, leading to radical change or significant improvements; and takes time to listen
to new ideas without pre-judgement
3. Risk taking - the entrepreneur understands that risk taking means trying something new, and possibly
better, in the sense of stretching beyond what has been done in the past; and that the constant challenge is
to learn how to assess choices responsibly, weighing the possible outcomes against his/her values and
responsibilities
4. Networking - the entrepreneur understands that networking is a key business activity which can
provide access to information, expertise, collaboration and sales; and that careful planning and
preparation helps achieve desired results
5. Strategic Thinking - the entrepreneur understands and values the planning process, thinking and
planning over a significant timescale; recognises external trends and opportunities; and is able to think
through any complex implications for the business
6. Commercial Aptitude - the entrepreneur keeps up to date with developments in the sector; seeks out
best practice; and identifies and seizes opportunities that are not obvious to others
7. Decisiveness - the entrepreneur resolves issues as they arise; does not get bogged down in analysis
during decision making; and responds flexibly to deal with changing priorities
8. Optimism - the entrepreneur persists in pursuing goals despite obstacles and setbacks; operates from
hope of success rather than from fear of failure; and sees setbacks as due to manageable circumstance
rather than a personal flaw
9. Customer Sensitivity - the entrepreneur builds trust and long term relationships with customers;
generates an expectation of high level of customer service; and regularly exceeds customer expectation

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10. People Focus - the entrepreneur creates common purpose with colleagues through shared vision and
values; walks the talk; sees and values the best in others; builds the total capability of the immediate and
wider team; and always considers the principles of inclusiveness in planning and dealing with others
11.persistance - taking repeated actions to overcome the obstacles.

The Importance of Business Opportunities Today!

To be able to begin business opportunities you have to go available and really appear for data. Business
opportunities call for a huge quantity of investigation in the legal suggestions region of the business
opportunity. Business opportunities for entrepreneurs need to also be looked over in order for the home
business chance to be legitimate and profitable. There are numerous business bureaus that will allow you
to start off house business opportunities faster. They also have data on business opportunities and their
monetary history.
For your business opportunities to be profitable you will / should be sure to start your business
opportunities rapidly. Business opportunities are identified all of the time so you better commence your
business opportunity before somebody else does. As an entrepreneur I recommend you are thinking about
the property business opportunities you may commence as it makes the advertising procedure less
complicated. You will be able to write a lot more very good quality content material for your business
opportunity. This is very critical indeed. Business opportunities basic mistake is always to not to be
considering the field of function for you residence business. This is something you desire to keep away
from by obtaining business opportunities that you are passionate about. It’ll make the home business
opportunities easier and smoother for anybody involved.

Starting up a new business can be a stressful endeavor, and the most difficult task can be raising the
startup capital need to get your new business off of the ground. There are numerous funding opportunities
available for anyone looking for startup capital, but you need to be aware that some options are safer and
more rewarding than others. With so many funding opportunities available for your new company, you
need to conduct your research so you are aware of the differences and how each one can contribute to
your new business.
The Importance Of Quality Business Plans And Funding Opportunities
One of the first things to start with when researching funding opportunities, is to have comprehensive
business plans drawn up. Again, your business plans are essential at this stage of setting up your business.
In it you will already have scoped out what your money needs are and how you plan to raise the startup
capital, and you'll be using it to persuade potential investors and lenders of the benefits of funding
your company. Your financial calculations in your business plan therefore need to be thorough and
accurate and presented with confidence. Don't just plan to read out your business plans, since people can
do that for themselves.
Turn it into a slick presentation with a strong argument for your case. Write down what you want to say
and rehearse it several times - in front of a mirror at first and then to family or friends. Confidence is key
and this will come with practice. When shopping for funding opportunities, business plans are a great way
to effectively and succinctly display your passion and expertise in your new business with the
necessary creditors. By seeking the best startup capital available, you will be happier in your new
business.
With so many business opportunities available, it is often difficult to determine whether a particular
opportunity shows great promise or is likely to fail. Your goal is to learn how to tell a good opportunity
from a bad one.

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Here are some tips that will help you assess the potential of any business opportunity that comes
your way and make the right decision.

One of the first factors to consider is the stability of the company associated with the opportunity. In
the case of a new business that does not yet have a proven track record, you want to know who is behind
the launch or who is supplying this company with operating capital until the business begins to generate
profits. Essentially, you want some amount of assurance that the company will be around long
enough for you to benefit from a relationship with the opportunity, especially in terms of recouping any
investment of time or other resources.

Keep in mind that a new business or a plan to start a business may be riskier than going with a company
with an established track record. However, business opportunities of this kind are not automatically
suspect. If the funding is there and the organization is structured properly, the opportunity is well worth
your consideration.

Assessing the good or service offered by the business is also important. The best business opportunities
involve companies that offer something consumers will need or desire over all other competing
products. It is not a problem if the product is aimed at a niche market. Business opportunities of this type
are often great moneymakers, since they address needs that are often overlooked by others. In addition,
the competition is probably less fierce in a niche market, a situation that will allow the company you are
evaluating to establish itself as the industry standard in that market.

Along with having a solid financial base and a product that is sure to attract attention , the best business
opportunities also have a comprehensive and well defined system for getting the products to
consumers. This includes such factors as a reliable process for producing the good or service,
excellent sales and marketing strategies, and an efficient delivery to the buyer. Without the ability to
satisfy orders quickly and efficiently, even the best product is less likely to build a loyal client base.

The return you will receive is also very important when considering different business
opportunities. Will you earn an equitable return in comparison to what you invest in the business in
terms of time and other resources? If so, then there is a good chance the opportunity is worth pursuing. If
you are not sure, keeping looking for something better.

You will find that in today’s market, it is worth your time to consider a home-based business as well as
a more traditional business setting. Business opportunities of this type often start with business ideas
that are new and fresh in terms of approach or some aspect of the products offered. If you see merit
in a given business idea and think it has a good chance of succeeding, then look it over carefully. That
home based business may be the ideal investment vehicle for you.

Decision Making Process

As I have already said, decision making process is one of the most important processes in your business.
You can see different types of this process in reality, but generally they all have the same purpose –
effective and efficient decision that will bring results to your business.
From issue identification to action, evaluation and learning. Improve your decision making … in
just a minute!
This is one of our Manage in a Minute pages. These contain practical tips on essential
management topics.

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No fuss or side-tracks, they get straight to the point.
And don’t miss out on our great half price e-guide offer. You can get our complete decision
making bundle for 50% off normal retail price.
Find out more about this great offer here, OR download them straight away by clicking on the
image below: 
Essential Steps in Decision Making: Evaluate and Learn
It’s useful to review how successful the decision has been, and the effectiveness of the decision
making process. Monitor these by asking:

 How will you evaluate the success of the decision?

 How can you improve on the decision making process?
 What did you do well?
 What can be improved?
 What are you now able to do that you couldn’t, before implementing the decision?

The most common used approaches in decision making process is according to the following steps:

7 Steps in Decision Making: from Identification to Implementation

1 . Identify a problem or opportunity
Discover the problem – distraction. First things, first. Every decision making process starts with the
problem or some type of distraction between the desired and current state.
• The first step is to recognise a problem or to see opportunities that may be worthwhile.
• Will it really make a difference to our customers?
• How worthwhile will it be to solve this problem or realise this opportunity?
2 . Gather information
• What is relevant and what is not relevant to the decision?
• What do you need to know before you can make a decision, or that will help you make the right
one?
• Who knows, who can help, who has the power and influence to make this happen (or to stop it)?
3 . Analyze the situation
Analyze the problem. After you find possible problems that require solutions you can start with the
analysis of already defined problems.
• What alternative courses of action may be available to you?
• What different interpretations of the data may be possible?
4 . Develop options
Define possible solutions. This is the step when you need to start brainstorming all possible solutions for
a given problem, or problem you want to solve with that solutions.
• Generate several possible options.
• Be creative and positive.
• Ask “what if” questions.

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 • How would you like your situation to be?
5 . Evaluate alternatives
Analyze all possible solutions. Because in the third step you come to more than one possible solution for
a given problem, in this step you need to analyze all proposed solutions in order to rang them to make a
decision what will be implemented.
• What criteria should you use to evaluate?
• Evaluate for feasibility, acceptability and desirability.
• Which alternative will best achieve your objectives?
6 . Select a preferred alternative
Select the best solution for application. Now is time for real decision. What will be implemented as a
solution for the given problem? Answer of this question will be the decision you are making.
Explore the provisional preferred alternative for future possible adverse consequences.
• What problems might it create?
• What are the risks of making this decision?
7 . Act on the decision
Implement the decision. We can’t talk about decision making process without the implementation sub-
process within it. The job is not finished until you don’t implement what you have decided.
• Put a plan in place to implement the decision.
• Have you allocated resources to implement?
• Is the decision accepted and supported by colleagues?
• Are they committed to making the decision work?
As you can see the overall process described above can be divided in the following four parts (see picture
below.)

BUSINESS PROCESS MANAGEMENT

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Business process management (BPM) is a field in operations management that focuses on improving
corporate performance by managing and optimizing a company's business processes. It can therefore be
described as a "process optimization process." It is argued that BPM enables organizations to be more
efficient, more effective and more capable of change than a functionally focused, traditional hierarchical
management approach. These processes can impact the cost and revenue generation of an organization.
As a policy-making approach, BPM sees processes as important assets of an organization that must be
understood, managed, and develop to announce value-added products and services to clients or customers
.[3] This approach closely resembles other Total Quality Management or Continuous Improvement Process
methodologies and BPM proponents also claim that this approach can be supported, or enabled, through
technology.[4] As such, many BPM articles and pundits frequently discuss BPM from one of two
viewpoints: people and/or technology.
BPM life-cycle
Business process management activities can be arbitrarily grouped into categories such as design,
modeling, execution, monitoring, and optimization.[13]

Design
Process design encompasses both the identification of existing processes and the design of "to-be"
processes. Areas of focus include representation of the process flow, the factors within it, alerts and
notifications, escalations, standard operating procedures, service level agreements, and task hand-over
mechanisms.[14]
Whether or not existing processes are considered, the aim of this step is to ensure that a correct and
efficient theoretical design is prepared.
The proposed improvement could be in human-to-human, human-to-system or system-to-system
workflows, and might target regulatory, market, or competitive challenges faced by the businesses.
The existing process and the design of new process for various applications will have to synchronise and
not cause major outage or process interruption.
Modelling
Modeling takes the theoretical design and introduces combinations of variables (e.g., changes in rent or
materials costs, which determine how the process might operate under different circumstances).
It may also involve running "what-if analysis" on the processes: "What if I have 75% of resources to do
the same task?" "What if I want to do the same job for 80% of the current cost?".
Execution
One of the ways to automate processes is to develop or purchase an application that executes the required
steps of the process; however, in practice, these applications rarely execute all the steps of the process
accurately or completely. Another approach is to use a combination of software and human intervention;
however this approach is more complex, making the documentation process difficult.

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As a response to these problems, software has been developed that enables the full business process (as
developed in the process design activity) to be defined in a computer language which can be directly
executed by the computer. The system will either use services in connected applications to perform
business operations (e.g. calculating a repayment plan for a loan) or, when a step is too complex to
automate, will ask for human input. Compared to either of the previous approaches, directly executing a
process definition can be more straightforward and therefore easier to improve. However, automating a
process definition requires flexible and comprehensive infrastructure, which typically rules out
implementing these systems in a legacy IT environment.
Business rules have been used by systems to provide definitions for governing behaviour, and a business
rule engine can be used to drive process execution and resolution.
Monitoring
Monitoring encompasses the tracking of individual processes, so that information on their state can be
easily seen, and statistics on the performance of one or more processes can be provided. An example of
this tracking is being able to determine the state of a customer order (e.g. order arrived, awaiting delivery,
invoice paid) so that problems in its operation can be identified and corrected.
In addition, this information can be used to work with customers and suppliers to improve their connected
processes. Examples are the generation of measures on how quickly a customer order is processed or how
many orders were processed in the last month. These measures tend to fit into three categories: cycle
time, defect rate and productivity.
The degree of monitoring depends on what information the business wants to evaluate and analyze and
how business wants it to be monitored, in real-time, near real-time or ad hoc. Here, business activity
monitoring (BAM) extends and expands the monitoring tools generally provided by BPMS.
Process mining is a collection of methods and tools related to process monitoring. The aim of process
mining is to analyze event logs extracted through process monitoring and to compare them with an a
priori process model. Process mining allows process analysts to detect discrepancies between the actual
process execution and the a priori model as well as to analyze bottlenecks.
Optimization
Process optimization includes retrieving process performance information from modeling or monitoring
phase; identifying the potential or actual bottlenecks and the potential opportunities for cost savings or
other improvements; and then, applying those enhancements in the design of the process. Overall, this
creates greater business value.[15]
Reengineering
When the process becomes too noisy and optimization is not fetching the desired output, it is
recommended to re-engineer the entire process cycle. Business process reengineering (BPR) has been
used by organizations to attempt to achieve efficiency and productivity at work.
Predictors of entrepreneurial success
Factors that may predict entrepreneurial success include the following:
Market
• Business-to-business (B2B) model, not business-to-consumer (B2C)
• High growth market
• Target customer's missed by others
Industry
• Growing industry

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 • High technology impact on the industry
• Low capital intensity
• Small average incumbent firm size
Team
• Large, diverse venture team, not individual entrepreneurs
• Graduate degrees
• Management experience
• Work experience in the start-up industry
• Employed full-time prior to new venture, as opposed to unemployed
• Prior successful entrepreneurial experience
• Full-time involvement in the new venture
• Motivated by high profits, not independence
• Number and diversity of individual's social ties
Company
• Written business plan
• Activity focused on a single product or service
• Competition based on a dimension other than price
• Early, frequent and intense marketing
• Tight financial controls
• $100,000+ start-up capital
• Corporation, not sole proprietorship
Status
• Wealth
• Dominant Race, Ethnicity, or Gender in a Socially Stratified Culture [52]
Predictors of entrepreneurial failure
• Low Business Acumen, failing to add value in consumers’ lives.
• Jack of all Trade, doing what everyone is doing and not doing what one can do the best.
• Short-sightedness, failing to create long lasting solutions for today’s vices.
• Extravagance, satisfying unnecessary wants and misuse of resources at hand.
• Insecurity, not building an efficient team.
Challenges of Starting a New Business
Starting a new business can lead to personal and financial rewards in the future, but you will likely face a
number of challenges when starting out. The demands on your time may be greater than you anticipated,
and enough money to keep things going can also be a problem. With some careful planning, you can
anticipate some of these challenges and be able to overcome them.
10 Challenges of Starting a Business plus Lessons Learned
Entrepreneurship Training

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What are the major challenges entrepreneurs face when starting a small business from scratch? How do
successful entrepreneurs and drop out billionaires handle and solve problems in business? Must an
entrepreneur face these business challenges when starting a business?
“Starting a business is like jumping out of an airplane without a parachute. In mid air, the entrepreneur
begins building a parachute and hopes it opens before hitting the ground.” – Rich Dad
If any of the above questions is currently running through your entrepreneurial mind, then I will advice
you read on as I trash out the top 10 challenges you will face when starting a business from scratch.
“Without the element of uncertainty, the bringing off of even, the greatest business triumph would be
dull, routine and eminently unsatisfying.” – J. Paul Getty
If you are an entrepreneur, then I believe you will be familiar with the challenges associated with the
entrepreneurial process of building a business from scratch. But if not, and you dream of becoming one
someday; then I think you will find this article worthwhile.
“A business has to be involving, it has to be fun and it has to exercise your creative instincts.” – Richard
Branson
I am writing this piece to enable aspiring entrepreneurs prepare in advance for challenges involved with
the entrepreneurial process. Please it’s never my intention to discourage or scare you from going into
business; In fact, I intend to achieve the opposite. I want you to venture into the business world and start
your own business with a feeling of confidence.
“He that is prepared has half won the battle.” – Chinese Proverb
“The biggest challenge you have is to challenge your own self doubt and your laziness. It is your self
doubt and your laziness that defines and limit who you are.” – Rich Dad
10 Challenges of Starting a Business from Scratch
1. Developing the Vision and Business Idea
“To have a great idea, have a lot of them.” – Thomas Edison
Developing a business idea is usually the first challenge faced by every entrepreneur when starting a
business from scratch. Finding the right business opportunity or creatively developing an idea is certainly
not an easy task. I call “Envisioning the idea” the first true task of an entrepreneur. As an entrepreneur,
you must possess the ability to see what others cannot see. While others see problems, you must see
opportunities.
“There is far more opportunity than there is ability.” – Thomas Edison
But seeing opportunities is just the beginning. The main business challenge is going to be your ability to
forge that opportunity into a business idea. I see this as a business challenge because the process of
transforming problems into business opportunities is like trying to turn lead into gold. I call it the
entrepreneurial process of “Creating Value out of nothing”; a process that brings innovative products into
existence. Below is an illustration of how the process goes.
• Identifying a problem > Seeing an opportunity in the problem > Coming up with a solution >
Forging the opportunity into a business idea > Integrating your solution into a business plan
“A good businessman must have nose for business the same way a journalist has nose for news. Once
your eyes, ears, nose, heart and brain are trained on business, you sniff business opportunities
everywhere. In places where people see a lot of obstacles, I see a lot of opportunities. At times, there is
something instinctive in me that tell me a business opportunity exist even at a place where others see
nothing. That is what makes me different, maybe unique. A good businessman sees where others don’t
see. What I see, you may not see. You cannot see because that is the secret of the business… the entire
world is a big market waiting for anybody who knows the rules of the game.” – Orji Uzor Kalu

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Developing a vision is definitely a business challenge because an entrepreneur must sometimes assume
the role of a sorcerer. Let me explain in detail. Most individuals are comfortable with the present way of
doing things but it is the duty of an entrepreneur to envision and forecast the future. An entrepreneur must
always be ahead of his time or else he will lose his relevance. It is the duty of an entrepreneur to bring
into present what is yet to be. It is also the duty of an entrepreneur to bring solutions to other people’s
problems. Let me give you some practical illustrations:
“If you want to be rich, you need to develop your vision. You must be standing on the edge of time
gazing into the future.” – Rich Dad
a)  In the late 70s and early 80s, while IBM saw increase in demand for their mainframe computers, Steve
Jobs envisioned a personal computer in every home and Bill Gates envisioned the need for easy to use
software for personal computers. That single vision made Bill Gates the richest man in the world and
Steve Jobs the most famous business person of the 21st century.
“Business is going to change in the next ten years than it has in the last fifty years.” – Bill Gates
b)  The Wright brothers envisioned a flying machine but they were massively opposed because the
thought of humans flying was perceived as impossible. Today, the Airplane is a reality.
c)  Back in those days when cars were custom made and exclusively for the rich, Henry Ford envisioned
affordable cars for the masses. That single vision made Henry Ford one of the richest men in history.
“You are nuts and you should be proud of it. Stick with what you believe in.” – Trip Hawkins
I believe with these few examples, my point is clear. Developing the vision and idea is the first true task
and challenge of being an entrepreneur.
2. Raising Capital for your Startup
After developing your idea, the next challenge you are going to face when starting a business from
scratch is that of raising capital. As an entrepreneur, you are the only one that knows business your idea to
the core. You are the only one that knows the story of your future.
“Capital can do nothing without brains to direct it.” – J. Ogden Armour
Trying to convince investors about something that doesn’t exist is definitely a challenge. Trying to make
them understand that you are trustworthy and equal to the task is not child’s play especially when you are
building your first business.
“If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin
There is more to raising capital than just simply asking for money. Most investors want to invest in
already established businesses with minimal risk and they want to be sure that they get returns for the risk
they took. Most brilliant business ideas never scale through the venture capital stage because the
entrepreneur is either not prepared or lacks what it takes to raise the needed capital. Just as my mentor,
Robert Kiyosaki says:
“The world is filled with brilliant ideas and excellent products but the world lacks seasoned
entrepreneurs.” – Robert Kiyosaki
To overcome the challenge of raising capital, you must develop the ability to sell your idea and vision to
potential investors. When I say “sell your ideas“, I mean improving your communication skill and your
manner of presentation. In the game of raising capital, you must have a good story to tell; backed by a
strong business plan and good persuasion skills. You must know how to pitch angel investors and venture
capitalists alike.
“The ability to sell is the number one skill in business. If you cannot sell, don’t bother thinking about
becoming a business owner.” – Rich Dad
3. Assembling a Business Team

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“Eagles don’t flock, you have to find them one at a time.” – Henry Ross Perot
The third business challenge you will face in the course of starting a small business from scratch is
assembling the right business management team. When I talk about a team, I am not talking about regular
employees. I am talking about a “strategic round table business team” that will meet regularly to
brainstorm on ways to grow your business.
“Individuals don’t win in business, teams do.” – Sam Walton
The process of building a business team starts even before the issue of raising initial start-up capital
arises. Remember I said that most brilliant ideas never scale through the phase of raising venture capital.
Well; this is where most budding entrepreneurs miss it. Most brilliant ideas and products never get funded
because the entrepreneur is trying to raise capital as an individual. A business team is a vital, yet often
ignored key to raising venture capital successfully.
“Business and investing are team sports.” – Rich Dad
As an entrepreneur, you are bound to have strengths and weaknesses. That is the more reason you need a
business team to cover up or compliment your weaknesses. A team is a necessity for building a successful
business. Now finding a business team is just the second hurdle, transferring your passion and vision to
your team is the next piece of cake.
“Teams should be able to act with the same unity of purpose and focus as a well motivated individual.” –
Bill Gates
It’s your duty as an entrepreneur to make sure your team sees the future you see. They must believe in
your possibilities and must also be passionate about making that possibility a reality. If they can’t grasp
your vision, if they can’t see the future with you, then they are not worthy being your team.
“My model for business is the Beatles. They were four guys that kept each other’s negative tendencies in
check; they balanced each other. And the total was greater than the sum of the parts. Great things in
business are not done by one person; they are done by a team of people.” – Steve Jobs
Your strategic business team should comprise your banker, financial adviser, accountant, attorney or legal
adviser and any other specialist that will be of tremendous impact to your business. A question on your
mind right now might be “how am I going to pay this team” My answer is I don’t know. You will have to
figure it out yourself or better still, you can consider bringing them on board as partners.
“Go to the wolf, consider its ways and be wise. A wolf will never hunt alone; it hunts in packs because it
knows the power of team work.” – Ajaero Tony Martins
4. Finding the Right Business Location
Is finding a good location a business challenge? I don’t know but what I do know is that finding a good
business location at the right price is definitely not easy. How do you get a location that has a rapidly
growing population, good road network and other amenities at a good price? Well, you will have to figure
out yourself.
5. Finding Good Employees
“If you own a butcher shop, don’t hire vegetarians. To hire the right people, you have to let the wrong
people go.” – Rich Dad
Most writers and managers crank up the process of finding good employees as an easy task. They define
the process of finding an employee as simply presenting the job description and the right employee will
surface. But I think it’s more than that.
“The competition to hire the best will increase in the years ahead. Companies that give extra flexibility to
their employees will have the edge in this area.” – Bill Gates

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Business owners know how difficult it is to find a hardworking, trustworthy employee. Most employees
want to work less and get paid more. Finding a good employee who will be passionate about delivering
his or her services is quite difficult. Finding good employees is a minor task compared to the business
challenge of forging your hired employees into a team.
You may have great employees but if they can’t act as a team, they are worthless and will yield nothing
but stagnation. A football team may have great skillful players but if they fail to play as a team, their
possessed skill is useless.
“Bringing together the right information with the right people will dramatically improve a company’s
ability to develop and act on strategic business opportunities.” – Bill Gates
Employees are your representatives to your customers and the outside world. They are a reflection of your
business culture and ethics. If an employee of yours is bad or rude to your customers, it is going to
portray a bad image for your company. So you must be careful when hiring employees. Remember the
golden rule of business; “Hire slow and fire fast.”
6. Finding Good Customers
The sixth challenge you will face in the process of starting a small business from scratch is finding good
customers. Note the keyword “good customers.” In the process of building a business, you will come to
find out that there are good customers as well as bad customers. You must be on guard for bad customers.
Good customers are really hard to find. A good customer will be loyal to your company and will be
willing to forgive you if you make a mistake and apologize. A good customer will try to do the right thing
that will benefit both himself and your company mutually.
“Thank God for my customers. They buy my products before they are perfected.” – Henry Ford
Bad customers will always look for loopholes in the company’s policy to exploit and make a few gains.
Bad customers will always try to exploit the company’s goodwill and look for ways to rip off the
company. Bad customers are responsible for bad debts. Good customers build your business and bad
customers will always try to liquidate your business. Just as you fire employees, you must also be
prepared to fire bad customers without hesitation. Remember the story of the customer that sued
McDonald’s claiming the coffee was too hot.
“You must fire bad customers just as you would fire a bad employee. If you do not get rid of your bad
employees, the good employees will leave. If I do not fire bad customers, not only will my good
customers leave but many of my good employees will leave as well.” – Rich Dad
7. Dealing with Competition
“In business, the competition will bite you if you keep running. If you stand still, they will swallow you.”
– Victor Kiam
Competition is the next challenge you will face when starting a business. Most individuals see
competition as a plague but I see competition as a good challenge. I see competition as a benchmark for
creativity, the main engine that stimulates innovation and production of quality products at great prices.
Without competition, there will be no innovation and without innovation, the world will be stagnant.
“If you don’t have a competitive advantage, don’t compete.” – Jack Welch
I see competition as a welcomed challenge and I want you to do the same. Competition keeps us on our
toes and drives us to constantly improve our products and services. But you must be warned. Competition
can make your business lose its relevance in the eye of your customers so you must always be on guard.
“The competitor to be feared is one who never bothers about you at all but goes on making his own
business better all the time.” – Henry Ford
8. Unforeseen Business Challenges and Expenses

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“Smooth seas seldom make good sailors.” – Anonymous
Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for unpredictable bad
weather and thunderstorms, so must an entrepreneur prepared for whatever comes. Unexpected
challenges can come in the form of:
• Unexpected law suits
• Inconsistent government policy
• Not being able to make payroll
• Unpaid bills and taxes
• Unexpected resignation of staff from sensitive office
• Bad debts from customers
• Loss of market share
• Dwindling working capital
• Inadequate stock or inventory
“A company’s ability to respond to an unplanned event, good or bad is a prime indicator of its ability to
compete.” – Bill Gates
These business challenges, if not handled properly can ruin your plan to build a successful business.
Another challenge you must expect is an unforeseen increase in business expenses. If not handled
properly, it might result in constant negative cash flow and eventually; business failure.
9. Keeping Up With Industrial Changes and Trends
“In three years, every product my company makes will be obsolete. The only question is whether we will
make them obsolete or somebody else will.” – Bill Gates
Change in trends is a challenge you must be prepared for when starting a small business. Trends have
made and broken lot of businesses. I know a lot of profitable businesses that have been wiped out by
slight industrial changes and trends. A typical example is the Dot com trend, where many established
industrial based businesses were wiped out by new web based dot com companies.
“How fast a company can respond in an emergency is a measure of its corporate reflexes.” – Bill Gates
When the Dot com era began, business owners were left with only two options. Either they join the dot
com train or they get crushed by the dot com train. Seasoned entrepreneurs know that trend is a friend and
are always willing to swiftly adjust their business to the current trend. Keeping your eyes open to spot
trends is really a challenge but the big task will be your ability to quickly use the trend to your advantage.
10. Exiting the Business
“In the world of business and investing, your exit is more important than your entry. A good thumb of
rule is this; exit before you enter.” – Robert Kiyosaki
When building a business from scratch, you are going to face the challenge of determining your exit
strategy. Just as the quote above states, you have to plan your exit strategy before you even start the
business. Most entrepreneurs run their business without any plans to exit and even if they have an exit
strategy, they find it difficult to implement it.
“Always start at the end before you begin. Professional investors always have an exit strategy before they
invest. Knowing your exit strategy is an important investment fundamental.” – Rich Dad
Before starting a business, it is advisable to plan an exit. Lack of an exit plan is the primary reason why
most businesses crumble after the death of the founder. An exit strategy is very important to the long term
survival of a business. now how do you plan an exit strategy? There are benchmarks you can use to

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determine your exit from any business. Most smart entrepreneurs will use a certain benchmark as a target
and once this specific target is reached, they exit the business. Examples of such benchmarks are:
• Annual sales
• Annual Turnover
• Asset Base
• Market Saturation
• Customer base, subscribers or number of users
Now when it comes to exiting a business, there are three strategies you can apply. You can choose to exit
a business in any of the following ways:
a) Turning over the business to professional managers
When your business reaches a certain stage of maturity, you can exit by turning it over to professional
managers. In this case, the business still belongs to you but you are not involved with its day to day
affairs. You will have to give up administrative role to assume the role of a watchdog. When you exit in
this manner, you will have more free time to look at other projects or retire.
b) Selling the business privately
In this case, you are exiting the business by selling it to a private investor. In the business world, it is
called M&A (Mergers and Acquisitions). Exiting your business this way means that after the sale and
transfer of assets is complete, you have nothing to do with the business again.
c) Taking the company public
The unique thing about this type of exit strategy is that while you are selling your business ( in form of
shares) to public investors, you still maintain control over the business. Please before you apply any of
these exit strategy, I will advise you consult with your attorney or legal adviser. But ultimately, it’s up to
you to decide the exit strategy you want to apply; but always remember “your exit is more important than
your entry.”
As a final note, I want to state clearly that challenges come only to make you stronger; so don’t faint in
the face of challenges. Stand tall; keep moving your business forward and I will see you at the top.
RESOURCES YOU NEED TO SUCCEED TO START A BUSINESS
Definition;
Human, financial, physical, and knowledge factors that provide a firm the means to perform its business
processes. See also factors of production.

Starting a business can seem like a daunting task. In fact, it is. Of the many businesses that open each
year, many fail to last as long. Though there is no guarantee for success, an entrepreneur who has
properly prepared has a leg up on the competition. In addition to a strong business plan, there are five
resources that contribute to the success of a new enterprise.

• Financial Resources
The most important element in starting a business is funding. Even the most basic home business incurs a
multitude of startup costs, including registering a business name, obtaining a business telephone line and
printing business cards. Financial resources can be obtained from a variety of sources, the easiest being
from the personal accounts of the company’s founder. Alternatively, loans and lines of credit may be
granted from financial institutions, friends and relatives, private investors and even the United States
government. In addition, many grants are offered from private and public sources to entrepreneurs of all
demographics and personal situations.

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 • Human Resources
The success of an organization is heavily reliant on the talent and strength of its employees. The hiring of
experienced professionals with track records of excellence within their area of expertise ensures that the
mission and goals of the company will be carried out efficiently and with competence. Strong team
members can be recruited using a variety of methods. Staffing agencies and executive search firms
specialize in placing talent of all levels within every industry. An alternative is to find employees through
referrals from individuals whose judgment is trusted.

• Educational Resources
Perhaps the greatest thing an entrepreneur can do when establishing a new business is to gain as much
education possible. By understanding her competition and gaining an in-depth knowledge of her industry,
she will be better prepared to make smarter decisions regarding the direction of her firm. Educational
resources can be found through professional trade associations that are geared toward her industry, her
local chamber of commerce as well as the Small Business Administration.

• Physical Resources
Whether a small home business or a retail operation with multiple locations, every organization must
have the appropriate physical resources to survive. This includes a proper workspace, working telephone
line, adequate information systems and effective marketing materials. This aspect of business planning
can be one of the costliest. As such, it is important for an entrepreneur to realistically assess his needs
before making any purchases.

• Emotional Resources
Starting a business can be an extremely stressful endeavor for an entrepreneur to undertake. To maintain
her sanity as well as stay motivated, it is important she have a support team that can give her inspirations
and guidance as needed. This team may be composed of friends and family as well as a mentor or
professional group.
6. Strategy of a Business
Definition stating that "Strategy is the direction and scope of an organisation over the long-term: which
achieves advantage for the organisation through its configuration of RESOURCES within a challenging
environment, to meet the needs of markets and to fulfil stakeholder expectations". So, what are these
"resources" that a business needs to put in place to pursue its chosen strategy?
Business resources can usefully be grouped under several categories:
• Financial Resources
• Human Resources e.g labour
• Physical Resources e.g. Production facilities, Marketing facilities, Information technology, etc.
• Intangible Resources e.g Goodwill, Reputation, Brands, Intellectual Property, etc

ENTREPRENEURIAL OPPORTUNITIES/ COMPETENCIES

The Importance of Business Opportunities Today!

To be able to begin business opportunities you have to go available and really appear for data.
Business opportunities call for a huge quantity of investigation in the legal suggestions region
of the business opportunity. Business opportunities for entrepreneurs need to also be looked over

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in order for the home business chance to be legitimate and profitable. There are numerous
business bureaus that will allow you to start off house business opportunities faster. They also
have data on business opportunities and their monetary history.

For your business opportunities to be profitable you will / should be sure to start your business
opportunities rapidly. Business opportunities are identified all of the time so you better
commence your business opportunity before somebody else does. As an entrepreneur I
recommend you are thinking about the property business opportunities you may commence as it
makes the advertising procedure less complicated. You will be able to write a lot more very good
quality content material for your business opportunity. This is very critical indeed. Business
opportunities basic mistake is always to not to be considering the field of function for you
residence business. This is something you desire to keep away from by obtaining business
opportunities that you are passionate about. It’ll make the home business opportunities easier and
smoother for anybody involved.

4 102
The Importance Of Quality Business Plans And Funding Opportunities
Starting up a new business can be a stressful endeavor, and the most difficult task can be raising the startup cap
new business off of the ground. There are numerous funding opportunities available for anyone looking for startu
need to be aware that some options are safer and more rewarding than others. With so many funding opportunit
new company, you need to conduct your research so you are aware of the differences and how each one can cont
business.

One of the first things to start with when researching funding opportunities, is to have comprehensive business
Again, your business plans are essential at this stage of setting up your business. In it you will already have scope
money needs are and how you plan to raise the startup capital, and you'll be using it to persuade potential inves
the benefits of funding your company. Your financial calculations in your business plan therefore need to be th
and presented with confidence. Don't just plan to read out your business plans, since people can do that for them

Turn it into a slick presentation with a strong argument for your case. Write down what you want to say and rehe
in front of a mirror at first and then to family or friends. Confidence is key and this will come with practice. Whe
funding opportunities, business plans are a great way to effectively and succinctly display your passion and ex
business with the necessary creditors. By seeking the best startup capital available, you will be happier in your

How Do I Identify Business Opportunities?

With so many business opportunities available, it is often difficult to determine whether a

particular opportunity shows great promise or is likely to fail. Your goal is to learn how to tell a
good opportunity from a bad one.

Here are some tips that will help you assess the potential of any business opportunity that
comes your way and make the right decision.

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One of the first factors to consider is the stability of the company associated with the
opportunity. In the case of a new business that does not yet have a proven track record, you
want to know who is behind the launch or who is supplying this company with operating capital
until the business begins to generate profits. Essentially, you want some amount of assurance
that the company will be around long enough for you to benefit from a relationship with the
opportunity, especially in terms of recouping any investment of time or other resources.

Keep in mind that a new business or a plan to start a business may be riskier than going with a
company with an established track record. However, business opportunities of this kind are not
automatically suspect. If the funding is there and the organization is structured properly, the
opportunity is well worth your consideration.

Assessing the good or service offered by the business is also important. The best business
opportunities involve companies that offer something consumers will need or desire over all
other competing products. It is not a problem if the product is aimed at a niche market.
Business opportunities of this type are often great moneymakers, since they address needs that
are often overlooked by others. In addition, the competition is probably less fierce in a niche
market, a situation that will allow the company you are evaluating to establish itself as the
industry standard in that market.

Along with having a solid financial base and a product that is sure to attract attention, the best
business opportunities also have a comprehensive and well defined system for getting the
products to consumers. This includes such factors as a reliable process for producing the
good or service, excellent sales and marketing strategies, and an efficient delivery to the
buyer. Without the ability to satisfy orders quickly and efficiently, even the best product is less
likely to build a loyal client base.

The return you will receive is also very important when considering different business
opportunities. Will you earn an equitable return in comparison to what you invest in the
business in terms of time and other resources? If so, then there is a good chance the opportunity
is worth pursuing. If you are not sure, keeping looking for something better.

You will find that in today’s market, it is worth your time to consider a home-based business as
well as a more traditional business setting. Business opportunities of this type often start with
business ideas that are new and fresh in terms of approach or some aspect of the products
offered. If you see merit in a given business idea and think it has a good chance of succeeding,
then look it over carefully. That home based business may be the ideal investment vehicle for
you.

Matching Skills and Resources to Changing Technology

Consider the following;

 Resources of appropriate technology;

 Market outlets; infrastructure, market conditions, price structure and competition.
 Cultural/ religious environment (values and believes)

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  Incentives and the political environment; government initiatives, initiatives by others
Sources of appropriate technology;

 Product literature,
 Trade fares and exhibitions
 Business tours

Forces For Change In The Future Market

Technology and changing skill requirements

Globalisation has also been accompanied by massive technological change which is transforming
the workplace and bringing new skill demands. The development of existing technologies and
the creation of new technologies have proceeded at a remarkable pace over the last 10 to 15
years. This has contributed to the development of new products, new services and new markets.
It has helped transform entire industries, as well as the operations of numerous individual
workplaces and enterprises.

The pace of technological change

Information technology changes have been most visible – rapid increases in computer power and
capacity and the speed at which information can be transmitted have been matched by
plummeting prices. These developments have enhanced the ability of individuals to take
advantage of computer technology while also aiding networking within and across firms and
between customers, producers and service providers.

