1

REPUBLIC OF RWANDA

KIGALI INDEPENDENT UNIVERSITY (ULK)

P.O Box 2280

Website://www.ulk.ac.rw

E-mail: [email protected]

ENTREPRENEURSHIP
By

1. NTEZIYAREMYE Stanislas
2. Dr.BOGERE MOHAMMED
E-mail:[email protected]

Tel.: 07826465538 January, 2014

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1 Module Code: DVS 402..Unit 1_ Faculty: SOCIAL SCIENCES

2. Module title:Entrepreneurship and Project Management/ Unit 1: Entrepreneurship

3. Level: 4 Semester: 2 Credits: 12

4. First year of presentation: 2011 Administering Faculty: SOCIAL SCIENCES

5. Pre-requisite or co-requisite modules, excluded combinations

Having successfully completed Third Year

6. Allocation of study and teaching hours

Total student hours ____________

Student hours Staffhours
Lectures
30 50
Seminars/workshops
10 10
Practical classes/laboratory
30 30
Structured exercises
10 10
Set reading etc.
10 --------
Self-directed study
10 --------
Assignments – preparation and writing
10 10
Examination – revision and attendance
10 10
TOTAL
120 120
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6.1. Brief description of aims and content

The module aims at:

 Making students aware of the Entrepreneurship and project management environments

 Making students aware of Historical evolution of Entrepreneurship and project
management theory and practices
 Making students understanding the various principles of each step of Entrepreneurship as
processes
 Making students understanding the various principles of each step or Project management
as processes
 Understanding the principles of Project management
 Making students understanding the different roles of framework.
 Making students understanding decision making and leadership skills

 Making students understanding advanced Taxation and Auditing as processes: Planning,

organizing, coordinating and controlling

6.2 Learning Outcomes

i) Knowledge and Understanding
Having successfully completed the module, students should be able to demonstrate
knowledge and understanding of:

 Principles of each step of Entrepreneurship and project management processes

 Demonstrate knowledge and understanding of the Entrepreneurship and projects
environment
 Principles of each step or Project management function

ii) Cognitive/Intellectual skills/Application of Knowledge

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Having successfully completed the module, students should be able to:

 Apply principles of Entrepreneurship and project management principles in

manufacturing or service industries
 Apply Principles of Entrepreneurship and project management principles in any working
environment

iii) Communication/ICT/Numeracy/Analytic Techniques/Practical Skills

Having successfully completed the module, students should be able to:

 Teach or communicate to others all principles of Entrepreneurship and of course

apply them in a working environment.
 Explain different roles of framework.
 Explain decision making and leadership skills
 Plan strategically, tactically and operationally, to organize, to supervise and to control
in any working environment
 Teach or communicate to others all principles of Project management and of course
apply them in a working environment.
 Explain different roles of framework.
 Explain decision making and leadership skills

iv) General transferable skills

Having successfully completed the module, students should be able to:
 Demonstrate Entrepreneurship and project management skills in a working environment
(being public or private sector)
 Demonstrate teamwork skills in a working environment
 Demonstrate decision making and leadership skills
 Demonstrate managerial skills in a working environment (being public or private sector)
 Demonstrate conceptual, planning, organizing, coordinating and controlling skills in any
environment
 Demonstrate teamwork skills in a working environment
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 Demonstrate decision making and leadership skills

7. Indicative Content

Part 1: Entrepreneurship

 Introduction to entrepreneurship: Notions and definition of entrepreneurship

 Entrepreneurship process: characteristics of successful entrepreneur
 success stories from Rwanda and elsewhere-
 Factors influencing entrepreneurship. Domestic, economic, social-political –
psychological –factors-
 Core competencies of successful entrepreneurs-
 Achievement cluster-opportunity seeking and initiative –risk taking –
 demand for efficiency any quality-persistence –
 commitment to the work contract –
 Planning cluster-information seeking –
 Goal setting –systematic planning and monitoring –
 Power cluster-persuasion and net working.
 Strategic management as an entrepreneurial tool,
 The entrepreneurial organization, Characteristics of an entrepreneurial manager
( Entrepreneur),
 Aims of entrepreneurial training and development, Managerialism,
 Case study and review questions
8. Learning and Teaching Strategy
.The learning and teaching strategy will be student centred.

9. Assessment Strategy
 Assignment (Research and presentation)
 Examination
10 Assessment Pattern

Component Weighting (%) Learning objectives covered

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In-course assessment: 40% I,ii.iii.iv

Final assessment: 60 % I,ii.iii.iv

11 Strategy for feedback and student support during module

 ; Each Presentation is marked, marks post on the course Web on the University Online
Campus Platform, with immediate feedback (direct contact with the student or contact
through the online courses platform);
 Specimen examination papers and solutions available

12 Indicative Resources

1. Michael H. Morris and Donald F. Kuratko (2002), Corporate entrepreneurship,

United States of America.
2. Jeffry A. Timmons and Stephen S. (2004), New venture: entrepreneurship for
the 21st century, McGraw-Hill, 6th Edition.
3. Jerome A. Katz and Richard P. Green (2007), Entrepreneurial small business,
McGraw-Hill, Irwin.
4. Roberts et al, (2007), New business ventures and entrepreneur, McGraw-Hill,
Irwin, sixth edition.
5. Ministry of Industry and Craft (1987), First national seminar on craft, cited by
NTEZIYAREMYE S. (2001), Appropriate technology: an alternative strategy
for developing Rwanda.
6. NDEKEZI S. (1986), Traditional professions of Rwanda, cited by
NTEZIYAREMYE S. (2001), Appropriate technology: an alternative strategy
for developing Rwanda.
7. Kato Moses M. (2008), Understanding entrepreneurship education, Kampala,
Kagga Publishers.
8. Robert A. Pitt and David Lei (2007), Strategic Management; Building and
Sustaining Competitive Advantage.
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9. Bakunda and Ngoma (2001), Business Strategy; An introduction, Makerere

University Press.
10. J. Gregory Dees et all,1998. The Meaning of Social Entrepreneurship,
www.caseatduke.org
11. Ministry of Finance and Economic Planning, Rwanda Vision 2020, Kigali, July
2000, www.gesci.org
12. Ministry of Commerce, Industry, Investment Promotion, Tourism and
Cooperatives: 2006,www.eac.int/trade
13. Private Sector Federation, www.psf.org.rw
14. Rwanda Development Board, Investing in Rwanda, An overview, (2009),
www.rwandainvest.com
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CHAPTER ONE: INTRODUCTION TO ENTREPRENEURSHIP, NOTIONS AND

DEFINITIONS

1.1 Historical evolution of Entrepreneurship theories and practices

1.1.1 Origins of the Word "Entrepreneur"

In common understanding, being an entrepreneur is associated with starting a business,

but this is a very vague application of such a term that has a rich history and a much
more significant meaning.

The term "entrepreneur" originated in French economics as early as the 17th and 18th
centuries. In French, it means someone who "undertakes" a significant project or
activity. More specifically, it came to be used to identify the venturesome individuals
(individuals daring to take risk) who stimulated economic progress by finding new and
better ways of doing things (J. Gregory Dees et. all,1998. The Meaning of Social
Entrepreneurship, www.caseatduke.org).