While there have been significant advances, some industries, such as transportation,
communications and the financial services sectors, have been faster to take up and invest in new
computer technologies than others. There remain significant opportunities for other sectors such
as farming, forestry and fisheries to make greater use of information technology to improve the
quality of their products and the profitability of their ventures.

The pace of change driven by new technologies and technological advances looks set to continue
and even accelerate, meaning that existing skills in the most high-value sectors of the workplace
will need to be frequently upgraded. However, the implications of advances in the newest
technologies – the genetic, robotic, information and nano processes (GRIN) – are much less well
understood. These four intertwining technologies are interacting with one another, and how they
will individually and collectively change the work that we do, and the way that we do that work,
is clearly an area for focused attention by the Department.

On a number of indicators such as business R&D spending, rates of information and

communications technologies (ICT) investment, broadband uptake and international patenting
rates, New Zealand is below the OECD average.

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New Zealand's industrial production remains concentrated in what the OECD classifies as low-
technology sectors, for example, the primary industry, although our technology intensity in these
sectors is higher than that in other countries.

Among the drivers of increased availability and access to technology will be the growing two-
way flow of high-tech brain power between developing countries and developed countries, the
increasing size of the technologically literate workforce worldwide, and efforts by multinational
corporations to diversify their high-tech operations (offshoring high-skilled work as well as low-
skilled enterprises).

Increasingly educated workforce

To respond to globalisation, productivity and technology challenges, a workforce with a greater

range of skills, experience, knowledge and aptitudes is needed to lift the value of work. New
Zealand’s overall level of investment in education and training will require ongoing monitoring
to determine the best mix of interventions for society and the economy. For example, in thinking
about the workforce of 2020, we need to decide if investment in primary and secondary schools
be increased now, or if the focus should be on upskilling those already in the workforce.

The New Zealand workforce has become more educated. A rising proportion of young people
are entering the workforce with tertiary qualifications, and there is a declining share of the
workforce with no qualifications, down from 40.5 percent of the working age population in 1986
to just 19 percent in 2006.

While New Zealand’s participation in tertiary education has risen significantly in recent years,
with the highest ever level of enrolments in tertiary education, only half of those enrolling
complete their qualifications.  Furthermore, despite the trend of rising tertiary education
participation, a substantial part of the adult population still has low levels of foundation skills
(literacy, numeracy, language and general social skills), and 11 percent of students leave school
with few or no formal qualifications. There are significant social and economic  challenges for
New Zealand if the long tail of educational underachievement persists into the future.

A question that is rarely raised, and remains unanswered, is “what proportion of the workforce
needs to be skilled to deliver a step-change in economic performance?” Around 80 percent of the
current workforce will still be in the workforce in 2020. This means it makes sense to continually
try to develop and raise the skills of people currently in work.

Linking education and training to workforce needs

The pace of change will also be an issue for educators and trainers in ensuring people have the
necessary skills for the changing scope of work, as well as the ability to be ongoing learners in a
faster moving world. A coordinated approach is needed to make sure that skills development and
use is aligned to the needs of industry and the economy.  There are already initiatives in some
countries such as the United States for more corporate development programmes and corporate
engagement with the tertiary sector, including industry training, to ensure that tertiary graduates
have the skills necessary for working in particular sectors.

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The level of investment and the time it takes to train the professionals needed in a knowledge
economy is considerable. For example, it takes approximately 12 years to train a scientist.
Consequently, we need to provide greater assistance to young people to ensure they make good
choices in their initial tertiary education and that what they study is relevant to the needs of the
future labour market. Equally important is the need for employers to establish good practices in
the workplace to ensure that graduates and trainees can continue to build upon their formal
training through the informal training that occurs in a work setting.

Workplace training and skills development

To ensure we remain competitive in a global environment we will also have to focus increasingly
on skill development at work. An increasing proportion of jobs (both among the lower and
higher skilled) will require continuous updating of knowledge and skills.

A gap in our current knowledge is the extent to which changes in employment arrangements and
practices will affect access to ongoing training in the labour force. For example, if the strongest
growth occurs in part-time and casual/temporary employment, there will be implications for life-
long learning by workers.  Changing employment arrangements and a changing mix of people in
the workforce will affect the methods of in-house training provided in workplaces.

Workplace training often tends to favour professional and managerial workers rather than those
at the bottom of the ladder with few skills. Ensuring equal educational opportunities in the
workplace will be required to more fully harness the range of technological change.  For
instance, the growth in satellite communication and inventory control systems makes
traditionally low skilled work in the warehousing and goods distribution a far more complex task
than it used to be.

Non-standard work arrangements

The world of work will evolve rapidly as we move towards 2020 and beyond. Technological
advances and globalisation are both changing the way the workplace is structured. The changing
nature of labour supply (with more older workers, people with caregiving reponsibilities and
persons with disabilities working) will create greater demand for less traditional and more
flexible working arrangements.  Increasing numbers of employees, both highly skilled and low
skilled, will have non-standard work arrangements.  The flipside of this is that there may be
greater insecurity and uncertainty for the workforce, particularly among the lower skilled
working in areas where they have less control.

Yet to a large extent, current policy settings governing work, the workforce and the workplace
assume a traditional employment relationship, characterised as “full-time jobs of indefinite
duration at a facility owned or rented by the employer”.

Shifts in organisational form and the use of non-standard work arrangements will alter the nature
of the employer/employee relationship. However, there is increasing recognition on the part of
employers of the importance of human capital to business success. How can employers value and
retain workersof the future in this more volatile working environment?  For example, how will

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employers provide benefits that come with traditional employment relationships, such as
workplace education and training, or safe and healthy workplaces?  With the greater mobility of
a skilled workforce, how can firms retain and disseminate the knowledge generated by these
workers once they move on?

Changing nature of work

The nature of jobs will continue to change, and, in an economy as open as New Zealand, it is
difficult to say which industries, sectors and occupations are going to grow the most during the
next 12 years. The Department’s sector and regional engagement and workplace productivity
work programmes are both about ensuring that we are responsive, and continue to build our
knowledge, around the changing nature of work.

Overseas analysis points to increased demand for more highly skilled occupations (eg managers
and professional occupations) and skills associated with “knowledge work” (eg cognitive skills
such as abstract reasoning, problem-solving, communication and collaboration).  As jobs become
less physically demanding and repetitive but more knowledge-intensive, personal traits such as
communication skills and attitudes will become increasingly important.  

At the same time, demographic and social factors are likely to substantially increase the demand
for lower skilled workers in service, personal care and retail. Education and vocational training
systems will need to cater for the increasing demand from both sides of the skill spectrum. 
Furthermore, as technologies emerge and change, and as working lives lengthen, arrangements,
management styles, workplace cultures and training the workforce (of all skill types) will need to
be adaptable and retrainable throughout their working lives.

New health and safety concerns

Emerging technologies and industries present new health and safety concerns.  While there are
likely to be fewer physically demanding “blue collar” jobs, the continuing shift towards service-
based work will mean that many jobs may become more mentally stressful. The changing
composition of the workforce and the emergence of new organisational structures will also
change the way we address health and safety issues. Future occupational health and safety
systems will need to cater for emerging occupational health and safety risks and a greater
diversity of workplaces and employment arrangements 

Health factors will become an increasingly imporant factor for many older workers in terms of
their decisions about where and for how long they will keep working. The increased participation
in work of people with disabilities and ill health is also an ongoing issue in terms of improving
the access to quality work for many people especially as the workforce ages.

Changing values and aspirations

The role of work in peoples’ lives is likely to continue to evolve over the next 12 years. New
population cohorts will enter the workforce with different values and aspirations around how
they want to engage in work and the type of work they want. Recognising and valuing diversity

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in the workplace will also become more important, as we can be sure that the New Zealand
workforce in 2020 will be more socially and demographically diverse than ever before.

EVALUATING BUSINESS ENVIRONMENT

Consumer Behaviour is the study of individuals, groups, or organizations and the processes
they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy
needs and the impacts that these processes have on the consumer and society. It blends elements
from psychology, sociology, social anthropology, marketing and economics. It attempts to
understand the decision-making processes of buyers, both individually and in groups such as
how emotions affect buying behaviour. It studies characteristics of individual consumers such as
demographics and behavioural variables in an attempt to understand people's wants. It also tries
to assess influences on the consumer from groups such as family, friends, sports, reference
groups, and society in general.

Customer behaviour study is based on consumer buying behaviour, with the customer playing
the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is
difficult to predict, even for experts in the field. Relationship marketing is an influential asset for
customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of
marketing through the re-affirmation of the importance of the customer or buyer. A greater
importance is also placed on consumer retention, customer relationship management,
personalisation, customisation and one-to-one marketing. Social functions can be categorized
into social choice and welfare functions.

Each method for vote counting is assumed as social function but if Arrow’s possibility theorem
is used for a social function, social welfare function is achieved. Some specifications of the
social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity
and weak and strong Pareto optimality. No social choice function meets these requirements in an
ordinal scale simultaneously. The most important characteristic of a social function is
identification of the interactive effect of alternatives and creating a logical relation with the
ranks. Marketing provides services in order to satisfy customers. With that in mind the
productive system is considered from its beginning at the production level, to the end of the
cycle, the consumer (Kioumarsi et al., 2009).

Black box model

The black box model shows the interaction of stimuli, consumer characteristics, decision process
and consumer responses. It can be distinguished between interpersonal stimuli (between people)
or intrapersonal stimuli (within people). The black box model is related to the black box theory
of behaviourism, where the focus is not set on the processes inside a consumer, but the relation
between the stimuli and the response of the consumer. The marketing stimuli are planned and
processed by the companies, whereas the environmental stimulus are given by social factors,
based on the economical, political and cultural circumstances of a society. The buyer's black box
contains the buyer characteristics and the decision process, which determines the buyer's
responses.

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NB. There are 4 main types of factors influencing consumer behavior: cultural factors,
social factors, personal factors and psychological factors.

The 4 factors influencing consumer behavior

Find out what are the factors influencing consumer behavior, how they work and how to better
understand them in order to better meet consumers’ expectations and improve your marketing
strategy.

The factors influencing consumer behavior

How reacts a consumer? What are the motivations and aspirations that guide him? What are the
factors that influence him? Why he will choose a product or brand over another?

Today, let’s focus on the factors influencing consumer behavior: what are they? How do they
work? What is their level of importance to the consumer and how he reacts to it?

There are 4 main types of factors influencing consumer behavior

There are 4 main types of factors influencing consumer behavior: cultural factors, social factors,
personal factors and psychological factors.

I. Cultural factors

Cultural factors are coming from the different components related to culture or cultural
environment from which the consumer belongs.

Culture and societal environment:

Culture is crucial when it comes to understanding the needs and behaviors of an individual.

Throughout his existence, an individual will be influenced by his family, his friends, his cultural
environment or society that will “teach” him values, preferences as well as common behaviors to
their own culture.

For a brand, it is important to understand and take into account the cultural factors inherent to
each market or to each situation in order to adapt its product and its marketing strategy. As these
will play a role in the perception, habits, behavior or expectations of consumers.

For example, in the West, it is common to invite colleagues or friends at home for a drink or
dinner. In Japan, on the contrary, invite someone home does not usually fit into the local
customs. It is preferable to do that this kind of outing with friends or colleagues  in restaurant.

A significant specificity to take into account for the brands in markets such as savory snacking or
sodas and alcoholic beverages. Usage and consumption moments are not the same in all regions
of the world.

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Sub-cultures :

A society is composed of several sub-cultures in which people can identify. Subcultures are
groups of people who share the same values based on a common experience or a similar lifestyle
in general.

Subcultures are the nationalities, religions, ethnic groups, age groups, gender of the individual,
etc..

The subcultures are often considered by the brands for the segmentation of a market in order to
adapt a product or a communication strategy to the values or the specific needs of this segment.

For example in recent years, the segment of “ethnic” cosmetics has greatly expanded. These are
products more suited to non-Caucasian populations and to types of skin pigmentation for african,
arab or indian populations for example.

It’s a real brand positioning with a well-defined target in a sector that only offered makeup
products to a caucasian target until now (with the exception of niche brands) and was then
receiving critics from consumers of different origin.

Brands often communicate in different ways, sometimes even create specific products
(sometimes without significant intrinsic difference) for the same type of product in order to
specifically target an age group, a gender or a specific sub-culture.

Consumers are usually more receptive to products and marketing strategies that specifically
target them.

Social classes:

Social classes are defined as groups more or less homogenous and ranked against each other
according to a form of social hierarchy. Even if it’s very large groups, we usually find similar
values, lifestyles, interests and behaviors in individuals belonging to the same social class.

We often assume three general categories among social classes : lower class, middle class and
upper class.

People from different social classes tend to have different desires and consumption patterns.
Disparities resulting from the difference in their purchasing power, but not only. According to
some researchers, behavior and buying habits would also be a way of identification and
belonging to its social class.

Beyond a common foundation to the whole population and taking into account that many
counterexample naturally exist, they usually do not always buy the same products, do not choose
the same kind of vacation, do not always watch the same TV shows, do not always read the same
magazines, do not have the same hobbies and do not always go in the same types of retailers and
stores.

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For example, consumers from the middle class and upper class generally consume more balanced
and healthy food products than those from the lower class.

They don’t go in the same stores either. If some retailers are, of course, patronized by everyone,
some are more specifically targeted to upper classes such as The Fresh Market, Whole Foods
Market, Barneys New York or Nordstrom. While others, such as discount supermarkets, attract
more consumers from the lower class.

Some studies have also suggested that the social perception of a brand or a retailer is playing a
role in the behavior and purchasing decisions of consumers.

In addition, the consumer buying behavior may also change according to social class. A
consumer from the lower class will be more focused on price. While a shopper from the upper
class will be more attracted to elements such as quality, innovation, features, or even the “social
benefit” that he can obtain from the product.

Cultural trends:

Cultural trends or “Bandwagon effect” are defined as trends widely followed by people and
which are amplified by their mere popularity and by conformity or compliance with social
pressure. The more people follow a trend, the more others will want to follow it.

They affect behavior and shopping habits of consumers and may be related to the release of new
products or become a source of innovation for brands.

By social pressure, desire to conformity or belonging to a group, desire to “follow fashion

trends” or simply due to the high visibility provided by media, consumers will be influenced,
consciously or unconsciously, by these trends.

For example, Facebook has become a cultural trend. The social network has widely grew to the
point of becoming a must have, especially among young people.

It is the same with the growth of the tablet market. Tablets such as iPad or Galaxy Tab have
become a global cultural trend leading many consumers to buy one. Even if they had never
specially felt the need before.

For a brand, create a new cultural trend from scratch is not easy. Apple did it with the tablets
with its iPad. But this is an exception. However, brands must remain attentive to the new trends
and “bandwagon effects”. Whether to accompany it (create a page on Facebook) or to take part
in the newly created market (create its own tablet).

II. Social factors

Social factors are among the factors influencing consumer behavior significantly. They fall into
three categories: reference groups, family and social roles and status.

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Reference groups and membership groups :

The membership groups of an individual are social groups to which he belongs and  which will
influence him. The membership groups are usually related to its social origin, age, place of
residence, work, hobbies, leisure, etc..

The influence level may vary depending on individuals and groups. But is generally observed
common consumption trends among the members of a same group.

The understanding of the specific features (mindset, values, lifestyle, etc..) of each group allows
brands to better target their advertising message.

More generally, reference groups are defined as those that provide to the individual some points
of comparison more or less direct about his behavior, lifestyle, desires or consumer habits. They
influence the image that the individual has of himself as well as his behavior. Whether it is a
membership group or a non-membership group.

Because the individual can also be influenced by a group to which he doesn’t belong yet but
wishes to be part of. This is called an aspirational group. This group will have a direct influence
on the consumer who, wishing to belong to this group and look like its members, will try to buy
the same products.

For example, even if he doesn’t need it yet, a surfing beginner may want to buy “advanced”
brands or products used by experienced surfers (aspirational group) in order to get closer to this
group. While a teen may want the shoe model or smartphone used by the group of “popular
guys” from his high school (aspirational group) in order to be accepted by this group.

Some brands have understood this very well and communicate, implicitly or not, on the “social
benefit” provided by their products.

Within a reference group that influence the consumer buying behavior, several roles have been
identified:

 The initiator: the person who suggests buying a product or service

 The influencer: the person whose point of view or advice will influence the buying
decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which
group members rely on.
 The decision-maker: the person who will choose which product to buy. In general, it’s
the consumer but in some cases it may be another person. For example, the “leader” of a
soccer supporters’ group (membership group) that will define, for the whole group, which
supporter’s scarf buy and bear during the next game.
 The buyer: the person who will buy the product. Generally, this will be the final
consumer.

Many brands look to target opinion leaders (initiator or influencer) to spread the use and
purchase of their product in a social group. Either through an internal person of the group when it

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comes to a small social group. Or through a sponsorship or a partnership with a reference leader
(celebrity, actor, musician, athlete, etc..) for larger groups.

Family:

The family is maybe the most influencing factor for an individual. It forms an environment of
socialization in which an individual will evolve, shape his personality, acquire values. But also
develop attitudes and opinions on various subjects such as politics, society, social relations or
himself and his desires.

But also on his consumer habits, his perception of brands and the products he buys.

We all kept, for many of us and for some products and brands, the same buying habits and
consumption patterns that the ones we had known in our family.

Perceptions and family habits generally have a strong influence on the consumer buying
behavior. People will tend to keep the same as those acquired with their families.

For example, if you have never drunk Coke during your childhood and your parents have
described it as a product “full of sugar and not good for health”. There is far less chance that you
are going to buy it when you will grow up that someone who drinks Coke since childhood.

For brands – especially for Fast-Moving Consumer Goods (FMCG) or Consumer Packaged
Goods (CPG) – successfully “integrate” the family is both a real challenge and an opportunity to
develop a strong consumer loyalty among all the family members.

That’s why it’s important for brands to be seen as a family brand in order to become a consumer
habit for parents and children when they will become adults.

Social roles and status:

The position of an individual within his family, his work, his country club, his group of friends,
etc.. – All this can be defined in terms of role and social status.

A social role is a set of attitudes and activities that an individual is supposed to have and do
according to his profession and his position at work, his position in the family, his gender, etc.. –
and expectations of the people around him.

Social status meanwhile reflects the rank and the importance of this role in society or in social
groups. Some are more valued than others.

The social role and status profoundly influences the consumer behavior and his purchasing
decisions. Especially for all the “visible” products from other people.

For example, a consumer may buy a Ferrari or a Porsche for the quality of the car but also for the
external signs of social success that this kind of cars represents. Moreover, it is likely that a CEO

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driving a small car like a Ford Fiesta or a Volkswagen Golf would be taken less seriously by its
customers and business partners than if he is driving a German luxury car.

And this kind of behaviors and influences can be found at every level and for every role and
social status.

Again, many brands have understood it by creating an image associated with their products
reflecting an important social role or status.

III. Personal factors:

Decisions and buying behavior are obviously also influenced by the characteristics of each
consumer.

Age and way of life:

A consumer does not buy the same products or services at 20 or 70 years. His lifestyle, values,
environment, activities, hobbies and consumer habits evolve throughout his life.

For example, during his life, a consumer could change his diet from unhealthy products (fast
food, ready meals, etc..) to a healthier diet, during mid-life with family before needing to follow
a little later a low cholesterol diet to avoid health problems.

The factors influencing the buying decision process may also change. For example, the “social
value” of a brand generally play a more important role in the decision for a consumer at 25 than
at 65 years.

The family life cycle of the individual will also have an influence on his values, lifestyles and
buying behavior depending whether he’s single, in a relationship, in a relationship with kids, etc..
As well as the region of the country and the kind of city where he lives (large city, small town,
countryside, etc..).

For a brand or a retailer, it may be interesting to identify, understand, measure and analyze what
are the criteria and personal factors that influence the shopping behavior of their customers in
order to adapt.

For example, it is more than possible that consumers living in New York do not have the same
behavior and purchasing habits than the ones in Nebraska. For a retailer, have a deep
understanding and adapt to these differences will be a real asset to increase sales.

Purchasing power and revenue:

The purchasing power of an individual will have, of course, a decisive influence on his behavior
and purchasing decisions based on his income and his capital.

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This obviously affects what he can afford, his perspective on money and the level of importance
of price in his purchasing decisions. But it also plays a role in the kind of retailers where he goes
or the kind of brands he buys.

As for social status, some consumers may also look for the “social value” of products they buy in
order to show “external indications” of their incomes and their level of purchasing power..

Lifestyle:

The lifestyle of an individual includes all of its activities, interests, values and opinions.

The lifestyle of a consumer will influence on his behavior and purchasing decisions. For
example, a consumer with a healthy and balanced lifestyle will prefer to eat organic products and
go to specific grocery stores, will do some jogging regularly (and therefore will buy shoes,
clothes and specific products), etc..

Personality and self-concept:

Personality is the set of traits and specific characteristics of each individual. It is the product of
the interaction of psychological and physiological characteristics of the individual and results in
constant behaviors.

It materializes into some traits such as confidence, sociability, autonomy, charisma, ambition,
openness to others, shyness, curiosity, adaptability, etc..

While the self-concept is the image that the individual has – or would like to have – of him and
he conveys to his entourage. These two concepts greatly influence the individual in his choices
and his way of being in everyday life. And therefore also his shopping behavior and purchasing
habits as consumer.

In order to attract more customers, many brands are trying to develop an image and a personality
that conveys the traits and values - real or desired – of consumers they are targeting.

For example, since its launch, Apple cultivates an image of innovation, creativity, boldness and
singularity which is able to attract consumers who identify to these values and who feel valued –
in their self-concept – by buying a product from Apple.

Because consumers do not just buy products based on their needs or for their intrinsic features
but they are also looking for products that are consistent and reinforce the image they have of
themselves or they would like to have.

The more a product or brand can convey a positive and favorable self-image to the consumer, the
more it will be appreciated and regularly purchased.

IV. Psychological factors

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Among the factors factors influencing consumer behavior, psychological factors can be divided
into 4 categories: motivation, perception, learning as well as beliefs and attitudes.

Motivation:

Motivation is what will drive consumers to develop a purchasing behavior. It is the expression of
a need is which became pressing enough to lead the consumer to want to satisfy it. It is usually
working at a subconscious level and is often difficult to measure.

Motivation is directly related to the need and is expressed in the same type of classification as
defined in the stages of the consumer buying decision process.

To increase sales and encourage consumers to purchase, brands should try to create, make
conscious or reinforce a need in the consumer’s mind so that he develops a purchase motivation.
He will be much more interested in considering and buy their products.

They must also, according to research, the type of product they sell and the consumers they
target, pick out the motivation and the need to which their product respond in order to make them
appear as the solution to the consumers’ need.

Perception:

Perception is the process through which an individual selects, organizes and interprets the
information he receives in order to do something that makes sense. The perception of a situation
at a given time may decide if and how the person will act.

Depending to his experiences, beliefs and personal characteristics, an individual will have a
different perception from another.

Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic,
olfactory and gustatory). It would be impossible for the brain to process all consciously. That is
why it focuses only on some of them.

The perception mechanism of an individual is organized around three processes:

 Selective Attention: The individual focuses only on a few details or stimulus to which he
is subjected. The type of information or stimuli to which an individual is more sensitive
depends on the person.

For brands and advertisers successfully capture and retain the attention of consumers is
increasingly difficult. For example, many users no longer pay any attention, unconsciously, to
banner ads on the Internet. This kind of process is called Banner Blindness.

The attention level also varies depending on the activity of the individual and the number of
other stimuli in the environment. For example, an individual who is bored during a subway trip

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will be much more attentive to a new ad displayed in the tube. It is a new stimuli that breaks the
trip routine for him.

Consumers will also be much more attentive to stimuli related to a need. For example, a
consumer who wishes to buy a new car will pay more attention to car manufacturers’ ads. While
neglecting those for computers.

Lastly, people are more likely to be attentive to stimuli that are new or out of the ordinary. For
example, an innovative advertising or a marketing message (Unique Value Proposition) widely
different from its competitors is more likely to be remembered by consumers.

 Selective Distortion: In many situations, two people are not going to interpret an
information or a stimulus in the same way. Each individual will have a different
perception based on his experience, state of mind, beliefs and attitudes. Selective
distortion leads people to interpret situations in order to make them consistent with their
beliefs and values.

For brands, it means that the message they communicate will never be perceived exactly in the
same way by consumers. And that everyone may have a different perception of it. That’s why
it’s important to regularly ask consumers in order to know their actual brand perception.

Selective distortion often benefits to strong and popular brands. Studies have shown that the
perception and brand image plays a key role in the way consumers perceived and judged the
product.

Several experiments have shown that even if we give them the same product, consumers find that
the product is or tastes better when they’ve been told that it’s  from a brand they like than when
they’ve been told it’s a generic brand. While it is exactly the same product!

Similarly, consumers will tend to appreciate even less a product if it comes from a brand for
which they have a negative perception.

 Selective Retention: People do not retain all the information and stimuli they have been
exposed to. Selective retention means what the individual will store and retain from a
given situation or a particular stimulus. As for selective distortion, individuals tend to
memorize information that will fit with their existing beliefs and perceptions.

For example, consumers will remember especially the benefits of a brand or product they like
and will “forget” the drawbacks or competing products’ advantages.

Selective retention is also what explains why brands and advertisers use so much repetition in
their advertising campaigns and why they are so broadcasted. So that the selective retention can
help the brand to become a “top of mind” brand in the consumer’s mind.

Learning:

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Learning is through action. When we act, we learn. It implies a change in the behavior resulting
from the experience. The learning changes the behavior of an individual as he acquires
information and experience.

For example, if you are sick after drinking milk, you had a negative experience, you associate the
milk with this state of discomfort and you “learn” that you should not drink milk. Therefore, you
don’t buy milk anymore.

Rather, if you had a good experience with the product, you will have much more desire to buy it
again next time.

The learning theories can be used in marketing by brands. As the theory of operant conditioning
which states that you can build a good image and high demand for a product by associating it
with a positive reinforcement (or rather a bad image with a negative reinforcement).

Beliefs and attitudes:

A belief is a conviction that an individual has on something. Through the experience he acquires,
his learning and his external influences (family, friends, etc..), he will develop beliefs that will
influence his buying behavior.

While an attitude can be defined as a feeling, an assessment of an object or idea and the
predisposition to act in a certain way toward that object. Attitudes allow the individual to
develop a coherent behavior against a class of similar objects or ideas.

Beliefs as well as attitudes are generally well-anchored in the individual’s mind and are difficult
to change. For many people, their beliefs and attitudes are part of their personality and of who
they are.

However, it is important to understand, identify and analyze the positive attitudes and beliefs but
also the negative ones that consumers can have on a brand or product. To change the brand’s
marketing message or adjust its positioning in order to get consumers to change their brand
perception.

Many factors influencing consumer behavior

As we have just seen, many factors, specificities and characteristics influence the individual in
what he is and the consumer in his decision making process, shopping habits, purchasing
behavior, the brands he buys or the retailers he goes.

A purchase decision is the result of each and every one of these factors. An individual and a
consumer is led by his culture, his subculture, his social class, his membership groups, his
family, his personality, his psychological factors, etc.. And is influenced by cultural trends as
well as his social and societal environment.

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By identifying and understanding the factors that influence their customers, brands have the
opportunity to develop a strategy, a marketing message (Unique Value Proposition) and
advertising campaigns more efficient and more in line with the needs and ways of thinking of
their target consumers. A real asset to better meet the needs of its customers and increase sales.

BUSINESS ENVIRONMENT

DEFINITION The definition of business environment means all of the internal and external
factors that affect how the company functions including employees, customers, management,
supply and demand and business regulations.
MEANING The term ‘business environment’ connotes external forces, factors and institutions
that are beyond the control of the business and they affect the functioning of a business
enterprise. These include customers,competitors, suppliers, government, and the social, political,
legal and technological factors etc.
FEATURES OF BUSINESSENVIRONMENT (a) Business environment is the sum total of all
factors external to the business firm and that greatly influence their functioning. (b) It covers
factors and forces like customers, competitors, suppliers, government, and the social, cultural,
political, technological and legal conditions.
FEATURES OF BUSINESSENVIRONMENT.. (e) The business environment is dynamic in
nature, that means, it keeps on changing. (d) The changes in business environment are
unpredictable. It is very difficult to predict the exact nature of future happenings and the changes
in economic and social environment. (e) Business Environment differs from place to place,
region to region and country to country. Political conditions in India differ from those in
Pakistan. Taste and values cherished by people in India and China vary considerably.
CHARACTERISTICSOF INDIANBUSINESS BUSINESS Bigger Role For Govt. Competition
Opportunities Management As a Science Globalisation Technology Waning Trust Transition
IMPORTANCE OF BUSINESS (a) Determining Opportunities and Threats: The interaction
between the business and its environment would identify opportunities for and threats to the
business. It helps the business enterprises for meeting the challenges successfully. (b) Giving
Direction for Growth: The interaction with the environment leads to opening up new frontiers of
growth for the business firms. It enables the business to identify the areas for growth and
expansion of their activities. (c) Continuous Learning: Environmental analysis makes the task of
managers easier in dealing with business challenges. The managers are motivated to
continuously update their knowledge, understanding and skills to meet the predicted changes in
realm of business.
IMPORTANCE.. (d) Image Building: Environmental understanding helps the business
organisations in improving their image by showing their sensitivity to the environment within
which they are working. For example, in view of the shortage of power, many companies have
set up Captive Power Plants (CPP) in their factories to meet their own requirement of power. (e)
Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their
own strategies accordingly. (f) Identifying Firm’s Strength and Weakness: Business environment

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helps to identify the individual strengths and weaknesses in view of the technological and global
developments.

OBJECTIVES Every business enterprise has certain objectives which regulate and generate its
activities. Objectives are needed in every area where performance and results directly affect
survival and prosperity of a business. The vision of Infosys – “To be globally respected
corporation that provides best-of-breed business solutions, leveraging technology, vendors and
society at large.”

Evaluate Prevailing Business Environment

Cultural /religious environment, - incentives and the political environment, government

initiatives by others.

7 Important Characteristics of Business Environment

Following are the chief characteristics of the business environment:

(1) Totality of External Forces:

Business environment is the sum totals of all those factors/forces which are available outside the
business and over which the business has no control. It is the group of many such forces that is
why, its nature is of totality.

(2) Specific and General Forces:

The forces present outside the business can be divided into two parts – specific and general.

(i) Specific:

These forces affect the firms of an industry separately, e.g., customers, suppliers, competitive
firms, investors, etc.

(ii) General:

These forces affect all the firms of an industry equally, e.g., social, political, legal and technical
situations.

(3) Interrelatedness:

The different factors of business environment are co-related. For example, let us suppose that
there is a change in the import-export policy with the coming of a new government.

In this case, the coming of new government to power and change in the import-export policy are
political and economic changes respectively. Thus, a change in one factor affects the other
factor.

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(4) Dynamic Nature:

As is clear that environment is a mixture of many factors and changes in some or the other
factors continue to take place. Therefore, it is said that business environment is dynamic.

(5) Uncertainty:

Nothing can be said with any amount of certainty about the factors of the business environment
because they continue to change quickly. The professional people who determine the business
strategy take into consideration the likely changes beforehand.

But this is a risky job. For example, technical changes are very rapid. Nobody can anticipate the
possibility of these swift technical changes. Anything can happen, anytime. The same is the
situation of fashion.

(6) Complexity:

Environment comprises of many factors. All these factors are related to each other. Therefore,
their individual effect on the business cannot be recognised. This is perhaps the reason which
makes it difficult for the business to face them.

(7) Relativity:

Business environment is related to the local conditions and this is the reason as to why the
business environment happens to be different in different countries and different even in the
same country at different places.

What Factors Are Important When Evaluating the Business Climate of an Area?
It must be economically feasible to locate an operation in an area, or the area should not be
considered for the project. As businesses continue to rationalize the size and location of their
operations, all factors affecting profitability must be reviewed.

The critical factors impacting site selection decisions vary slightly in importance from project-to-
project, but they are considered by all companies deciding where to expand or locate facilities.
Please find below a summary of the key issues which should be evaluated by a company prior to
making a site selection decision.

1. Location: A company must start the site selection process by identifying the potential
geographic areas that could work for the project. There is no point in considering a location for
the project, if you cannot serve clients from the prospective area.

2. Workforce: A business must be confident that there is an ample supply of prospective team
members, with the necessary education and skill sets. As important, a company must be
comfortable in its ability to attract, retain and afford the people required for its operations.

3. Real Estate: A company must evaluate potential real estate options in the locations under
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consideration for the project to ensure its requirements can be met. In most cases, several
adequate real estate options exist for a project, but this should be verified.

4. Tax Structure: A business must have a complete picture of the local, regional and state tax
environment to make certain it can operate profitably. Several areas of the country have made
changes to their tax structures, and it is important to understand how these changes negatively or
positively impact a company’s project.

5. Infrastructure: A company must be confident that there is adequate infrastructure in place to

meet the project’s current and future requirements. Transportation, telecommunications and
electric infrastructure, just to name a few, are critical infrastructure factors to evaluate during the
site selection process.

6. Incentives: A business must have a thorough understanding of what forms of local, regional
and/or state economic development incentives are available to help the company lower its project
costs. Incentives should never drive site selection decisions, but they are important to ensure the
economic feasibility of the project.

7. Regulatory Environment: A company must understand how local, regional and state
governmental regulations will impact its business and project. Critical issues such as building
plan approvals, environmental permits, utility connection approvals and waste disposal permits,
can have a significant financial and timing impact on a company’s project.

8. Cost of Living: A business must evaluate the cost of living in a potential geographic area. It is
important for a company to understand the cost of living for an area to make certain it
appreciates the impact on its team members who would be working in the selected community.

9. Unionization Rates: A company must review unionization rates prior to making a site
selection decision for a new or expanded facility. Clearly, unionization rates and right-to-work
laws impact some industries more than others, but it should be considered by all businesses.

10. Quality of Life: A business should consider the quality of life in a region and state as a part
of its decision making process. This business climate factor has become more important during
the past decade as companies look to attract and retain knowledge workers.

Additional factors may impact a company’s final decision regarding the location of a new or
expanded operation; however, the aforementioned issues should always be on the list. These
factors can be used quite effectively to eliminate potential locations from consideration. Once a
business narrows its options to a few potential locations, the relationships built between the
company’s team members, economic development organizations and governmental entities
become critical in selecting a location and successfully completing the project.

IMPORTANCE OF BUSINESS ENVIRONMENT

There is a close and continuous interaction between the business and its environment. This
interaction helps in strengthening the business firm and using its resources more effectively.
As stated above, the business environment is multifaceted, complex, and dynamic in nature and

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has a far-reaching impact on the survival and growth of the business. To be more specific, proper
understanding of the social, political, legal and economic environment helps the business in the
following ways:
(a) Determining Opportunities and Threats: The interaction between the business
and its environment would identify opportunities for and threats to the business. It
helps the business enterprises for meeting the challenges successfully.
(b) Giving Direction for Growth: The interaction with the environment leads to opening up
new frontiers of growth for the business firms. It enables the business to identify the areas for
growth and expansion of their activities.
(c) Continuous Learning: Environmental analysis makes the task of managers easier in
dealing with business challenges. The managers are motivated to continuously update
their knowledge, understanding and skills to meet the predicted changes in realm of
business.
(d) Image Building: Environmental understanding helps the business organizations in
improving their image by showing their sensitivity to the environment within which they are
working. For example, in view of the shortage of power, many companies have
set up Captive Power Plants (CPP) in their factories to meet their own requirement of power.
(e) Meeting Competition: It helps the firms to analysis the competitors’ strategies and formulate
their own strategies accordingly.
(f) Identifying Firm’s Strength and Weakness: Business environment helps to identify
the individual strengths and weaknesses in view of the technological and global
developments.
EVALUATION OF BUSINESS FINANCE
Types of capital;
 Start up expenses,
 Operation / running expenses,
 Expansion capital
 Outlay – money spent to acquire, maintain, repair or upgrade capital assets.
Evaluation of various sources of business finance / loans;

 Short term loans; 0-1 years

 Medium term loans; 1-3 years
 Long term loans; over 3 years
CONTRACTUAL AGREEMENT
Explanation of a contract;
Meaning

Contracts

A contract is a written or oral legally-binding agreement between the parties identified in the
agreement to fulfill the terms and conditions outlined in the agreement. A prerequisite

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requirement for the enforcement of a contract, amongst other things, is the condition that the
parties to the contract accept the terms of the claimed contract. Historically, this was most
commonly achieved through signature or performance, but in many jurisdictions - especially
with the advance of electronic commerce - the forms of acceptance have expanded to include
various forms of electronic signature.

Contracts can be of many types, e.g. sales contracts (including leases), purchasing contracts,
partnership agreements, trade agreements, and intellectual property agreements.

 A sales contract is a contract between a company (the seller) and a customer where the
company agrees to sell products and/or services and the customer in return is obligated to
pay for the product/services bought.
 A purchasing contract is a contract between a company (the buyer) and a supplier who is
promising to sell products and/or services within agreed terms and conditions. The
company (buyer) in return is obligated to acknowledge the goods / or service and pay for
liability created.
 A partnership agreement may be a contract which formally establishes the terms of a
partnership between two legal entities such that they regard each other as 'partners' in a
commercial arrangement. However, such expressions may also be merely a means to
reflect the desire of the contracting parties to act 'as if' both are in a partnership with
common goals. Therefore, it might not be the common law arrangement of a partnership
which by definition creates fiduciary duties and which also has 'joint and several'
liabilities.