The French economist most commonly credited with giving the term this particular
meaning is Jean Baptiste Say. Writing around the turn of the 19th century, this author
argued "The entrepreneur shifts economic resources out of an area of lower and into an
area of higher productivity and greater yield." Entrepreneurs create value.

In the 20th century, the economist most closely associated with the term was Joseph
Schumpeter. He described entrepreneurs as the innovators who drive the "creative-
destructive" process of capitalism. In his words, "the function of entrepreneurs is to
reform or revolutionize the pattern of production." They can do this in many ways: "by
exploiting an invention or, more generally, an untried technological possibility for
producing a new commodity or producing an old one in a new way, by opening up a
new source of supply of materials or a new outlet for products, by reorganizing an
industry and so on." Schumpeter's entrepreneurs are the change agents in the economy.
By serving new markets or creating new ways of doing things, they move the economy
forward.
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It is true that many of the entrepreneurs that Say and Schumpeter have in mind serve their
function by starting new, profit-seeking business ventures, but starting a business is not
the essence of entrepreneurship. Though other economists may have used the term
“entrepreneur” with various nuances, the Say-Schumpeter tradition that identifies
entrepreneurs as the catalysts and innovators behind economic progress, has served as the
foundation for the contemporary use of the concept of “entrepreneurship”(J. Gregory
Dees et all,1998. The Meaning of Social Entrepreneurship, www.caseatduke.org).

1.1.2 Myths and origins of Entrepreneurship

Entrepreneurship results in creation, enhancement, realization, and renewal of value, not just for
owners, but for all participants and stakeholders. At the heart of the process are the creation
and/or recognition of opportunities, followed by the will and initiative to seize these
opportunities. It requires a willingness to take risks both personal and financial but in a very
calculated fashion in order to constantly shift the odds/chances of success, balancing the risk
with the potential reward (Jeffry A. Timmons and Stephen S., 2004).

The successful entrepreneurs are those who inject imagination, motivation,

commitment/engagement, tenacity, passion, integrity, teamwork, and vision into their
companies. They sometimes face dilemmas and have to make decisions despite
ambiguity and contradictions.

Entrepreneurs do not get rich quickly; on the contrary they continuously renew and are
never satisfied with the nature of their opportunity.

Many researchers have noted that the study of entrepreneurship is still emerging/new, and
characterized by the folklore. Below are listed the most notable myths on which lay the
origins of entrepreneurship as noted by Michael H. Morris and Donald F. Kuratko (2002).

1. “Entrepreneurs are born not made”

The prevailing or predominant idea that the characteristics of entrepreneurs cannot be

taught or learned, that they are innate traits with which one must be born, has a long
history. These traits include achievement motivation, aggressiveness, initiative,
drive/energy, and willingness to take the risks, tolerance of ambiguity, analytical ability,
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initiative and self-confidence. Today, however, it is recognized that traits and

characteristics associated with entrepreneurial behavior are heavily influenced by
environmental conditions (family, work, and peer group, social) and that each of us has
significant entrepreneurial potential. The challenge is to help people recognize and
develop those characteristics within themselves.

In fact, experience has proved that the entrepreneurial competency can be injected in
human beings through education and training. Practice helps in developing competencies.
Then competency is expressed by human behavior.

Therefore, Entrepreneurship is regarded as a concept of alertness/watchfulness towards

profit opportunities. It is the ability of the entrepreneur which mobilizes resources and
combines them to initiate change in production.

2. “Entrepreneurship is about invention”

The idea that entrepreneurs are investors is a result of misunderstanding vision. Although
many investors are also entrepreneurs, there are numerous entrepreneurs who do not
invent anything. They do tend to engage in various kinds of innovative activity and/or
capitalize on the creative ideas of others.
3. “Entrepreneur profile”
Many books and articles presented checklists of characteristics of the successful
entrepreneur, but these lists were neither validated nor complete; they were based on case
studies and on research findings among achievement-oriented people. Today it is realized
that a standard entrepreneurial profile is hard to compile or to design. The environment,
the venture itself, and the entrepreneur all interact resulting in many different types of
profiles.
4. “All you need is luck to be entrepreneur”
Being at the right place at the right time is always an advantage. But the adage to which
“luck happens when preparation meets opportunity” is hereto justified. Actually prepared
entrepreneurs who seize opportunity when it arises are often “lucky”. They are, in fact,
simply better prepared to deal with situations and become successful. Finally, “luck” is
really preparation, determination, desire, knowledge, and innovation.
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5. “Entrepreneurs are extreme risk-takers”

Risk is a major element in the entrepreneurial process. However, the public’s perception
of the risk assumed by most entrepreneurs is distorted/ altered. Although it may appear
that an entrepreneur is gambling on a wild chance, the fact is that the entrepreneur is
usually assuming a moderate or calculated level of risk. Most successful entrepreneurs
work hard through planning and preparation to mitigate or minimize the risk involved.
Few of them like risk. They seek to manage risk in order to better control the destiny of
their vision.
6. “Entrepreneurs are academic and social misfits”
The belief that entrepreneurs are academically and socially ineffective may be a reaction
to the fact that some business owners started successful enterprises after dropping out of
school or quitting a job. In fact, begin a business immediately after abandoning school or
resigning from a job is the first reason to which those kinds of entrepreneurs fail. As seen
above they begin business without preliminary preparation.
7. “All entrepreneurs need is money”
It is true that a venture needs capital to survive; it is also true that a large number of
businesses fail because of lack of adequate financing. However, many other resources,
such as skilled and balanced team, technical and selling capacities, distribution channels,
etc, are vital for entrepreneurial success. Money is not always a guarantee that the right
resources are put together in the right way at the right time. Also, entrepreneurs do not
own all the resources they use; they need support from borrowing, sharing, leasing,
renting and networking. Furthermore, having money is not enough because failure may
happen because of managerial incompetence, lack of financial understanding, poor
investments, poor planning, etc. To entrepreneurs, money is a resource but never an end
in itself.

8. “Ignorance is bliss for entrepreneurs”

“Ignorance is bliss”, this adage means that it is often better not to know about something
unpleasant (Microsoft Encarta 2008). It relates to the myth that too much planning and
evaluation lead to constant problems, or analysis leads to paralysis. But these ideas do not
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fit with today’s competitive markets, which demand detailed planning and preparation.
Identifying the strengths and weaknesses of a concept or a venture, setting up clear
timetables with contingencies for handling problems, and minimizing these problems
through careful strategy formulation are the key for successful entrepreneurship. Thus
careful planning, not ignore it, is the mark of a determined entrepreneur.

9. “The high failure rate myth”

It is true that many entrepreneurs suffer a number of failures before they succeed. They
follow the adage “if at first you do not succeed, try, try, again”. In fact, the failure can
teach many lessons to those who are willing to learn and often leads to future success.

10. “Entrepreneurship is unstructured and chaotic”

Some entrepreneurs are assumed to be disorganized and unstructured. This is because

most of entrepreneurs are heavily involved in all facets of their ventures, and they usually
have lots of thoughts and several issues at hand at the same time. In fact, their systems
may seem strange to the casual observer, but they are well-organized individuals, because
at the end they are successful.