Areas of Contract Management

The business-standard contract management model, as employed by many organizations in the

United States, typically exercises purview over the following business disciplines:

 Authoring and negotiation

 Baseline management
 Commitment management
 Communication management.
 Contract visibility and awareness
 Document management
 Growth (for Sales-side contracts)

Stages in Contract Placement

STEP 1) Requirements Analysis

STEP 2) Evaluation Plan

STEP 3) Invitation to Tender

STEP 4) Evaluation of Proposals

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Negotiating the Terms of the Contract

The next step is to negotiate the contract itself. The contract sets out each party’s unertakings to
the other. Negotiations will usually focus on the quality an quantity aspects of the specifications
for service elivery, an the price. The price set nees to be realistic, given the quality requirements,
an the likely nee for ongoing elivery. Contract managers shoul negotiate within a clear set of
parameters. It is normally in the interests of both the Government agency an the NGO to
approach negotiations in a collaborative rather than a confrontational manner. A contract can
range from a ocument of hunres of pages of etaile specification, to a ocument of a few pages.
The nature of the ocument signe will epen on the:

 Nature of the activities or services being provie for.

 Nature of the parties to the contract an the relationship between them.
 The amount of money involve.
 The term of the contract.
 Risk an risk management – what nees to happen if things o not turn out as planne?

Essentials of binding contract for;

What are the basic requirements for making a valid contract?

A valid contract normally contains the following five basic elements.

(i) Intention to create legal relations

It is generally presumed that in a commercial transaction, the contracting parties must have the
intention to create a legally binding contract. In other words, if you have signed a contract for
business-related activities, then you will be able to sue the other party if that party does not fulfil
the contractual provisions, and vice versa.

This presumption can only be rejected if the parties expressly state that they do not intend to
make a legally binding contract. Sometimes you may see the words "subject to contract"
printed on a document. These words have the legal meaning that the document is not a contract,
and that all of the contents will be bound by a subsequent contract (if the parties sign that
contract). A party that is acting “subject to contract” can withdraw from the negotiation at any
time before the contract is concluded. In case of dispute, the burden of proof that the intention
was to create a binding contract rests on the person who wishes to rely on the contract.

You may also come across the words "without prejudice". These two words are used to indicate
that nothing that is written in the relevant document is legally binding.

(ii) Offer

An offer is an expression of readiness to do something which, if followed by the unconditional

acceptance of another person (see item (iii)), results in a contract. For example, if a company

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tells you that it will sell you 100 boxes of red wine at the price of $100,000, that company is
making you an offer.

If no time limit is specified, an offer is valid for a reasonable length of time before the offeror
(the person who makes the offer) can revoke or cancel it. To avoid potential disputes, however,
the offeror should specify the deadline for the acceptance of an offer.

It is also important to note that the offeror cannot take silence as a form of acceptance. This
means the offeror cannot say "If I do not hear from you within 10 days, then I will assume that
you have accepted my offer and will pay for the product".

An offer must be distinguished from an "invitation to treat", which merely invites other people
to make offers but is not in itself an offer. Examples of invitations to treat include: invitations to
tender, displaying goods on the shelves of a shop, and the advertisement of goods or services in
newspapers or on television (unless it is expressly stated that the advertisement is an offer).

(iii) Acceptance

There is no contract unless and until the offer is accepted by the person to whom the offer is
addressed (sometimes called "the offeree"). Acceptance is normally made orally or in writing,
but if the contract allows that the acceptance and performance of contractual duties are to be
carried out simultaneously, then acceptance can also be made by conduct. For example, when a
supplier receives your cheque, that supplier may immediately deliver the goods to you without
saying or writing anything.

It is recommended that both of the contracting parties clearly specify and agree to the method of
acceptance.

If the method of acceptance is not specified by the offeror, then the following rules may apply.

 Postal Rule – If it is reasonable to use the post for the offer and acceptance process, then
the contract is formed at the time of posting the letter of acceptance, even if the letter is
lost in the post.
 Receipt Rule – When an acceptance is sent by fax, it is deemed to be valid when the
message is received, even if the offeror does not in fact read the fax immediately. This
rule also applies to e-mail messages and the Electronic Transactions Ordinance.

Another important point to note is that a conditional (or partial) acceptance is only a "counter-
offer" and does not constitute a valid contract. In other words, if the person to whom the offer is
addressed only accepts some of the terms or proposes some new terms, then that person is not
accepting the offer but is making a new offer to the other party. In the business world, there may
be a series of counter-offers before a final acceptance comes out.

(iv) Consideration (benefit given to the other party)

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In contract law, consideration means a detriment to the person who made the promise or a
benefit conferred on the other party, both of which are measurable in economic terms. Money,
goods and services are the most common examples of consideration. You should note that
consideration need not be adequate, which means that if the seller or service provider is
contracted to sell a product or service at a price that is below the market price, then that seller or
provider cannot subsequently go to court to claim the shortfall.

A promise of a gift is not enforceable in law because of the lack of mutual exchange of
consideration (the recipient does not have to pay anything in return). An exception to this rule is
when a contract is executed in a specific form called a "deed", in which case the recipient may
not be required to give consideration to the other party.

(v) Capacity (the authority or ability to make contracts)

Persons under the age of 18 (called "minors") and lunatics (mentally disordered or intoxicated
persons) do not have the capacity to enter into contracts. Any contracts that are made by persons
who are lacking in legal capacity are voidable: that is, the party who needs the protection can
seek to avoid the contractual liability.

An exception to this rule arises when the parties enter into a contract for "necessaries" (a legal
term for "necessities", which means the goods or services that are suitable to the condition of life
of a minor and to that minor’s actual requirements at the time of the sale and delivery, such as
clothes or food). A minor who fails to pay for "necessaries" can be sued by the seller.

Legal aspects of business enterprise;

Sale of goods and services. E.g. goods once sold cannot be returned, errors and omissions are
accepted etc.
GOVERNMENT MEASURES OF SMALL SCALE ENTERPRISES
Policy on rural industrialization;
Incentives eg. Women fund and table banking, loans with less interest rates.
Ministerial agencies that promote SSE development; ministry of special programs eg. Women
and youth trainings etc.
Parastatals that promote SSE development; Kenya women,etc.
PROCEDURE OF STARTING A BUSINESS
The following is the basic procedure of starting any business
1. Identification of business idea, location / premises
2. Registration of business organization and business name
3. Trading license / permit

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4. Opening up
PREPARATION / USE OF TENDERING DOCUMENTS
 clients requirements
 contractors requirements
 Presentation of tender documents
 Processing of tenders; authority, consideration of bids and offer of tender.

Types of Tendering

The majority of builders still obtain much of their work by the system of tendering, especially for
new work or work of some importance as opposed to smaller or repair work.

Tendering for work takes various forms; all cost money to prepare yet many tenders are
unsuccessful. Success rates vary according to the companies tendering strategy.

Open Tendering

This usually takes the form of an advertisement in the national or local press stating that tenders
are required to carry out a construction contract.  The system has disadvantages but does give
contractors new to an area or those starting new businesses the chance to tender or establish
themselves.

Selective Tendering

Contractors apply to be included on an approved list maintained by an employing body often an

architectural practice, local authority or statutory body. These organisations have extensive
knowledge and experience of individual contractors and regularly review contractor performance
an approved list. From such lists they are able to select contractors most suited to the contract the
number invited will vary according to the value of the contract.

The main advantage of this system is that the contractors are known and vetted by the employing
authority and be assured as is possible that they will meet their contractual obligations. The
system of vetting usually by pretender questionnaires and the interviewing of contractors can
work against contractors who are trying to establish themselves in a particular market or newer
companies which are expanding. However the system is used extensively throughout the
construction Industry.

Serial Tendering

This type of tender the contractor is required to submit costs for carrying out work usually not
against  a particular project but against sample Bills of Quantity , Works Schedule, or price for a
sample structure in the knowledge that others of a similar nature will be undertaken.  The rates
given in such documents will form the basis of costing for future work undertaken, which will be
measured and valued by both parties to the contract. The contract is usually also for a fixed
period of time (often 5 years) after which the tendering procedure will be repeated.

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Some contractors specialise in this form of contract in the knowledge that once secured they
have continuity of work for their employees.

Negotiated Contract

Negotiated contracts take many forms it is very much dependent upon the type of construction
and the requirement by the client for factors such as speed, quality, repetition, cost, desire to
retain the services etc.

Generally the negotiated contract is credited with saving much of the costs arising from selective
tendering and allows early contractor involvement but other factors disadvantages are also
present it is important that the Client and contractor determine the parameters for negotiation
before commencement and that the stages at which each may withdraw are agreed together with
any associated costs at each stage.

There are three methods used to calculate a final contract price;-

The maintenance of positive relationships during the negotiation process is essential , trust
partnering and mutual benefit of the contract to both parties during negotiations and the actual
contract works is required.

Package Deal Tendering and Turnkey Contracts

These aim at provide the client with a complete service from enquiry to completion with the
responsibility for all design, construction and associated works being borne by the contractor. 
The Turnkey option will usually include everything needed by the client to commence work
( Desks, Chairs Computer installations etc)  It is usual for the client to approach one or more
contractors y and carry out initial discussions before entering into formal design and contractual
discussions with  the selected contractor, this process is similar to the Negotiated tender process.

This type of contract is often associated with commercial and industrial structures where simple
repetitive design and speed of construction are the main criteria and with clients who wish to
retain the services of a contractor who has given good service and value in the past and with
whom a positive relationship exists.

Package deals are also popular in that they provide a service which usually involves only two
parties the client and the builder, the builder being responsible for securing and managing other
building professions which in the construction process.

Recommendation and Reputation

Much work may come to the builder through other ways other than that of tendering or the
various methods already dealt with.  One of the most likely sources is of course, the reputation of
the builder, which has taken possibly many years to build up and all members in the organisation
have to play their part in achieving this, from management to operative. 

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Another method closely related to the firm’s reputation is that of receiving work on the
recommendation of a satisfied client, this can also result in work of a continuous nature such as
maintaining various properties, for example, banks, supermarkets etc., after showing competency
for work of this type.  Speculative or spec. building, as it is often termed, is now quite common
and this generally means that the builder takes a gamble (usually a very calculated one) of
building houses, office blocks, etc. before having any client. These methods of obtaining work
all hold a place on the make-up of a progressive company and to create a steady flow of work -
all must be exploited to the full

Planning stages

The Tender Stage

The tender stage comprises of the gathering together of all resources (physical and human)
required to carry out a contract; the pretender team determining via the use of critical analysis of
information available the most efficient and cost effective process by which the contract may be
progressed and completed.

The Estimator will contribute to this process by providing advice on the overall cost of the
various constructional strategies proposed but until the method statements have been produced
the Estimator is not in a position to accurately cost the work proposed.  The production of a
contract programme derived from method statements produced for the various elements of work
to be completed and encompassing health and safety assessments is central to the estimating (and
subsequently to the construction) process.

Each company tendering for a contract will have their own strategy on constructional techniques
to be used and resources available and will incorporate these into the estimating process.

The estimating of the rates used within the tender is both an art and a science and it must never
be assumed that an Estimators role is to place predetermined unit rates derived from historical
data and synthesis into Bills of Quantity.

The estimate is only a part of the tender process and it should not be assumed that the estimate
derived by the pretender team will be the final tender figure presented to the client.  The
importance of commercial awareness at adjudication to convert the estimate into a tender cannot
be overstated.

 Pre-Tender and Pre- Contract Processes         

The majority of work secured by a contractor is done so by some form of competitive tendering
process.

The importance of gaining as much information as possible about the proposed contract and site
cannot be over emphasized.

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The contract documentation and tender drawings will provide a useful starting point but most
Estimators will need to visit the proposed site to get a ‘feel’ for the contract and the environment
in which the work will take place.

The initial examination of a site may be divided into 3 stages:

 The Site Visit

 The Desk Top Study
 Soil Exploration / insitu testing (These usually result in laboratory analysis of soil
samples and a formal report for use by the tender team).

The extent of this investigation is in reality often limited to the site visit and desk top information
which increases the risks taken by the contractor.

The extent upon which the estimator will complete each of these stages will depend upon the
complexity of the contract, the need to secure the new work.

Thus the site visit and the recording of such information to relay back to the tender team will
have a profound effect upon the tender figure eventually arrived at and submitted to the client.

Site visit will vary according to whether the site is Compact (Traditional enclosed area) or
Extended (sewers runs, pipelines or coastal defences).

Considerations will include:

 Access and egress points to the site present

 Temporary roads and access points needed
 Ground conditions especially where bore hole information has not been provided within
the contract documents.
 Standing surface water / ponding
 Excavations which can be examined.
 Water courses
 Surface contamination
 Existing buildings on the site
 Dumped rubbish or other clearance items
 Excavation challenges including machinery assessment removal of or storage of spoil
 Obvious service location and type of service
 Potential vandalism in the area
 Security arrangements and the type of hoarding or fencing required
 Temporary buildings location and type
  Adjacent buildings type and proximity
 Crane operation and access
 Local restrictions pedestrian restrictions / police restrictions local events
 Local knowledge

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Many other considerations will apply on a site by site basis and most companies adopt a
standardised site visit report or check list to ensure that items are not overlooked.

The Preliminaries section is very important in establishing the overall tender costs and will
contribute a considerable percentage to the overall

Desk Top Analysis 

This is basically writing e-mailing and accessing web based information to add to the on site
evaluation.

It will include:

 Archive and current maps charts, geological profiles and historical data.
 Ordinance Survey maps
 Past use of the site
 Local Authority records and Archives
 Details of existing utilities NRSWA.
 Covenants
 Rights of Way
 Archaeological evidence
 Ordinance
 Ownership of adjacent land.
 Mining activities
 Environmental considerations
 Aerial photographs.
 Planning constraints
 SSSI
 Rail track

Pre Construction / Pre Tender & Planning

1. Appointment of all necessary professionals to assist with the design, planning and
development of information required for construction purposes.
2. Completion of all rezoning, special consent and departure application with the local
authorities.
3. Assistance and co-ordination of design and development of drawings and other necessary
information with appointed professionals (i.e. architects, engineers, quantity surveyors
etc) required for client approval, municipal approval, contractor costing and client budget
/ cash flow requirements.
4. Co-ordination of building specification and detailing of finishes to suit client
requirements regarding structural integrity, completed finish and client budget.
5. Establishment of a working budget and an estimated duration of the project.
6. Where necessary coordinating of all land re-zoning, sub divisions, environmental impact
assessments and land surveys etc. for the proposed development.

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 7. Ensuring that drawings & infrastructure details are timorously submitted to local
authorities for approval in accordance with recognized codes of practice.

Pre-contract meeting for construction contracts

The pre-contract meeting is an important meeting that takes place after the contractor has been
appointed but before work commences on site. It is an opportunity to for the project team to meet
(perhaps for the first time) and to plan the construction stage.

The pre-contract meeting is chaired by the contract administrator and is an opportunity to:

 Make introductions and issue contact details (perhaps a project directory).

 Clarify roles, responsibilities and lines of communication.
 Agree meeting schedules, meeting structures and attendees.
 Handover outstanding documents (such as insurance certificates) and issue outstanding
information (which may including any variations made since the contract was awarded).
 Issue nomination instructions.
 Discuss the contractor's master programme, including incorporation of works outside of
the main contract, inspections, commissioning and testing.
 Discuss the role of site inspectors.
 Agree procedures for monitoring, issuing, receiving and reviewing information
(including the information release schedule if there is one, and its relationship with the
contractor's master programme). This may include a distribution matrix.
 Agree site access procedures and issues.
 Agree site induction procedures and other health and safety issues.
 Agree procedures for dealing with queries.
 Agree procedures for issuing instructions.

The meeting should be minuted so that there is a clear record of the procedures agreed and
decisions made.

Construction Phase

1. Management of the contractors and involved professionals over the duration of the
project.
2. Acting as the principle liaison between the client, the professionals and contractors
involved.
3. Ensuring that long lead-time items have been ordered timorously throughout the contract
so the critical path is adhered to.
4. Complete communication with contractor and client with assistance to him/them in
providing any outstanding information, alternative methods of construction and
professional opinion on other sub contractors.
5. Complete supervision of all planned changes (structural and financial) and issuing of all
site instructions to contractors detailing the required changes.
6. Management of budget fluctuations, should changes to the scope of work be required,
with written report detailing the impact thereof.

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 7. Ensuring that information flow between professionals and client does not affect the
critical path of construction. And when such occurs, assisting the contractor in resolving
conflicts, reorganizing basic program structure and critical path.
8. Quality controls of all materials used, and direct supervision of construction methods
implemented; ensuring that building standards are strictly adhered to and that deviations
from approved drawings is limited to acceptable industry norms.
9. Detailed evaluation of monthly contractor interim payments and issuing of financial
certificates for payment on clients behalf. This evaluation is done with the architect and
or any others you might want included in the financial process.
10. Progress reports and evaluation of construction program with contractor. A report will be
submitted to the client on the contract status (i.e. time and finance) and or any remedial
actions required in order to correctly affect the critical path of the project.
11. Ensuring that all necessary municipal inspections mandated by law are carried out and
signed off by the appropriate authorities when and where necessary.

Turning the Cost Estimate into a Tender

The Estimator in co-ordination with the tender team will by this stage have completed the task of
investigating the true nature and extent of the contract under consideration and produced
documents and reference material to aid their final pricing of the contract. They will have
produced a pre-tender programme early in the tendering cycle to ensure that the tender is
completed and received by the Client by the date noted on the tender documentation. They will
be working as a team to produce that which they consider will be the right price for the contract
and the strategy by which this price will be competitive and secure the contract.

Even at this stage the manner in which the contract and its individual elements and operations
will be completed will have been established and method statements, risk assessment, the overall
contract programme etc, produced and discussed.

The estimating team must be optimistic about their chances of winning the contract, and the type
of contract should be compatible with the ‘Bidding Strategy’ of the company if the team are to
be fully motivated.

It is a reflection on some contractors that only 10% or less of contracts tendered for are won, yet
other contractors achieve success rates of 50% or more merely by targeting certain types of
contract and recruiting and retaining expertise within that field of work.

Assuming that the tendering team have worked diligently completed the required documentation,
produced the required statements and programmes, and studied the drawings and details fully the
challenge still remains. - How can the Estimators price be converted into a tender price which
can be submitted to the Client and secure the contract for the company.

Taking the contract forward using the knowledge of the tender team and utilizing their
understanding of the project and experience from previous contracts is a process known to some
as ‘Adjudication’ and to others as ‘Settlement’; some use the description of ‘Completing the
Estimate and Final Tender Review’ and separate out settlement as a separate stage.

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All are terms which interact and in essence describe a process of checking what has been
produced by the tender team and taking this forward to produce a Tender Figure /Price which
will secure the contract; turning the estimators cost price to the contractor of actually carrying
out the work into a figure which will actually win the contract.

The tender team is charged with the objective of winning the contract at the highest possible
price that it is actually possible to do so; not the lowest price anyone can achieve that feat but
their company will not remain in business for any length of time. (It should be appreciated that in
the real world other factors may make the above statement seem simplistic but the essential point
is made).

The estimate should be carefully checked for errors in the bills of quantity unit rates and
extension of the rates until the Estimator is content with the price calculated.

Settlement / Adjudication Meeting

The process of settlement or adjudication involves considering amongst other factors:

 The Estimators report

 Contract conditions and form of contract
 Site factors
 Past experience of the Client
 Analysing own work content
 Sub-Contract allocation.
 Prime cost and Provisional sum content
 Discounts available
 Non Standard insurance requirements
 Liquidated damages applicable
 Complexity of the contract
 Programme constraints
 Likely variations
 Valuation dates
 Labour availability
 Profit margins required
 Preliminaries
 Effects on overheads
 Dayworks
 Contingency sums included
 Preliminaries including contractual requirements
 Competitors
 The existing company workload
 The need for the new contract.
 Financial implications and cash flow analysis
 Risk analysis

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  Health and Safety Plan.
 Cash flow with the new contract
 Cash flow without the new contract
 Company retention on selective tendering lists.

The list is in reality extensive and many of these factors will already have been considered by the
tendering team and related to the estimator but the final ‘settlement’ is in many respects left to
the senior management of the tendering company; on their shoulders rests the continuance of the
company and responsibility for its profitability.

That which turns the estimate by into the formal tender is complex and many would consider it
an art rather than a science, everyone attending the settlement meeting(s) should contribute and
much discussion will take place until a sum of money is agreed and the Form of Tender
completed and submitted.

It is not unusual for a Managing Director aware of the competition to reduce or increase the
Estimators cost prediction before submitting the tender.

Outline Tender Procedure for a Contract to be Awarded under JCT form of Contract

1. Invitation to tender – Document delivery

2. Check contract documentation
3. Ensure complete
4. Bills of Quantity
5. Drawings as contract documentation
6. Conditions/Form of Tender
7. Note return date
8. Determine tender policy for this invitation
9. Yes/No (with carefully worded letter)
10. Read all documentation carefully
11. Decision to tender – Positive
12. Produce Pre-tender Programme
13. Method Statements
14. Contract outline programme
15. Working methods
16. Health, safety, welfare and environmental protection requirements
17. Meeting schedule etc.
18. Assign duties to personnel
19. Carry out pre-tender site investigation – assess work and site conditions
20. Determine own work content of the Bills of Quantity
21. Request quotations for plant and materials – full documentation must be provided,
including specification and form of contract
22. Determine extent of the sub-contract works and request quotations – full documentation
must be provided, including specification and form of contract
23. Price sections of the Bills of Quantity to be completed by the main contractor

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 24. Compile/price the whole of the Bills of Quantity using information gathered from internal
and external sources
25. Analyse Bills of Quantity to determine contractors own work content
26. Preliminaries
27. Domestic sub-contractors
28. Nominated sub-contractors
29. Nominated suppliers
30. Provisional sums
31. Daywork sums
32. Contingencies
33. Discounts
34. Possible additions/omissions etc.
35. Adjust rates and price in line with the findings- analysis report for adjudication meeting
36. Determine financial viability of the contract
37. Determine work impact of success or failure of the tender – report for adjudication
meeting
38. Adjudication meeting – to determine tender price
39. Complete form of tender and deliver to the appointed place in good time – obtain a
receipt

PROBLEMS LIABLE TO ENCOUNTER WHEN STARTING / OPERATING A

BUSINESS
The following may pose some challenges in starting a business
i. political climate
ii. changing tastes/fashion/trends
iii. sustainable drive/business continuity
iv. retaining skillful labour/man power
v. changing attitudes and technology
vi. entrepreneurial attitudes
vii. knowledge of product market

Major Challenges of Starting a New Business

Starting a new business can lead to personal and financial rewards in the future, but you will
likely face a number of challenges when starting out. The demands on your time may be greater
than you anticipated, and enough money to keep things going can also be a problem. With some
careful planning, you can anticipate some of these challenges and be able to overcome them.

10 Challenges of Starting a Business plus Lessons Learned

What are the major challenges entrepreneurs face when starting a small business from
scratch? How do successful entrepreneurs and drop out billionaires handle and solve
problems in business? Must an entrepreneur face these business challenges when starting a
business?

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“Starting a business is like jumping out of an airplane without a parachute. In mid air, the
entrepreneur begins building a parachute and hopes it opens before hitting the ground.” – Rich
Dad

If any of the above questions is currently running through your entrepreneurial mind, then I will
advice you read on as I trash out the top 10 challenges you will face when starting a business
from scratch.

“Without the element of uncertainty, the bringing off of even, the greatest business triumph
would be dull, routine and eminently unsatisfying.” – J. Paul Getty

If you are an entrepreneur, then I believe you will be familiar with the challenges associated with
the entrepreneurial process of building a business from scratch. But if not, and you dream of
becoming one someday; then I think you will find this article worthwhile.

“A business has to be involving, it has to be fun and it has to exercise your creative instincts.” –
Richard Branson

I am writing this piece to enable aspiring entrepreneurs prepare in advance for challenges
involved with the entrepreneurial process. Please it’s never my intention to discourage or scare
you from going into business; In fact, I intend to achieve the opposite. I want you to venture into
the business world and start your own business with a feeling of confidence.

“He that is prepared has half won the battle.” – Chinese Proverb

“The biggest challenge you have is to challenge your own self doubt and your laziness. It is your
self doubt and your laziness that defines and limit who you are.” – Rich Dad

10 Challenges of Starting a Business from Scratch

1. Developing the Vision and Business Idea

“To have a great idea, have a lot of them.” – Thomas Edison

Developing a business idea is usually the first challenge faced by every entrepreneur when
starting a business from scratch. Finding the right business opportunity or creatively developing
an idea is certainly not an easy task. I call “Envisioning the idea” the first true task of an
entrepreneur. As an entrepreneur, you must possess the ability to see what others cannot see.
While others see problems, you must see opportunities.

“There is far more opportunity than there is ability.” – Thomas Edison

But seeing opportunities is just the beginning. The main business challenge is going to be your
ability to forge that opportunity into a business idea. I see this as a business challenge because
the process of transforming problems into business opportunities is like trying to turn lead into

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gold. I call it the entrepreneurial process of “Creating Value out of nothing”; a process that
brings innovative products into existence. Below is an illustration of how the process goes.

 Identifying a problem > Seeing an opportunity in the problem > Coming up with a
solution > Forging the opportunity into a business idea > Integrating your solution into a
business plan

“A good businessman must have nose for business the same way a journalist has nose for news.
Once your eyes, ears, nose, heart and brain are trained on business, you sniff business
opportunities everywhere. In places where people see a lot of obstacles, I see a lot of
opportunities. At times, there is something instinctive in me that tell me a business opportunity
exist even at a place where others see nothing. That is what makes me different, maybe unique.
A good businessman sees where others don’t see. What I see, you may not see. You cannot see
because that is the secret of the business… the entire world is a big market waiting for anybody
who knows the rules of the game.” – Orji Uzor Kalu

Developing a vision is definitely a business challenge because an entrepreneur must sometimes

assume the role of a sorcerer. Let me explain in detail. Most individuals are comfortable with the
present way of doing things but it is the duty of an entrepreneur to envision and forecast the
future. An entrepreneur must always be ahead of his time or else he will lose his relevance. It is
the duty of an entrepreneur to bring into present what is yet to be. It is also the duty of an
entrepreneur to bring solutions to other people’s problems. Let me give you some practical
illustrations:

“If you want to be rich, you need to develop your vision. You must be standing on the edge of
time gazing into the future.” – Rich Dad

a)  In the late 70s and early 80s, while IBM saw increase in demand for their mainframe
computers, Steve Jobs envisioned a personal computer in every home and Bill Gates envisioned
the need for easy to use software for personal computers. That single vision made Bill Gates the
richest man in the world and Steve Jobs the most famous business person of the 21st century.

“Business is going to change in the next ten years than it has in the last fifty years.” – Bill Gates

b)  The Wright brothers envisioned a flying machine but they were massively opposed because
the thought of humans flying was perceived as impossible. Today, the Airplane is a reality.

c)  Back in those days when cars were custom made and exclusively for the rich, Henry Ford
envisioned affordable cars for the masses. That single vision made Henry Ford one of the richest
men in history.

“You are nuts and you should be proud of it. Stick with what you believe in.” – Trip Hawkins

I believe with these few examples, my point is clear. Developing the vision and idea is the first
true task and challenge of being an entrepreneur.

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2. Raising Capital for your Startup

After developing your idea, the next challenge you are going to face when starting a business
from scratch is that of raising capital. As an entrepreneur, you are the only one that knows
business your idea to the core. You are the only one that knows the story of your future.

“Capital can do nothing without brains to direct it.” – J. Ogden Armour

Trying to convince investors about something that doesn’t exist is definitely a challenge. Trying
to make them understand that you are trustworthy and equal to the task is not child’s play
especially when you are building your first business.

“If you want to know the value of money, go and try to borrow some.” – Benjamin Franklin

There is more to raising capital than just simply asking for money. Most investors want to invest
in already established businesses with minimal risk and they want to be sure that they get returns
for the risk they took. Most brilliant business ideas never scale through the venture capital stage
because the entrepreneur is either not prepared or lacks what it takes to raise the needed capital.
Just as my mentor, Robert Kiyosaki says:

“The world is filled with brilliant ideas and excellent products but the world lacks seasoned
entrepreneurs.” – Robert Kiyosaki

To overcome the challenge of raising capital, you must develop the ability to sell your idea and
vision to potential investors. When I say “sell your ideas“, I mean improving your
communication skill and your manner of presentation. In the game of raising capital, you must
have a good story to tell; backed by a strong business plan and good persuasion skills. You must
know how to pitch angel investors and venture capitalists alike.

“The ability to sell is the number one skill in business. If you cannot sell, don’t bother thinking
about becoming a business owner.” – Rich Dad

3. Assembling a Business Team

“Eagles don’t flock, you have to find them one at a time.” – Henry Ross Perot

The third business challenge you will face in the course of starting a small business from scratch
is assembling the right business management team. When I talk about a team, I am not talking
about regular employees. I am talking about a “strategic round table business team” that will
meet regularly to brainstorm on ways to grow your business.

“Individuals don’t win in business, teams do.” – Sam Walton

The process of building a business team starts even before the issue of raising initial start-up
capital arises. Remember I said that most brilliant ideas never scale through the phase of raising
venture capital. Well; this is where most budding entrepreneurs miss it. Most brilliant ideas and

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products never get funded because the entrepreneur is trying to raise capital as an individual. A
business team is a vital, yet often ignored key to raising venture capital successfully.

“Business and investing are team sports.” – Rich Dad

As an entrepreneur, you are bound to have strengths and weaknesses. That is the more reason
you need a business team to cover up or compliment your weaknesses. A team is a necessity for
building a successful business. Now finding a business team is just the second hurdle,
transferring your passion and vision to your team is the next piece of cake.

“Teams should be able to act with the same unity of purpose and focus as a well motivated
individual.” – Bill Gates

It’s your duty as an entrepreneur to make sure your team sees the future you see. They must
believe in your possibilities and must also be passionate about making that possibility a reality. If
they can’t grasp your vision, if they can’t see the future with you, then they are not worthy being
your team.

“My model for business is the Beatles. They were four guys that kept each other’s negative
tendencies in check; they balanced each other. And the total was greater than the sum of the
parts. Great things in business are not done by one person; they are done by a team of people.” –
Steve Jobs

Your strategic business team should comprise your banker, financial adviser, accountant,
attorney or legal adviser and any other specialist that will be of tremendous impact to your
business. A question on your mind right now might be “how am I going to pay this team” My
answer is I don’t know. You will have to figure it out yourself or better still, you can consider
bringing them on board as partners.

“Go to the wolf, consider its ways and be wise. A wolf will never hunt alone; it hunts in packs
because it knows the power of team work.” – Ajaero Tony Martins

4. Finding the Right Business Location

Is finding a good location a business challenge? I don’t know but what I do know is that finding
a good business location at the right price is definitely not easy. How do you get a location that
has a rapidly growing population, good road network and other amenities at a good price? Well,
you will have to figure out yourself.

5. Finding Good Employees

“If you own a butcher shop, don’t hire vegetarians. To hire the right people, you have to let the
wrong people go.” – Rich Dad

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Most writers and managers crank up the process of finding good employees as an easy task.
They define the process of finding an employee as simply presenting the job description and the
right employee will surface. But I think it’s more than that.

“The competition to hire the best will increase in the years ahead. Companies that give extra
flexibility to their employees will have the edge in this area.” – Bill Gates

Business owners know how difficult it is to find a hardworking, trustworthy employee. Most
employees want to work less and get paid more. Finding a good employee who will be
passionate about delivering his or her services is quite difficult. Finding good employees is a
minor task compared to the business challenge of forging your hired employees into a team.

You may have great employees but if they can’t act as a team, they are worthless and will yield
nothing but stagnation. A football team may have great skillful players but if they fail to play as
a team, their possessed skill is useless.

“Bringing together the right information with the right people will dramatically improve a
company’s ability to develop and act on strategic business opportunities.” – Bill Gates

Employees are your representatives to your customers and the outside world. They are a
reflection of your business culture and ethics. If an employee of yours is bad or rude to your
customers, it is going to portray a bad image for your company. So you must be careful when
hiring employees. Remember the golden rule of business; “Hire slow and fire fast.”

6. Finding Good Customers

The sixth challenge you will face in the process of starting a small business from scratch is
finding good customers. Note the keyword “good customers.” In the process of building a
business, you will come to find out that there are good customers as well as bad customers. You
must be on guard for bad customers. Good customers are really hard to find. A good customer
will be loyal to your company and will be willing to forgive you if you make a mistake and
apologize. A good customer will try to do the right thing that will benefit both himself and your
company mutually.

“Thank God for my customers. They buy my products before they are perfected.” – Henry Ford

Bad customers will always look for loopholes in the company’s policy to exploit and make a few
gains. Bad customers will always try to exploit the company’s goodwill and look for ways to rip
off the company. Bad customers are responsible for bad debts. Good customers build your
business and bad customers will always try to liquidate your business. Just as you fire
employees, you must also be prepared to fire bad customers without hesitation. Remember the
story of the customer that sued McDonald’s claiming the coffee was too hot.

“You must fire bad customers just as you would fire a bad employee. If you do not get rid of
your bad employees, the good employees will leave. If I do not fire bad customers, not only will
my good customers leave but many of my good employees will leave as well.” – Rich Dad

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7. Dealing with Competition

“In business, the competition will bite you if you keep running. If you stand still, they will
swallow you.” – Victor Kiam

Competition is the next challenge you will face when starting a business. Most individuals see
competition as a plague but I see competition as a good challenge. I see competition as a
benchmark for creativity, the main engine that stimulates innovation and production of quality
products at great prices. Without competition, there will be no innovation and without
innovation, the world will be stagnant.

“If you don’t have a competitive advantage, don’t compete.” – Jack Welch

I see competition as a welcomed challenge and I want you to do the same. Competition keeps us
on our toes and drives us to constantly improve our products and services. But you must be
warned. Competition can make your business lose its relevance in the eye of your customers so
you must always be on guard.

“The competitor to be feared is one who never bothers about you at all but goes on making his
own business better all the time.” – Henry Ford

8. Unforeseen Business Challenges and Expenses

“Smooth seas seldom make good sailors.” – Anonymous

Just as a sailor prepares for unexpected storm, just as a pilot is always on the watch for
unpredictable bad weather and thunderstorms, so must an entrepreneur prepared for whatever
comes. Unexpected challenges can come in the form of:

 Unexpected law suits

 Inconsistent government policy
 Not being able to make payroll
 Unpaid bills and taxes
 Unexpected resignation of staff from sensitive office
 Bad debts from customers
 Loss of market share
 Dwindling working capital
 Inadequate stock or inventory

“A company’s ability to respond to an unplanned event, good or bad is a prime indicator of its
ability to compete.” – Bill Gates

These business challenges, if not handled properly can ruin your plan to build a successful
business. Another challenge you must expect is an unforeseen increase in business expenses. If
not handled properly, it might result in constant negative cash flow and eventually; business
failure.

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9. Keeping Up With Industrial Changes and Trends

“In three years, every product my company makes will be obsolete. The only question is whether
we will make them obsolete or somebody else will.” – Bill Gates

Change in trends is a challenge you must be prepared for when starting a small business. Trends
have made and broken lot of businesses. I know a lot of profitable businesses that have been
wiped out by slight industrial changes and trends. A typical example is the Dot com trend, where
many established industrial based businesses were wiped out by new web based dot com
companies.

“How fast a company can respond in an emergency is a measure of its corporate reflexes.” – Bill
Gates

When the Dot com era began, business owners were left with only two options. Either they join
the dot com train or they get crushed by the dot com train. Seasoned entrepreneurs know that
trend is a friend and are always willing to swiftly adjust their business to the current trend.
Keeping your eyes open to spot trends is really a challenge but the big task will be your ability to
quickly use the trend to your advantage.

10. Exiting the Business

“In the world of business and investing, your exit is more important than your entry. A good
thumb of rule is this; exit before you enter.” – Robert Kiyosaki

When building a business from scratch, you are going to face the challenge of determining your
exit strategy. Just as the quote above states, you have to plan your exit strategy before you even
start the business. Most entrepreneurs run their business without any plans to exit and even if
they have an exit strategy, they find it difficult to implement it.

“Always start at the end before you begin. Professional investors always have an exit strategy
before they invest. Knowing your exit strategy is an important investment fundamental.” – Rich
Dad

Before starting a business, it is advisable to plan an exit. Lack of an exit plan is the primary
reason why most businesses crumble after the death of the founder. An exit strategy is very
important to the long term survival of a business. now how do you plan an exit strategy? There
are benchmarks you can use to determine your exit from any business. Most smart entrepreneurs
will use a certain benchmark as a target and once this specific target is reached, they exit the
business. Examples of such benchmarks are:

 Annual sales
 Annual Turnover
 Asset Base
 Market Saturation
 Customer base, subscribers or number of users

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Now when it comes to exiting a business, there are three strategies you can apply. You can
choose to exit a business in any of the following ways:

a) Turning over the business to professional managers

When your business reaches a certain stage of maturity, you can exit by turning it over to
professional managers. In this case, the business still belongs to you but you are not involved
with its day to day affairs. You will have to give up administrative role to assume the role of a
watchdog. When you exit in this manner, you will have more free time to look at other projects
or retire.

b) Selling the business privately

In this case, you are exiting the business by selling it to a private investor. In the business world,
it is called M&A (Mergers and Acquisitions). Exiting your business this way means that after the
sale and transfer of assets is complete, you have nothing to do with the business again.

c) Taking the company public

The unique thing about this type of exit strategy is that while you are selling your business (in
form of shares) to public investors, you still maintain control over the business. Please before
you apply any of these exit strategy, I will advise you consult with your attorney or legal adviser.
But ultimately, it’s up to you to decide the exit strategy you want to apply; but always remember
“your exit is more important than your entry.”