In conclusion, entrepreneurship is a planned activity that can be managed as a process,

involves risks, requires innovation, and which requires significant dedication,
perseverance and adaptability. Thus anyone is capable of being entrepreneur.

1.1.3 Current Theories of Entrepreneurship

Contemporary writers in management and business have presented a wide range of

theories of entrepreneurship. Many of the leading thinkers remain true to the Say-
Schumpeter tradition while offering variations on the theme. For instance, in his attempt
to get at what is special about entrepreneurs, Peter Drucker starts with Say's definition,
but amplifies it to focus on opportunity.
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Drucker does not require entrepreneur to change (in technology, consumer preferences,
social norms, etc.) or create new things. He says, “the entrepreneur always searches for
change, responds to it, and exploits it as an opportunity."

The notion of "opportunity" has come to be central to many current definitions of

entrepreneurship. That is “entrepreneurship is an opportunity got” according to Druker.
It is the way today's management theorists capture Say's notion of shifting resources to
areas of higher yield. An opportunity, presumably, means an opportunity to create value
in this way. Entrepreneurs have a mind-set that sees the possibilities rather than the
problems created by change.

Howard Stevenson, a leading theorist of entrepreneurship at HarvardBusinessSchool,

added an element of resourcefulness to the opportunity-oriented definition based on
research he conducted to determine what distinguishes entrepreneurial management from
more common forms of "administrative" management. After identifying several
dimensions of difference, he suggests defining the heart of entrepreneurial management
as "the pursuit of opportunity without regard to resources currently controlled." He
found that entrepreneurs do not only see and pursue opportunities that elude/escape
administrative managers; entrepreneurs do not allow their own initial resource
endowments to limit their options. Entrepreneurs mobilize the resources of others to
achieve their entrepreneurial objectives. Administrators allow their existing resources
and their job descriptions to constrain their visions and actions (J. Gregory Dees et all,
1998. The Meaning of Social Entrepreneurship,www.caseatduke.org).

1.2 Defining Entrepreneurship

Michael and Donald in Corporate Entrepreneurship (2002) citing Stevenson define

“entrepreneurship as the process of creating value by bringing together a unique package of
resources to exploit an opportunity”. This definition has four key components;
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- First, entrepreneurship involves a process. It is manageable, can be broken down into

steps or stages, and is ongoing.
- Second, entrepreneurs create value where there was none before. They create value
within organizations, and marketplace.
- Third, entrepreneurs put resources together in a unique way. Unique combination of
money, people, procedures, technologies, materials, facilities, packaging, distribution
channels, and other resources representing the means by which entrepreneurs create value
and differentiate their efforts.
- Fourth, entrepreneurship is opportunity-driven behavior. It is the pursuit of opportunity
regardless resources currently controlled.

In general, entrepreneurship is the ability to take calculated risks and do everything possible
to reduce the chance of failure. It is the facility of sensing an opportunity where others see
chaos, contradiction, and confusion or possessing the know-how to find, and control
resources often owned by others. Simply, entrepreneurship involves skills and talents.

1.3 The role of entrepreneurship in the society

1. Economic role

a) Households level

Entrepreneurship helps in problem solving by:

-creating jobs,
-creating demand and supply for new products and services,
-developing venture ideas,
-developing creative and innovative activities,
-developing skilled and semi-skilled workers.

b) National level
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Entrepreneurship helps the government:

-increase economic growth,
-improve balance of payments by increasing international exchanges,
-reduce unemployment by creating lots of jobs,
-extend distribution channels for products and services,
-expand national market by diverse sectors of activities,
-improve a rural-urban balance,
2. Social role

a) Households level

Entrepreneurship helps households:

-improve health,
-increase education,
-increase family peace and tranquillity.

b) National level

Entrepreneurship helps government:

-creating an informed society: people are aware of issues that affect them and help
government in democratization process,
-creating social cohesion,
-creating enterprise culture,
-improving security: people are busy with creative activities.

1.4 Meaning of Entrepreneur

An entrepreneur is someone who perceives an opportunity and creates an organization to

pursue it. According to Kuratko 2002, entrepreneurs are calculated risk takers who attempt to
estimate at least conceptually the likelihood or probability and magnitude/importance of the
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key risk factors, and attempt to mitigate or minimize the key risk factors through good
planning and managerial decision-making (good management for decision making).

Entrepreneurs are not born; the traits associated with entrepreneurial behavior are strongly
influenced by the environment and are developed over time. In fact, the tendency to be self-
confident, to have an internal locus of control, or to be achievement motivated is the result of
family, educational, social and work experiences. Thus there is an entrepreneurial potential in
everyone.

1.5 Types of Entrepreneurs

Basing on their degree of innovation and risk taking, Landau (1982) has proposed four types
of entrepreneurs:

- The gambler
- The consolidator
- The entrepreneur
- The dreamer

High level
Gambler Entrepreneur
Risk taking

Low level
Consolidator Dreamer

Low levelHigh level

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Innovativeness

- The gambler is the entrepreneur characterized by a low degree of innovation and a high
level of risk. The gambler does not resist on the market because the innovation is the
most important factor that enables an organization to keep its position in the market
place. Being not able to minimize risks the gambler immediately disappears from the
market.

- The consolidator is the entrepreneur who develops a venture based on low levels of both
innovation and risk. The consolidator makes a marginal improvement on what existing
players are doing and expects some returns, but does not grow. This entrepreneur
attempts to mitigate risks but does not innovate while innovation helps the organization
to maintain its position in the marketplace.

- The dreamer is the entrepreneur who attempts to combine a high level of innovativeness
with low risk. The dream of this entrepreneur cannot be realized because the more
potentially valuable the innovation, the greater the risk of unknown.

- The true entrepreneur: this combines high innovativeness and high risk; this type of
entrepreneurs operates. They must accept risk, but after understanding well their
innovation and why it applies to the market, then they take measures for minimizing or
mitigating risks.

1.6 Entrepreneurship versus Intrapreneurship

Entrepreneurship is a process of creating or initiating a risky venture while

Intrapreneurship is entrepreneurship within existing business structures. It occurs when
employees and management break the bureaucratic structures and start acting in creative
and innovative ways. It involves implementation of new and better methods of
accomplishing tasks, or identification and exploitation of market opportunities.
Individual employees in intrapreneurial organizations typically have opportunity to work
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independently, are given tremendous latitude, and are expected to generate and
implement new ideas – new units, departments, services and markets.

1. Similarities

 Both focus on innovation – e.g. new products, new ways of doing things, new services etc.
 Both focus on value addition – i.e. in order for a process to be entrepreneurial, something
new and different must be developed.
 Both require investment in activities that are more risky than normal.

2. Differences

 Intrapreneurship is often restorative while entrepreneurship is often developmental.