As a final note, I want to state clearly that challenges come only to make you stronger; so don’t
faint in the face of challenges. Stand tall; keep moving your business forward and I will see you
at the top.

ENTREPRENEURIAL MOTIVATORS

The following are the Internal entrepreneurial motivators factors;

 Self actualization
 Desire to succeed /achieve
 Survival
 Adventure
 Independence
 Profit maximization
The following are the External/national motivators’ factors;

 Infrastructure
 Export/import incentives
 Pricing policy
 Credit facilities

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  Education
 Role models
 Technology
 Enabling environment
The following are the Self-assessment techniques;

 Meditation - thinking about it carefully, don’t just rush but take your time.
 Strength weakness analysis test (swat)
Financial status, Supporting alumni, Programs & services, Employee suggestion
program, Equipment, Administrative team, Staff expertise, Location, Marketing,
Patient satisfaction, Union demands, Lag time for management, information
system, Escalating cost for benefits & salaries, Unprofitable services

DECISION-MAKING IN BUSINESS

Introduction

Decision-making is a crucial part of good business. The question then is ‘how is a good decision
made?

One part of the answer is good information, and experience in interpreting information.
Consultation i.e. seeking the views and expertise of other people also helps, as does the ability to
admit one was wrong and change one’s mind. There are also aids to decision-making, various
techniques which help to make information clearer and better analysed, and to add numerical and
objective precision to decision-making (where appropriate) to reduce the amount of subjectivity.

Managers can be trained to make better decisions. They also need a supportive environment
where they won’t be unfairly criticised for making wrong decisions (as we all do sometimes) and
will receive proper support from their colleague and superiors. A climate of criticism and fear
stifles risk-taking and creativity; managers will respond by ‘playing it safe’ to minimise the risk
of criticism which diminishes the business’ effectiveness in responding to market changes. It
may also mean managers spend too much time trying to pass the blame around rather than
getting on with running the business.

Decision-making increasingly happens at all levels of a business. The Board of Directors may
make the grand strategic decisions about investment and direction of future growth, and
managers may make the more tactical decisions about how their own department may contribute
most effectively to the overall business objectives. But quite ordinary employees are increasingly
expected to make decisions about the conduct of their own tasks, responses to customers and
improvements to business practice. This needs careful recruitment and selection, good training,
and enlightened management.

Types of Business Decisions

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1. Programmed Decisions These are standard decisions which always follow the same routine.
As such, they can be written down into a series of fixed steps which anyone can follow. They
could even be written as computer program

2. Non-Programmed Decisions. These are non-standard and non-routine. Each decision is not
quite the same as any previous decision.

3. Strategic Decisions. These affect the long-term direction of the business eg whether to take
over Company A or Company B

4. Tactical Decisions. These are medium-term decisions about how to implement strategy eg
what kind of marketing to have, or how many extra staff to recruit

5. Operational Decisions. These are short-term decisions (also called administrative decisions)
about how to implement the tactics eg which firm to use to make deliveries.

ASSIGNMENT 1;

The following are METHODS OF DECISION MAKING. Discuss

a) Rule of thumb
b) Committee approach
c) Critical path analysis
d) Brain storming

Figure 1: Levels of Decision-Making

Figure 2: The Decision-Making Process

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The model in Figure 2 above is a normative model, because it illustrates how a good decision
ought to be made. Business Studies also uses positive models which simply aim to illustrate
how decisions are, in fact, made in businesses without commenting on whether they are good or
bad.

Linear programming models help to explore maximising or minimising constraints eg one can
program a computer with information that establishes parameters for minimising costs subject to
certain situations and information about those situations.

Spread-sheets are widely used for ‘what if’ simulations. A very large spread-sheet can be
used to hold all the known information about, say, pricing and the effects of pricing on profits.
The different pricing assumptions can be fed into the spread-sheet ‘modelling’ different pricing
strategies. This is a lot quicker and an awful lot cheaper than actually changing prices to see what
happens. On the other hand, a spread-sheet is only as good as the information put into it and no
spread-sheet can fully reflect the real world. But it is very useful management information to
know what might happen to profits ‘what if’ a skimming strategy, or a penetration strategy were
used for pricing.

The computer does not take decisions; managers do. But it helps managers to have quick and
reliable quantitative information about the business as it is and the business as it might be in
different sets of circumstances. There is, however, a lot of research into ‘expert systems’ which
aim to replicate the way real people (doctors, lawyers, managers, and the like) take decisions.
The aim is that computers can, one day, take decisions, or at least programmed decisions (see
above). For example, an expedition could carry an expert medical system on a lap-top to deal
with any medical emergencies even though the nearest doctor is thousands of miles away.
Already it is possible, in the US, to put a credit card into a ‘hole-in-the-wall’ machine and get
basic legal advice about basic and standard legal problems.
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PROCESS OF DECISION MAKING

Tips for Wise Decision-Making

As you manage your business, you will be faced with important decisions that may impact the
future of your company. This may seem stressful, but keep these tips in mind and you'll find
yourself making wiser decisions in no time:

I. Define, as specifically as possible, what the decision is that needs to be made. Is this
really your decision or someone else's? Do you really need to make a decision? (If you do
not have at least two options, there is no decision to be made.) When does the decision
need to be made? Why is this decision important to you?
II. Brainstorm, and write down as many alternatives as you can think of. Be sure to use
your resources (experienced friends and family, the Internet, etc.) to find out more about
the implications of each option.
III. Visualize the outcome of each alternative. Do you feel more satisfied with one outcome
than with the others?
IV. Do a reality check. Cross off those alternatives that most likely will not occur.
V. Implement. Once you have made your decision, get moving on it. Worrying or second-
guessing yourself will only cause stress. You have done your very best. Remember, no
decision is set in stone!

Quality of Decision-Making

Some managers and businesses make better decisions than others. Good decision-making comes
from:-

1. Training of managers in decision-making skills. See Developing Managers

2. Good information in the first place.
3. Management skills in analysing information and handling its shortcomings.
4. Experience and natural ability in decision-making.
5. Risk and attitudes to risk.
6. Human factors. People are people. Emotional responses come before rational
responses, and it is very difficult to get people to make rational decisions about
things they feel very strongly about. Rivalries and vested interests also come into
it. People simply take different views on the same facts, and people also simply
make mistakes. Business Thinkers -John Pierpoint Morgan & Good Management
Self-Assessment

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Instituting Change

We all know that organizations that fail to evolve will be left behind, but resistance to change is
so ingrained it is almost impossible to convince some managers that the wisdom of change also
applies to them. John Kenneth Galbraith said it well: "Faced with the choice between changing
one's mind and proving that there is no need to do so, almost everyone gets busy on the proof".

Many thoughtful authors have written about implementing change, and I certainly do not pretend
to have the management credentials that most of them can boast—I am an academic, away from
the day-to-day fray. What I do have, is experience from the outside trying to help managers on
the inside introduce planning tools new to the organization. In this article I will discuss some of
the ways I have seen implementation fail and some ideas for how to increase the odds that
changes will stick.

Instituting an engineering change process one step at a time

We often meet small and mid-size manufacturers when they’re in the midst of a growth stage—
and the processes they’ve created on the fly are no longer good enough to keep product
development running smoothly. While the engineering change process is one of the first places
most of them want to add more structure, we typically recommend that they take a phased
approach instead of trying to implement an entire end-to-end change process all at once.

If your company finds itself in a similar position—needing better engineering change control but
not yet ready for a full-blown change management process—start the way that many of our
customers start, by pinpointing the specific change-related challenges you’re facing and
instituting some structure there.

At a high level, the change process is about identifying problems, solving problems and
disseminating solutions. A complete engineering change process might include these seven steps
(which are described in more detail in an article on the Arena website):

1. Issue identification & scoping

2. Engineering change request (ECR) creation
3. ECR review
4. Engineering change order (ECO) creation
5. ECO review
6. Engineering change notification (ECN) circulation
7. Change implementation

The engineering change request (ECR) process

Steps 1-3 make up the engineering change request (ECR) process, where issues are identified
and tracked and solutions are proposed and evaluated. You may want to start by adding more
control to your ECR process if your biggest challenges sound like this:

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  Your customers, salespeople and service teams are unsure how to alert the right people in
your organization when they encounter problems with your products.
 You have no good way to compare proposed solutions and pick the most promising one.
 You fear you’re missing out on the best solutions because you don’t have a way to get all
the right people involved when a product issue arises.

The engineering change order (ECO) process

Steps 4 & 5 make up the ECO process, where change orders and related documentation are
circulated, reviewed, discussed and ultimately approved or rejected. You should think about
implementing a more structured ECO process if:

 You need input from partners, contract manufacturers (CMs) or remote employees before
you can make a decision about a change—but you’re getting slowed down by involving
them in the review process.
 The complexity of considering multiple changes at once prevents people from making
decisions on any of them.
 Your team is wasting too much time manually creating ECO packets and sitting through
lengthy change control board (CCB) meetings.

The engineering change notification (ECN) process

Steps 6 & 7 make up the engineering change notification (ECN) process, where key stakeholders
are notified of changes and the organization makes sure that changes are implemented. You
might want a more formalized ECN process if any of the following situations sound familiar:

 You’ve lost weeks in your production schedule because no one remembered to notify
purchasing of a change to a component with a long lead time.
 You’ve had to scrap thousands of dollars worth of parts because your CM didn’t get
notified about a change—and you didn’t know that until it was too late.
 You’ve watched the production line stay down longer than necessary—just because the
process for notifying your CM of an approved change was so cumbersome and difficult.

If your company needs more structure in its engineering change process, the scenarios above can
help you identify a good place to start. But don’t forget that whatever processes you implement
have to work for your organization. Try a phased approach if you’re not ready to implement a
complete engineering change process all at once, and make sure you’re instituting practices that
are a good fit for your organization’s structure, culture, growth stage and product development
process.

ASSIGNMENT 2;
1. Find out the causes of change in the following
i. Product/service
ii. Technology
iii. Policy
2. The following are methods of instituting change. Discuss.
Page 80 of 173
 i. Education and training
ii. Persuasion
iii. Innovativeness and creativity
iv. Directive
COPING WITH COMPETITION
The following are some of the processes of copying with competition (as per the course outline)

 Understand the competitors advantages

 Comparing differences of the products and services
 Development of a competitive strategy/strategies
 Implementation and evaluation of strategy/strategies
 Making competitive changes
 Improvement of product/ service
 Improvement/increase in efficiency i.e. reduction of /unit cost
 Trade agreements/business associations
 Adjustment of market segmentations.

TEN WAYS TO KEEP AHEAD OF THE COMPETITION

Whenever consumer spending is slowing down, you need to defend your market position
and maintain your competitive edge. Tom Whitney shows you how to stay ahead of your
rivals.

1. Know the competition. Find out who your competitors are, what they are offering and
what their unique selling point (USP) is. This will identify the areas you need to compete
in, as well as giving you a platform for differentiating yourself.
2. Know your customers. Customer expectations can change dramatically when economic
conditions are unstable. Find out what matters to your customers now - is it lower price,
more flexible service, the latest products? Revise your sales and marketing strategy
accordingly.
3. Differentiate. It's essential to give your customers good reasons to come to you rather
than a rival. Your USP should tap into what customers want and it should be clear and
obvious - no-one should have to ask what makes you different.
4. Step up your marketing. Make more effort to tell people who you are, what you sell and
why they should buy from you. It doesn't have to be expensive; marketing can range from
posters in your window and leaflet drops through to advertising campaigns in local
media.
5. Update your image. Simple steps such as painting the front of your premises can make
your business look more modern and inviting. But look also at business cards, stationery,
your website, branded packaging, clothing and so on. Does your image reflect your USP?
6. Look after your existing customers. They will be your competitors' target market.
Provide better customer service by being more responsive to their needs and
expectations. If feasible, consider offering low-cost extras such as improved credit terms,

Page 81 of 173
 discounts or loyalty schemes - remember, it's cheaper and easier to keep customers than
to find new ones.
7. Target new markets. Selling into a greater number of markets can increase your
customer base and spread your risk. Consider whether you can sell online or overseas, for
example. Are there groups you've never targeted before who might be interested in your
offer? Don't waste time marketing to people who won't be interested, however.
8. Expand your offer. What related products or services might your customers be
interested in? You might even consider diversifying into another area - many cafes have
successfully offered Internet access, for example.
9. Be the best employer. Skilled, motivated staff underpin vibrant, growing businesses. But
attracting them means more than paying a competitive wage - people are often more
impressed by a good working atmosphere and benefits such as flexible working and
structured career development.
10. Look to the future. Businesses that plan for growth are more successful than those that
are happy to stay still. Keep up with developments in your sector, follow consumer
trends, invest in new technology and - crucially - have a clear idea of where you want to
be in one, three and five years' time.

RISK

Risk is the potential of losing something of value. Values (such as physical health, social status,
emotional well-being or financial wealth) can be gained or lost when taking risk resulting from a
given action, activity and/or inaction, foreseen or unforeseen. Risk can also be defined as the
intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, unmeasurable
and uncontrollable outcome, risk is a consequence of action taken in spite of uncertainty

Risk perception is the subjective judgment people make about the severity and/or probability of a
risk, and may vary from person to person. Any human endeavor carries some risk, but some are
much riskier than others
Evaluation of business risk
The following factors are considered
i. Characteristics of risk takers
ii. Personal risk taking
iii. Nature of risk
iv. Techniques of evaluating risks
v. Coping with risk/risk management

Time management skills &techniques, free templates and tools, tips and training

Consider to manage the following:

 Time consciousness
 Time scheduling; prioritization and keeping to the specifics

Page 82 of 173
  Overtime

Here are practical tips, tools and skills to improve time management. Time management starts
with the commitment to change. Time management is easy as long as you commit to action. You
can train others and improve your own time management through better planning; prioritising;
delegating; controlling your environment; understanding yourself and identifying what you will
change about your habits, routines and attitude.

The key to successful time management is planning and then protecting the planned time. People
who say that they have no time do not plan, or fail to protect planned time. If you plan what to do
and when, and then stick to it, then you will have time. This involves conditioning, or re-
conditioning your environment. For people who have demands placed on them by others,
particularly other departments, managers, customers, etc, time management requires
diplomatically managing the expectations of others. Time management is chiefly about
conditioning your environment, rather than allowing your environment to condition you. If you
tolerate, and accept without question, the interruptions and demands of others then you
effectively encourage these time management pressures to continue.

Urgent and Important Time Management Matrix

The judgement as to whether activities are urgent, important, both or neither, is crucial for good
time management. Most inexperienced people, and people who are not good at time
management, nor in managing their environment, tend to spend most of their time in boxes 1 and
3. Poor time managers tend to prioritise tasks (and thereby their time), according to who shouted
last and loudest (interestingly, loudness normally correlates to seniority, which discourages most
people from questioning and probing the real importance and urgency of tasks received from
bosses and senior managers). Any spare time is typically spent in box 4, which comprises only
aimless and non-productive activities. Most people spend the least time of all in box 2, which is
the most critical area for success, development and proactive self-determination.

Summary overview matrix - (tips on how to manage time and activities in the matrix below
this one)
Urgent not urgent

important 1 - DO NOW 2 - PLAN TO DO

 emergencies, complaints and crisis  planning, preparation,

issues scheduling
 demands from superiors or  research, investigation,
customers designing, testing
 planned tasks or project work now  networking relationship building
due  thinking, creating, modelling,
 meetings and appointments designing
 reports and other submissions  systems and process
 staff issues or needs development
 problem resolution, fire-fighting,  anticipation and prevention

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 fixes  developing change, direction,
strategy

Subject to confirming the importance and Critical to success: planning, strategic

the urgency of these tasks, do these tasks thinking, deciding direction and aims,
now. Prioritise according to their relative etc. Plan time-slots and personal space
urgency. for these tasks.

4 - RESIST AND CEASE

3 - REJECT AND EXPLAIN  'comfort' activities, computer

games, net surfing, excessive
 trivial requests from others cigarette breaks
 apparent emergencies  chat, gossip, social
 ad-hoc interruptions and distractions communications
 misunderstandings appearing as  daydreaming, doodling, over-
complaints long breaks
not  pointless routines or activities  reading nonsense or irrelevant
important  accumulated unresolved trivia material
 boss's whims or tantrums  unnecessary adjusting equipment
etc.
 embellishment and over-
Scrutinise and probe demands. Help production
originators to re-assess. Wherever possible
reject and avoid these tasks sensitively and Habitual 'comforters' not true tasks.
immediately. Non-productive, de-motivational.
Minimise or cease altogether. Plan to
avoid them.

ASSIGNMENT 3:
LEADERSHIP STYLES: Discuss the following leadership styles/image;
i. Behavior and character
ii. Leading and motivating others

ENTERPRISE PROJECT MANAGEMENT

Enterprise Project Management (EPM), in broad terms, is the field of organizational

development that supports organizations in managing integrally and adapting themselves to the
changes of a transformation. Enterprise Project Management is a way of thinking,
communicating and working, supported by an information system, that organizes enterprise's
resources in a direct relationship to the leadership's vision and the mission, strategy, goals and
objectives that move the organization forward. Simply put, EPM provides a 360 degree view of
the organization's collective efforts.

Page 84 of 173
In recent years, with general adoption of (IT) governance practices, Enterprise Project
Management has become more specific: whereas in the 1990s focus was generally on the
management of the single project, in the subsequent decade, the focus lay more on the fact that a
project is likely to be not the only one in the enterprise. The project co-exists with many other
projects in the enterprise, or may be part of one or more programs. It may utilize (human)
resources that are shared among other projects.

In order to facilitate governance, it has become essential to be able to manage, monitor, and
assess the status of all projects (and other assets, of course) in the enterprise, through a set of
(preferably uniform) Enterprise Project Management processes, methods and application
packages. Typically, organizations that adopt an Enterprise Project Management way of
working, might set up a Project Management Office (PMO)/ Enterprise Project Management
Office (EPMO), which is said to be more successful than a traditional PMO in addressing the
priorities of the organization as its scope is enterprise-wide), might select and adopt a Project
Management Methodology like PRINCE2, PMBOK (or create a proprietary method) or follow
the concepts of IPMA Competence Baseline as a foundation for development and certification of
project managers and their knowledge, experience and behaviour. They might even select and
implement a software system to support Enterprise Project Management.

An even more recent evolution in Enterprise Project Management is to not only plan and track
the existing set of projects, but to create a portfolio (per budget size, per calendar year, per
budget year, per business line, et cetera) of existing and future (demand) projects. This is called
Project Portfolio Management. Just like the management of a portfolio of shares, Project
Portfolio Management is the activity of selecting which projects to keep in portfolio (because of
their anticipated value) and which ones to discard (because of their obsoleteness or because they
will not yield the value that was initially calculated). Project Portfolio Management includes the
creation of various scenarios to decide which is the best portfolio (for a certain year, business,
budget, etcetera). Once the contents of the portfolio are agreed upon, it is key to constantly
scrutinize how the individual projects are evolving in terms of quality, cost and schedule.

Implementing an Enterprise Project Management toolset needs to be considered in the light of

the organization's Project Management Maturity and the methodologies, processes and
governance structures that are currently in place. There are many consulting organizations that
can support such implementations.

For effective enterprise management one has to evaluate the goals by considering the following
steps; identification of goals, comparison of actual versus planned, causes of deviation and
adjustments. Efficiency of resource utilization must also be considered. Enterprise productivity,
degree of utilization, waste management, and recycling feasibility must all be utilized.
MANAGING THE BUSINESS FINANCES
Accounting: GL, AP, AR, and beyond.

Workday Financial Management gives you the tools to achieve the highest levels of business
performance and financial excellence.

Page 85 of 173
  Get immediate visibility into financial performance with real-time, comprehensive
financial and operational reports
 Process transactions quicker and more accurately without compromising control
 Accommodate multi-entity, multi-book, and multi-currency requirements for global
organizations
 Adapt and accommodate new business and regulatory requirements as they arise without
additional customizations or technology investments
 Ensure proper security and support compliance efforts with embedded controls and an
always-on audit trail

Manage all your business assets.

Workday combines the traditionally separate domains of fixed assets and inventory with the
ability to manage and account for all your business assets – from high-value, low-cost assets like
laptops and mobile phones to intangible, high-value assets like rights and licenses. And it all
happens in a single, unified system.

 Manage your asset roster, depreciation, and lifecycle accounting

 Define, track, and account for both tangible and intangible assets
 Track low-cost and zero-cost items that have high value or liability (e.g., mobile devices
or security badges)
 Assign custody and responsibility of items to workers to prevent cost leakage and
security risks due to worker turnover
 Account for business assets according to accounting rules and track according to business
use

Controls: adhere, audit, adapt.

Workday eliminates the need for bolt-on governance, risk, and compliance (GRC) systems with
built-in controls at the transaction level that ensure proper security, separation of duties,
transparent business processes, and comprehensive auditing.

 Configure and monitor business processes and workflows

 Adapt business processes whenever changes are needed without having to reimplement
your financial system
 Report on transactions and get full audit reports on any and every transaction processed
in the system
 Configure security access policies and ensure separation of duties
 Manage all your business controls centrally, while allowing for variations for local
regions or specific countries

ENTERPRISE PROJECT MANAGEMENT

Page 86 of 173
Enterprise Project Management (EPM), in broad terms, is the field of organizational
development that supports organizations in managing integrally and adapting themselves to the
changes of a transformation. Enterprise Project Management is a way of thinking,
communicating and working, supported by an information system, that organizes enterprise's
resources in a direct relationship to the leadership's vision and the mission, strategy, goals and
objectives that move the organization forward. Simply put, EPM provides a 360 degree view of
the organization's collective efforts.

In recent years, with general adoption of (IT) governance practices, Enterprise Project
Management has become more specific: whereas in the 1990s focus was generally on the
management of the single project, in the subsequent decade, the focus lay more on the fact that a
project is likely to be not the only one in the enterprise. The project co-exists with many other
projects in the enterprise, or may be part of one or more programs. It may utilize (human)
resources that are shared among other projects.

In order to facilitate governance, it has become essential to be able to manage, monitor, and
assess the status of all projects (and other assets, of course) in the enterprise, through a set of
(preferably uniform) Enterprise Project Management processes, methods and application
packages. Typically, organizations that adopt an Enterprise Project Management way of
working, might set up a Project Management Office (PMO)/ Enterprise Project Management
Office (EPMO), which is said to be more successful than a traditional PMO in addressing the
priorities of the organization as its scope is enterprise-wide), might select and adopt a Project
Management Methodology like PRINCE2, PMBOK (or create a proprietary method) or follow
the concepts of IPMA Competence Baseline as a foundation for development and certification of
project managers and their knowledge, experience and behaviour. They might even select and
implement a software system to support Enterprise Project Management.

An even more recent evolution in Enterprise Project Management is to not only plan and track
the existing set of projects, but to create a portfolio (per budget size, per calendar year, per
budget year, per business line, et cetera) of existing and future (demand) projects. This is called
Project Portfolio Management. Just like the management of a portfolio of shares, Project
Portfolio Management is the activity of selecting which projects to keep in portfolio (because of
their anticipated value) and which ones to discard (because of their obsoleteness or because they
will not yield the value that was initially calculated). Project Portfolio Management includes the
creation of various scenarios to decide which is the best portfolio (for a certain year, business,
budget, etcetera). Once the contents of the portfolio are agreed upon, it is key to constantly
scrutinize how the individual projects are evolving in terms of quality, cost and schedule.

Implementing an Enterprise Project Management toolset needs to be considered in the light of

the organization's Project Management Maturity and the methodologies, processes and
governance structures that are currently in place. There are many consulting organizations that
can support such implementations.

Managing the Enterprise on Limited Resources.

Page 87 of 173
We've all heard the mantra: Do more with less. In the current economy, colleges and universities
are continually being asked to be more productive and effective with ever-shrinking resources. A
key to accomplishing that is to have a solid information system - an intergrated Enterprise
Resource Planning (ERP) system that can help them toward that goal in numerous ways.

Datatel, Jenzabar, Oracle, SunGard HE, and other vendors offer solutions that help institutions of
all sizes get control of the heart and soul of their operations: their data. The new generation of
ERP systems often include Business Intelligence (BI) capabilities that enable administrators to
consider "what if" scenarios as they plan budgets, allocate resources, and more.

Many institutions are also considering the relatively new option of hosted ERP, where the nuts
and bolts of the system reside offsite. This can result in considerable cost savings to the school as
the budget line items of equipment and maintenance costs are largely eliminated. At Carl
Sandburg College (Ill.), for example, Datatel's Colleague ERP helps the school realize real dollar
savings. According to CIO and Vice President of Administrative Services Samuel Sudhakar, the
school annually saves about $100,000 in hardware costs, $175,000 on programming charges, and
about $20,000 from automated communications to students and paperless purchase orders,
requisitions, and payroll.

Advertisement
It allows you to offer more services with the people you have. Often, you can increase both
accessibility and business intelligence with your existing staff numbers.

Smaller schools often find themselves with greater challenges than their larger counterparts, but
they can still get control of the enterprise without breaking the bank.

ERM also stands for enterprise relationship management.

1) ERM (enterprise resource management) describes software that lets an enterprise manage user
access to its network resources efficiently. ERM software generally lets a user sign on to
different enterprise systems and applications using the same password. ERM software makes it
easy for the enterprise to control and keep track of which systems and resources each user has
access to, and provides consistent standards for creating and changing passwords. One system
administrator can usually manage user access to all platforms - UNIX, mainframe, Windows NT,
and so forth - and to the applications on these platforms that require controlled access.

2) ERM (enterprise resource management) also describes software that manages all of a
company's assets and resources, including such basic applications as general ledger, accounts
payable and receivable, as well as manufacturing, inventory, and human resources.

MANAGING THE BUSINESS FINANCES

When planning for business finances, cash flows, budgeting and performance reports must be
critically looked into.

Page 88 of 173
Accounting: GL, AP, AR, and beyond.

Workday Financial Management gives you the tools to achieve the highest levels of business
performance and financial excellence.

 Get immediate visibility into financial performance with real-time, comprehensive

financial and operational reports
 Process transactions quicker and more accurately without compromising control
 Accommodate multi-entity, multi-book, and multi-currency requirements for global
organizations
 Adapt and accommodate new business and regulatory requirements as they arise without
additional customizations or technology investments
 Ensure proper security and support compliance efforts with embedded controls and an
always-on audit trail

Manage all your business assets.

Workday combines the traditionally separate domains of fixed assets and inventory with the
ability to manage and account for all your business assets – from high-value, low-cost assets like
laptops and mobile phones to intangible, high-value assets like rights and licenses. And it all
happens in a single, unified system.

 Manage your asset roster, depreciation, and lifecycle accounting

 Define, track, and account for both tangible and intangible assets
 Track low-cost and zero-cost items that have high value or liability (e.g., mobile devices
or security badges)
 Assign custody and responsibility of items to workers to prevent cost leakage and
security risks due to worker turnover
 Account for business assets according to accounting rules and track according to business
use

Controls: adhere, audit, adapt.

Workday eliminates the need for bolt-on governance, risk, and compliance (GRC) systems with
built-in controls at the transaction level that ensure proper security, separation of duties,
transparent business processes, and comprehensive auditing.

 Configure and monitor business processes and workflows

 Adapt business processes whenever changes are needed without having to re-implement
your financial system
 Report on transactions and get full audit reports on any and every transaction processed
in the system
 Configure security access policies and ensure separation of duties
 Manage all your business controls centrally, while allowing for variations for local
regions or specific countries

Page 89 of 173
PRODUCTION MANAGEMENT
Alternate title: operations management

Production management, also called operations management, planning and control of industrial

processes to ensure that they move smoothly at the required level. Techniques of production
management are employed in service as well as in manufacturing industries. It is a responsibility
similar in level and scope to other specialties such as marketing or human resource and financial
management. In manufacturing operations, production management includes responsibility for
product and process design, planning and control issues involving capacity and quality, and
organization and supervision of the workforce.

The following are the key areas for a successful production management;

i. Operation schedules; materials requirements forecasts & stock inventory and stock levels.
ii. Quality control
iii. Waste control
iv. Maintenance of production and support machines

The “five M’s”

Production management’s responsibilities are summarized by the “five M’s”: men, machines,
methods, materials, and money. “Men” refers to the human element in operating systems. Since
the vast majority of manufacturing personnel work in the physical production of goods, “people
management” is one of the production manager’s most important responsibilities.

The production manager must also choose the machines and methods of the company, first
selecting the equipment and technology to be used in the manufacture of the product or service
and then planning and controlling the methods and procedures for their use. The flexibility of the
production process and the ability of workers to adapt to equipment and schedules are important
issues in this phase of production management.

The production manager’s responsibility for materials includes the management of flow
processes—both physical (raw materials) and information (paperwork). The smoothness of
resource movement and data flow is determined largely by the fundamental choices made in the
design of the product and in the process to be used.

The manager’s concern for money is explained by the importance of financing and asset
utilization to most manufacturing organizations. A manager who allows excessive inventories to
build up or who achieves level production and steady operation by sacrificing good customer
service and timely delivery runs the risk that overinvestment or high current costs will wipe out
any temporary competitive advantage that might have been obtained.

Planning and control

Although the five M’s capture the essence of the major tasks of production management, control
summarizes its single most important issue. The production manager must plan and control the

Page 90 of 173
process of production so that it moves smoothly at the required level of output while meeting
cost and quality objectives. Process control has two purposes: first, to ensure that operations are
performed according to plan, and second, to continuously monitor and evaluate the production
plan to see if modifications can be devised to better meet cost, quality, delivery, flexibility, or
other objectives. For example, when demand for a product is high enough to justify continuous
production, the production level might need to be adjusted from time to time to address
fluctuating demand or changes in a company’s market share. This is called the “production-
smoothing” problem. When more than one product is involved, complex industrial engineering
or operations research procedures are required to analyze the many factors that impinge on the
problem.

Inventory control is another important phase of production management. Inventories include raw
materials, component parts, work in process, finished goods, packing and packaging materials,
and general supplies. Although the effective use of financial resources is generally regarded as
beyond the responsibility of production management, many manufacturing firms with large
inventories (some accounting for more than 50 percent of total assets) usually hold production
managers responsible for inventories. Successful inventory management, which involves the
solution of the problem of which items to carry in inventory in various locations, is critical to a
company’s competitive success. Not carrying an item can result in delays in getting needed parts
or supplies, but carrying every item at every location can tie up huge amounts of capital and
result in an accumulation of obsolete, unusable stock. Managers generally rely on mathematical
models and computer systems developed by industrial engineers and operations researchers to
handle the problems of inventory control.

To control labour costs, managers must first measure the amount and type of work required to
produce a product and then specify well-designed, efficient methods for accomplishing the
necessary manufacturing tasks. The concepts of work measurement and time study introduced by
Taylor and the Gilbreths, as well as incentive systems to motivate and reward high levels of
worker output, are important tools in this area of management. In new operations particularly, it
is important to anticipate human resource requirements and to translate them into recruiting and
training programs so that a nucleus of appropriately skilled operators is available as production
machinery and equipment are installed. Specialized groups responsible for support activities
(such as equipment maintenance, plant services and production scheduling, and control
activities) also need to be hired, trained, and properly equipped. This type of careful personnel
planning reduces the chance that expensive capital equipment will stand idle and that effort,
time, and materials will be wasted during start-up and regular operations.

The effective use and control of materials often involves investigations of the causes of scrap and
waste; this, in turn, can lead to alternative materials and handling methods to improve the
production process. The effective control of machinery and equipment depends on each
machine’s suitability to its specific task, the degree of its utilization, the extent to which it is kept
in optimum running condition, and the degree to which it can be mechanically or electronically
controlled.

Production-control summary

Page 91 of 173
 processes inventory inspection costs

measuring rate of
output; recording inspecting materials collecting cost
observation recording stock levels
idle time or and parts data
downtime

analyzing demand for

computing costs
comparing progress stocks in different estimating process
analysis in relation to
with the plan uses and at different capabilities
estimates
times

issuing production initiating full

corrective adjusting selling
expediting and procurement inspection; adjusting
action price of product
orders processes

estimating reassessing evaluating

drawing up
production capacity specifications; production
evaluation replenishment policies
and maintenance improving processes economics;
and inventory systems
schedules and procedures improving data

MANAGEMENT OF HUMAN RESOURCES

It involves the following;

 Interviews and recruitment

 Staff development programmes
 Human relations and communication
 Good working relations

The Interview Process: Selecting the "Right" Person

How do you select the right person for your business? There is no perfect answer, but the
interview process can be a tremendous help if you use it effectively. In other words, you must
have completed all of the other steps in the hiring process in order to get the most out of the
interview process.

Interviewing candidates for a position within your company is one of the final steps in the hiring
process. Before you get to this step, you want to make sure that you've completed all of the
preceding steps since each of these steps will have a direct impact on how effective the interview
process will be. Below is a list of the steps involved in the hiring process. Note that after you
have completed the interviewing process, there are still two additional key steps that you need to
complete. In order to achieve the best hiring results possible, just remember that all of the steps
are important.

Page 92 of 173
In order, the key steps to finding the right person to fill a position in your company include:

 Determining your need to hire a new employee. Are you properly utilizing the
skills and talents of your current employees? Do you know what needs to be done?
Can your business growth support a new employee?
 Conducting a thorough job analysis. What are the job's essential functions and key
performance criteria?
 Writing a job description and job specification for the position based on the job
analysis.
 Determining the salary for the position, based on internal and external equity. Is
the salary comparable and proportional with the salaries and responsibilities of other
positions inside your company as well as similar positions out in the marketplace?
 Deciding where and how to find qualified applicants. What are the recruitment
techniques to be used? What is the time frame for conducting your search?
Remember, advertising is not the only, or necessarily the best, way to recruit.
 Collecting and reviewing a fair amount of applications and resumes and then
selecting the most qualified candidates for further consideration.
 Interviewing the most qualified candidates for the position, based on the job's
description and specification.
 Checking references.
 Hiring the best person for the job.

Hopefully, after reviewing all of the resumes, you will be able to pick and choose a select
number of qualified applicants to be interviewed. (If not, you may want to expand your time
frame and re-write any ad copy and/or look at another recruitment technique)

Now that you know where the interview process fits into the hiring process, let's take a look at
the "do's" and "don'ts" of conducting a Successful interview.

Conducting the Successful Interview - What to DO

1.  Prepare in Advance for the Interview

 Know what you want in a candidate before you begin the interview. Review the
job specifications and requirements that have been prepared.
 Know the job and its responsibilities. Review the job description.
 Prepare a list of standard questions concerning the candidate's skills, abilities and
past work performance that you want him/her to answer.
 Prepare a list of prioritized and measurable criteria, either in the form of a
worksheet or other method, for analyzing and comparing the candidates.
 Review the candidate's resume prior to the interview.
 Set specific appointment times and reasonable time limits.
 Be prepared to justify the use of any required employment test. Typically, the
most legally defensible tests are those that involve a "piece of the job."

Page 93 of 173
2.  Collect Pertinent Information During the Interview

 Since past behavior predicts future behavior, look for the candidate's behavior
"patterns" as you collect information. For example, has the candidate enjoyed "big
picture" work or detailed analysis more? Is he/she more of a generalist or more of a
specialist? Oftentimes, by listening to how the candidate responds to your questions
about previous jobs, you will be able to get a very good idea of what their behavior
will be like in the future.
 Try not to offer too much detailed information up front so that the candidate
will be able to formulate answers that exactly fits your company's needs. Don't
put the right words in his/her mouth! Remember, the candidate (hopefully) wants the
job and will be looking to say the right thing to impress you.
 Ask questions that focus on the candidate's past performances. For example, if
the job, such as an office manager, demands an individual who is well-organized and
handles paperwork easily, you may want to ask, "How do you keep track of your own
schedules and desk work in your current position?"
 Ask specific, structured questions in regards to specific problems that the job
holder may face. Focus on past behavior and the results of the candidate's actions in
a particular situation. For example: "As the customer service representative, you may
encounter a few unhappy campers who will yell and scream at you over the telephone
or in person. Have you had any experience dealing with difficult customers? Who
was the most difficult customer you had to deal with? What was the situation? How
did you resolve the problem?"
 Notice how well the candidate listens and responds to the questions asked.
 Note the candidate's choice of words and non-verbal behavior. Are they
answering your questions clearly?
 Listen to the questions the candidate asks. Clarify the reasons why the questions
are being asked. Notice which questions he/she asks first as they may be his/her
primary concerns.
 Take detailed hand-written notes concerning job related topics that will help you
distinguish the candidates from one another (especially if you will be conducting
several interviews). Help yourself remember each candidate and each interview
clearly.
 Record information pertaining to the set criteria that will help in the evaluation
of candidates.
 Organize and analyze the information immediately after the interview when
memory is fresh. Don't try to remember everything, it's impossible. One idea is to
"rate" each candidate on each of the criteria immediately following the interview.

3.  Look and Act Professionally During the Interview

 Dress appropriately.
 Avoid appearing bored and fatigued.
 Set a businesslike atmosphere.

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  Structure the interview and inform the candidate of the structure.Let the
candidate know you will be focusing on past results and that you will be taking a lot
of notes.
 Provide information on the company and the job to each candidate.

4.  Treat All Candidates Fairly

 Use your list of standard questions during each interview so that you treat the
applicants the same and so that you can compare apples to apples.
 Refer to the criteria for analyzing candidates. Ask questions in regards to the job
criteria.
 Keep all questions job-related.
 Do not ask discriminating questions.
 Show a genuine interest in every candidate you interview.
 If possible, have at least one other person meet and/or interview candidates who
are "finalists." They should also "rate" the candidates on each of the criteria;
ultimately, all interviewers should compare their "ratings" and discuss any
discrepancies. Having more than one interviewer helps control for personal biases.

5.  Be Courteous and Respectful

 Conduct the interview in a private place away from distractions.

 Begin the interview on schedule.
 If possible, conduct the interview without interruptions.
 Allow sufficient time for the interview.
 Appreciate the candidate's accomplishments.
 Do not patronize the candidate.
 Do not argue with the candidate.
 Thank the candidate for his/her time and interest.

6. Facilitate Open Communication

 Immediately attempt to establish a rapport with the candidate by breaking the

ice; for example, ask about their experiences in a particular industry or geographical
location (refer to his/her resume).
 Promote a relaxed environment with free-flowing conversation.
 Do not dominate the discussion by talking too much. Many experts use a 80/20
rule - you talk 20% of the time and the candidate talks 80% of the time.
 Politely probe the candidate for information by asking open-ended questions that
will provide insight into the candidate's values and traits.
 Ask structured questions that will require some thought on the part of the
candidate.
 Listen carefully to the candidate's answers. If they do not provide you with specific
results, probe until they do.

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  Explain the selection process to the candidate. Offer realistic time frames and stick
to your word!

The Successful Interview - What NOT to DO

The following list is comprised of subject matter that is widely regarded as "off-limits" for
discussion in an interview by employment experts. Most of these subjects relate directly to
federal and state employment laws. Legislation covering equal employment opportunity is
extensive and complex. Check not only federal laws, but also your own state's laws and
guidelines. Remember, state laws vary! Consult an attorney for legal advice (before you begin
the search process for a new employee).

In an interview, or on an employment application, do not ask questions...

 ..concerning the age of the candidate. Be careful using the words "over qualified"
with older candidates.
 ..about their arrest record (this is different from convictions - in most states, it is
permissible to ask if the candidate has ever been convicted of a crime).
 ..about race or ethnicity
 ..concerning the candidate's citizenship of the U.S. prior to hiring (It is
permissible to ask "Will you be able to provide proof of eligibility to work in the U.S.
if hired?")
 ..concerning the candidate's ancestry, birthplace or native language (it is
permissible to ask about their ability to speak English or a foreign language if
required for the job).
 ..about religion or religious customs or holidays.
 ..concerning the candidate's height and weight if it does not affect their ability to
perform the job.
 ..concerning the names and addresses of relatives (only those relatives employed
by the organization are permitted).
 ..about whether or not the candidate owns or rents his/her home and who lives
with them. (asking for their address for future contact is acceptable).
 ..concerning the candidate's credit history or financial situation. In some cases,
credit history may be considered job-related, but proceed with extreme caution.
 ..concerning education or training that is not required to perform the job.
 ..concerning their sex or gender. Avoid any language or behavior that may be found
inappropriate by the candidate. It's his/her standard of conduct that must be met.
 ..concerning pregnancy or medical history. Attendance records at a previous
employer may be discussed in most situations as long as you don't refer to illness or
disability.
 ..concerning the candidate's family or marital status or child-care arrangements
(it is permissible to if the candidate will be able to work the required hours for the
job).
 ..concerning the candidate's membership in a non-professional organization or
club that is not related to the job.

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  ..concerning physical or mental disabilities (asking whether the candidate can
perform the essential job duties is permitted.) The ADA allows you to ask the
applicant to describe or demonstrate how they would perform an essential function (s)
when certain specific conditions are met. Check the law or consult with an attorney
before moving forward.

Remember--When in doubt, ask yourself if the question is job-related; if not, don't ask!

MARKETING

Marketing is the process of communicating the value of a product or service to customers, for
the purpose of selling that product or service.

Marketing can be looked at as an organizational function and a set of processes for creating,
delivering and communicating value to customers, and customer relationship management that
also benefits the organization. Marketing is the science of choosing target markets through
market analysis and market segmentation, as well as understanding consumer behavior and
providing superior customer value. From a societal point of view, marketing is the link between
a society's material requirements and its economic patterns of response. Marketing satisfies these
needs and wants through exchange processes and building long term relationships.
Customer orientation

Constructive criticism helps marketers adapt offerings to meet changing customer needs.

A firm in the market economy survives by producing goods that persons are willing and able to
buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even
existence as a going concern. Many companies today have a customer focus (or market
orientation). This implies that the company focuses its activities and products on consumer
demands. Generally, there are three ways of doing this: the customer-driven approach, the
market change identification approach and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing
decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a
market offering, including the nature of the product itself, is driven by the needs of potential
consumers. The starting point is always the consumer. The rationale for this approach is that
there is no reason to spend R&D (research and development) funds developing products that

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people will not buy. History attests to many products that were commercial failures in spite of
being technological breakthroughs.

A formal approach to this customer-focused marketing is known as SIVA (Solution, Information,

Value, Access). This system is basically the four Ps renamed and reworded to provide a
customer focus. The SIVA Model provides a demand/customer-centric alternative to the well-
known 4Ps supply side model (product, price, placement, promotion) of marketing management.

Product → Solution

Promotion → Information

Price → Value

Place (Distribution) → Access

If any of the 4Ps were problematic or were not in the marketing factor of the business, the
business could be in trouble and so other companies may appear in the surroundings of the
company, so the consumer demand on its products will decrease. However, in recent years
service marketing has widened the domains to be considered, contributing to the 7P's of
marketing in total. The other 3P's of service marketing are: process, physical environment and
people.

Some consider there to be a fifth "P": positioning. SeePositioning (marketing).

Some qualifications or caveats for customer focus exist. They do not invalidate or contradict the
principle of customer focus; rather, they simply add extra dimensions of awareness and caution
to it.

The work of Christensen and colleagues on disruptive technology has produced a theoretical
framework that explains the failure of firms not because they were technologically inept (often
quite the opposite), but because the value networks in which they profitably operated included
customers who could not value a disruptive innovation at the time and capability state of its
emergence and thus actively dissuaded the firms from developing it. The lessons drawn from this
work include:

 Taking customer focus with a grain of salt, treating it as only a subset of one's corporate
strategy rather than the sole driving factor. This means looking beyond current-state
customer focus to predict what customers will be demanding some years in the future,
even if they themselves discount the prediction.
 Pursuing new markets (thus new value networks) when they are still in a commercially
inferior or unattractive state, simply because their potential to grow and intersect with
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 established markets and value networks looks like a likely bet. This may involve buying
stakes in the stock of smaller firms, acquiring them outright, or incubating small,
financially distinct units within one's organization to compete against them.

Other caveats of customer focus are:

 The extent to which what customers say they want does not match their purchasing
decisions. Thus surveys of customers might claim that 70% of a restaurant's customers
want healthier choices on the menu, but only 10% of them actually buy the new items
once they are offered. This might be acceptable except for the extent to which those items
are money-losing propositions for the business, bleeding red ink. A lesson from this type
of situation is to be smarter about the true test validity of instruments like surveys. A
corollary argument is that "truly understanding customers sometimes means
understanding them better than they understand themselves." Thus one could argue that
the principle of customer focus, or being close to the customers, is not violated here—just
expanded upon.
 The extent to which customers are currently ignorant of what one might argue they
should want—which is dicey because whether it can be acted upon affordably depends on
whether or how soon the customers will learn, or be convinced, otherwise. IT hardware
and software capabilities and automobile features are examples. Customers who in 1997
said that they would not place any value on internet browsing capability on a mobile
phone, or 6% better fuel efficiency in their vehicle, might say something different today,
because the value proposition of those opportunities has changed.

Organizational orientation

In this sense, a firm's marketing department is often seen as of prime importance within the
functional level of an organization. Information from an organization's marketing department
would be used to guide the actions of other departments within the firm. As an example, a
marketing department could ascertain (via marketing research) that consumers desired a new
type of product, or a new usage for an existing product. With this in mind, the marketing
department would inform the R&D (research and development) department to create a prototype
of a product or service based on the consumers' new desires.

The production department would then start to manufacture the product, while the marketing
department would focus on the promotion, distribution, pricing, etc. of the product. Additionally,
a firm's finance department would be consulted, with respect to securing appropriate funding for
the development, production and promotion of the product. Inter-departmental conflicts may
occur, should a firm adhere to the marketing orientation. Production may oppose the installation,
support and servicing of new capital stock, which may be needed to manufacture a new product.
Finance may oppose the required capital expenditure, since it could undermine a healthy cash
flow for the organization.

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Herd behavior

Herd behavior in marketing is used to explain the dependencies of customers' mutual behavior.
The Economist reported a recent conference in Rome on the subject of the simulation of adaptive
human behavior. It shared mechanisms to increase impulse buying and get people "to buy more
by playing on the herd instinct." The basic idea is that people will buy more of products that are
seen to be popular, and several feedback mechanisms to get product popularity information to
consumers are mentioned, including smart card technology and the use of Radio Frequency
Identification Tag technology. A "swarm-moves" model was introduced by a Florida Institute of
Technology researcher, which is appealing to supermarkets because it can "increase sales
without the need to give people discounts." Other recent studies on the "power of social
influence" include an "artificial music market in which some 19,000 people downloaded
previously unknown songs" (Columbia University, New York); a Japanese chain of convenience
stores which orders its products based on "sales data from department stores and research
companies;" a Massachusetts company exploiting knowledge of social networking to improve
sales; and online retailers such as Amazon.com who are increasingly informing customers about
which products are popular with like-minded customers.
Further orientations

 An emerging area of study and practice concerns internal marketing, or how employees
are trained and managed to deliver the brand in a way that positively impacts the
acquisition and retention of customers, see also employer branding.
 Diffusion of innovations research explores how and why people adopt new products,
services, and ideas.
 With consumers' eroding attention span and willingness to give time to advertising
messages, marketers are turning to forms of permission marketing such as branded
content, custom media and reality marketing.

PUBLIC RELATIONS

What is Public Relations?

“Public relations is a strategic communication process that builds mutually beneficial

relationships between organizations and their publics.”

Simple and straightforward, this definition focuses on the basic concept of public relations — as
a communication process, one that is strategic in nature and emphasizing “mutually beneficial
relationships.”

“Process” is preferable to “management function,” which can evoke ideas of control and top-
down, one-way communications.

“Relationships” relates to public relations’ role in helping to bring together organizations and
individuals with their key stakeholders.

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“Publics” is preferable to “stakeholders,” as the former relates to the very “public” nature of
public relations, whereas “stakeholders” has connotations of publicly-traded companies. 

As a management function, public relations also encompasses the following:

 Anticipating, analyzing and interpreting public opinion, attitudes and issues that might
impact, for good or ill, the operations and plans of the organization.
 Counseling management at all levels in the organization with regard to policy decisions,
courses of action and communication, taking into account their public ramifications and
the organization’s social or citizenship responsibilities.
 Researching, conducting and evaluating, on a continuing basis, programs of action and
communication to achieve the informed public understanding necessary to the success of
an organization’s aims. These may include marketing; financial; fund raising; employee,
community or government relations; and other programs.
 Planning and implementing the organization’s efforts to influence or change public
policy. Setting objectives, planning, budgeting, recruiting and training staff, developing
facilities — in short, managing the resources needed to perform all of the above.

Public relations (PR) is the practice of managing the spread of information between an
individual or an organization (such as a business, government agency, or a nonprofit
organization) and the public.

Tactics

Public relations professionals present the face of an organization or individual, usually to

articulate its objectives and official views on issues of relevance, primarily to the media. Public
relations contributes to the way an organization is perceived by influencing the media and
maintaining relationships with stakeholders. According to Dr. Jacquie L’Etang from Queen
Margaret University, public relations professionals can be viewed as "discourse workers
specializing in communication and the presentation of argument and employing rhetorical
strategies to achieve managerial aims."[20]

Specific public relations disciplines include:

 Financial public relations – communicating financial results and business strategy

 Consumer/lifestyle public relations – gaining publicity for a particular product or service
 Crisis communication – responding in a crisis
 Internal communications – communicating within the company itself
 Government relations – engaging government departments to influence public policy
 Food-centric relations – communicating specific information centered on foods,
beverages and wine.
 Media Relations – a public relations function that involves building and maintaining
close relationships with the news media so that they can sell and promote a business.

Building and managing relationships with those who influence an organization or individual’s
audiences has a central role in doing public relations. After a public relations practitioner has

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been working in the field, they accumulate a list of relationships that become an asset, especially
for those in media relations.

Audience targeting

A fundamental technique used in public relations is to identify the target audience and to tailor
messages to be relevant to each audience.[23] Sometimes the interests of differing audiences and
stakeholders common to a public relations effort necessitate the creation of several distinct but
complementary messages. These messages however should be relevant to each other, thus
creating a consistency to the overall message and theme. Audience targeting tactics are important
for public relations practitioners because they face all kinds of problems: low visibility, lack of
public understanding, opposition from critics and insufficient support from funding sources.[24]

On the other hand, stakeholder theory identifies people who have a stake in a given institution or
issue. All audiences are stakeholders (or presumptive stakeholders), but not all stakeholders are
audiences. For example, if a charity commissions a public relations agency to create an
advertising campaign to raise money to find a cure for a disease, the charity and the people with
the disease are stakeholders, but the audience is anyone who is likely to donate money. Public
relations experts possess deep skills in media relations, market positioning and branding. They
are powerful agents that help clients deliver clear, unambiguous information to a target audience
that matters to them.

Ethics

Public Relations professionals both serve the public's interest and private interests of businesses,
associations, non-profit organizations and governments. This dual obligation gave rise to heated
debates among scholars of the discipline and practitioners over its fundamental values. This
conflict represents the main ethical predicament of public relations

Information management

Information management (IM) concerns a cycle of organisational activity: the acquisition of

information from one or more sources, the custodianship and the distribution of that information
to those who need it, and its ultimate disposition through archiving or deletion. This cycle of
organisational involvement with information involves a variety of stakeholders: for example
those who are responsible for assuring the quality, accessibility and utility of acquired
information, those who are responsible for its safe storage and disposal, and those who need it
for decision making. Stakeholders might have rights to originate, change, distribute or delete
information according to organisational information management policies. Information
management embraces all the generic concepts of management, including: planning, organizing,
structuring, processing, controlling, evaluation and reporting of information activities, all of
which is needed in order to meet the needs of those with organisational roles or functions that
depend on information. Information management is closely related to, and overlaps, the
management of data, systems, technology, processes and – where the availability of information
is critical to organisational success – strategy. This broad view of the realm of information
management contrasts with the earlier, more traditional view, that the life cycle of managing

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information is an operational matter that requires specific procedures, organisational capabilities
and standards that deal with information as a product or a service.

Positioning information management in the bigger picture

In the transitional period leading up to the strategic view of information management,

Venkatraman (a strong advocate of this process of transition and transformation,[5] proffered a
simple arrangement of ideas that succinctly brought data management, information management
and knowledge management together (see the figure). He argued that:

 Data that is maintained in IT infrastructure has to be interpreted in order to render

information.
 The information in our information systems has to be understood in order to emerge as
knowledge.
 Knowledge allows managers to take effective decisions.
 Effective decisions have to lead to appropriate actions.
 Appropriate actions are expected to deliver meaningful results.

This is often referred to as the DIKAR model: Data, Information, Knowledge, Action and Result,
it gives a strong clue as to the layers involved in aligning technology and organisational
strategies, and it can be seen as a pivotal moment in changing attitudes to information
management. The recognition that information management is an investment that must deliver
meaningful results is important to all modern organisations that depend on information and good
decision making for their success.

Some theoretical background

Behavioural and organisational theories

Clearly, good information management is crucial to the smooth working of organisations, and
although there is no commonly accepted theory of information management per se, behavioural
and organisational theories help. Following the behavioural science theory of management,
mainly developed at Carnegie Mellon University and prominently supported by March and
Simon, most of what goes on in modern organizations is actually information handling and
decision making. One crucial factor in information handling and decision making is an
individuals’ ability to process information and to make decisions under limitations that might
derive from the context: a person's age, the situational complexity, or a lack of requisite quality
in the information that is at hand – all of which is exacerbated by the rapid advance of
technology and the new kinds of system that it enables, especially as the social web emerges as a
phenomenon that business cannot ignore. And yet, well before there was any general recognition
of the importance of information management in organisations, March and Simon argued that
organizations have to be considered as cooperative systems, with a high level of information
processing and a vast need for decision making at various levels. Instead of using the model of
the "economic man", as advocated in classical theory they proposed "administrative man" as an
alternative, based on their argumentation about the cognitive limits of rationality. Additionally
they proposed the notion of satisficing, which entails searching through the available alternatives
until an acceptability threshold is met - another idea that still has currency.

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Economic theory

In addition to the organisational factors mentioned by March and Simon, there are other issues
that stem from economic and environmental dynamics. There is the cost of collecting and
evaluating the information needed to take a decision, including the time and effort required. The
transaction cost associated with information processes can be high. In particular, established
organizational rules and procedures can prevent the taking of the most appropriate decision,
leading to sub-optimum outcomes . This is an issue that has been presented as a major problem
with bureaucratic organizations that lose the economies of strategic change because of
entrenched attitudes.

Strategic Information Management

Background

According to the Carnegie Mellon School an organization's ability to process information is at

the core of organizational and managerial competency, and an organization's strategies must be
designed to improve information processing capability and as information systems that provide
that capability became formalised and automated, competencies were severely tested at many
levels. It was recognised that organisations needed to be able to learn and adapt in ways that
were never so evident before and academics began to organise and publish definitive works
concerning the strategic management of information, and information systems. Concurrently, the
ideas of business process management and knowledge management although much of the
optimistic early thinking about business process redesign has since been discredited in the
information management literature.

Aligning technology and business strategy with information management

Venkatraman has provided a simple view of the requisite capabilities of an organisation that
wants to manage information well – the DIKAR model (see above). He also worked with others
to understand how technology and business strategies could be appropriately aligned in order to
identify specific capabilities that are needed. This work was paralleled by other writers in the
world of consulting, practice and academia.

A contemporary portfolio model for information

Bytheway has collected and organised basic tools and techniques for information management in
a single volume. At the heart of his view of information management is a portfolio model that
takes account of the surging interest in external sources of information and the need to organise
un-structured information external so as to make it useful

This portfolio model organizes issues of internal and external sourcing and management of
information, that may be either structured or unstructured.

Such an information portfolio as this shows how information can be gathered and usefully
organised, in four stages:

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Stage 1: Taking advantage of public information: recognise and adopt well-structured external
schemes of reference data, such as post codes, weather data, GPS positioning data and travel
timetables, exemplified in the personal computing press.

Stage 2: Tagging the noise on the world wide web: use existing schemes such as post codes and
GPS data or more typically by adding “tags”, or construct a formal ontology that provides
structure. Shirky provides an overview of these two approaches.

Stage 3: Sifting and analysing: in the wider world the generalised ontologies that are under
development extend to hundreds of entities and hundreds of relations between them and provide
the means to elicit meaning from large volumes of data. Structured data in databases works best
when that structure reflects a higher-level information model – an ontology, or an entity-
relationship model.

Stage 4: Structuring and archiving: with the large volume of data available from sources such as
the social web and from the miniature telemetry systems used in personal health management,
new ways to archive and then trawl data for meaningful information. Map-reduce methods,
originating from functional programming, are a more recent way of eliciting information from
large archival datasets that is becoming interesting to regular businesses that have very large data
resources to work with, but it requires advanced multi-processor resources.

The information management knowledge areas:

The IMBOK is based on the argument that there are six areas of required management
competency, two of which (“business process management” and “business information
management”) are very closely related.

 Information technology: The pace of change of technology and the pressure to

constantly acquire the newest technological products can undermine the stability of the
infrastructure that supports systems, and thereby optimisesbusiness processes and
delivers benefits. It is necessary to manage the “supply side” and recognise that
technology is, increasingly, becoming a commodity.

 Information system: While historically information systems were developed in-house,

over the years it has become possible to acquire most of the software systems that an
organisation needs from the software package industry. However, there is still the
potential for competitive advantage from the implementation of new systems ideas that
deliver to the strategic intentions of organisations.

 Business processes and Business information: Information systems are applied to

business processes in order to improve them, and they bring data to the business that
becomes useful as business information. Business process management is still seen as a
relatively new idea because it is not universally adopted, and it has been difficult in many
cases; business information management is even more of a challenge.

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  Business benefit: What are the benefits that we are seeking? It is necessary not only to be
brutally honest about what can be achieved, but also to ensure the active management
and assessment of benefit delivery. Since the emergence and popularisation of the
Balanced scorecard there has been huge interest in business performance management
but not much serious effort was been made to relate business performance management
to the benefits of information technology investments and the introduction of new
information systems until the turn of the millennium.

 Business strategy: Although a long way from the workaday issues of managing
information in organisations, strategy in most organisations simply has to be informed by
information technology and information systems opportunities, whether to address poor
performance or to improve differentiation and competitiveness. Strategic analysis tools
such as the value chain and critical success factor analysis are directly dependent on
proper attention to the information that is (or could be) managed.

The information management processes:

It involves the following; collection, processing, analysis, storage and retrieval.

Even with full capability and competency within the six knowledge areas, it is argued that things
can still go wrong. The problem lies in the migration of ideas and information management value
from one area of competency to another. Summarising what Bytheway explains in some detail
(and supported by selected secondary references):

 Projects: Information technology is without value until it is engineered into information

systems that meet the needs of the business by means of good project management.

 Business change: The best information systems succeed in delivering benefits through
the achievement of change within the business systems, but people do not appreciate
change that makes new demands upon their skills in the ways that new information
systems often do. Contrary to common expectations, there is some evidence that the
public sector has succeeded with information technology induced business change.

 Business operations: With new systems in place, with business processes and business
information improved, and with staff finally ready and able to work with new processes,
then the business can get to work, even when new systems extend far beyond the
boundaries of a single business.

 Performance management: Investments are no longer solely about financial results,

financial success must be balanced with internal efficiency, customer satisfaction, and
with organisational learning and development.

Summary

There are always many ways to see a business, and the information management viewpoint is
only one way. It is important to remember that other areas of business activity will also

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contribute to strategy – it is not only good information management that moves a business
forwards. Corporate governance, human resource management, product development and
marketing will all have an important role to play in strategic ways, and we must not see one
domain of activity alone as the sole source of strategic success. On the other hand, corporate
governance, human resource management, product development and marketing are all dependent
on effective information management, and so in the final analysis our competency to manage
information well, on the broad basis that is offered here, can be said to be predominant.

Operationalising Information Management

Managing requisite change

Organizations are often confronted with many information management challenges and issues at
the operational level, especially when organisational change is engendered. The novelty of new
systems architectures and a lack of experience with new styles of information management
requires a level of organisationalchange management that is notoriously difficult to deliver. As a
result of a general organisational reluctance to change, to enable new forms of information
management, there might be (for example): a shortfall in the requisite resources, a failure to
acknowledge new classes of information and the new procedures that use them, a lack of support
from senior management leading to a loss of strategic vision, and even political manoeuvring
that undermines the operation of the whole organisation. However, the implementation of new
forms of information management should normally lead to operational benefits.

Information, as we know it today, includes both electronic and physical information. The
organizational structure must be capable of managing this information throughout the
information lifecycle regardless of source or format (data, paper documents, electronic
documents, audio, video, etc.) for delivery through multiple channels that may include cell
phones and web interfaces.

According to Wikipedia, Information management (IM) is the collection and management of

information from one or more sources and the distribution of that information to one or more
audiences. This sometimes involves those who have a stake in, or a right to that information.
Management means the organization of and control over the structure, processing and delivery of
information.

PROJECT VIABILITY

What is project viability?

The rationale for the project is set out in the business case which will be expressed in terms of a
set of benefits which contribute towards strategic goal(s). The project framework and planning
should be written to ensure that achievement of those benefits is maximised.

Many things can affect project viability

 Cost overruns. If the project is based on a rate of return on capital invested, then an
increase in project costs can eliminate this.
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  Time overruns. Some projects have to be delivered within a certain time frame to deliver
benefits. Extending time may completely eliminate the benefits.
 Changes to specifications and scope. As projects progress changes to the plan or even the
scope will inevitably be requested. These need to be carefully assessed against the
continued ability to deliver the benefits.
 Quality problems. It may become clear during the project life cycle that the original
quality expectations cannot be met. This can have an impact on the acceptability and
hence the usability of the project's outputs by the end user. Changes to quality must be
assessed against the benefits.
 Change in the business environment. Sometimes organisations have to take a different
strategic path, making the need for the project obsolete. There is little point carrying on
committing resources to a project for which there is no longer a need.

It is the project sponsor's duty to continually assess project viability and if necessary to stop an
unviable project. To determine if a project is viable, the following must be done.

 Feasibility study
 Planning – business plan
 Project implementation
 Project evaluation
 Cost benefit analysis

Keeping the focus right

Project managers and project teams working at the coal face of project delivery often get focused
on deliverables, timelines and budget profiles. This can often lead to compromises being made to
quality which make the project benefits unachievable. Project sponsors should always be focused
on benefits realisation, so should be removed from the everyday decision-making of the project
so they can take an objective view of the project.

Five Steps to Determine Project Feasibility

Is your project feasible?

The best way to find out whether your project is feasible is to complete a Feasibility Study. This
process helps you gain confidence that the solution you need to build can be implemented on
time and under budget. So here’s how to do it in 5 simple steps…

Completing a Feasibility Study

A Feasibility Study needs to be completed as early in the Project Life Cycle as possible. The best
time to complete it is when you have identified a range of different alternative solutions and you
need to know which solution is the most feasible to implement. Here’s how to do it…

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Step 1: Research the Business Drivers

In most cases, your project is being driven by a problem in the business. These problems are
called “business drivers” and you need to have a clear understanding of what they are, as part of
your Feasibility Study.

For instance, the business driver might be that an IT system is outdated and is causing customer
complaints, or that two businesses need to merge because of an acquisition. Regardless of the
business driver, you need to get to the bottom of it so you fully understand the reasons why the
project has been kicked off.

Find out why the business driver is important to the business, and why it’s critical that the project
delivers a solution to it within a specified timeframe. Then find out what the impact will be to the
business, if the project slips.

Step 2: Confirm the Alternative Solutions

Now you have a clear understanding of the business problem that the project addresses, you need
to understand the alternative solutions available.

If it’s an IT system that is outdated, then your alternative solutions might include redeveloping
the existing system, replacing it or merging it with another system.

Only with a clear understanding of the alternative solutions to the business problem, can you
progress with the Feasibility Study.

Step 3: Determine the Feasibility

You now need to identify the feasibility of each solution. The question to ask of each alternative
solution is “can we deliver it on time and under budget?”

To answer this question, you need to use a variety of methods to assess the feasibility of each
solution. Here are some examples of ways you can assess feasibility:

 Research: Perform online research to see if other companies have implemented the same
solutions and how they got on.
 Prototyping: Identify the part of the solution that has the highest risk, and then build a
sample of it to see if it’s possible to create.
 Time-boxing: Complete some of the tasks in your project plan and measure how long it
took vs. planned. If you delivered it on time, then you know that your planning is quite
accurate.

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Step 4: Choose a Preferred Solution

With the feasibility of each alternative solution known, the next step is to select a preferred
solution to be delivered by your project. Choose the solution that; is most feasible to implement,
has the lowest risk, and you have the highest confidence of delivering.

You’ve now chosen a solution to a known business problem, and you have a high degree of
confidence that you can deliver that solution on time and under budget, as part of the project.

Step 5: Reassess at a lower level

It’s now time to take your chosen solution and reassess its feasibility at a lower level. List all of
the tasks that are needed to complete the solution. Then run those tasks by your team to see how
long they think it will take to complete them. Add all of the tasks and timeframes to a project
plan to see if you can do it all within the project deadline. Then ask your team to identify the
highest risk tasks and get them to investigate them further to check that they are achievable. Use
the techniques in Step 3 to give you a very high degree of confidence that it’s practically
achievable. Then document all of the results in a Feasibility Study report.

After completing these 5 steps, get your Feasibility Study approved by your manager so that
everyone in the project team has a high degree of confidence that the project can deliver
successfully.

I am not confident that my project will deliver but can’t get to the bottom of what’s wrong

Use independent external project assurance to help. Bring in someone with significant project
experience either from outside the University or from another school or directorate to review
your project and give you a project health check. Sometimes the project team can be too close to
the project to acknowledge lurking problems. In projects which have significant implications for
the University it is good practice to build these audits in at the beginning, without waiting for a
crisis to occur.

Selecting the right project manager

Selecting the right project manager is essential to the success of your project. It is often true that
project managers are selected on availability rather than skills or knowledge. This is the worst
possible reason for selection.

It is useful to categorise project managers into three types when considering who to pick [source:
The role of the executive project sponsor p67, Robert Butterick 2003].

 Intuitive: This type of manager will have little formal knowledge or training in project
management but uses common sense and acquired good practice in project management.
This type of person has probably managed a number of small projects successfully and
will be a good communicator with well-developed skills in scheduling and organising.
They will use initiative to solve problems and naturally engage with stakeholders.

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  Methodological: This type of manager will have training in formal project management
tools and techniques and will have formal procedures and practices set out to control the
project. This is needed for larger projects where informal methods will not work.
 Judgemental: This type of manager will be highly experienced with formal training in
many tools and techniques of project management and will have highly developed
general management skills and will think strategically about the projects. This type of
manager will always start with the principles of good project management and use those
to apply a range of tools and techniques in flexible and creative ways. They will be
comfortable with highly complex projects and even managing a programme or portfolio
of projects.

A good project manager of a reasonably large and complex project will not only have specific
project management skills but also will have all other skills you would expect to see in a
competent middle to senior manager. Leadership, team building and change management are
vital, as is a high degree of initiative and the ability to communicate with people at all levels in
the organisation. There will be many conflicting demands. This level of manager will also be
able to broker effective compromises without sacrificing the benefits of the project.

Project managers are often selected because of technical ability; this should not in itself be the
reason for choosing a particular individual. Project management skills should always be the first
requirement. The ideal project manager is someone who is willing to put the effort into grasping
the essence of the technicalities without becoming a subject matter expert.

Project Financial Viability

The preparation of reports on the financial viability of a project is imperative for the soundness
of the financial health of an organization. The financial analysis focuses on the financial
viability, stability, and the profitability of the project. Moreover, regular financial analysis
ensures timely changes in the strategies of business for betterment. The Financial Viability report
prepared by us using highly effective tools will help your company streamline its structure
towards optimization and will provide access to comprehensive financial information. We focus
on empowering your management with strategic information on the performance and
profitability of your company. Some of the tools we employ to determine the project viability
are:

 What is the Return on Investment - yearly return calculated on the total investment
needed for the project? For a project to be viable, the Return on Investment must be
greater than the Cost of Investment
 Finding out if the business generates surplus adequate to meet recurring repayment
obligations.
 Determining the Break Even Point - the point of activity where all costs (variable as well
as fixed) are recovered from the sales values. The rule of thumb is that lowering the
break-even point betters the proposition.

Project Feasibility Analysis, Step by Step

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This section describes how to determine if there is sufficient demand from the chosen target
market to support the proposed development, the factors to consider when selecting a site, how
to evaluate the competition and how to assess the financial feasibility of the proposed
undertaking. This information is needed for project planning and design (see Volume 3:
Planning the Project and Volume 4: Designing the Project) and can be used to secure
construction or mortgage financing.

Project feasibility analysis is a multi-step exercise. As the analysis progresses, the developer or
sponsor will gradually acquire more information that will help determine whether or not to
proceed further. The following four  activities may be performed sequentially, although more
often than not, they are done simultaneously:

1. Market analysis;
2. Site selection and analysis;
3. Competitive market analysis; and
4. Financial feasibility analysis.

PRODUCTION MANAGEMENT
Alternate title: operations management

Production management, also called operations management, planning and control of industrial

processes to ensure that they move smoothly at the required level. Techniques of production
management are employed in service as well as in manufacturing industries. It is a responsibility
similar in level and scope to other specialties such as marketing or human resource and financial
management. In manufacturing operations, production management includes responsibility for
product and process design, planning and control issues involving capacity and quality, and
organization and supervision of the workforce.

The following are the key areas for a successful production management;

v. Operation schedules; materials requirements forecasts & stock inventory and stock levels.
vi. Quality control
vii. Waste control
viii. Maintenance of production and support machines

The “five M’s”

Production management’s responsibilities are summarized by the “five M’s”: men, machines,
methods, materials, and money. “Men” refers to the human element in operating systems. Since
the vast majority of manufacturing personnel work in the physical production of goods, “people
management” is one of the production manager’s most important responsibilities.

The production manager must also choose the machines and methods of the company, first
selecting the equipment and technology to be used in the manufacture of the product or service
and then planning and controlling the methods and procedures for their use. The flexibility of the
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production process and the ability of workers to adapt to equipment and schedules are important
issues in this phase of production management.

The production manager’s responsibility for materials includes the management of flow
processes—both physical (raw materials) and information (paperwork). The smoothness of
resource movement and data flow is determined largely by the fundamental choices made in the
design of the product and in the process to be used.

The manager’s concern for money is explained by the importance of financing and asset
utilization to most manufacturing organizations. A manager who allows excessive inventories to
build up or who achieves level production and steady operation by sacrificing good customer
service and timely delivery runs the risk that overinvestment or high current costs will wipe out
any temporary competitive advantage that might have been obtained.

Planning and control

Although the five M’s capture the essence of the major tasks of production management, control
summarizes its single most important issue. The production manager must plan and control the
process of production so that it moves smoothly at the required level of output while meeting
cost and quality objectives. Process control has two purposes: first, to ensure that operations are
performed according to plan, and second, to continuously monitor and evaluate the production
plan to see if modifications can be devised to better meet cost, quality, delivery, flexibility, or
other objectives. For example, when demand for a product is high enough to justify continuous
production, the production level might need to be adjusted from time to time to address
fluctuating demand or changes in a company’s market share. This is called the “production-
smoothing” problem. When more than one product is involved, complex industrial engineering
or operations research procedures are required to analyze the many factors that impinge on the
problem.

Inventory control is another important phase of production management. Inventories include raw
materials, component parts, work in process, finished goods, packing and packaging materials,
and general supplies. Although the effective use of financial resources is generally regarded as
beyond the responsibility of production management, many manufacturing firms with large
inventories (some accounting for more than 50 percent of total assets) usually hold production
managers responsible for inventories. Successful inventory management, which involves the
solution of the problem of which items to carry in inventory in various locations, is critical to a
company’s competitive success. Not carrying an item can result in delays in getting needed parts
or supplies, but carrying every item at every location can tie up huge amounts of capital and
result in an accumulation of obsolete, unusable stock. Managers generally rely on mathematical
models and computer systems developed by industrial engineers and operations researchers to
handle the problems of inventory control.

To control labour costs, managers must first measure the amount and type of work required to
produce a product and then specify well-designed, efficient methods for accomplishing the
necessary manufacturing tasks. The concepts of work measurement and time study introduced by
Taylor and the Gilbreths, as well as incentive systems to motivate and reward high levels of

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worker output, are important tools in this area of management. In new operations particularly, it
is important to anticipate human resource requirements and to translate them into recruiting and
training programs so that a nucleus of appropriately skilled operators is available as production
machinery and equipment are installed. Specialized groups responsible for support activities
(such as equipment maintenance, plant services and production scheduling, and control
activities) also need to be hired, trained, and properly equipped. This type of careful personnel
planning reduces the chance that expensive capital equipment will stand idle and that effort,
time, and materials will be wasted during start-up and regular operations.

The effective use and control of materials often involves investigations of the causes of scrap and
waste; this, in turn, can lead to alternative materials and handling methods to improve the
production process. The effective control of machinery and equipment depends on each
machine’s suitability to its specific task, the degree of its utilization, the extent to which it is kept
in optimum running condition, and the degree to which it can be mechanically or electronically
controlled.

Production-control summary

processes inventory inspection costs

measuring rate of
output; recording inspecting materials collecting cost
observation recording stock levels
idle time or and parts data
downtime

analyzing demand for

computing costs
comparing progress stocks in different estimating process
analysis in relation to
with the plan uses and at different capabilities
estimates
times

issuing production initiating full

corrective adjusting selling
expediting and procurement inspection; adjusting
action price of product
orders processes

estimating reassessing evaluating

drawing up
production capacity specifications; production
evaluation replenishment policies
and maintenance improving processes economics;
and inventory systems
schedules and procedures improving data

MANAGEMENT OF HUMAN RESOURCES

It involves the following;

 Interviews and recruitment

 Staff development programmes
 Human relations and communication

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  Good working relations

The Interview Process: Selecting the "Right" Person

How do you select the right person for your business? There is no perfect answer, but the
interview process can be a tremendous help if you use it effectively. In other words, you must
have completed all of the other steps in the hiring process in order to get the most out of the
interview process.