Intrapreneurship can restore growth and innovation in an otherwise traditional and slow
growth company. Entrepreneurship on the other hand creates something out of nothing.
 In terms of funding, the intrapreneur receives funds from the parent company, whereas the
entrepreneur has to look for personal savings or search for funds elsewhere
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CHAPTER TWO

2.0 ENTREPRENEURSHIP PROCESS, ENVIRONMENTAL BEHAVIOR AND

CHARACTERISTICS OF SUCCESSFUL ENTREPRENEURS

2.1 Motivating Entrepreneurial behavior

It is argued that psychological factors greatly contribute to the entrepreneurial process. In
fact, the willingness to pursue entrepreneurial concepts and the willingness to devote
himself to a concept over time are directly related to an entrepreneur’s personal make-up/
preparation.
In an attempt to explain the motivational process that drives entrepreneurial behavior,
Michael H. Morris and Donald F. Kuratko (2002) illustrate this situation in the following
model:
Model of Entrepreneurial Motivation

Expectation/outcome Intrinsic/extrinsic
comparison rewards

PC PE PG

Decision to Entrepreneurial Entrepreneurial Firm

behave strategy management outcomes
entrepreneurially

BE IDEA

Implementation/
outcome perception
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PC: Personal characteristics; PE: Personal environment; BE: Business environment, PG:
Personal goals

This model means that the decision to behave entrepreneurially results from the
interaction of several factors. When an individual has an idea or recognizes an
opportunity, the tendency to act on it and the manner in which he acts is the result of the
interplay between his personal characteristics, the individual’s personal goal setting, his
personal environment, the current business environment, and the nature of the innovative
idea.

However, before the entrepreneur acts on the idea, he actually makes two comparisons:
-Comparison of his perceptions of the probable outcomes and the idea to be successfully
implemented with the personal outcomes he has in mind.
- Comparison of implementation approach that would be required with the likely
outcomes from that approach.
In this case the potential entrepreneur is concerned with what it will take to gather or to
collect resources and support, overcome obstacles, and ensure that the final concept
meets market requirements.

When outcomes meet or exceed expectations, the entrepreneurial behavior is positively

reinforced, and the individual is motivated to continue to behave entrepreneurially; when
outcomes fail to meet expectations, the entrepreneur’s motivation will be lower, and the
individual will not be motivated and reject his concept.

2.2 Entrepreneurial mindset

The way of thinking of entrepreneurs is based on belief in change, create self-confidence,

and seeing opportunity where others see barriers and limits. They do not admit they are
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beaten; they view failure as a temporary setback (or something that delays a progress), to
be learned from and deal with. They do not blame their failure on others but instead focus
on learning how they might have done better.

2.3 Factors influencing Entrepreneurship

2.3.1 Economic Factors

The nature of the economy is a major factor that influences entrepreneurship. Some economic
examples are given below:

 The general purchasing power of the people, manifested by income levels and economic
prosperity of the region, plays a major role in the success of entrepreneurial ventures.

 During times of economic slowdown or recession, the purchasing power declines and people
remain reluctant to invest, affecting entrepreneurship adversely.

 In a subsistence economy, most of the people are engaged in agriculture, consuming most of
their output and bartering the rest for simple goods and services. Entrepreneurial opportunities
are few in such scenarios.

Other economic critical factors that influence entrepreneurship include also the availability of
resources such as capital, human assets, and raw materials:

 Capital remains indispensable to start an enterprise. The availability of capital allows the
entrepreneur to bring together other factors and use them to produce goods or services.

 The importance of human assets or employees can never be underestimated. No enterprise

succeeds without a skilled and committed workforce.

 The existence of the business depends on the availability of raw materials to process.
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2.3.2 Social factors

Social factors are also considered as important factors that might influence entrepreneurial
decisions of individuals. Social support provided to individuals can change the mental status of
individuals towards business start-up decisions.

Social support can be for instance financial support from family or friends, and cultural values,
norms and rituals. But some of them can influence entrepreneurial decisions both positively and
negatively. How people react towards one’s decision of business start-up has been seen to be a
crucial factor of risk taking propensity of individuals (Baku, Azerbaijan; INTERNATIONAL
JOURNAL ofACADEMIC RESEARCH Vol. 4. No.1. January, 2012).

2.3.3 Political factors

The following are some of the ways in which the political environment influences positively or
negatively entrepreneurship:

 Unstable political conditions where government policies change frequently discourage

business, as investors fear for the safety of their investments.

 Government support to economic development through infrastructure development,

facilitation, industrial parks, good roads, power, communication facilities, and lack of
corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurship.

 High taxes that cut into the returns usually discourage entrepreneurs. On the other hand, tax
holidays (period of no taxation) to encourage business, attract start-ups.

 Economic freedom in the form of favorable legislation to start and operate businesses
encourages entrepreneurship.

 Country governance characterized by corruption, nepotism, favoritism, poor legislation and

other forms like these influence negatively entrepreneurship.

2.3.4 Psychological factors and general management skills

The success of an entrepreneurial venture depends on the entrepreneur. The individuals’ decision
making varies as per their own traits, perceptions and personality. For instance individuals with
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stable personality can hold the situation in better way. The entrepreneur is the leader and driver
of the venture; therefore needs psychological characteristics and skill-set and orientation for
success:

 Hard work and persistence

 Personality

 Self confidence

 Locus of control (level of control one has on his own life)

 A strong need-orientation that provides the inclination to achieve things

 Etc.

2.4 Characteristics of successful entrepreneurs

1. Hard work and commitment to work:

Entrepreneurs put a lot of physical and mental effort
into developing their venture. They must even work together
with their workers to get the job done.

2. Self-starting: Entrepreneurs do not need to be told what to do.

They identify tasks for themselves and follow them
without looking for encouragement or direction.
3. Setting of personal goals: Entrepreneurs tend to set themselves
clear goals and demanding goals (or goals
requiring a lot of attention).

4. Resilience/Persistence: Entrepreneurs must have ability to react to

potential crisis and learn positively from the
experience, and use that learning to
increase the chances of success for the next
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time.
5. Risk taking: An entrepreneur is not afraid of uncertainty. But
entrepreneurs are not high-risk takers, they are also
not gamblers; they calculate their risks before taking
action. So they are moderate risk takers.

6. Confidence: Entrepreneurs demonstrate that they do not only

believe in themselves but also in the
venture/enterprise they are pursuing.

7. Assertiveness: Entrepreneurs must act confidently to gain what

they want from a situation. They are not frightened
to express their wishes. Note that being assertive
does not mean being aggressive. In this case
assertiveness means a commitment to
outcomes not mean.
8. Receptiveness to new ideas: Entrepreneurs are willing to revise
their ideas in the light of new
experience.

9. Information seeking: Entrepreneurs are never satisfied by the

information they have one time, and
constantly seek more.

10. Eager to learn: Entrepreneurs are enthusiastic and excited to learn,

they always want to improve their skills and develop
new ones.
11. Attuned to opportunity/Opportunity seeking:
A good Entrepreneur is constantly
searching for new opportunities. They are
ever satisfied with the way
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things are at any moment in time.

12. Commitment to others: Good Entrepreneurs are not selfish. They
recognize the value that other people bring
to their ventures and the importance of
motivating those people to
make the best effort they can.

13. Receptive to change: Entrepreneurs are always willing to embrace

change in a positive fashion rather than resist it.

2.5 Entrepreneurial general management skills or core competencies for successful

entrepreneurs

A good Entrepreneur must have preliminary skills which will help him manage
continuously his organization and keep its position in the marketplace. Those are:
1. Strategy skills
This is ability to understand how a business fits within its market place, how it
can organize itself to deliver value to its customers, and the way in which it does
this better than its competitors.