Interviewing candidates for a position within your company is one of the final steps in the hiring
process. Before you get to this step, you want to make sure that you've completed all of the
preceding steps since each of these steps will have a direct impact on how effective the interview
process will be. Below is a list of the steps involved in the hiring process. Note that after you
have completed the interviewing process, there are still two additional key steps that you need to
complete. In order to achieve the best hiring results possible, just remember that all of the steps
are important.

In order, the key steps to finding the right person to fill a position in your company include:

 Determining your need to hire a new employee. Are you properly utilizing the
skills and talents of your current employees? Do you know what needs to be done?
Can your business growth support a new employee?
 Conducting a thorough job analysis. What are the job's essential functions and key
performance criteria?
 Writing a job description and job specification for the position based on the job
analysis.
 Determining the salary for the position, based on internal and external equity. Is
the salary comparable and proportional with the salaries and responsibilities of other
positions inside your company as well as similar positions out in the marketplace?
 Deciding where and how to find qualified applicants. What are the recruitment
techniques to be used? What is the time frame for conducting your search?
Remember, advertising is not the only, or necessarily the best, way to recruit.
 Collecting and reviewing a fair amount of applications and resumes and then
selecting the most qualified candidates for further consideration.
 Interviewing the most qualified candidates for the position, based on the job's
description and specification.
 Checking references.
 Hiring the best person for the job.

Hopefully, after reviewing all of the resumes, you will be able to pick and choose a select
number of qualified applicants to be interviewed. (If not, you may want to expand your time
frame and re-write any ad copy and/or look at another recruitment technique)

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Now that you know where the interview process fits into the hiring process, let's take a look at
the "do's" and "don'ts" of conducting a Successful interview.

Conducting the Successful Interview - What to DO

1.  Prepare in Advance for the Interview

 Know what you want in a candidate before you begin the interview. Review the
job specifications and requirements that have been prepared.
 Know the job and its responsibilities. Review the job description.
 Prepare a list of standard questions concerning the candidate's skills, abilities and
past work performance that you want him/her to answer.
 Prepare a list of prioritized and measurable criteria, either in the form of a
worksheet or other method, for analyzing and comparing the candidates.
 Review the candidate's resume prior to the interview.
 Set specific appointment times and reasonable time limits.
 Be prepared to justify the use of any required employment test. Typically, the
most legally defensible tests are those that involve a "piece of the job."

2.  Collect Pertinent Information During the Interview

 Since past behavior predicts future behavior, look for the candidate's behavior
"patterns" as you collect information. For example, has the candidate enjoyed "big
picture" work or detailed analysis more? Is he/she more of a generalist or more of a
specialist? Oftentimes, by listening to how the candidate responds to your questions
about previous jobs, you will be able to get a very good idea of what their behavior
will be like in the future.
 Try not to offer too much detailed information up front so that the candidate
will be able to formulate answers that exactly fits your company's needs. Don't
put the right words in his/her mouth! Remember, the candidate (hopefully) wants the
job and will be looking to say the right thing to impress you.
 Ask questions that focus on the candidate's past performances. For example, if
the job, such as an office manager, demands an individual who is well-organized and
handles paperwork easily, you may want to ask, "How do you keep track of your own
schedules and desk work in your current position?"
 Ask specific, structured questions in regards to specific problems that the job
holder may face. Focus on past behavior and the results of the candidate's actions in
a particular situation. For example: "As the customer service representative, you may
encounter a few unhappy campers who will yell and scream at you over the telephone
or in person. Have you had any experience dealing with difficult customers? Who
was the most difficult customer you had to deal with? What was the situation? How
did you resolve the problem?"
 Notice how well the candidate listens and responds to the questions asked.
 Note the candidate's choice of words and non-verbal behavior. Are they
answering your questions clearly?

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  Listen to the questions the candidate asks. Clarify the reasons why the questions
are being asked. Notice which questions he/she asks first as they may be his/her
primary concerns.
 Take detailed hand-written notes concerning job related topics that will help you
distinguish the candidates from one another (especially if you will be conducting
several interviews). Help yourself remember each candidate and each interview
clearly.
 Record information pertaining to the set criteria that will help in the evaluation
of candidates.
 Organize and analyze the information immediately after the interview when
memory is fresh. Don't try to remember everything, it's impossible. One idea is to
"rate" each candidate on each of the criteria immediately following the interview.

3.  Look and Act Professionally During the Interview

 Dress appropriately.
 Avoid appearing bored and fatigued.
 Set a businesslike atmosphere.
 Structure the interview and inform the candidate of the structure.Let the
candidate know you will be focusing on past results and that you will be taking a lot
of notes.
 Provide information on the company and the job to each candidate.

4.  Treat All Candidates Fairly

 Use your list of standard questions during each interview so that you treat the
applicants the same and so that you can compare apples to apples.
 Refer to the criteria for analyzing candidates. Ask questions in regards to the job
criteria.
 Keep all questions job-related.
 Do not ask discriminating questions.
 Show a genuine interest in every candidate you interview.
 If possible, have at least one other person meet and/or interview candidates who
are "finalists." They should also "rate" the candidates on each of the criteria;
ultimately, all interviewers should compare their "ratings" and discuss any
discrepancies. Having more than one interviewer helps control for personal biases.

5.  Be Courteous and Respectful

 Conduct the interview in a private place away from distractions.

 Begin the interview on schedule.
 If possible, conduct the interview without interruptions.
 Allow sufficient time for the interview.
 Appreciate the candidate's accomplishments.
 Do not patronize the candidate.

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  Do not argue with the candidate.
 Thank the candidate for his/her time and interest.

6. Facilitate Open Communication

 Immediately attempt to establish a rapport with the candidate by breaking the

ice; for example, ask about their experiences in a particular industry or geographical
location (refer to his/her resume).
 Promote a relaxed environment with free-flowing conversation.
 Do not dominate the discussion by talking too much. Many experts use a 80/20
rule - you talk 20% of the time and the candidate talks 80% of the time.
 Politely probe the candidate for information by asking open-ended questions that
will provide insight into the candidate's values and traits.
 Ask structured questions that will require some thought on the part of the
candidate.
 Listen carefully to the candidate's answers. If they do not provide you with specific
results, probe until they do.
 Explain the selection process to the candidate. Offer realistic time frames and stick
to your word!

The Successful Interview - What NOT to DO

The following list is comprised of subject matter that is widely regarded as "off-limits" for
discussion in an interview by employment experts. Most of these subjects relate directly to
federal and state employment laws. Legislation covering equal employment opportunity is
extensive and complex. Check not only federal laws, but also your own state's laws and
guidelines. Remember, state laws vary! Consult an attorney for legal advice (before you begin
the search process for a new employee).

In an interview, or on an employment application, do not ask questions...

 ..concerning the age of the candidate. Be careful using the words "over qualified"
with older candidates.
 ..about their arrest record (this is different from convictions - in most states, it is
permissible to ask if the candidate has ever been convicted of a crime).
 ..about race or ethnicity
 ..concerning the candidate's citizenship of the U.S. prior to hiring (It is
permissible to ask "Will you be able to provide proof of eligibility to work in the U.S.
if hired?")
 ..concerning the candidate's ancestry, birthplace or native language (it is
permissible to ask about their ability to speak English or a foreign language if
required for the job).
 ..about religion or religious customs or holidays.
 ..concerning the candidate's height and weight if it does not affect their ability to
perform the job.

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  ..concerning the names and addresses of relatives (only those relatives employed
by the organization are permitted).
 ..about whether or not the candidate owns or rents his/her home and who lives
with them. (asking for their address for future contact is acceptable).
 ..concerning the candidate's credit history or financial situation. In some cases,
credit history may be considered job-related, but proceed with extreme caution.
 ..concerning education or training that is not required to perform the job.
 ..concerning their sex or gender. Avoid any language or behavior that may be found
inappropriate by the candidate. It's his/her standard of conduct that must be met.
 ..concerning pregnancy or medical history. Attendance records at a previous
employer may be discussed in most situations as long as you don't refer to illness or
disability.
 ..concerning the candidate's family or marital status or child-care arrangements
(it is permissible to if the candidate will be able to work the required hours for the
job).
 ..concerning the candidate's membership in a non-professional organization or
club that is not related to the job.
 ..concerning physical or mental disabilities (asking whether the candidate can
perform the essential job duties is permitted.) The ADA allows you to ask the
applicant to describe or demonstrate how they would perform an essential function (s)
when certain specific conditions are met. Check the law or consult with an attorney
before moving forward.

Remember--When in doubt, ask yourself if the question is job-related; if not, don't ask!

MARKETING

Marketing is the process of communicating the value of a product or service to customers, for
the purpose of selling that product or service.

Marketing can be looked at as an organizational function and a set of processes for creating,
delivering and communicating value to customers, and customer relationship management that
also benefits the organization. Marketing is the science of choosing target markets through
market analysis and market segmentation, as well as understanding consumer behavior and
providing superior customer value. From a societal point of view, marketing is the link between
a society's material requirements and its economic patterns of response. Marketing satisfies these
needs and wants through exchange processes and building long term relationships.

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Customer orientation

Constructive criticism helps marketers adapt offerings to meet changing customer needs.

A firm in the market economy survives by producing goods that persons are willing and able to
buy. Consequently, ascertaining consumer demand is vital for a firm's future viability and even
existence as a going concern. Many companies today have a customer focus (or market
orientation). This implies that the company focuses its activities and products on consumer
demands. Generally, there are three ways of doing this: the customer-driven approach, the
market change identification approach and the product innovation approach.

In the consumer-driven approach, consumer wants are the drivers of all strategic marketing
decisions. No strategy is pursued until it passes the test of consumer research. Every aspect of a
market offering, including the nature of the product itself, is driven by the needs of potential
consumers. The starting point is always the consumer. The rationale for this approach is that
there is no reason to spend R&D (research and development) funds developing products that
people will not buy. History attests to many products that were commercial failures in spite of
being technological breakthroughs.

A formal approach to this customer-focused marketing is known as SIVA (Solution, Information,

Value, Access). This system is basically the four Ps renamed and reworded to provide a
customer focus. The SIVA Model provides a demand/customer-centric alternative to the well-
known 4Ps supply side model (product, price, placement, promotion) of marketing management.

Product → Solution

Promotion → Information

Price → Value

Place (Distribution) → Access

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If any of the 4Ps were problematic or were not in the marketing factor of the business, the
business could be in trouble and so other companies may appear in the surroundings of the
company, so the consumer demand on its products will decrease. However, in recent years
service marketing has widened the domains to be considered, contributing to the 7P's of
marketing in total. The other 3P's of service marketing are: process, physical environment and
people.

Some consider there to be a fifth "P": positioning. SeePositioning (marketing).

Some qualifications or caveats for customer focus exist. They do not invalidate or contradict the
principle of customer focus; rather, they simply add extra dimensions of awareness and caution
to it.

The work of Christensen and colleagues on disruptive technology has produced a theoretical
framework that explains the failure of firms not because they were technologically inept (often
quite the opposite), but because the value networks in which they profitably operated included
customers who could not value a disruptive innovation at the time and capability state of its
emergence and thus actively dissuaded the firms from developing it. The lessons drawn from this
work include:

 Taking customer focus with a grain of salt, treating it as only a subset of one's corporate
strategy rather than the sole driving factor. This means looking beyond current-state
customer focus to predict what customers will be demanding some years in the future,
even if they themselves discount the prediction.
 Pursuing new markets (thus new value networks) when they are still in a commercially
inferior or unattractive state, simply because their potential to grow and intersect with
established markets and value networks looks like a likely bet. This may involve buying
stakes in the stock of smaller firms, acquiring them outright, or incubating small,
financially distinct units within one's organization to compete against them.

Other caveats of customer focus are:

 The extent to which what customers say they want does not match their purchasing
decisions. Thus surveys of customers might claim that 70% of a restaurant's customers
want healthier choices on the menu, but only 10% of them actually buy the new items
once they are offered. This might be acceptable except for the extent to which those items
are money-losing propositions for the business, bleeding red ink. A lesson from this type
of situation is to be smarter about the true test validity of instruments like surveys. A
corollary argument is that "truly understanding customers sometimes means
understanding them better than they understand themselves." Thus one could argue that
the principle of customer focus, or being close to the customers, is not violated here—just
expanded upon.
 The extent to which customers are currently ignorant of what one might argue they
should want—which is dicey because whether it can be acted upon affordably depends on
whether or how soon the customers will learn, or be convinced, otherwise. IT hardware
and software capabilities and automobile features are examples. Customers who in 1997

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 said that they would not place any value on internet browsing capability on a mobile
phone, or 6% better fuel efficiency in their vehicle, might say something different today,
because the value proposition of those opportunities has changed.

Organizational orientation

In this sense, a firm's marketing department is often seen as of prime importance within the
functional level of an organization. Information from an organization's marketing department
would be used to guide the actions of other departments within the firm. As an example, a
marketing department could ascertain (via marketing research) that consumers desired a new
type of product, or a new usage for an existing product. With this in mind, the marketing
department would inform the R&D (research and development) department to create a prototype
of a product or service based on the consumers' new desires.

The production department would then start to manufacture the product, while the marketing
department would focus on the promotion, distribution, pricing, etc. of the product. Additionally,
a firm's finance department would be consulted, with respect to securing appropriate funding for
the development, production and promotion of the product. Inter-departmental conflicts may
occur, should a firm adhere to the marketing orientation. Production may oppose the installation,
support and servicing of new capital stock, which may be needed to manufacture a new product.
Finance may oppose the required capital expenditure, since it could undermine a healthy cash
flow for the organization.
Herd behavior

Herd behavior in marketing is used to explain the dependencies of customers' mutual behavior.
The Economist reported a recent conference in Rome on the subject of the simulation of adaptive
human behavior. It shared mechanisms to increase impulse buying and get people "to buy more
by playing on the herd instinct." The basic idea is that people will buy more of products that are
seen to be popular, and several feedback mechanisms to get product popularity information to
consumers are mentioned, including smart card technology and the use of Radio Frequency
Identification Tag technology. A "swarm-moves" model was introduced by a Florida Institute of
Technology researcher, which is appealing to supermarkets because it can "increase sales
without the need to give people discounts." Other recent studies on the "power of social
influence" include an "artificial music market in which some 19,000 people downloaded
previously unknown songs" (Columbia University, New York); a Japanese chain of convenience
stores which orders its products based on "sales data from department stores and research
companies;" a Massachusetts company exploiting knowledge of social networking to improve
sales; and online retailers such as Amazon.com who are increasingly informing customers about
which products are popular with like-minded customers.
Further orientations

 An emerging area of study and practice concerns internal marketing, or how employees
are trained and managed to deliver the brand in a way that positively impacts the
acquisition and retention of customers, see also employer branding.

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  Diffusion of innovations research explores how and why people adopt new products,
services, and ideas.
 With consumers' eroding attention span and willingness to give time to advertising
messages, marketers are turning to forms of permission marketing such as branded
content, custom media and reality marketing.

PUBLIC RELATIONS

What is Public Relations?

“Public relations is a strategic communication process that builds mutually beneficial

relationships between organizations and their publics.”

Simple and straightforward, this definition focuses on the basic concept of public relations — as
a communication process, one that is strategic in nature and emphasizing “mutually beneficial
relationships.”

“Process” is preferable to “management function,” which can evoke ideas of control and top-
down, one-way communications.

“Relationships” relates to public relations’ role in helping to bring together organizations and
individuals with their key stakeholders.

“Publics” is preferable to “stakeholders,” as the former relates to the very “public” nature of
public relations, whereas “stakeholders” has connotations of publicly-traded companies. 

As a management function, public relations also encompasses the following:

 Anticipating, analyzing and interpreting public opinion, attitudes and issues that might
impact, for good or ill, the operations and plans of the organization.
 Counseling management at all levels in the organization with regard to policy decisions,
courses of action and communication, taking into account their public ramifications and
the organization’s social or citizenship responsibilities.
 Researching, conducting and evaluating, on a continuing basis, programs of action and
communication to achieve the informed public understanding necessary to the success of
an organization’s aims. These may include marketing; financial; fund raising; employee,
community or government relations; and other programs.
 Planning and implementing the organization’s efforts to influence or change public
policy. Setting objectives, planning, budgeting, recruiting and training staff, developing
facilities — in short, managing the resources needed to perform all of the above.

Public relations (PR) is the practice of managing the spread of information between an
individual or an organization (such as a business, government agency, or a nonprofit
organization) and the public.

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Tactics

Public relations professionals present the face of an organization or individual, usually to

articulate its objectives and official views on issues of relevance, primarily to the media. Public
relations contributes to the way an organization is perceived by influencing the media and
maintaining relationships with stakeholders. According to Dr. Jacquie L’Etang from Queen
Margaret University, public relations professionals can be viewed as "discourse workers
specializing in communication and the presentation of argument and employing rhetorical
strategies to achieve managerial aims."[20]

Specific public relations disciplines include:

 Financial public relations – communicating financial results and business strategy

 Consumer/lifestyle public relations – gaining publicity for a particular product or service
 Crisis communication – responding in a crisis
 Internal communications – communicating within the company itself
 Government relations – engaging government departments to influence public policy
 Food-centric relations – communicating specific information centered on foods,
beverages and wine.
 Media Relations – a public relations function that involves building and maintaining
close relationships with the news media so that they can sell and promote a business.

Building and managing relationships with those who influence an organization or individual’s
audiences has a central role in doing public relations. After a public relations practitioner has
been working in the field, they accumulate a list of relationships that become an asset, especially
for those in media relations.

Audience targeting

A fundamental technique used in public relations is to identify the target audience and to tailor
messages to be relevant to each audience.[23] Sometimes the interests of differing audiences and
stakeholders common to a public relations effort necessitate the creation of several distinct but
complementary messages. These messages however should be relevant to each other, thus
creating a consistency to the overall message and theme. Audience targeting tactics are important
for public relations practitioners because they face all kinds of problems: low visibility, lack of
public understanding, opposition from critics and insufficient support from funding sources.[24]

On the other hand, stakeholder theory identifies people who have a stake in a given institution or
issue. All audiences are stakeholders (or presumptive stakeholders), but not all stakeholders are
audiences. For example, if a charity commissions a public relations agency to create an
advertising campaign to raise money to find a cure for a disease, the charity and the people with
the disease are stakeholders, but the audience is anyone who is likely to donate money. Public
relations experts possess deep skills in media relations, market positioning and branding. They
are powerful agents that help clients deliver clear, unambiguous information to a target audience
that matters to them.

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Ethics

Public Relations professionals both serve the public's interest and private interests of businesses,
associations, non-profit organizations and governments. This dual obligation gave rise to heated
debates among scholars of the discipline and practitioners over its fundamental values. This
conflict represents the main ethical predicament of public relations

Information management

Information management (IM) concerns a cycle of organisational activity: the acquisition of

information from one or more sources, the custodianship and the distribution of that information
to those who need it, and its ultimate disposition through archiving or deletion. This cycle of
organisational involvement with information involves a variety of stakeholders: for example
those who are responsible for assuring the quality, accessibility and utility of acquired
information, those who are responsible for its safe storage and disposal, and those who need it
for decision making. Stakeholders might have rights to originate, change, distribute or delete
information according to organisational information management policies. Information
management embraces all the generic concepts of management, including: planning, organizing,
structuring, processing, controlling, evaluation and reporting of information activities, all of
which is needed in order to meet the needs of those with organisational roles or functions that
depend on information. Information management is closely related to, and overlaps, the
management of data, systems, technology, processes and – where the availability of information
is critical to organisational success – strategy. This broad view of the realm of information
management contrasts with the earlier, more traditional view, that the life cycle of managing
information is an operational matter that requires specific procedures, organisational capabilities
and standards that deal with information as a product or a service.

Positioning information management in the bigger picture

In the transitional period leading up to the strategic view of information management,

Venkatraman (a strong advocate of this process of transition and transformation,[5] proffered a
simple arrangement of ideas that succinctly brought data management, information management
and knowledge management together (see the figure). He argued that:

 Data that is maintained in IT infrastructure has to be interpreted in order to render

information.
 The information in our information systems has to be understood in order to emerge as
knowledge.
 Knowledge allows managers to take effective decisions.
 Effective decisions have to lead to appropriate actions.
 Appropriate actions are expected to deliver meaningful results.

This is often referred to as the DIKAR model: Data, Information, Knowledge, Action and Result,
it gives a strong clue as to the layers involved in aligning technology and organisational
strategies, and it can be seen as a pivotal moment in changing attitudes to information
management. The recognition that information management is an investment that must deliver

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meaningful results is important to all modern organisations that depend on information and good
decision making for their success.

Some theoretical background

Behavioural and organisational theories

Clearly, good information management is crucial to the smooth working of organisations, and
although there is no commonly accepted theory of information management per se, behavioural
and organisational theories help. Following the behavioural science theory of management,
mainly developed at Carnegie Mellon University and prominently supported by March and
Simon, most of what goes on in modern organizations is actually information handling and
decision making. One crucial factor in information handling and decision making is an
individuals’ ability to process information and to make decisions under limitations that might
derive from the context: a person's age, the situational complexity, or a lack of requisite quality
in the information that is at hand – all of which is exacerbated by the rapid advance of
technology and the new kinds of system that it enables, especially as the social web emerges as a
phenomenon that business cannot ignore. And yet, well before there was any general recognition
of the importance of information management in organisations, March and Simon argued that
organizations have to be considered as cooperative systems, with a high level of information
processing and a vast need for decision making at various levels. Instead of using the model of
the "economic man", as advocated in classical theory they proposed "administrative man" as an
alternative, based on their argumentation about the cognitive limits of rationality. Additionally
they proposed the notion of satisficing, which entails searching through the available alternatives
until an acceptability threshold is met - another idea that still has currency.

Economic theory

In addition to the organisational factors mentioned by March and Simon, there are other issues
that stem from economic and environmental dynamics. There is the cost of collecting and
evaluating the information needed to take a decision, including the time and effort required. The
transaction cost associated with information processes can be high. In particular, established
organizational rules and procedures can prevent the taking of the most appropriate decision,
leading to sub-optimum outcomes . This is an issue that has been presented as a major problem
with bureaucratic organizations that lose the economies of strategic change because of
entrenched attitudes.

Strategic Information Management

Background

According to the Carnegie Mellon School an organization's ability to process information is at

the core of organizational and managerial competency, and an organization's strategies must be
designed to improve information processing capability and as information systems that provide
that capability became formalised and automated, competencies were severely tested at many
levels. It was recognised that organisations needed to be able to learn and adapt in ways that
were never so evident before and academics began to organise and publish definitive works

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concerning the strategic management of information, and information systems. Concurrently, the
ideas of business process management and knowledge management although much of the
optimistic early thinking about business process redesign has since been discredited in the
information management literature.

Aligning technology and business strategy with information management

Venkatraman has provided a simple view of the requisite capabilities of an organisation that
wants to manage information well – the DIKAR model (see above). He also worked with others
to understand how technology and business strategies could be appropriately aligned in order to
identify specific capabilities that are needed. This work was paralleled by other writers in the
world of consulting, practice and academia.

A contemporary portfolio model for information

Bytheway has collected and organised basic tools and techniques for information management in
a single volume. At the heart of his view of information management is a portfolio model that
takes account of the surging interest in external sources of information and the need to organise
un-structured information external so as to make it useful

This portfolio model organizes issues of internal and external sourcing and management of
information, that may be either structured or unstructured.

Such an information portfolio as this shows how information can be gathered and usefully
organised, in four stages:

Stage 1: Taking advantage of public information: recognise and adopt well-structured external
schemes of reference data, such as post codes, weather data, GPS positioning data and travel
timetables, exemplified in the personal computing press.

Stage 2: Tagging the noise on the world wide web: use existing schemes such as post codes and
GPS data or more typically by adding “tags”, or construct a formal ontology that provides
structure. Shirky provides an overview of these two approaches.

Stage 3: Sifting and analysing: in the wider world the generalised ontologies that are under
development extend to hundreds of entities and hundreds of relations between them and provide
the means to elicit meaning from large volumes of data. Structured data in databases works best
when that structure reflects a higher-level information model – an ontology, or an entity-
relationship model.

Stage 4: Structuring and archiving: with the large volume of data available from sources such as
the social web and from the miniature telemetry systems used in personal health management,
new ways to archive and then trawl data for meaningful information. Map-reduce methods,
originating from functional programming, are a more recent way of eliciting information from
large archival datasets that is becoming interesting to regular businesses that have very large data
resources to work with, but it requires advanced multi-processor resources.

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The information management knowledge areas:

The IMBOK is based on the argument that there are six areas of required management
competency, two of which (“business process management” and “business information
management”) are very closely related.

 Information technology: The pace of change of technology and the pressure to

constantly acquire the newest technological products can undermine the stability of the
infrastructure that supports systems, and thereby optimisesbusiness processes and
delivers benefits. It is necessary to manage the “supply side” and recognise that
technology is, increasingly, becoming a commodity.

 Information system: While historically information systems were developed in-house,

over the years it has become possible to acquire most of the software systems that an
organisation needs from the software package industry. However, there is still the
potential for competitive advantage from the implementation of new systems ideas that
deliver to the strategic intentions of organisations.

 Business processes and Business information: Information systems are applied to

business processes in order to improve them, and they bring data to the business that
becomes useful as business information. Business process management is still seen as a
relatively new idea because it is not universally adopted, and it has been difficult in many
cases; business information management is even more of a challenge.

 Business benefit: What are the benefits that we are seeking? It is necessary not only to be
brutally honest about what can be achieved, but also to ensure the active management
and assessment of benefit delivery. Since the emergence and popularisation of the
Balanced scorecard there has been huge interest in business performance management
but not much serious effort was been made to relate business performance management
to the benefits of information technology investments and the introduction of new
information systems until the turn of the millennium.

 Business strategy: Although a long way from the workaday issues of managing
information in organisations, strategy in most organisations simply has to be informed by
information technology and information systems opportunities, whether to address poor
performance or to improve differentiation and competitiveness. Strategic analysis tools
such as the value chain and critical success factor analysis are directly dependent on
proper attention to the information that is (or could be) managed.

The information management processes:

It involves the following; collection, processing, analysis, storage and retrieval.

Even with full capability and competency within the six knowledge areas, it is argued that things
can still go wrong. The problem lies in the migration of ideas and information management value

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from one area of competency to another. Summarising what Bytheway explains in some detail
(and supported by selected secondary references):

 Projects: Information technology is without value until it is engineered into information

systems that meet the needs of the business by means of good project management.

 Business change: The best information systems succeed in delivering benefits through
the achievement of change within the business systems, but people do not appreciate
change that makes new demands upon their skills in the ways that new information
systems often do. Contrary to common expectations, there is some evidence that the
public sector has succeeded with information technology induced business change.

 Business operations: With new systems in place, with business processes and business
information improved, and with staff finally ready and able to work with new processes,
then the business can get to work, even when new systems extend far beyond the
boundaries of a single business.

 Performance management: Investments are no longer solely about financial results,

financial success must be balanced with internal efficiency, customer satisfaction, and
with organisational learning and development.

Summary

There are always many ways to see a business, and the information management viewpoint is
only one way. It is important to remember that other areas of business activity will also
contribute to strategy – it is not only good information management that moves a business
forwards. Corporate governance, human resource management, product development and
marketing will all have an important role to play in strategic ways, and we must not see one
domain of activity alone as the sole source of strategic success. On the other hand, corporate
governance, human resource management, product development and marketing are all dependent
on effective information management, and so in the final analysis our competency to manage
information well, on the broad basis that is offered here, can be said to be predominant.

Operationalising Information Management

Managing requisite change

Organizations are often confronted with many information management challenges and issues at
the operational level, especially when organisational change is engendered. The novelty of new
systems architectures and a lack of experience with new styles of information management
requires a level of organisationalchange management that is notoriously difficult to deliver. As a
result of a general organisational reluctance to change, to enable new forms of information
management, there might be (for example): a shortfall in the requisite resources, a failure to
acknowledge new classes of information and the new procedures that use them, a lack of support
from senior management leading to a loss of strategic vision, and even political manoeuvring
that undermines the operation of the whole organisation. However, the implementation of new
forms of information management should normally lead to operational benefits.
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Information, as we know it today, includes both electronic and physical information. The
organizational structure must be capable of managing this information throughout the
information lifecycle regardless of source or format (data, paper documents, electronic
documents, audio, video, etc.) for delivery through multiple channels that may include cell
phones and web interfaces.

According to Wikipedia, Information management (IM) is the collection and management of

information from one or more sources and the distribution of that information to one or more
audiences. This sometimes involves those who have a stake in, or a right to that information.
Management means the organization of and control over the structure, processing and delivery of
information.

PROJECT VIABILITY

What is project viability?

The rationale for the project is set out in the business case which will be expressed in terms of a
set of benefits which contribute towards strategic goal(s). The project framework and planning
should be written to ensure that achievement of those benefits is maximised.

Many things can affect project viability

 Cost overruns. If the project is based on a rate of return on capital invested, then an
increase in project costs can eliminate this.
 Time overruns. Some projects have to be delivered within a certain time frame to deliver
benefits. Extending time may completely eliminate the benefits.
 Changes to specifications and scope. As projects progress changes to the plan or even the
scope will inevitably be requested. These need to be carefully assessed against the
continued ability to deliver the benefits.
 Quality problems. It may become clear during the project life cycle that the original
quality expectations cannot be met. This can have an impact on the acceptability and
hence the usability of the project's outputs by the end user. Changes to quality must be
assessed against the benefits.
 Change in the business environment. Sometimes organisations have to take a different
strategic path, making the need for the project obsolete. There is little point carrying on
committing resources to a project for which there is no longer a need.

It is the project sponsor's duty to continually assess project viability and if necessary to stop an
unviable project. To determine if a project is viable, the following must be done.

 Feasibility study
 Planning – business plan
 Project implementation
 Project evaluation
 Cost benefit analysis

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Keeping the focus right

Project managers and project teams working at the coal face of project delivery often get focused
on deliverables, timelines and budget profiles. This can often lead to compromises being made to
quality which make the project benefits unachievable. Project sponsors should always be focused
on benefits realisation, so should be removed from the everyday decision-making of the project
so they can take an objective view of the project.

Five Steps to Determine Project Feasibility

Is your project feasible?

The best way to find out whether your project is feasible is to complete a Feasibility Study. This
process helps you gain confidence that the solution you need to build can be implemented on
time and under budget. So here’s how to do it in 5 simple steps…

Completing a Feasibility Study

A Feasibility Study needs to be completed as early in the Project Life Cycle as possible. The best
time to complete it is when you have identified a range of different alternative solutions and you
need to know which solution is the most feasible to implement. Here’s how to do it…

Step 1: Research the Business Drivers

In most cases, your project is being driven by a problem in the business. These problems are
called “business drivers” and you need to have a clear understanding of what they are, as part of
your Feasibility Study.

For instance, the business driver might be that an IT system is outdated and is causing customer
complaints, or that two businesses need to merge because of an acquisition. Regardless of the
business driver, you need to get to the bottom of it so you fully understand the reasons why the
project has been kicked off.

Find out why the business driver is important to the business, and why it’s critical that the project
delivers a solution to it within a specified timeframe. Then find out what the impact will be to the
business, if the project slips.

Step 2: Confirm the Alternative Solutions

Now you have a clear understanding of the business problem that the project addresses, you need
to understand the alternative solutions available.

If it’s an IT system that is outdated, then your alternative solutions might include redeveloping
the existing system, replacing it or merging it with another system.

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Only with a clear understanding of the alternative solutions to the business problem, can you
progress with the Feasibility Study.

Step 3: Determine the Feasibility

You now need to identify the feasibility of each solution. The question to ask of each alternative
solution is “can we deliver it on time and under budget?”

To answer this question, you need to use a variety of methods to assess the feasibility of each
solution. Here are some examples of ways you can assess feasibility:

 Research: Perform online research to see if other companies have implemented the same
solutions and how they got on.
 Prototyping: Identify the part of the solution that has the highest risk, and then build a
sample of it to see if it’s possible to create.
 Time-boxing: Complete some of the tasks in your project plan and measure how long it
took vs. planned. If you delivered it on time, then you know that your planning is quite
accurate.

Step 4: Choose a Preferred Solution

With the feasibility of each alternative solution known, the next step is to select a preferred
solution to be delivered by your project. Choose the solution that; is most feasible to implement,
has the lowest risk, and you have the highest confidence of delivering.

You’ve now chosen a solution to a known business problem, and you have a high degree of
confidence that you can deliver that solution on time and under budget, as part of the project.

Step 5: Reassess at a lower level

It’s now time to take your chosen solution and reassess its feasibility at a lower level. List all of
the tasks that are needed to complete the solution. Then run those tasks by your team to see how
long they think it will take to complete them. Add all of the tasks and timeframes to a project
plan to see if you can do it all within the project deadline. Then ask your team to identify the
highest risk tasks and get them to investigate them further to check that they are achievable. Use
the techniques in Step 3 to give you a very high degree of confidence that it’s practically
achievable. Then document all of the results in a Feasibility Study report.

After completing these 5 steps, get your Feasibility Study approved by your manager so that
everyone in the project team has a high degree of confidence that the project can deliver
successfully.

I am not confident that my project will deliver but can’t get to the bottom of what’s wrong

Use independent external project assurance to help. Bring in someone with significant project
experience either from outside the University or from another school or directorate to review

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your project and give you a project health check. Sometimes the project team can be too close to
the project to acknowledge lurking problems. In projects which have significant implications for
the University it is good practice to build these audits in at the beginning, without waiting for a
crisis to occur.

Selecting the right project manager

Selecting the right project manager is essential to the success of your project. It is often true that
project managers are selected on availability rather than skills or knowledge. This is the worst
possible reason for selection.

It is useful to categorise project managers into three types when considering who to pick [source:
The role of the executive project sponsor p67, Robert Butterick 2003].

 Intuitive: This type of manager will have little formal knowledge or training in project
management but uses common sense and acquired good practice in project management.
This type of person has probably managed a number of small projects successfully and
will be a good communicator with well-developed skills in scheduling and organising.
They will use initiative to solve problems and naturally engage with stakeholders.
 Methodological: This type of manager will have training in formal project management
tools and techniques and will have formal procedures and practices set out to control the
project. This is needed for larger projects where informal methods will not work.
 Judgemental: This type of manager will be highly experienced with formal training in
many tools and techniques of project management and will have highly developed
general management skills and will think strategically about the projects. This type of
manager will always start with the principles of good project management and use those
to apply a range of tools and techniques in flexible and creative ways. They will be
comfortable with highly complex projects and even managing a programme or portfolio
of projects.

A good project manager of a reasonably large and complex project will not only have specific
project management skills but also will have all other skills you would expect to see in a
competent middle to senior manager. Leadership, team building and change management are
vital, as is a high degree of initiative and the ability to communicate with people at all levels in
the organisation. There will be many conflicting demands. This level of manager will also be
able to broker effective compromises without sacrificing the benefits of the project.

Project managers are often selected because of technical ability; this should not in itself be the
reason for choosing a particular individual. Project management skills should always be the first
requirement. The ideal project manager is someone who is willing to put the effort into grasping
the essence of the technicalities without becoming a subject matter expert.

Project Financial Viability

The preparation of reports on the financial viability of a project is imperative for the soundness
of the financial health of an organization. The financial analysis focuses on the financial
viability, stability, and the profitability of the project. Moreover, regular financial analysis

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ensures timely changes in the strategies of business for betterment. The Financial Viability report
prepared by us using highly effective tools will help your company streamline its structure
towards optimization and will provide access to comprehensive financial information. We focus
on empowering your management with strategic information on the performance and
profitability of your company. Some of the tools we employ to determine the project viability
are:

 What is the Return on Investment - yearly return calculated on the total investment
needed for the project? For a project to be viable, the Return on Investment must be
greater than the Cost of Investment
 Finding out if the business generates surplus adequate to meet recurring repayment
obligations.
 Determining the Break Even Point - the point of activity where all costs (variable as well
as fixed) are recovered from the sales values. The rule of thumb is that lowering the
break-even point betters the proposition.

Project Feasibility Analysis, Step by Step

This section describes how to determine if there is sufficient demand from the chosen target
market to support the proposed development, the factors to consider when selecting a site, how
to evaluate the competition and how to assess the financial feasibility of the proposed
undertaking. This information is needed for project planning and design (see Volume 3:
Planning the Project and Volume 4: Designing the Project) and can be used to secure
construction or mortgage financing.

Project feasibility analysis is a multi-step exercise. As the analysis progresses, the developer or
sponsor will gradually acquire more information that will help determine whether or not to
proceed further. The following four  activities may be performed sequentially, although more
often than not, they are done simultaneously:

5. Market analysis;
6. Site selection and analysis;
7. Competitive market analysis; and
8. Financial feasibility analysis.

ENTERPRISE PROJECT MANAGEMENT

Enterprise Project Management (EPM), in broad terms, is the field of organizational

development that supports organizations in managing integrally and adapting themselves to the
changes of a transformation. Enterprise Project Management is a way of thinking,
communicating and working, supported by an information system, that organizes enterprise's
resources in a direct relationship to the leadership's vision and the mission, strategy, goals and
objectives that move the organization forward. Simply put, EPM provides a 360 degree view of
the organization's collective efforts.

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In recent years, with general adoption of (IT) governance practices, Enterprise Project
Management has become more specific: whereas in the 1990s focus was generally on the
management of the single project, in the subsequent decade, the focus lay more on the fact that a
project is likely to be not the only one in the enterprise. The project co-exists with many other
projects in the enterprise, or may be part of one or more programs. It may utilize (human)
resources that are shared among other projects.

In order to facilitate governance, it has become essential to be able to manage, monitor, and
assess the status of all projects (and other assets, of course) in the enterprise, through a set of
(preferably uniform) Enterprise Project Management processes, methods and application
packages. Typically, organizations that adopt an Enterprise Project Management way of
working, might set up a Project Management Office (PMO)/ Enterprise Project Management
Office (EPMO), which is said to be more successful than a traditional PMO in addressing the
priorities of the organization as its scope is enterprise-wide), might select and adopt a Project
Management Methodology like PRINCE2, PMBOK (or create a proprietary method) or follow
the concepts of IPMA Competence Baseline as a foundation for development and certification of
project managers and their knowledge, experience and behaviour. They might even select and
implement a software system to support Enterprise Project Management.

An even more recent evolution in Enterprise Project Management is to not only plan and track
the existing set of projects, but to create a portfolio (per budget size, per calendar year, per
budget year, per business line, et cetera) of existing and future (demand) projects. This is called
Project Portfolio Management. Just like the management of a portfolio of shares, Project
Portfolio Management is the activity of selecting which projects to keep in portfolio (because of
their anticipated value) and which ones to discard (because of their obsoleteness or because they
will not yield the value that was initially calculated). Project Portfolio Management includes the
creation of various scenarios to decide which is the best portfolio (for a certain year, business,
budget, etcetera). Once the contents of the portfolio are agreed upon, it is key to constantly
scrutinize how the individual projects are evolving in terms of quality, cost and schedule.

Implementing an Enterprise Project Management toolset needs to be considered in the light of

the organization's Project Management Maturity and the methodologies, processes and
governance structures that are currently in place. There are many consulting organizations that
can support such implementations.

ENTERPRISE RELATIONSHIP MANAGEMENT

Enterprise relationship management or ERM is a business method in relationship

management beyond customer relationship management.

ERM - Enterprise Relationship Management is basically a business strategy for value creation
that is not based on cost containment, but rather on the leveraging of network-enabled processes
and activities to transform the relationships between the organization and all its internal and
external constituencies in order to maximize current and future opportunities.

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Contents

Overview

Relationship management is not an entirely new concept. In fact, it has taken on many forms that
address specific organizational constituencies (customers, channel partners, specialized service
providers, employees, suppliers, etc.). The most obvious form is CRM (customer relationship
management), which focuses on improving top-line growth by maximizing an organization's
ability to identify sales and business opportunities with its customers. CRM's little brother PRM
(partner relationship management), focuses on optimizing opportunity and downstream order
management for an organization's channel partners (e.g. CISCO and its partner lead and referral
management process) On the back end, we have ERP (enterprise resource planning) to manage
internal operations including manufacturing, finance, HR, sales and distribution, etc. Specialized
HRM (human resource management) solutions exist to manage employee benefits, collective
agreements, performance reviews and so forth. And lastly, SCM (supply chain management,
either as an ERP module or as a stand-alone application) to manage the product flow, up and
down a firm's value chain, with external partners/suppliers.

Making the links in a business network

However, according to Galbreath (2002), "for the most part CRM, human resources management
(HRM), enterprise resource planning (ERP), supply chain management (SCM), partner
relationship management (PRM) and similar programs have paid very little attention to the
relationships that underpin those processes, or to the intangible – relationship – assets embedded
in them."

Norman and Ramirez (1993) state, "One of the chief strategic challenges of the new economy is
to integrate knowledge and relationships – devise a good fit between competencies
(Competencies are the technologies, specialized expertise, business processes and techniques that
a company has accumulated over time and packages in its offering) and customers and keep that
fit current." Galbraeth (2002) adds that "success in the relationship age requires a deliberate
process of creating intangible, relationship assets, growing them and monetizing them".

Galbreath (2002) suggests that enterprise relationship management is a process that harmonizes
and synergiezes different organizational relationships to realize targeted business benefits and
goal. Harbison et al. (2000)did some research on the performance of alliances and cited the
following statisitics in their study:

 "Strategic alliances have consistently produced a return on investment of nearly 17

percent among the top 2,000 companies in the world for nearly a decade. This return is 50

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 percent more than the average return on investment that the companies produced overall."
Harbison et al. (2000)
 "The 25 companies most active in alliances achieved a 17.2 percent return on equity - 40
percent more than the average return on equity of the Fortune 500." - Harbison et al.
(2000)
 "The 25 companies least active in alliances lagged the Fortune 500, with an average
return on equity of only 10.1 percent." - Harbison et al. (2000)
 "Successful alliances recognize 20 percent profitability improvements as compared to
only 11 percent for the less successful companies." - Harbison et al. (2000)
 "Revenue generation from highly successful alliances equates to 21 percent of overall
firm sales as compared to 14 percent for less successful alliances." - Harbison et al.
(2000)

In a similar study conducted for the supplier side (results of efficiently run supply chains based
on electronic integration and quality processes) by Solomon Smith Barney Analyst Report,
Teagarden (2000) presents the following statistics for suppliers:

 Inventory levels reduced by as much as 50 percent.

 Inventory turns doubled.
 Stock outs reduced ninefold.
 On-time deliveries increased by as much as 40 percent.
 Cycle times decreased by as much as 27 percent overall.
 Supply chain costs reduced by as much as 20 percent.
 Revenues increased by as much as 17 percent.

When looking at these numbers, collaboration with outside firms becomes very attractive. But
success in business, as in many other pursuits, is dependent on motivation, investment, trust,
discipline and repeatability.

Tools and methodologies

Why do we need an enterprise relationship management framework? Simply put, because

relationships are becoming more and more prevalent and more integral to an organization's
success. Although establishing inter-enterprise links is far from a new science, Klambach and
Roussel(1999) affirm that nearly 60% of business alliances do not deliver anticipated benefits
while Lovallo&Kahneman(2003) and Selden & Colvin(2003) estimate M&A ( Mergers&
Acquisitions) failures range between 70% and 80%.

With statistics like these, the need to improve relationship success rates seems quite obvious.
Many authors have addressed these issues from varying perspectives, including technology
enabling a firm, reviewing or re-designing operational & administrative processes, and
transforming the culture to one that is more adapted to collaboration. As Galbreath (2002) and
Norman & Ramirez(1993) state, collaboration or rather the effective leveraging of relationship
resources to create new sources of value, is a process of learning and developing new mental
models and competencies (Senge, 1991) as well as obtaining resources through new
means/sources.

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ERM is still a relatively new field and few players stand-out with a complete ERM methodology
and tools. Nevertheless a host of best of breed tools and methodologies exist to carry out an
ERM implementation, unfortunately they are not integrated and focus on very specialized
problem areas. ERM tools can be viewed as enablers of an ERM methodology.

Fundamentally adopting ERM is a cultural and change management issue more than a
technology or process one. Therefore regardless of the methodology or tools that one may elect
to use when integrating with outside firms, they must maintain a focus on the human side of the
equations. The figure below illustrates the benefits of focusing on the human, cultural and
change aspect of a project, notably deploying ERM in this case.

Practical methodologies and frameworks

Velox framework

Velox ERM is a product of Technology Partnerz. It integrates ONA - organizational network

analysis, process re-design, IS/IT strategy, change management, supplier relationship
management, customer relationship management, and risk and business continuity management
into a comprehensive and simple framework that supports people and organizations in
repeatably/consistently:

 Mapping and understanding collaborative processes and networks within and across
organizational boundaries
 Benchmarking collaborative capability
 Identifying and selecting the best partners and collaborators to minimize risk and improve
agility of the business network
 Understanding and deploying collaborative best practices
 Aligning and leveraging new and existing business relationships to business objectives
 Accelerating/Facilitating the adoption of business change related to processes, policies,
systems and culture changes.
 Accelerating decision making resulting in improved corporate responsiveness to
changing market conditions.

Also available in a searchable knowledge base tool that supports managers and business
professionals to effectively understand and use collaborative best practices and accelerate the
adoption of ERM

Managing the Enterprise on Limited Resources.

We've all heard the mantra: Do more with less. In the current economy, colleges and universities
are continually being asked to be more productive and effective with ever-shrinking resources. A
key to accomplishing that is to have a solid information system - an intergrated Enterprise
Resource Planning (ERP) system that can help them toward that goal in numerous ways.

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Datatel, Jenzabar, Oracle, SunGard HE, and other vendors offer solutions that help institutions of
all sizes get control of the heart and soul of their operations: their data. The new generation of
ERP systems often include Business Intelligence (BI) capabilities that enable administrators to
consider "what if" scenarios as they plan budgets, allocate resources, and more.

Many institutions are also considering the relatively new option of hosted ERP, where the nuts
and bolts of the system reside offsite. This can result in considerable cost savings to the school as
the budget line items of equipment and maintenance costs are largely eliminated. At Carl
Sandburg College (Ill.), for example, Datatel's Colleague ERP helps the school realize real dollar
savings. According to CIO and Vice President of Administrative Services Samuel Sudhakar, the
school annually saves about $100,000 in hardware costs, $175,000 on programming charges, and
about $20,000 from automated communications to students and paperless purchase orders,
requisitions, and payroll.

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It allows you to offer more services with the people you have. Often, you can increase both
accessibility and business intelligence with your existing staff numbers.

Smaller schools often find themselves with greater challenges than their larger counterparts, but
they can still get control of the enterprise without breaking the bank.

ERM also stands for enterprise relationship management.

1) ERM (enterprise resource management) describes software that lets an enterprise manage user
access to its network resources efficiently. ERM software generally lets a user sign on to
different enterprise systems and applications using the same password. ERM software makes it
easy for the enterprise to control and keep track of which systems and resources each user has
access to, and provides consistent standards for creating and changing passwords. One system
administrator can usually manage user access to all platforms - UNIX, mainframe, Windows NT,
and so forth - and to the applications on these platforms that require controlled access.

2) ERM (enterprise resource management) also describes software that manages all of a
company's assets and resources, including such basic applications as general ledger, accounts
payable and receivable, as well as manufacturing, inventory, and human resources.

MANAGING THE BUSINESS FINANCES

Accounting: GL, AP, AR, and beyond.

Workday Financial Management gives you the tools to achieve the highest levels of business
performance and financial excellence.

 Get immediate visibility into financial performance with real-time, comprehensive

financial and operational reports
 Process transactions quicker and more accurately without compromising control

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  Accommodate multi-entity, multi-book, and multi-currency requirements for global
organizations
 Adapt and accommodate new business and regulatory requirements as they arise without
additional customizations or technology investments
 Ensure proper security and support compliance efforts with embedded controls and an
always-on audit trail

Manage all your business assets.

Workday combines the traditionally separate domains of fixed assets and inventory with the
ability to manage and account for all your business assets – from high-value, low-cost assets like
laptops and mobile phones to intangible, high-value assets like rights and licenses. And it all
happens in a single, unified system.

 Manage your asset roster, depreciation, and lifecycle accounting

 Define, track, and account for both tangible and intangible assets
 Track low-cost and zero-cost items that have high value or liability (e.g., mobile devices
or security badges)
 Assign custody and responsibility of items to workers to prevent cost leakage and
security risks due to worker turnover
 Account for business assets according to accounting rules and track according to business
use

Controls: adhere, audit, adapt.

Workday eliminates the need for bolt-on governance, risk, and compliance (GRC) systems with
built-in controls at the transaction level that ensure proper security, separation of duties,
transparent business processes, and comprehensive auditing.

 Configure and monitor business processes and workflows

 Adapt business processes whenever changes are needed without having to reimplement
your financial system
 Report on transactions and get full audit reports on any and every transaction processed
in the system
 Configure security access policies and ensure separation of duties
 Manage all your business controls centrally, while allowing for variations for local
regions or specific countries

MANAGEMENT ACCOUNTING

In Management accounting or managerial accounting, managers use the provisions of

accounting information in order to better inform themselves before they decide matters within
their organizations, which allows them to better manage and perform control functions.

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According to the Institute of Management Accountants (IMA): "Management accounting is a
profession that involves partnering in management decision making, devising planning and
performance management systems,and providing expertise in financial reporting and
control to assist management in the formulation and implementation of an organization's
strategy".

Role within a corporation

Consistent with other roles in today's corporation, management accountants have a dual reporting
relationship. As a strategic partner and provider of decision based financial and operational
information, management accountants are responsible for managing the business team and at the
same time having to report relationships and responsibilities to the corporation's finance
organization.

The activities management accountants provide inclusive of forecasting and planning,

performing variance analysis, reviewing and monitoring costs inherent in the business are ones
that have dual accountability to both finance and the business team. Examples of tasks where
accountability may be more meaningful to the business management team vs. the corporate
finance department are the development of new product costing, operations research, business
driver metrics, sales management scorecarding, and client profitability analysis. (See Financial
modeling.) Conversely, the preparation of certain financial reports, reconciliations of the
financial data to source systems, risk and regulatory reporting will be more useful to the
corporate finance team as they are charged with aggregating certain financial information from
all segments of the corporation.

In corporations that derive much of their profits from the information economy, such as banks,
publishing houses, telecommunications companies and defence contractors, IT costs are a
significant source of uncontrollable spending, which in size is often the greatest corporate cost
after total compensation costs and property related costs. A function of management accounting
in such organizations is to work closely with the IT department to provide IT cost transparency.

Given the above, one widely held view of the progression of the accounting and finance career
path is that financial accounting is a stepping stone to management accounting. Consistent with
the notion of value creation, management accountants help drive the success of the business
while strict financial accounting is more of a compliance and historical endeavor.

RECORDS MANAGEMENT

Records management (RM), also known as Records information management or RIM, is the
professional practice or discipline of controlling and governing what are considered to be the
most important records of an organization throughout the records life-cycle, which includes from
the time such records are conceived through to their eventual disposal. This work includes
identifying, classifying, prioritizing, storing, securing, archiving, preserving, retrieving, tracking
and destroying of records.

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Records management is part of an organization's broader activities that are associated with the
discipline or field known as Governance, risk, and compliance (or "GRC") and is primarily
concerned with the evidence of an organization's activities as well as the reduction or mitigation
of risk that may be associated with such evidence.

A record is something that represents proof of existence and that can be used to recreate or
prove state of existence, regardless of medium or characteristics. A record is either created or
received by an organization in pursuance of or compliance with legal obligations, or in the
transaction of business. Records can be either tangible objects, such as paper documents like
birth certificates, driver's licenses, and physical medical x-rays, or digital information, such as
electronic officedocuments, data in applicationdatabases, web site content, and electronic mail
(email).

A businessrecord is a document that records a business dealing. Business records include

meeting minutes, memoranda, employment contracts, and accounting source documents.

It must be retrievable at a later date so that the business dealings can be accurately reviewed as
required. Since business is dependent upon confidence and trust, not only must the record be
accurate and easily retrieved, the processes surrounding its creation and retrieval must be
perceived by customers and the business community to consistently deliver a full and accurate
record with no gaps or additions.

Most business records have specified retention periods based on legal requirements or internal
company policies. This is important because in many countries (including the United States)
documents are required by law be disclosed to government regulatory agencies or to the general
public. Likewise, they may be discoverable if the business is sued. Under the business records
exception in the Federal Rules of Evidence, certain types of business records, particularly those
made and kept with regularity, may be considered admissible in court despite containing hearsay.

Records management is the first important task in the process of sound financial management for
a small business operator. Accurate and regular financial information allows you to monitor the
success or failure of your business and provides you with information to evaluate the
consequences of your financial decisions.

Why keep financial records?

To be successful it is essential that you know the precise financial condition of your business.
Accurate and regular financial information allows you to monitor the success or failure of your
business and provides you with information to evaluate the consequences of your financial
decisions. Regularly monitoring your business activities will help you operate more efficiently,
control your cash flow, and increase your profitability.

Useful information about your business depends on complete, accurate, and timely record
keeping practices . Your financial records will allow you to:

♦ identify your income and expenses to create a profit and loss statement

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♦ identify your business assets and liabilities to create a balance sheet

♦ identify the timing of income and expenses to create a cash flow forecast

♦ compare your business operations with industry benchmarks

♦ prepare accurate business activity statements and tax returns so you don't over or underpay
your taxes.

Record keeping obligations

By law, the Australian Tax Office (ATO) requires small business operators to keep certain
business records for tax purposes.

You are required to keep records for five years after they are prepared, obtained or the
transactions completed (whichever occurs later), and in English.

Employers in the West Australian state industrial relations system also have legal obligations in
regard to time and wages record keeping. Read Time and wages record keeping: Employer
obligations

How to keep the financial records

Maintaining good financial records on a regular basis requires time and effort that you might
believe would be better spent on running your business. However, doing the bookkeeping
yourself, to begin with, could minimise your costs and allow you more control of your financial
information and operations.

♦ Our easy-to-follow Understanding Business Financials workshop will help you to get on the
right track with keeping financial records. You'll also receive a resource book that provides
examples and templates of all the financial records you need.

♦ The ATO provides record keeping for small business tools, examples and templates on their
website.

Record keeping systems

Creating a system for collecting revenue, paying employees, suppliers, and taxes correctly and
on time is a vital part of operating a small business. There are many systems available from
manual to electronic. Each has advantages and disadvantages which you should think about
carefully before choosing a system

Why Records Management? Ten Business Reasons

Records management programs are not generally an organization's primary business, and even
though RM programs don't usually generate income, the following are the most important

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reasons to set up a good records management program in your office anyway. (Adapted from
Ten Business Reasons for Records Management in Information and Records Management:
Document-based Information Systems, Robek, Brown, Stephens, 1995.)

1. To Control the Creation and Growth of Records

Despite decades of using various non-paper storage media, the amount of paper in our
offices continues to escalate. An effective records management program addresses both
creation control (limits the generation of records or copies not required to operate the
business) and records retention (a system for destroying useless records or retiring
inactive records), thus stabilizing the growth of records in all formats.

2. To Reduce Operating Costs

Recordkeeping requires administrative dollars for filing equipment, space in offices, and
staffing to maintain an organized filing system (or to search for lost records when there is
no organized system).

It costs $22 less per linear foot of records to store inactive records in the Federal Records
Center versus in the office. [Multiply that by 30% to 50% of the records in an office that
doesn't have a records management program in place], and there is an opportunity to
effect some cost savings in space and equipment, and an opportunity to utilize staff more
productively - just by implementing a records management program.

Usually, in an office that doesn't have a records program, 30-50% of the files could be
stored off-site. In EPA, we average 25 feet of paper per person. In a 30 person office
that could mean a savings of $7,000 annually!

3. To Improve Efficiency and Productivity

Time spent searching for missing or misfiled records is non-productive. A good records
management program can help any organization upgrade its recordkeeping systems so
that information retrieval is enhanced, with corresponding improvements in office
efficiency and productivity. A well designed and operated filing system with an effective
index can facilitate retrieval and deliver information to users as quickly as they need it.

4. To Assimilate New Records Management Technologies

A good records management program provides an organization with the capability to

assimilate new technologies and take advantage of their many benefits. Investments in
new computer systems don't solve filing problems unless current manual recordkeeping
systems are analyzed (and occasionally, overhauled) before automation is applied.

5. To Ensure Regulatory Compliance

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 In terms of recordkeeping requirements, the United States is the most heavily regulated
country in the world. These laws can create major compliance problems for businesses
and government agencies since they can be difficult to locate, interpret and apply. The
only way an organization can be reasonably sure that it is in full compliance with laws
and regulations is by operating a good records management program which takes
responsibility for regulatory compliance, while working closely with the Office of
General Counsel. Failure to comply with laws and regulations could result in severe
fines, penalties or other legal consequences.

6. To Minimize Litigation Risks

Business organizations implement records management programs in order to reduce the

risks associated with litigation and potential penalties. This can be equally true in
Government agencies. A consistently applied records management program can reduce
the liabilities associated with document disposal by providing for their systematic, routine
disposal in the normal course of business.

7. To Safeguard Vital Information

Every organization, public or private, needs a comprehensive program for protecting its
vital records and information from catastrophe or disaster, because every organization is
vulnerable to loss. Operated as part of the overall records management program, vital
records programs preserve the integrity and confidentiality of the most important records
and safeguard the vital information assets according to a "Plan" to protect the records.

8. To Support Better Management Decision Making

In today's business environment, the manager that has the relevant data first often wins,
either by making the decision ahead of the competition, or by making a better, more
informed decision. A records management program can help ensure that managers and
executives have the information they need when they need it.

By implementing an enterprise-wide file organization, including indexing and retrieval

capability, managers can obtain and assemble pertinent information quickly for current
decisions and future business planning purposes.

9. To Preserve the Corporate Memory

An organization's files contain its institutional memory, an irreplaceable asset that is

often overlooked. Every business day, you create the records which could become
background data for future management decisions and planning. These records document
the activities of the Agency which future scholars may use to research the workings of
the Environmental Protection Agency in the 1990's.

10. To Foster Professionalism in Running the Business

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 A business office with files askew, stacked on top of file cabinets and in boxes
everywhere, creates a poor working environment. The perceptions of customers and the
public, and "image" and "morale" of the staff, though hard to quantify in cost-benefit
terms, may be among the best reasons to establish a good records management program.

SUPPORT SERVICE

Definition

Activity or functionrequired for successful completion of a process, program, or project.

The secretary of yesteryear needed to know how to take shorthand, type and answer the phone.
Today's secretary deals with dictation using a tape recorder and transcription equipment; instead
of simply typing, she inputs data into a computer; and the office telephone she uses is actually a
complex communications center.

What we now call the business support services industry has experienced a similar and perhaps
even more remarkable evolution. It began as secretarial services or typing services, and typing
was pretty much all they did. But those operations have gone the way of the horse and buggy,
replaced by modern, techno-savvy entrepreneurs who want to take advantage of a virtually
limitless market.

What's Inside

 Introduction
 Target Market
 Startup Costs
 Operations
 Income and Billing
 Marketing
 Resources

Though the term "secretarial service" has a strong degree of consumer recognition, it's no longer
an appropriate description of the industry. While typing and transcription (historically typical
secretarial services) are still a mainstay, consumers often don't think of a secretarial service as
providing desktop publishing, spreadsheet design, Internet-related services, and other
sophisticated product and service packages. The phrase "business support services" does a much
better job of conveying what the industry is all about today and still leaves flexibility for the
changes that are likely to occur in the future. You'll also hear terms such as "administrative
support services" and "office support services" applied to this industry.

In 1998, the National Association of Secretarial Services changed its name to the Association of
Business Support Services International. Executive Director Lynette M. Smith says, "We felt that
'business support services' did a better job than 'secretarial services' of covering the scope of our
members' services and bringing more respectability to the profession."

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Of course, the size of the market for business support services is difficult to estimate for a
number of reasons--primarily because the U.S. Bureau of the Census mixes other types of
businesses with business support services. Also, the providers, services and customers are
constantly evolving with technological advances. The secretarial service of the 1960s and 1970s,
when a good electric typewriter was pretty much all you needed, wouldn't get off the ground
today. And who knows what technology will be able to do 20 or 30 years from now?

Types of Services

You can offer a wide range of services. The following list encompasses what we found on the
market, but it is by no means exhaustive. Some of these services could be businesses in and of
themselves; others are ancillary to a primary service. Listen to your clients; they'll let you know
what they need, and then you can decide if you can provide it.

 Word processing
 Tape transcription
 Phone-in dictation
 Desktop publishing
 Spreadsheet design
 College papers and reports
 Telephone answering
 Mail receiving and forwarding
 Packing and shipping
 Database/mailing list management
 Bookkeeping, check preparation and billing
 Resume preparation
 Proofreading
 Print brokering
 Fax sending and receiving
 Photocopying
 Notary
 Internet research
 Web page design and maintenance
 Event planning
 Consulting
 Training

Marketing - Promotion Strategy

Promotion is the method you use to spread the word about your product or service to customers,
stakeholders and the broader public.
Once you’ve identified your target market, you’ll have a good idea of the best way to reach
them, but most businesses use a mix of advertising, personal selling, referrals, sales promotion
and public relations to promote their products or services.

 Advertising

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  Selling
 Sales Promotion
 Public Relations
1. Advertising
What is advertising?
Advertising is a form of communication designed to persuade potential customers to choose your
product or service over that of a competitor
Successful advertising involves making your products or services positively known by that
section of the public most likely to purchase them.
It should be a planned, consistent activity that keeps the name of your business and the benefits
of your products or services uppermost in the mind of the consumer.
Why advertise?
The objective of advertising is to increase your profit by increasing your sales. Advertising aims
to:

 Make your business and product name familiar to the public

 Create goodwill and build a favourable image
 Educate and inform the public
 Offer specific products or services
 Attract customers to find out more about your product or service
The rules of advertising
There are four rules to consider when planning any advertising activity – ie: before you prepare
and book any form of advertising.
Aim - What is the primary purpose of the advertisement? Is it to inform, sell, produce listings or
improve the image of your business?
Target - Who is the target? From which sector of the public are you trying to achieve a
response? For example is it male, female, adult, teenager, child, mother, father etc.
Media – Bearing the aim and target in mind, which of the media available to you is the most
suitable – ie: TV, radio, press or Internet?
Competitors – What are your competitors doing? Which media channel do they use? Are they
successful? Can you improve on their approach and beat them in competition?
Developing effective advertising
Good advertising generally elicits the following four responses:
Attention – It catches the eye or ear and stands out amid the clutter of competing
advertisements.
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Interest – It arouses interest and delivers sufficient impact in the message or offering.
Desire – It creates a desire to learn more or crave ownership.
Action – It spurs an action which leads to achievement of the ad’s original objective – ie: it
prompts potential customers to purchase or use your product or service.
Making sure your advertisement is legal
You must consider the advertisement as a whole and the ordinary meaning of the words used.
You must determine if the people to whom the advertisement is directed are likely to be misled
or deceived by its content.
2. Selling
What is selling?
Put simply, selling is the exchange of goods or services for an agreed sum of money.
Depending on the circumstances, a sales transaction can include one, some or all of the following
stages.

 Prospecting and qualifying – identifying qualified prospects ie: those that are likely to
want or need your product or service and can afford to pay for it.
 Pre-approach – undertaking research about prospects to assist in the actual selling
process.
 Approach – making actual contact with the prospect in person, by phone or in writing.
 Presentation and demonstration – presenting and demonstrating the features and
benefits of your product or service in order to convince the prospect that their want or
need can be satisfied.
 Handling objections – demonstrating the product or service value to overcome real or
perceived objections or misunderstandings that are impeding the purchase decision.
 Closing – bringing the selling process to a successful conclusion by either asking for the
order or responding to a positive decision from the prospect.
 Follow-up – proactive or reactive contact with the purchaser to establish their satisfaction
level and to address any problems that may exist.
In planning the selling element of your marketing strategy you will need to consider the
following:

 The size and structure of your sales team

 Recruiting, training, motivating and evaluating individuals and the team as a whole
 The remuneration structure
 The location/territory to be serviced
 Management and communication systems
Selling is a particularly important element if you are marketing services because the purchaser of
a professional service is in fact buying the capabilities of the seller. So he or she would be

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closely evaluating the behaviour and characteristics of your sales person, your business, its
reputation, facilities and appearance.
3. Sales Promotion
What is sales promotion?
Sales promotion relates to short term incentives or activities that encourage the purchase or sale
of a product or service. Sales promotions initiatives are often referred to as “below the line”
activities.
What are the major sales promotion activities?
Sales promotion activities can be targeted toward final buyers (consumer promotions), business
customers (business promotions), retailers and wholesalers (trade promotions) and members of
the sales force (sales force promotions). Here are some typical sales promotion activities:
Consumer promotions

 Point of purchase display material

 In-store demonstrations, samplings and celebrity appearances
 Competitions, coupons, sweepstakes and games
 On-pack offers, multi-packs and bonuses
 Loyalty reward programs
Business promotions

 Seminars and workshops

 Conference presentations
 Trade show displays
 Telemarketing and direct mail campaigns
 Newsletters
 Event sponsorship
 Capability documents
Trade promotions

 Reward incentives linked to purchases or sales

 Reseller staff incentives
 Competitions
 Corporate entertainment
 Bonus stock
Sales Force Promotions

 Commissions
 Sales competitions with prizes or awards
4. Public Relations

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What is public relations?
The Public Relations Institute of Australia (PRIA) defines Public Relations (PR) as: “The
deliberate, planned and sustained effort to establish and maintain mutual understanding between
an organisation (or individual) and its (or their) publics”.
Put more simply, public relations is about building good relations with the stakeholders (public)
of your business by obtaining favourable publicity, building a good corporate image and
handling or heading off unfavourablerumours, stories and events.
By building good relationships with your stakeholders, particularly customers, you can generate
positive word of mouth and referrals from satisfied customers.
Who is a stakeholder?
Stakeholders are the various groups in a society which can influence or pressure your business’s
decision making and have an impact on its marketing performance. These groups include:

 Clients/customers
 Staff
 Shareholders
 Strategic partners
 Media
 Government
 Local community
 Financial institutions
 Community groups
Operationally, stakeholders really refer to those groups that your business is or should be,
communicating with.
What are the main public relations tools?

 Typical PR tools include:

 News creation and distribution (media releases)
 Special events such as news conferences, grand openings and product launches
 Speeches and presentations
 Educational programs
 Annual reports, brochures, newsletters, magazines and AV presentations
 Community activities and sponsorships
What are the key steps in implementing public relations?

 Implementing effective public relations activities requires careful planning. The three
major steps are outlined below
 Setting the objectives – what is it you want to achieve and who do you want to reach? Is
it to create awareness of a new product or service to your existing clients, to overcome

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 community misconceptions about your business or to create a positive impression with
your bank manager?
 Deciding on the message and the vehicle – what is the major thing you want to
communicate and what public relations tools will you use to get the message to its target?
 Evaluating the results – did you achieve the desired result and did it lead to a positive
outcome?
 Many small businesses do not devote enough attention to public relations in their
promotional mix but done properly, it can be a powerful and cost effective business
development and marketing tool.

How to Promote a New Product & Marketing Activities

How to launch a new product with marketing efforts.

Getting a new product out for customers to see and try out is the first step in selling that product
successfully. Even the best product will do little good for the public if they do not know it exists.
Therefore, business owners or marketing professionals must utilize various marketing techniques
to guarantee that the right audience knows about the product and that they receive the knowledge
as effectively as possible. Fortunately, there are a number of fairly simple marketing
opportunities for spreading the word and ensuring sales.

Step 1

Offer promotional products. The majority of people love freebies, and creating an event at which
you give away products is more likely to draw customers that might not otherwise have been
interested. In addition, a promotional event creates an opportunity for you to send out a press
release about the event--as well as the product--and thus utilize the local media outlets, such as
newspapers and news programs, for getting the word to the public.

Step 2

Order printed promotional material that shares information about the products. Printed
promotional material can range from simple flyers to more elaborate pamphlets that detail
product specifications. In addition, business cards can be an excellent marketing tool. If the
company features one product in particular, the business card can note that the company is
“home of the ______ product,” or something along those lines, to keep
the connection in mind for customers. And be sure to hand out as many of these printed
promotional items as possible, to reach the widest desired audience.

Step 3

Create sample sizes of products and offer them to those who can review the products and offer
feedback or a positive response. Focus on sending the samples to those with credibility in the
industry, such as professionals or experts whose feedback will have more effect on convincing
customers to try the product.

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Step 4

Collect testimonials from customers who have used and enjoyed the product. Testimonials can
be a powerful tool for convincing potential customers to take the plunge, because they create the
link between customers who trust the opinions of others like themselves. Suppose, for instance,
that you have designed and are marketing a new range of hand lotion. Testimonials from
customers can be powerful for persuading others to pass by more familiar names to use your
product.

SOCIAL RESPONSIBILITY

Social responsibility is an ethical framework that suggests that an entity, be it an organization or

individual, has an obligation to act to benefit society at large. Social responsibility is a duty every
individual has to perform so as to maintain a balance between the economy and the ecosystems.
A trade-off mayexist between economic development, in the material sense, and the welfare of
the society and environment. Social responsibility means sustaining the equilibrium between the
two. It pertains not only to business organizations but also to everyone whose any action impacts
the environment. This responsibility can be passive, by avoiding engaging in socially harmful
acts, or active, by performing activities that directly advance social goals.

Businesses can use ethical decision making to secure their businesses by making decisions that
allow for government agencies to minimize their involvement with the corporation. For instance
if a company follows the United States Environmental Protection Agency (EPA) guidelines for
emissions on dangerous pollutants and even goes an extra step to get involved in the community
and address those concerns that the public might have; they would be less likely to have the EPA
investigate them for environmental concerns. “A significant element of current thinking about
privacy, however, stresses "self-regulation" rather than market or government mechanisms for
protecting personal information”. According to some experts, most rules and regulations are
formed due to public outcry, which threatens profit maximization and therefore the well-being of
the shareholder, and that if there is not outcry there often will be limited regulation.

Corporate social responsibility

Corporate Social Responsibility or CSR has been defined by Lord Holme and Richard Watts in
The World Business Council for Sustainable Development’s publication ‘Making Good Business
Sense’ as “…the continuing commitment by business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and their families as
well as the local community and society at large". CSR is one of the newest management
strategies where companies try to create a positive impact on society while doing business. There
is no clear-cut definition of what CSR comprises. Every company has different CSR objectives
though the main motive is the same. All companies have a two point agenda- to improve
qualitatively (the management of people and processes) and quantitatively (the impact on
society). The second is as important as the first and stake holders of every company are
increasingly taking an interest in “the outer circle”-the activities of the company and how these
are impacting the environment and society.

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{Enterprise Social Responsibility and Enterprise Sustainable Development
Abstract
Enterprise undertaking social responsibility is not a business posture, but is the result of market
economy development in some stage, is the inner demand of enterprise and self-conscious
action. Enterprise social responsibility has become a new competition after the talent, technology
and management, is the important variable effected enterprise sustainable development, this
paper introduces the meaning of enterprise social responsibility and enterprise sustainable
development, dissertates the relationship between enterprise undertaking social responsibility
and enterprise sustainable development, analyzes enterprise how to come true sustainable and
build up harmonious society through undertaking social responsibility.}
The importance of fulfilling social responsibility by central enterprises

a) Growth must be balanced with environmental and labor welfare

Fulfilling social responsibility is an action taken by central enterprises for implementing
the concept of scientific development. It requires central enterprises to be human-oriented
and act according the view of scientific development, and to be responsible to
stakeholders and environment, so as to realize a harmony between the growth of
enterprises, society and environment
b) CSR will be mandatory and society will judge you if you fail to deliver
Fulfilling social responsibility is a requirement by the entire society. Central enterprises
constitute the backbone of the state-owned economy. Since most central enterprises are in
important industries and key areas that are closely related to national security and
national economy, their business activities may have significant impact on almost all
aspects of the economic activities of the entire society and life of the people. Therefore,
fulfilling social responsibility is not only the mission and responsibility of central
enterprises, it is also an expectation and requirement by the entire society.
c) CSR will improve your commercial success
Fulfilling social responsibility is the only choice for realizing the sustainable
development of central enterprises. By taking social responsibility and embedding the
concepts and requirements of social responsibility into the strategies, business activities,
and corporate culture of central enterprises, it is able to develop new ideas and solutions
for development, promote innovative thinking, improve public image and employees’
integrity, enhance cohesion within enterprises, and bring about a huge improvement to
the quality and level of central enterprises.
d) As China goes global CSR will give China Plc credibility
Fulfilling social responsibility is an objective requirement for international economic
cooperation. With the increasing development of economic globalization, the
international community shows great concern on corporate social responsibility, and
performance on social responsibility has become an important index for evaluating an
enterprise by the international community. By fulfilling social responsibility, it is not
only able to establish a “responsible” public image of central enterprises and improve the
international image of Chinese enterprises, but can also help establishing the image of a
responsible developing country of China.

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The concerns of Social Enterprise

This post is the fifth in a series of six that deals with Social Business and Social Enterprise. The
goal of the series: to explore the pros and cons of Social Business and Social Enterprise, given
the current odds, and fast-forwarding to business opportunities now and in the near future

This post is about the concerns of Social Enterprise. While yesterday's was all about the concerns
of Social Business, this one will take those concerns and apply them to Social Enterprise. An
enterprise is a company with 10,000 employees or more, regardless of geographical dispersal
(my definition)

So. Here we are. I gave my view on how we used to be naturally social and the current state of
affairs: businesses trying to close the void of anonymity and re-establish trust. I then suggested
how Social Business has tried to close that gap, and why that works.
One step further I dove into the Social Enterprise, first giving my view of the workings of the
current Enterprise, then showing how it could greatly benefit from Social in order to solve its
core problem: the survival of the fittest.
Then, I switched hats.
I put on my curmudgeon hat and had another look at Social. I voiced my concerns about Social
Business, its challenges, its extremely high dependence on people for data quality and business
information, as well its cannibalisation of your current business offerings.
Now, it's time to voice my concerns about Social Enterprise. And well about time, after this
long introduction...

Finance

Another evident change in this sector is in the manner of funding. Although funding is cited by
most literature as a major challenge for social enterprises (Salamon 1994; Dees 1998; Kingston
and Bolton 2004), there seems to be a shift in funding policy. Literature identified that most
social enterprises failed to secure start up capital. Most organisations that participated professed
minimum hindrance in the initial funding of their projects by capital providers, although the
capital seems to be restricted to immovable structures (not for buying buses). The supporting
culture fostered by the local, central and regional governments is the mostly likely cause of
easing of financing challenges, with most organisations mentioning a European Union
programme as having played a role.