2. Planning skills
It is an ability to consider what the future might offer; how it will impact on the
business and needs to be done to prepare for it since now.

3. Marketing skills
It is an ability to see the firm’s or business’ offerings and their features, to be able
to see how they satisfy the customer’s needs and why the customer finds it
attractive.

4. Financial skills
 26

This is an ability to manage money and to assess investments in terms of their

potential risks.

5. Project management skills

It is an ability to organize projects, to set specific objectives, to set schedules and
to ensure that the necessary resources are in the right place at the right time.
6. Time management skills
It is an ability to use time productively, to be able to prioritize important jobs and
to get things done on schedule.

7. Leadership skills
It is an ability to inspire/ encourage people to work in a specific way, and to
undertake the tasks that are necessary for the success of the venture.

8. Motivation skills
It is an ability to get people to give their full commitment to the tasks in hand.

9. Delegation skills
It is an ability to allocate tasks to different people. This demands a full
understanding of the skills people possess; how they use them and how they
might be developed to fulfill future needs.

10. Communication skills

It is an ability to use spoken and written language to express ideas and inform
others. It is using language to influence people’s actions.

11. Negotiation skills

It is an ability to understand what is wanted from a situation, what is motivating
others in that situation and recognize the possibilities of maximizing the
outcomes for all parties. It is simply being able to “bargain hard”.
 27

In summary all these different people skills are interrelated. A good leadership
demands being able to motivate, and effective delegation requires ability to
communicate.

2.6 Potential constraints of Entrepreneurship

There are lots of mistakes that are committed in entrepreneurship and which

can lead some entrepreneurs to losing of their entire investment. Those are:

1. Management mistakes or poor management

2. Lack of experience
3. Poor financial control
4. Weak marketing efforts
5. Failure to develop a strategic plan
6. Uncontrolled growth
7. Poor location
8. Improper inventory control
9. Incorrect control

2.7 Proposed solutions to constraint

Some solutions can be given to the above constraints to avoid those

mistakes:

1. Know your business in depth

2. Develop a solid business plan
3. Manage financial resources
4. Understanding financial statement
5. Learn to manage people effectively
6. Monitor your health closely to reduce stress
 28

2.8 Entrepreneurial process

Although the entrepreneurial process may be described in various ways,
it generally consists of the following steps:
1) Identifying an opportunity: where to invest?
2) Defining a business concept: what is interesting, what people need?
3) Assessing resource requirements: Financing?
4) Acquiring those resources: how to acquire resources?
5) Implementing and managing the concept: how to implement the concept
6) Harvesting the concept or venture: what outcome?

In summary, no one is born entrepreneur; the successful entrepreneur is

the result of:

a) The preparation, characteristics, and values of the individual

entrepreneur
b) A unique, well-defined, internally consistent and viable business
concept
c) And a favourable set of environmental conditions

Then everyone can be entrepreneur.

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CHAPTER THREE

3. CREATIVITY, INNOVATION AND ENTREPRENEURSHIP

1.1 What is creativity?

Creativity can be defined as the application of a person’s mental ability and

curiosity to discover something new (Kuratko, 2002). It is the ability to develop
new ideas and to discover new ways of looking at problems and opportunities.

1.2 Creative thinking

There are general ways in which people are creative, but normally people are
naturally creative. In fact, some people act on that creativity all the time, others
stifle it without knowing it, and most of us are somewhere in between. For
instance some employees in the organization often do not realize when or how
they are being creative. Further, they fail to recognize the many opportunities for
creativity that arise within their jobs daily. As Miller (1999) said, we are all
creative in many different ways.

1.3 Characteristics of creative people

Creative people have common characteristics; some of them are outlined below.
1) They always ask question like “is there a better way?”
2) They challenge custom, routine and tradition
3) They are deep in thought
4) They are prolific thinkers
5) They do mental exercises trying to see issue from different perspectives
 30

6) They realize that there may be more than one “right answer”
7) They see mistakes and failure as simple “pit stops” (or a simple stop on road
for refreshment) on the way to success
8) They see problems as springboards ( or a factor for advancing) for a new
success
9) They relate unrelated ideas to a problem to generate innovative solutions

1.4 Barriers to creativity

Creative individuals are in general explorers, looking other areas for ideas. But
some people miss creative opportunities because they are narrow and focused in
their jobs only. Really the creative key lies in the employee’s willingness to look
beyond his field or job responsibilities. Below are outlined some barriers that
stifle creativity:
1) Searching for the one “right answer” (being bound or limited on one solution
to a problem)
2) Focusing on “being logical” (logic is fine for development and application of
ideas but stifles or stops creativity)
3) Blindly following the rules (violation/breaking existing systems and beliefs)
4) Constantly being practical (the tendency to allow practical considerations
kills concepts and halts the search for new ideas)
5) Avoiding ambiguity (strict adherence to one fixed perspective on a situation)
6) Fearing looking foolish ( people fear appearing foolish when they break
rules for instance)
7) Fearing mistakes and failure (people fear a failure but when you fail, you
learn what does not work or fit and can adjust)
8) Believing that “I’m not creative” (this is the worst barrier: the self-
condemnation stifles talent, opportunity and intelligence)
9) Becoming overly or extremely specialized (focusing on one thing; when you
see that things in front of you are hard, they will remain hard to you)
 31

1.5 Enhancing creativity

Entrepreneurs can stimulate their own creativity and encourage it among workers
by:
1) Embracing diversity
2) Expecting creativity
3) Expecting and tolerating failure
4) Encouraging curiosity
5) Viewing problems as challenges/target
6) Providing creativity training
7) Providing support (tools and resources for creative thinking)
8) Rewarding creativity

1.6 Enhancing individual creativity

This is a procedure by which an individual changes his heart or finds a new

perspective or way to look at things. This can be done by:
1) Allow yourself to be creative (believe that you are creative)
2) Do something different each day
3) Recognize the creativity power of mistakes
4) Keep journal handy and record your thoughts/ideas as soon as you get
them
5) Listen to other people (sometimes the best business ideas come from
someone else
6) Talk to a child (children place very few limitations on their thinking)
7) Read books on stimulating creativity or take training on creativity
8) Relaxing (it is vital to the creative process: getting away from a problem
gives the mind time to reflect on it; for instance fishing is the ideal activity
for stimulating activity).
 32

1.7 Creative process

The creative process is concerned with the way in which creativity actually
happens (Jerome A. Katz and Richard P. Green, 2007). In this frame, Kuratko
(2002) identifies seven steps of creative process:
1) Preparation
2) Investigation
3) Transformation
4) Incubation
5) Illumination
6) Verification
7) Implementation

1. Preparation
Creative favours the prepared mind, then this step demands that the
individual:
- gets the mind ready for creative thinking
- might have a formal education, the job training,
Work experience and taking advantage of other
learning opportunity.
- adapts an attitude of a lifelong/ permanent
student
- takes time to discuss his ideas with other people

2. Investigation

This step requires the individual to develop a solid understanding of the problem,
situation or decision at hand. It should be noted that creative thinking comes about or
 33

happen when people make careful observations of the world around them and then
investigate the way things work (or fail to work).

3. Transformation

This step involves viewing the similarities and the differences in the

informationcollected. It requires two types of thinking: convergent and

divergent.

- Convergent thinking is the ability to see the similarities and the

connections among various data and events.
- Divergent thinking is the ability to see the differences among
various data and events.

4. Incubation

This step involves the subconscious. This needs time to reflect on the information
collected. This phase is normally boring; it looks as nothing is happening.

How to enhance incubation?

Incubation can be improved by:

- Work away from the situation

- Take time to daydream

- Relax and play regularly to avoid fatigue/tiredness
- Dream about the problem or opportunity
- Work on the problem or opportunity in a different environment;
somewhere other than the office
5. Illumination
 34

This phase occurs at some points during the incubation stage when spontaneous
breakthrough or important discovery comes out. This phase may take five
minutes or five years. In this step all the previous steps come together to produce
the “Eureka factor” or the creation of the innovative idea.

6. Verification

This phase involves validation of the idea as accurate or correct and useful. It
may include:
-Conducting experiments
-Running simulations
-Establishing small-scale pilot programmes
-Building prototypes/standard example
-Many other activities designed to verify that the new idea will work and is
practical to implement

During this phase the following questions must be answered:

-Will it work?
-Is there a need for it?
-If so, what is the best application of this idea in the marketplace?
-Does this product/service idea fit into our core competencies (cost
of raw materials, technology or equipment)?
-How much will it cost to produce or to provide?
-Can we sell it at a reasonable price that will produce adequate
sales, profit and Return on Investment?

7. Implementation
This phase is concerned with transforming the idea into reality.
 35

In summary, building a creative environment takes time, but the payoffs/gains

can be phenomenal. And as an Entrepreneur keep this philosophy “ready, aim,
fire” not “ready, aim, aim, aim, aim…”. Meaning that when you are ready with
your idea, fixe your aim and fire/start up.

1.8 Innovation

The first dimension that characterizes an entrepreneurial organization is

innovativeness or degree of innovation. Simply stated, innovativeness means to
what extent is the company doing things that are new, unique, or different.
In other words, innovation is the ability to apply creative solutions to the
problems and opportunities to enhance/improve or to enrich people’s live
(Kuratko, 2002).

Anything new involves risk or some likelihood/probability that actual results will
differ from expectations. The risk-taking involves a willingness to pursue
opportunities that have a reasonable likelihood of producing losses and attempts
to manage or moderate the risk. Although innovation is risky, is necessary.

1.8.1 Why innovate?

Companies today find that they must innovate more than in the times past. This
is due to external forces, including the emergence of the new and improved
technologies, globalization of market, fragmentation of markets (for customer
needs), government deregulation, and dramatic social change. Financial markets
are also penalizing companies that fail to demonstrate an effective innovation
strategy.

1.8.2 Innovation process

There are some key steps that generally must be accomplished to produce a
commercial viable new product. Those steps are below illustrated:
 36

Idea generation

Concept testing

Technical feasibility assessment

Product testing

Financial assessment

Test marketing

Launch

Life cycle management

1. Idea generation
 37

Ideas for innovation come from a variety of sources, both inside and outside
the company. The system for regularly generating and cataloging ideas
includes both active and passive search efforts:

-Active search: patent searches, attending research conferences and trade

shows, conducting market research, internal brainstorming sessions.
-Passive search: informal conversations at work, ideas that come to an
employee while /when doing some other task.
The company set evaluative criteria to those ideas and rates them.
2.Concept testing
This phase is where a hypothetical product is explained to relevant audiences,
including customers to get their reactions. Focus groups, interviews and
surveys are used, and potential benefits are identified. After a concept has
been well defined and core benefits identified, it must be then transformed
into a physical product or service delivery model.
3.Technical feasibility assessment
This phase involves establishing more exact technical requirements for
designing and producing the product and ensuring that these requirements
can be met on a reasonable time and cost schedule.
4. Product testing
This phase subjects the innovation to a rigorous examination of tolerance.
Products are often placed in customer locations (or beta test sites) and their
use is monitored.
5.Financial assessment
During this phase, profitability analysis is performed to determine break-even
points in terms of the initial investment and rates of return that will be
realized based on projected cash flows.
6. Test marketing
This phase is concerned with; confirming initial sales projections and
finalize decisions regarding price, packaging, promotion, and distribution. It
uses a representative subset of the intended market.
 38

7. Launch and Life cycle management

After all of the above phases have been done, the company can start
processing and launching the product, then proceed at life cycle management
of the new product.

3.9 Relationship between Entrepreneurship, Creativity, and Innovation

While entrepreneurship is about making things happen and deal with the
practical challenges of implementation, creativity is the capacity to develop
new ideas, concepts and processes. In this linkage, creativity is thinking new
things while innovation is doing new things. Finally, entrepreneurs succeed by
thinking and doing new things or old things in new ways.
 39

CHAPTER FOUR

4. ENTREPRENEURIAL ORGANIZATION, RESOURCES AND STRATEGY

4.1. Critical considerations prior to selection of form of ownership

Every business operates as a form of legally recognized entity. The decision regarding the
selected form of ownership must be made with attention because changing from one ownership
form to another can be difficult, time consuming, complicated and expensive. Then before
selecting any ownership form the following considerations must be taken into account:

1. Tax considerations
2. Liability exposure i.e. protection from personal liability
3. Start-up capital requirements
4. Control
5. Business goals
6. Management succession plans
7. Cost of formation/creation

In addition, attention to advantages and disadvantages of each form of ownership must be done
before making decision. According to Roberts et al, (2007) the most prevalent legal forms of
business ownership are:

1. Sole proprietor
2. Partnership
3. Corporation
4. Joint venture
5. Franchise
 40

4.2. Sole proprietor

This is the simplest and most popular form of ownership. It is a business owned and managed by
one individual. It has advantages and disadvantages.

1. Advantages:
a) Simple to create
b) Least costly to begin
c) Total decision making authority
d) No special legal restrictions
e) Easy to discontinue

2. Disadvantages:
a) Unlimited personal liability
b) Limited skills and capabilities
c) Feelings of isolation : no one to turn to in solving problems or getting feedback
d) Limited access to capital
e) Lack of continuity for the business

4.3. Partnership

This is an association of two or more people who co-own a business for the purpose of making a
profit. Partners share the business’ assets, liabilities, and profits according to the terms in the
partnership agreement. It has the following advantages and disadvantages:

1. Advantages:
a) Easy to establish
b) Complementary skills
c) Division of profits ( no restrictions on how profits should be distributed as long as the
agreement is followed; note that there is a case where managers and owners have
conflicts on how profits must be allocated)
d) Larger pool/fund of capital
e) Ability to attract limited partners
 41

f) Little government regulation

g) Flexibility to changing market conditions

2. Disadvantages:
a) Unlimited liability of at least one partner
b) Capital accumulation (you cannot raise capital by selling shares)
c) Difficulty in disposing of partnership interest without dissolving the partnership
d) Lack of continuity
e) Potential personality and authority conflicts

4.4. Corporation
A corporation/company is a separate legal entity from its owners and which may engage in
business, make contracts, sue and be sued, own property, and pay taxes. It has some advantages
and disadvantages.