Strategy and Training

The failure or lack of strategy kept propping up as a major challenge in some literature works
(Dees 1998; Boschee 2006; Chell 2007; Dees and Joan 2008). It ranged from failure to identify
significant changes in the operational and financial climate to failure to strategise in securing
funding to start an entrepreneurial project (failure to adapt). This might not be evidenced in the
running of the participating organisations but an analysis of their experiences and perception
point to this weakness within the social sector. The poor strategy argument can potential be a
precipitant to the challenge of fund raising, hinting on that the organisations that are documented

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by literature as facing financial challenges might actually be facing a strategy deficiency and not
a financial deficiency. In reference to other social enterprises, poor strategy was highlighted as
the major reason for collapse. The respondents identified the failure to identify threats and
changes to the operational environment as the major cause that other social organisations fail.
These quotes were in response to the question that asked them to identify a failed social
organisation and then were asked on their input on what they thought led to the failure of the
organisation.

Connections (Social Capital)

The organisations that seemed to survive and prosper as social enterprises stay and maintain a
culture of community involvement by being members of local or regional social sector support
organisations. Most respondents mentioned the involvement of organisations like SAVS
(Southend Association of Voluntary Service), Advantage West Midlands, ABCD (All Saints and
Blakenhall Community Development) etc, making a contribution at one time or another in their
set-up or just giving assistance. This highlights the importance of such support organisations in
providing support to social enterprises from inception and throughout their life. The study
reveals the influence and power that these organisationposses. They disseminate information or
direct social enterprises through the right channels. This signifies the importance of social capital
in promoting the social sector identified by Kerlin 2006. Organisations that have chances of
survival are the ones that are better connected.
Governance

Governance might have featured as a potential challenge for emerging social enterprises in
previous literature, mostly due to conflict of interests arising between board members and the
objectives of the entity. To the contrary, this research identified that either model of governance
(stewardship and stakeholder models) was suitable for the organisations that participated. Both
the sample organisations and the participative discussions comprised of organisations that had a
mixture of governance models. There was no friction that existed between the functions of the
organisations and their boards. However data in this field was limited due to the number of
organisations that participated. As social entrepreneurship has spread and has been development
for more than a decade, it is most likely that most differences have been ironed out over the years
as most boards leaned over to accept and acknowledge the importance of social entrepreneurship.
If evidence from these few organisations is a fare representation of the sector, it concords well
with the assertions of Challenges in Social Enterprises MakhosiNkala

Cultural Implications

This research identified instances when there are socio-cultural resistance from either within,
employees resisting changes like managers undermining strategy or outside or from the public or
other stakeholders resisting changes, like unhappy locals. Apart from highlighting the potential
for conflict in social enterprises, these findings identified the need for social enterprise leaders to
adopt different (or appropriate) strategies for diffusing such situations through consultation or
involvement of most stakeholders at most stages. This highlights the diversity of knowledge and
skill that a leader of a social enterprise should posses as there are complex management

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decisions that need to be made. This boils down to the training highlighted above that a social
enterprise leader need to undergo in order to succeed in handling these situations.

Other challenges and observations

Attitude of mistrust of social entrepreneurship by most grant givers in the social sector has been
widely documented (Boschee 2003). This research highlighted a change of attitude as most
traditional grant givers are now being interested in how the organisation would fund their future
programs without further grant finance. This nudging of social organisations toward social
entrepreneurship symbolises the changing attitudes towards entrepreneurship from all spheres of
the social sector. In the yesteryears it was rare for social organisations to acquire funding for
capital projects from most donors and grant givers (Hind 1995). This could be signalling the
demise of reliance on grants and donations in the social sector and a concerted push for social
entrepreneurship in most if not the whole social sector.

INFORMATION COMMUNICATION TECHNOLOGY I ENTREPRENEURSHIP

Benefits of ICT

The only difference woldbe that suing ICT will enable the small businesses to streamline and
become more efficient in order to compete with bigger businesses.

It is very easy to store data, and Save things can be saved in many places other than just your
computer, for example; external hard drives.
Organisation is much more easier and better when using a PC.
If done efficiently, your work can be very accurate, depending on the user iput.
Using ICT also means there is unlimited amount of space available to you.

Some of the advantages of information technology include:

1) Globalization - IT has not only brought the world closer together, but it has allowed the
world's economy to become a single interdependent system. This means that we can not
only share information quickly and efficiently, but we can also bring down barriers of
linguistic and geographic boundaries. The world has developed into a global village due
to the help of information technology allowing countries like Chile and Japan who are not
only separated by distance but also by language to shares ideas and information with each
other.
2) Communication - With the help of information technology, communication has also
become cheaper, quicker, and more efficient. We can now communicate with anyone
around the globe by simply text messaging them or sending them an email for an almost
instantaneous response. The internet has also opened up face to face direct

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 communication from different parts of the world thanks to the helps of video
conferencing.
3) Cost effectiveness - Information technology has helped to computerize the business
process thus streamlining businesses to make them extremely cost effective money
making machines. This in turn increases productivity which ultimately gives rise to
profits that means better pay and less strenuous working conditions.
4) Bridging the cultural gap - Information technology has helped to bridge the cultural gap
by helping people from different cultures to communicate with one another, and allow for
the exchange of views and ideas, thus increasing awareness and reducing prejudice.
5) More time - IT has made it possible for businesses to be open 24 x7 all over the globe.
This means that a business can be open anytime anywhere, making purchases from
different countries easier and more convenient. It also means that you can have your
goods delivered right to your doorstep with having to move a single muscle.
6) Creation of new jobs - Probably the best advantage of information technology is the
creation of new and interesting jobs. Computer programmers, Systems analyzers,
Hardware and Software developers and Web designers are just some of the many new
employment opportunities created with the help of IT.

What are the benefits of ICT to a small business?

Some disadvantages of information technology include:
1) Unemployment - While information technology may have streamlined the business
process it has also crated job redundancies, downsizing and outsourcing. This means that
a lot of lower and middle level jobs have been done away with causing more people to
become unemployed.
2) Privacy - Though information technology may have made communication quicker, easier
and more convenient, it has also bought along privacy issues. From cell phone signal
interceptions to email hacking, people are now worried about their once private
information becoming public knowledge.
3) Lack of job security - Industry experts believe that the internet has made job security a
big issue as since technology keeps on changing with each day. This means that one has
to be in a constant learning mode, if he or she wishes for their job to be secure.
4) Dominant culture - While information technology may have made the world a global
village, it has also contributed to one culture dominating another weaker one. For
example it is now argued that US influences how most young teenagers all over the world
now act, dress and behave. Languages too have become overshadowed, with English
becoming the primary mode of communication for business and everything else.

Computer Applications

According to The History of Computing Project, the prototype of the first microcomputer was
introduced by the aptly named Micro Computer Inc., Los Angeles, in 1968. ARPANET, a
defense contractors' information exchange and the precursor of the Internet, was born a year
later. Commercial microcomputers (Apple, Commodore, Tandy, Sinclair, and Texas

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Instruments) appeared in 1977. Apple Computer introduced the first graphical interface with the
Macintosh; Microsoft followed with the first version of Windows in 1985. The Internet evolved
from ARPANET over a period of 18 years and, by 1987, it was a world-wide network. By 1990
it was beginning to appear in small businesses, usually in text mode. The first well-known
microcomputer software applications were the VisiCalc spreadsheet and the word processors
Applewriter and WordStar, all dating to the 1978—1979 period.

A few small businesses used computers before the micros appeared, but primarily in professional
applications rather than as business tools. Minicomputers like the Honeywell (used in
engineering) and the Wang (a dedicated word processor much used by law-firms and here and
there by a successful author) were in the small business price range. Since then the three related
strands of computing—hardware, software, and networks—have produced something of an
avalanche of change in business administration and communications, every year bringing
changes. Not surprisingly, four months before 2006 began, PC Magazine published a forecast
entitled "2006: The Year Everything Changes." More or less the same theme has been sounded
every year since 1980. But changes in computing and related software applications have shifted
toward cell-phone-sized devices. In the traditional areas of office computing, the emerging issues
of the mid-2000s are 1) centralization and decentralization: should the information technology
(IT) staff have more or less control; 2) renewal or adaptation: should aging applications be
brought up to date or should the business intelligently integrate old and new and save money;
and 3) Web-related expansion and exploitation.

Small business has taken an active part both in the use and provision of computer applications.
Once computers became affordable, they have been widely deployed in small business and,
whether stand-alone or networked, have provided much the same administrative support service
they do in larger enterprises. Small businesses have also participated actively in providing
computer services, the production of custom software, the writing of such software for their own
operations, in consulting with clients and systems integration, and in Web-consulting and Web-
page design and development. By the very nature of the small business environment, small
operations have found it easy to adapt and to respond rapidly to change in what was a dynamic
environment.

CATEGORIES OF APPLICATIONS

Operating Systems

All computers run under the control of operating system software (OS) designed for the hard-
ware platform. The OS provides the basic environment in which everything takes place.
Windows is the most widely-used OS on small computers followed by the Apple's Mac OS; only
a small minority of small computers run on Unix, developed in 1969 at Bell Laboratories, or its
derivates, e.g., LINUX. The choice of operating systems in small businesses is often driven by
the type of work done and/or the operating systems used by clients. Many operations based on
the graphic arts use Macintosh computers; in other cases the need easily to exchange data with
clients may dictate choice of the OS. All else being equal, small businesses will tend to use the
most cost-effective system in-house, typically a Windows-based or a Macintosh system.

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Office Applications

Word processing for written communications, spreadsheets for analysis, databases for inventory
control, bookkeeping software for accounting, and software for tax preparation have become
reasonably priced for even small businesses that have only one computer. Payroll software has
now emerged for smaller operations too, sometimes free-standing and sometimes as extensions
of popular bookkeeping packages. In the mid-2000s, most small businesses were computerized
and, in addition, enjoyed data management at levels of sophistication unimaginable in the mid-
1990s.

Professional Software

Computer-assisted software development, design, and manufacturing systems (CAS, CAD, and
CAM) are perhaps the best-known examples of professional software. Such systems, however,
are also available for just about any professional activity that is based on symbol manipulation,
data storage, and data processing. The Apple Macintosh, an early entrant into the graphical
environment, continues to dominate graphic arts operations. Computer-based page design and
typesetting packages have become affordable and are widely used in the small organization.
Virtually all medical practices use computer-based patient scheduling and billing systems; the
goal of completely automated and digitalized patient record-keeping, however, is still in the
future; systems are being installed here and there but are not yet widely used.

Business Communications and Outreach

The introduction of computer faxes and especially e-mail systems has revolutionized the way
that businesses communicate with one another and employees interact within the company.
Long-distance telephone costs and postage costs are saved in the process, and faster
communications also speed up decision-making. Of greatest importance, perhaps, for the small
business is its ability to communicate with potential customers through its own Web-site. Web-
based marketing is very widespread.

Finding computer applications for various aspects of a company's operations has, in recent years,
become an increasingly vital task of many small business owners. Indeed, computers are an
integral part of the business landscape today, in part because they can be an effective tool in so
many different aspects of a business's daily operations. Computer systems are now relied on for a
broad spectrum of duties, including bookkeeping, business communications, product design,
manufacturing, inventory control, and marketing. Indeed, a 1997 survey conducted by Sales &
Management magazine indicated that 85 percent of respondents felt that technology was
increasing the efficiency of their sales force, while another 62 percent concluded that it was
helping them increase their sales.

SMALL BUSINESS AND COMPUTER USE

Entrepreneurs and other small business owners utilize today's rapidly changing computer
technology in many different realms of operation:

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BOOKKEEPING Computer systems are heavily utilized for a variety of accounting functions,
including employee payroll; cash flow analysis; job costing; tracking of vendor and customer
payments and debts; federal, state, and local taxes; and other expenses and revenues that impact
on the business's fiscal health. Small business owners use computers for bookkeeping more than
for any other purpose, and software programs designed to help even inexperienced business
owners with their bookkeeping have proliferated on the marketplace in recent years as a result.

BUSINESS COMMUNICATIONS The introduction of computer faxes and especially

electronic mail systems has revolutionized the way that businesses communicate with one
another. Moreover, e-mail has significantly altered how employees within the same company
interact with one another. The savings, both in time and money, that have been realized through
the use of this computer technology have been considerable. E-mail, for instance, not only
enables users to save significant sums of money that would otherwise go to long-distance
telephone and delivery charges, but also speeds up the process of information delivery.
Computer faxes, meanwhile, also enable businesses to "save, labor, office supplies, and long-
distance phone charges" that are associated with regular fax machines, noted Sandi Smith in the
Journal of Accountancy. "The savings: You don't have to make a paper copy, go to the fax
machine, wait to be sure the pages don't jam—and if they do, resend. The cost of sending a fax
via computer is a fraction of the cost of sending a machine fax."

PRODUCT DESIGN Product design is one of the most popular computer applications in the
business world today. Computer-aided design (CAD) involves creating computer models of
products that are ultimately transformed into reality. CAD systems enable designers to view
objects under a wide variety of representations and to test these objects by simulating real-world
conditions.

MANUFACTURING Computer-aided manufacturing (CAM), meanwhile, uses geometrical

design data to control automated machinery and other production processes. Since both CAD and
CAM use computer based methods for encoding geometrical data, it is possible for the processes
of design and manufacture to be highly integrated. Computer-aided design and manufacturing
systems are commonly referred to as CAD/CAM.

In recent years, technological advances have triggered fundamental changes in many CAD/CAM
systems. Whereas CAD/CAM applications used to be limited to older mainframe and
workstation-based systems, advances in personal computers and software programs have spurred
a dramatic upsurge in their use among small business owners, who are now better able to afford
the technology. The greater viability of personal computers for CAD/CAM applications results
from their ever-increasing processing power. An important trend is toward the standardization of
software, so that different packages can readily share data. Standards have been in place for
some time regarding data exchange and graphics; user interfaces are rapidly going the same
route. In the realm of electronic design automation software, a similar trend toward
standardization has also been underway. Other improvements in software include greater
sophistication of visual representation and greater integration of modeling and testing
applications.

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INVENTORY CONTROL Small businesses are increasingly using computers to track all
aspects of their inventory, including warehousing, ordering, receiving, and distribution. In
addition, many computer systems maintain programs that integrate inventory control needs with
other aspects of the business's operations, which helps the company perform in a cohesive and
intelligent manner as it negotiates the various obstacles of the business world.

MARKETING Computer applications for marketing have surged in recent years. Whereas
computer applications for other business needs have been a part of the picture for a decade or
two now, the widespread use of computers to shape a company's marketing strategies and
campaigns is a relatively new development. "Firms …are gathering tremendous amounts of
information about customers, markets, and industries by using an array of relatively inexpensive
software and computerized databases," wrote Tim Mc-Collum in Nation's Business. "These
resources can help entrepreneurs increase their effectiveness in targeting markets, cultivating
leads, and closing sales.…Whether it's called database marketing, smart marketing, or target
selling, it boils down to using technology to delivery information that can boost sales."

Many consultants and business experts contend that it is particularly important for small business
enterprises to make maximum use of this still-developing computer technology. Small business
entities typically have fewer clients than do larger firms, which makes the search for new
customers an essential component of future success. As analyst Martha Rogers noted in Nation's
Business, information technologies like business and customer databases and sales force
automation systems can be effective tools for small business owners looking to develop
profitable and lasting relationships with customers. Indeed, smaller firms often need good
customer information simply to keep pace with larger competitors.

Of course, reliable customer information is a major key to any effective marketing campaign.
Consequently, database service providers such as Dun & Bradstreet Information Services (DBIS)
and American Business Information Inc. (ABI) have become enormously popular with
businesses of varying shapes and sizes. "These businesses," wrote McCollum, "have
accumulated vast amounts of data on companies throughout the United States and Canada.
Customers can buy the records on firms in specific locations or industries or of certain sizes or
sales volumes. The databases make it easy to generate lists of potential customers for direct mail
or telemarketing campaigns." In addition, DBIS, ABI, and other companies that provide similar
services have made their information available via CD-ROMs (with regular updates). Another
favorite site for finding business leads is the expanding group of CD-ROM products that provide
business and residential telephone listings for various geographic regions of the United States.

Ultimately, however, Nation's Business magazine noted that although computers can be a
valuable marketing resource for small firms, "technology itself won't boost sales…. For sales to
climb, information must be carefully integrated into a total marketing strategy." The magazine
thus made the following recommendations to companies looking to apply computer resources to
marketing efforts:

 Build a database of customers and prospective customers, and update it regularly.

 Decide what marketing information is needed, and establish a plan to obtain it.

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  Use demographic and geographic data to put together a profile of current customer base,
which can then be used to identify potential new markets.
 Use data to identify long-term interests and buying habits of clients.
 Involve sales force (if any) in introduction of new technologies; "If salespeople don't
think the automated system will benefit them, they won't use it."
 Share information throughout the company.
 Use computer resources to personalize and coordinate direct mailings and other
campaigns.
 Arrange so that pertinent customer information is available to those who need it.

FACTORS TO WEIGH WHEN CONSIDERING NEW COMPUTER APPLICATIONS

Many small business owners have embraced computers as tools in doing business—and have
done so early enough so that at present, in many places, hardware and applications both are
becoming old. Amanda Kooser, writing in Entrepreneur, summed up the situation as follows: "A
recent report by the Business Performance Management Forum took a look at this neglected
issue [obsolete programs]. They surveyed a cross section of businesses and found more than 70
percent of respondents were convinced there were redundant, deficient or obsolete applications
being maintained and supported on their networks. Forty percent estimated unwanted programs
consumed more than 10 percent of their IT budgets. That can add up to a lot of unnecessary
costs." IT in this context stands for Information Technology. Kooser recommends that
companies conduct disciplined IT audits followed by systematic culling of old technology and its
replacement with more modern software.

Another view is taken by Joe Tedesco, writing in Database. Tedesco's title signals the strategy:
"Out With The Old? Not So Fast." Tedesco asks: "Is it time, simply, to buy new stuff? Again?"
He goes on to spell out the downside: "Investing anew in software is not an especially appealing
option, for a variety of reasons. How can [companies] leverage proven tools for new challenges
such as increased functionality, heightened security and better data and subject-matter
management? More and more companies are finding new value in the software already in use in
their organizations."

These two views—replace the old or rationalize the old—have a counterpart in movements to
centralize systems that have grown up throughout the company without coordination (on the one
hand) and creating order by networking or rearranging existing systems to fit a more orderly
situation easier for computer staffs to oversee and to maintain (on the other).

These kinds of arguments, common in the trade press, may signal that computer use is beginning
to mature in organizations and that, at least in the immediate future, much more attention will be
paid to cost-effective management of existing resources and cautious acquisition of the new.

Despite conflicting views, peer pressure and anxiety often influence buyers, not least small
business buyers. In an article for Fortune, Joel Dreyfuss wrote as follows: "If you don't have the
latest and (always) greatest software and hardware on your business computers, your vendors
and employees can make you feel that you're just one step away from quill pens and parchment.

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The truth is that most small businesses, and consumers for that matter, get cajoled into upgrades
that give them more headaches than benefits."

Dreyfuss suggested that small business owners have employees figure out the cost of installation,
debugging, and training associated with new computer equipment before consenting to a
purchase. He also mentioned that Usenet discussion groups and technical bulletin boards on the
Internet can provide valuable analysis of new products. "Seeing the comments about installation
problems, upgrade issues, and reported incompatibilities with other products can cool the ardor
of any technology fanatic," he noted.

Another factor for small business owners to keep in mind is that a variety of computer
applications are available online over the Internet. A number of companies have established
small business portals on the Internet to give companies access to software and services—such as
payroll processing, legal services, online banking, or assistance in building a Web site for E-
commerce. In addition, application service providers (ASPs) offer companies the opportunity to
test and use software over the Internet without having to purchase it. These options may
eventually reduce the cost and improve the accessibility of computer applications for small
businesses.

As part of its 10-year birthday celebrations, Working Knowledge - the Harvard Business School
publication which provides a first glimpse into cutting-edge research from Harvard faculty -
asked several influential management thinkers and faculty, including the new Dean, NitinNohria
to shed some light on the most significant ideas and developments that have impacted business
management in the first decade of the 21st century and also the most productive management
research areas in the decade to follow.

Based on responses from the reputed faculty researchers, we take a look at five areas or trends
which are emerging as the key influencers of business and management in the 21st century and
are also likely to spawn a good share of research in the domain.

Globalization

 The melting of barriers among nations and their increasing interconnectedness, accelerated by
technology, has led to a change in the world order that has had a profound impact on global
business. The emergence of nations such as India and China has replaced the era of unquestioned
dominance of the Western countries or any one particular region, paving the way for a flattened
business arena where developments in one part of the other are certain to have a spiraling impact.
Perhaps the best evidence of this is the recent financial crisis.

A recent 335-page study by the AACSB, the leading accreditation agency for business schools
around the world, highlights the implications of this and asserts that rising expectations from
business and society for graduates with global competencies, coupled with the increasing
complexity and global connectedness of higher education, command the attention of business
schools around the world.

Technology

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 If the current wave of globalization has been the driving force behind the most far-reaching and
powerful changes in business, then information technology has indisputably been the facilitator.
Drawing attention to the fact that four out of the top five companies in Businessweek's annual
list of most innovative companies are technology-driven businesses, Professor Teresa Amabile
writes in Working Knowledge, Customers are courted and supply chains are managed via
websites, social media, and email; marketing, manufacturing, and distribution processes are
managed by sophisticated real-time information systems; colleagues working 12 time zones apart
can see and hear each other as they work at their desks-or in airport lounges on opposite sides of
the planet.

Sustainability and Corporate Social Responsibility

 For business to be sustainable, and even profitable, our planet has to be sustainable - this
realization has hit businesses perhaps the hardest in recent times. HBS Dean NitinNohria feels
that in the coming decade, we are likely to see a lot of focus directed towards applying
management principles to solutions of complex social issues such as environmental
sustainability, energy security, access to healthcare etc. This will also underline the need for
increased interdisciplinary interaction and influence on business management.

One evidence of this growing engagement with issues of society and sustainability is the increase
in number of companies who have intensified their CSR focus and the innovative ways in which
they have engaged themselves, points out professor of marketing, Michael Norton. Shifting
steadily from corporate philanthropy to more direct and effective engagement, companies have
devised new models of extending a social footprint. Drawing attention to the Pepsi Refresh
project, Norton has highlighted how the company encouraged users to submit projects with
social impact-from cleaning up a river to saving animals-and allowed other users to vote on
which projects Pepsi should fund.

The Study of Psychology

Speaking of interdisciplinary influences on business, the study of human psychology - probing

into cognition, motivation, behavior and performance - has become a key pillar of organizational
management. From employee management to customer satisfaction and social engagement,
satisfaction of business objectives requires effective analysis of both individual and institutional
psychology. A good amount of research is therefore likely to be focused on how psychological
theory and research can be integrated into business academics and management practice;
Professor Amabile feels that with more evolved tools and access to ever-growing information
databases, managers will have the power to substantially improve both the practice of business
and the welfare of society.

Business Ecosystems

Professor Carlyss Y. Baldwin feels that one of the most notable trends in management has been
the rise of business ecosystems - defined as groups of firms which together provide complex
products and related services to meet end-to- end requirements of users across the value chain.

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The integration between media, technology and telecommunication firms would be an apt
contemporary example.

This has important implications for management because innovation in business ecosystems has
a character distinct from traditional, vertically integrated firms. Every organization in the
ecosystem has to be aware of the bigger picture. As Professor Baldwin tells Working
Knowledge, Innovation in ecosystems requires collective action to both invent and appraise,
efficient, cross-organization knowledge flows, modular architectures, and good stewardship of
legacy systems. It rests on multiple, complementary platforms.

EMERGING TRENDS IN ENTERPRISE CONTENT MANAGEMENT

The second day of Nuxeworld began with a keynote presentation from Laurence Hart of
Washington Consulting, who tackled the enterprise content management trends and how we are
going to handle a level of content that will be the equivalent of around 35 billion Libraries of
Congress by 2020.

Managing Content

While the keynote was entitled ECM Market Trends, he dispensed with the enterprise element of
the title suggesting that the real problem over the next few years is not so much enterprise
content management systems and how they develop, but rather how companies are actually
going to strategize and manage content.

Enterprise, he says, is:

… a strategy for the coordinated management of all content throughout an organization, allowing
for people and systems to find and use content from within any business context.”

Since the 1990s the ECM technology has been evolving in such a way and with so many
different elements it that “… it’s challenging at the best of times to make it work”.

At this stage, the amount of content being used or accessed by enterprises is rising by 50% per
year, which means that by 2020 there will be around 35 zetabytes of information floating around,
which is where the Library of Congress analogy comes in.

With this comes more users, bigger infrastructure and bigger security issues around securing that
content, making it harder and harder to make things work.

In this respect he cites the case of the US Immigration Service and the difficulties in managing
the content in just this one service:

 Every year there is one million new immigrants into the United States.
 Each immigrant creates enough information for 70MB of information.

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  Each file has to be held for 99 years, and made accessible to all the different departments
that need it.

For social security it’s even worse with 16 billion claims every year, with every single request or
reference to that claim recorded and logged.

That’s just two examples in the US of many in the public sector. Then add the private sector, and
all the other related content and you get a great big mess.

4 Trends in Content Management

The real question is not how enterprise content managing systems should be evolving, but how
do you manage the entire content within this context. What has happened, Hart says, is that we
spend more and more time every year managing the infrastructure to manage that content.

From that, he says, the ‘Unanswerable Question’ arises:

If all the obstacles to enterprise content management adoption were to go away - user/culture
acceptance, networks bandwidth, cost, security, etc - what would you do with enterprise content
management?”

In other words, if all the technical problems around ECM suddenly disappeared, how and what
kind of content strategy would be left.

And a number of trends are evolving in this respect that, while current in the US at the moment,
are also making their way across the Atlantic to Europe.

1. Content Management For All

He says there is a growing awareness among people working in business that content needs to be
managed that it won’t just happen itself

2. Content Governance

The distinction between enterprise ownership and personal ownership is changing, where content
created in the enterprise belongs to the enterprise as opposed to the person who created it, and
that content, as a result needs to be findable and available.

3. Solving the Business Problem

Vendors are slowly moving away from the idea of building a single fix-it-all enterprise content
management system to designing systems that will actually deal with business problems.

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4. Moving to the Cloud

The Cloud, he says, is the initial promise of the web for business realized; a situation where all
their business issues can be dealt with through technology, without having to worry about the
infrastructure issues. While vendors are beginning to see the potential for that, it still has a long
way to go.

Focus on Business Problems

These trends, he says, should take users to a place where they are unaware of what is going on in
the background; where they are working with content to fulfill business needs, not to keep an
infrastructure in shape.

However, there is still one thing that is lacking and that is centralized Identity management,
without which you will still need a centralized infrastructure to achieve ECM so that all
authentication and authorization can be managed by the LDAP service of choice.

ECM vendors need to start getting up to speed on this issue as they look to move beyond their
traditional application boundaries.

Ultimately, the goal is Omnipresent Content Management, defined as the coordinated

management of all content throughout the world, allowing systems and people to find, use and
share content from within any context.

The Challenges facing Entrepreneurs in Kenya include the following;

 Competition,
 Lack of accurate information,
 Support,
 Lack of Finance,
 Fear to Risk- Taking,
 Lack of Education and Training
 Lack of Support.

Competition as one of the Challenges facing Entrepreneurs in Kenya

Competition is one of the Challenges facing Entrepreneurs in Kenya. Competition is seen in

form of the size of Market Share in the Rural Setting. There is limited expansion in these
settings. New Competitors such as mini-super Markets with wide varieties of products for those
who were engaged in selling household products are emerging.

Lack of accurate information as one of the Challenges facing Entrepreneurs in Kenya

Lack of accurate information is one of the Challenges facing Entrepreneurs in Kenya. There is
lack of knowledge on Business Management which include; management of debtors and proper

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Record Keeping. There is also need for effective communication to negotiate or bargain
favorable with the customers.

Lack of Finance as one of the Challenges facing Entrepreneurs in Kenya

Lack of Finance is another of the Challenges facing Entrepreneurs in Kenya. The experiences the
Women Entrepreneurs in Kenya have in running their Businesses include such problems as lack
of enough Capital, difficulties in transportation and Marketing, the perishability of some
commodities. They also encounter difficulties in licensing procedures .Most Women
Entrepreneurs who need Financing lack the needed collateral to enable them secure bank loans.
They have limited opportunities to make Savings or undertake Business Expansion and
Diversification.

Fear to Risk-Take as one of the Challenges facing Entrepreneurs in Kenya

One of the Challenges facing Entrepreneurs in Kenya is fear to risk take. Entrepreneurship
always involves some level of risk taking. For women in the rural areas, gender stereotyped
perception of self, lack of confidence and assertiveness appear to be major barriers that hinder
Women Entrepreneurs in Kenya from risk taking.

Lack of Education and Training as one of the Challenges facing Entrepreneurs in Kenya

Lack of Education is one of the Challenges facing Entrepreneurs in Kenya. Lack of sufficient
Education and Business Training for Women Entrepreneurs in Kenya is another hindrance to
micro-enterprise success.  Culturally, and especially in the rural setting, the Girl Child was not
given equal opportunity to study like the boys; hence they had limited Education and Training
which tends to affect effective performance in later life.

Lack of Support as one of the Challenges facing Entrepreneurs in Kenya

One of the Challenges facing Entrepreneurs in Kenya is lack of support. Many rural Women
Entrepreneurs in Kenya are unaware of support mechanisms that include key Stake Holders like
the Government or other income generating activities. In the absence of such coordinated effort,
these Entrepreneurs will continue to suffer ‘eking’ a living at survivalist level only. This is
coupled with the reluctance of the formal Public Institutions to help women in micro- and small-
scale enterprises.

Conclusion and Recommendations on Challenges facing Entrepreneurs in Kenya

The pivotal place of Women Entrepreneurs in Kenya Society especially in rural areas needs to be
accepted and supported.

Women Entrepreneurs in Kenya need Training in functional areas such as Finance, Literacy
Skills, Marketing, Production and Managerial Skills.

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Married Women should be given support by their spouse in respect of Finances, motivational
encouragement, advice and actual involvement in the running of Business.

Access to Credit by women at the level of Micro and Small-scale Enterprises, should be
facilitated through innovative Programs and Financing arrangements by the Government and
other Finance Institutions

The Public Sector and formal Financial Organizations should be sensitized on the value of
Gender-balanced participation in the Informal Sector Enterprises. All this will help boost
Women Entrepreneurs in Kenya. Thus the Challenges facing Entrepreneurs in Kenya

4 97
Essential Components Of Business Plans

A Business plan; is a formal statement of the business goals, reasons they are attainable, and plans for reaching
them. It may also contain background information about the organization or team attempting to reach those goals.
It is a written document that describes in detail how a new business is going to achieve its goals.

Business plans have a well defined form that shouldn't be changed by anyone. Business plans include
several elements that shouldn't be modified, because otherwise they won't have the expected results.

When you want to write your business plan remember to stick to its original form. Those that will read it
will expect to see a certain format. In the case that they won't notice the elemental components then they
won't take your plan into consideration even if you've presented a great idea.

The business plans have five fundamental components: the executive summary section, the business
description section, the market analysis section, the production the financing section, and the management
section.

The executive summary section is the first section in all business plans. Those business plans with a good
executive summary will have greater chances to be successful. The audience will be convinced to read the
whole business plan if you'll come with an excellent executive summary. For successful business plans the
executive summary is very important.

All business plans should include in this section the nature of your new venture and the need you want to
satisfy. Also, describe your potential market and why is your product or service needed. Don't forget to
describe how is your business organized, your management team, and include a briefly summary of your
marketing plan. Also, remember that the audience wants to see the amount of capital that you need, your
sales expectations and how are you expecting to pay back the debt.

If the audience is pleased by what you have written till now then they will continue reading the whole plan.
But if you couldn't capture their attention then they will reject your plan no matter how good is your idea.

The business section of business plans should include the legal name, physical address and full description
of the nature of the business. Firstly, keep in mind that business plans should contain a general terminology.
Those that read the plan don't necessarily have the same level of knowledge like those that write the plan.

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Also, you should try to explain why your idea is better than that of your competitors.

The market analysis section helps you understand better the market on which you want to enter. This section
is more like a marketing plan description. All business plans should include in the market analysis section
the estimated demand of the product or service, the market target, the industry's trends, the pricing plan that
you will follow and the description of the company's policies.

In the financing section you should prove to the audience that you really want to make your business work.
Explain exactly how much money from the personal funds do you have and their sources. Also, mention the
amount that you need to borrow and how are you going to repay it. Any relevant financial worksheets like
annual income projections, a break-even worksheet, predictable cash flow statements and a balance sheet are
important and should be included in all business plans.

Good business plans contain in the management section information about the organizational structure of
the business and about the management team. Also, it contains resumes and biographies of key members of
the management team.

There are some persons that might consider that business plans require a lot of time and effort. But, they
don't realize that the time spent writing the plan is well spent. Also, there is a business plan building
software that helps people make their business plans. This software is easy to use and at an affordable price
and will help you obtain some great business plans.

4 103
Create A Business Plan Before Looking For Funding

There are plenty of small business hopefuls looking for funding at any given time, and not all of them will
be successful. Most people will be able to get the funding needed to get the business going, but statistics
show that only the frugal, fortunate and financially savvy will turn a profit and stay in business.

So, before looking for business startup funding, entrepreneurs must research and strategize to create a long-
term business plan for the present and the future. The first rule is to find an industry that you are familiar
with, and allows you to utilize your skills and abilities before looking for funding. By concentrating on what
you do best, your business startup funding will be well spent. People who try to start a business in an
industry that they know nothing about will probably have failed before they even find the funding needed.

It's also important to ask a lot of people about what the right kind of business startup funding would be for
the business you are going into. People who are looking for funding may want to talk to a banker, an
accountant, a financial advisor and friends in the business sector before they start looking. While it is easy to
find the funding needed, it is not so easy to find the right funding. A business plan will also be necessary,
especially if you will need to bring in outside investors or get financing from a bank. It is smart to read as
many articles about the industry as possible, and learn what other people have done to be successful in that
industry. Then you can go out there and get the funding needed to get started and be successful in the long
run.

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DEVELOP YOUR BUSINESS PLAN
An effective business plan serves at least four useful purposes:
􀀁It helps you focus your ideas.
􀀁It creates a track for you to follow in the early stages of business growth.
􀀁It creates benchmarks against which you can measure progress.
􀀁It provides a document for attracting equity or debt financing.
The business plan brings together the goals, plans, strategies, and resources of a business. By
developing a comprehensive plan prior to commencement of operations, it can minimize risk
and may save you from significant financial and professional losses resulting from an
unprofitable business.
There are many different suggestions for organizing and presenting a business plan. Organize
and prepare your plan so that it meets your style and needs as well as the needs of those who will
read it.
The following are the elements that are important in a comprehensive and detailed plan. Let this
serve as a step by- step guide to help you gather and evaluate your thoughts and develop your
plan.

Tips for writing a good business plan

􀀁Keep it simple and focused
􀀁Make it easy to read
􀀁Use understandable language, a layout that is pleasing to the eye, and charts or graphs
to explain difficult concepts
􀀁Be objective
􀀁Review the plan with the critical eye of an outsider who doesn’t know your business
and isn’t committed to the business
􀀁Be honest
􀀁Acknowledge your weaknesses as well as your strengths
􀀁Review and revise the document regularly
􀀁Consider your business plan a “living” document
􀀁Schedule periodic revisions to keep it current
􀀁Get your staff to participate in the development of the plan
􀀁Not only will they have good ideas for improving it, they will work harder to support
something that they helped to develop
Mistakes to avoid when creating a business plan
􀀁Submitting a “rough draft” of the business plan.
􀀁Coffee stains and crossed out words indicate to the reader the owner is not serious
about the business – there are a number of businesses or printers that can help the small
business owner with professional quality presentations.
􀀁Outdated historical financial information or industry comparisons will indicate a lack
of current research and investigation on the owner’s part.
􀀁Unsubstantiated assumptions can undermine a business plan.
􀀁The owner must anticipate doubts or questions about every point of the plan.
􀀁Failure to consider potential problems will lead the reader to view the plan as
unrealistic.
􀀁A lack of understanding of financial information is a drawback.

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 􀀁If an outside source is used to prepare financial statements, the owner must fully
comprehend the information.
􀀁Absence of any consideration of the impact of outside influences on the business is a
problem.
􀀁The owner needs to discuss the potential impact of competitive factors as well as
economic factors at the time of the request.
􀀁Difficulties will arise if there is no verification of 30% investment by the owner. The
lender will typically expect the potential owner to have at least 30% equity in potential
business.
􀀁If the owner does not or cannot personally guarantee a loan, questions will arise.
􀀁Proposing unrealistic loan repayment terms.
􀀁After the lender evaluates the viability of a business, he will discuss realistic loan
terms.
􀀁Too much focus on collateral is a problem in the business plan. Even for a cash
secured loan, the banker is looking toward projected profits for repayment of the loan.
Emphasis should be on cash flow.
CONFIDENTIALITY
The business plan contains sensitive information about every aspect of the business and the
personal financial status of all owners. Therefore, it should be treated like a top-secret document.
All copies should be consecutively numbered and strictly accounted for in writing. All recipients
of the plan must sign an agreement that s/he will not make copies of the plan or disclose details
to anyone other than financial advisors. The receipt also requires that if the person is not
interested in investing in the company’s future growth, the business plan will be returned.
Distribute the business plan on a strict “need-to-know” basis for the protection of the business
and all those involved.

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