1. Advantages:
a) Limited liability of stockholders/shareholders
b) Ability to attract capital
c) Ability to continue indefinitely
d) Transferable ownership

2. Disadvantages:
a) Cost and time involved in the incorporation process ( process of obtaining a legal form of
corporation)
b) Legal requirements and regulatory red tape/unnecessary bureaucracy
c) Potential loss of control by the founders

4.5. Joint venture

It is like a partnership, except it is formed for a specific and limited purpose. It should be noted
that a partnership has a status of unlimited liability.
 42

4.6. Franchising
It is a system of distribution in which semi-independent business owner (franchisee) pays fees
and royalties (percentage of income from invention paid to the author) to a parent company
(franchiser) in return for the right to become identified with its trademark/brand, to sell its
products or services, and often to use its business format and system. It is simply, an agreement
or license to sell a company’s products exclusively in a particular area or to operate a business
that carries that company’s name.

1. Types of Franchising:

a) Trade-name franchising
b) Product distribution franchising
c) Pure franchising: It is providing the franchisee with a complete business format,
including a license for a trade name, the products or services to be sold, the physical
plant, methods of operation, marketing strategy plan, quality control process, a two-
way communication system and the necessary business services.

2. Advantages of buying a franchise:

a) Management training and support

b) Brand-name appeal/attraction
c) Standardized quality of goods and services
d) National advertising program
e) Site selection and territorial protection
f) Greater chance to success

3. Disadvantages of buying a franchise:

a) Franchise fees and profit sharing

b) Strict adherence to standardized operations
c) Restrictions on purchasing : buy only from franchiser or approved supplier
 43

d) Market saturation ( enough quantity of a product on market such that consumers do

not buy it, and the franchisee does not sell)
e) Less freedom

4.7. Entrepreneurial resources and strategy

4.7.1. Entrepreneurial resources

Resources are an essential component of a successful entrepreneurial launch. One of the major
challenges that entrepreneurial firms face is a lack of resources. For start-ups or new
entrepreneurs, the most important resource is money. A new firm typically has to expend/spend
large sums just to open the door for business. Furthermore, as new in the market, they face the
problem of “liability of newness”, which is referred as to the vulnerability that most new firms
feel because of lack of experience, being unknown in their industry, and unfamiliar to customers
(Gregory G. Dess, et al, 2005).

As financial resources are essential for start-up success, the new entrepreneur business person
may raise capital or money for starting his activity by the following sources (K. Moses Musoke,
2008):

1) Own sources (personal income: wage/salary, savings, profits, dividends or commission

etc, and sale of personal property and inheritance)
2) Gifts and offer (gifts and grants may be in form of money or physical materials: land,
buildings, raw materials etc from friends relatives or government)
3) Family contribution or inheritance (some entrepreneurs can start with the contribution
from their family members; it can include cash, land, buildings, vehicles, furniture,
machinery, rendering free services, etc)
4) Suppliers credit (favorable payment terms with suppliers: goods or services obtained
from suppliers on credit paid after a certain period after being sold by the new enterprise)
5) Fundraising ( it implies soliciting funds from the public organizations and specified
individuals who may give grants and donations voluntarily)
 44

6) Borrowing or acquiring loans from financial institutions ( loan can be either in cash or in
form of physical assets obtained from external sources with intention of paying it back
later with or without interest; it can be obtained by family members, friends, savings and
credit cooperatives /societies, banks: line of credit, government: underwrite loan made by
banks to small business to reduce risk feared by banks, etc)
7) Official gambling ( some lottery services like MTN, BRALIRWA promotions)

4.7.2. Entrepreneurial strategy

Once resources are in place, the new venture needs a strategy. To be successful new ventures
must evaluate industry conditions, competitive environment, and market opportunities in order to
position them strategically. The new entrant needs to examine barriers to entry. If the barriers are
too high, the potential entrant may decide not to enter or to gather more resources before
attempting to do so. To overcome this problem, a new venture must look for a strategic
opportunity to offer a unique/specific value proposition to potential customers. The concepts of
entry strategy and generic strategy can be useful for a new venture as a new entrant in the
industry, to make a decision of how it will actually enter a new market (Gregory G. Dess, 2005).

1. What is a strategy?

The concept of strategy originated in the study of success in war. It comes from the Greek
“Stratos” (army) and “again” (to lead).The word “strategy” was used by Greeks about 400 B.C.
as the art and the sciences of directing military forces. A strategy outlines the basic steps that the
management plans to take, to reach an objective or a set of objectives. In other words, a strategy
outlines how management intends or plans to achieve its objectives. (Leslie W. Rue, et al 2005).

A strategy can also be meant as the rule of making decisions. It is the way in which a corporate
endeavors or attempts to differentiate itself positively from its competitors, using its relative
strengths to better satisfy customer needs.

2. Entry strategy
 45

One of the most challenging aspects of launching a new venture is finding a way to begin doing
business that generates cash, builds credibility, attracts good employees and overcome the
‘liability of newness’. The first challenge for any new venture is to get a foothold in the market.
The entry strategy may be helpful for the devoted entrepreneur. This strategy lies on one of the
three categories: pioneering new entry, imitative new entry, or adaptive new entry.

a) Pioneering new entry

This is creating new ways to solve old problems or meeting customer’s needs in a unique new
way. In other words, pioneering means to invent or innovate or to present something new. It is
similar to radical innovation and is actually based on technological breakthroughs. The problem
is that if the breakthrough is successful other competitors will rush in to copy it. For the new
entrant to sustain its pioneering advantage (or its new technological breakthrough), it should
protect its intellectual property or discovery, and advertise heavily to build brand, form alliances
with businesses that will adopt its products or services and offer exceptional customer service.

b) Imitative new entry

Whereas pioneers are often inventors or tinkerers with new technology, imitators have a strong
market orientation. Basically, imitation strategy is simply to copy a strategy from an area, it is
used by entrepreneurs who see products or business concepts that have been successful in one
market niche and introduce the same product or service in another segment of the market. It
should be noted that imitation may be also make a product or produce a service better than
existing competitors.

c) Adaptive new entry

This is taking an existing idea and adapting it to a particular situation. Note that it is not
“reinventing a wheel” or imitate existing things. The entrants use the strategy somewhere
between “pure” imitation and “pure” pioneering/invention or innovation. That is, they offer a
product that is somewhat new and sufficiently different to create new value for customers and
capture market share.

3. Generic strategy
 46

This strategy lies on overall low cost, differentiation, and focus strategies to achieve competitive
advantages.

a) Overall cost leadership

This principle implies achieving success by doing more with less cost. That is, by holding down
costs or making more efficient use of resources than larger competitors, new ventures are often
able to offer lower prices and still be profitable. Thus, a low-cost leader strategy is a viable
alternative for some new ventures.

Because new ventures are typically small, they usually do not have high economies of scale
compared to competitors, so it is difficult for them to achieve low-cost leadership or reduce
costs. Given this constraint, to be successful in cost-leader strategy, new ventures may for
example source raw materials from a supplier who provides them more cheaply or seek for
manufacturing facilities and set up in another country where labor costs are especially low. They
can also exploit internet, it offers some potential cost-saving alternatives, i.e. to manage supplier
relations through a website or sell products online that competitors sell by using a sales force.

b) Differentiation

The new entrant is based on being able to offer a differentiated value proposition. To do so, it
can use either new technology or deploying resources in a way that radically alters/changes the
way business is currently conducted. It should be noted that differentiation is usually expensive
because of being associated with strong brand identity, and for the reason that building a brand is
expensive because of advertising and promotion costs, exceptional customer service cost, and
other expenses associated with building brand. To be successful, according to Garry Ridge (cited
by Gregory G. Dess, 2005) the new firm needs to have a great product, make the end user aware
of it, and make it easy to buy.

c) Focus

Focus or “niche” strategies may include elements of differentiation and overall cost leadership,
as well as combinations of these approaches. The purpose of the new venture is to capture a
small segment within a market or a niche.
 47

The major problem is that a large firm with more resources will copy what new ventures are
doing. That is, well-established larger competitors observe the success of new entrant’s product
or service will copy it and use their market power to overwhelm the new ventures. To overcome
this problem, small firms/ new entrants should take the business away from the existing
competitors to capture a market niche where they can get a foothold and make small advances
that can destroy gradually the position of existing competitors.

CHAPTER FIVE

5. STRATEGIC MANAGEMENT AS AN ENTREPRENEURIAL TOOL

5.1 Concept of Strategic management

1. What is management?

It is a process of deciding how best to use a business’ resources to produce goods or services.
Note that a business’ resources include its employees, equipment, and money (Leslie W. Rue, et
al, 2005).

Management can also be considered as the process of planning, organizing, controlling and
managing the business operations to ensure efficiency and effectiveness in running the business
and achievement of the set goals and objectives (Kato M. Musoke, 2008).

2. Defining Strategic Management

Strategic management consists of the analysis, decisions, and actions an organization undertakes
in order to create and sustain competitive advantages (Gregory G. Dess, 2005).

This definition lies on two main elements that are on the heart of strategic management.

- First, the strategic management of an organization implies three ongoing processes: analysis,
decisions and actions. That is, strategic management is concerned with:
 48

1) Analysis of strategic goals (vision, mission, and strategic objectives) along with/ as well as the
analysis of the internal and external environment of the organization.

2) Decisions: the leader must take strategic decisions. His decisions must focus on the two
following basic questions: What industries should we compete? How should we compete in those
industries?

3) Actions: Firms must take the necessary actions to implement their strategies. This requires the
leader to allocate the necessary resources and to design/invent the organization to bring the
intended strategies to reality.

- Second, the essence (the most important element) of strategic management is the study of why
some firms outperform others. Managers need to determine how a firm is to compete so that it
can obtain advantages that are sustainable over a long period of time. At this level strategic
management focuses on two fundamental questions:

1) How should we compete in order to create competitive advantages in the marketplace? For
example the manager needs to determine if the firm should position itself as a low-cost producer
on the market to develop products or services that are unique which will enable the firm to
charge premium or reduced prices.

2) How can we create competitive advantages in the marketplace that are not only unique and
valuable but also difficult for competitors to copy or substitute? That is, managers must seek out
how to make those advantages sustainable, instead of temporary, in the marketplace. Note that
sustainable competitive advantage is possible only through performing different activities from
rivals or performing similar activities in different ways. Thus, the strategy for having sustainable
competitive advantages is being all about different from everyone else.

5.2 Strategic management and Entrepreneurship

As defined above, Entrepreneurship is concerned with creating or initiating a new venture. That
is, entrepreneurs to start a new business must combine in the specific way resources such as
money, people, procedures, technologies, materials, facilities, packaging, and distribution
channels to create value and differentiate their efforts. To succeed, entrepreneurs need
management skills as seen above. Thus, a new firm to create and sustain competitive advantages
 49

needs strategic management as important tool. Among strategic management tools we can
highlight for example SWOT Analysis and Porter’s Five Forces Model of Industry Competition
which are important tools for any entrepreneur.

5.2.1 SWOT Analysis as a management tool for decision making

To understand the business environment of a particular firm, an entrepreneur needs to analyze

both the general environment and the firm’s industry and competitive environment. Generally,
firms compete with other firms in the same industry. An industry is composed of a set of firms
that produce similar products or services, sell to similar customers and use similar methods of
production. Thus, gathering industry information and understanding competitive dynamics
among the different companies in your industry as entrepreneur, is key to successful strategic
management (Gregory G. Dess, 2005).

One of the most basic techniques for analyzing firm and industry conditions is SWOT analysis.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a
technique for evaluating an organization’s internal strengths and weaknesses, and its external
opportunities and threats whose major advantage is to provide a general overview of an
organization’s strategic situation (Leslie W. Rue, et al, 2005). It helps identifying what an
organization is doing right or wrong and what it can do well and what it cannot.

- How conduct SWOT Analysis

A. Analysis of Strengths and Weaknesses

1) Strengths:
These represent something an organization is doing well or important characteristics an
organization has that others may not have, i.e. skills, expertise, patents etc,. They are
internal factors.

When analyzing an organization’s strengths, you focus on the following questions:

-What do you do well?
 50

-What unique/specific resources can you use?

-What do others see as your strengths?

2) Weaknesses:
They represent something an organization lacks or does poorly in comparison to others; it
is a disadvantage for an organization.

When conducting analysis of weaknesses an emphasis is put on:

-What could you improve?
-Where do you have fewer resources than others?
-What are others likely to see as weaknesses?

B. Analysis of Opportunities and Threats

1) Opportunities:
They include any favorable current or perspective situation in organization’s external
environment that enhance its competitive position, i.e. trends, change, etc.

When conducting analysis of opportunities an emphasis is put on:

-What good opportunities are open to us?
-What trends could take advantage of?
-Looking at your strengths, what can you turn into opportunities?

2) Threats:
They include any unfavorable situation, and trend in organization’s external
environment that is threatening its ability to compete, i.e. financial loss, damages, etc.

When analyzing an organization threats, you focus on the following questions:

-What threats could harm you?
-What are your competitors doing?
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-Looking at your weaknesses, what threats do they expose you to?

- Contribution of SWOT Analysis to organization

1) It brings key issues from external and internal environment that can be a foundation
for strategic choice.
2) It brings a picture from external and internal analysis that can help to develop
appropriate strategies for sustainable growth.
3) It creates greater confidence and ability to map out overall direction that organization
should take.

5.2.2 Porter’s Five Forces Model of Industry Competition as a managerial tool for
decision making

The “five forces” model developed by Michael E. Porter is the most commonly used
analytical tool for examining the competitive environment. It describes the competitive
environment in terms of five basic competitive forces (Gregory G. Dess, et al, 2005).

1) The threats of new entrants

2) The bargaining power of buyers
3) The bargaining power of suppliers
4) The threats of substitute products and services
5) The intensity of rivalry among competitors in an industry
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Porter’s Five Forces Model of Industry Competition

POTENTIAL

ENTRANTS

Threat of

new entrants

Bargaining power Bargaining power

INDUSTRY
of suppliers of buyers
COMPETITORS
SUPPLIERS Rivalry among BUYERS

Existing Firms

Threat of

Substitute products

Or services

SUBSTITUTES

Each of these forces affects a firm’s ability to compete in a given market. Together they
determine the profit potential for a particular industry.
 53

1) The threat of New entrants:

The threat of new entrants refers to the possibility that the profits of established firms in the
industry may be eroded/ destroyed gradually by new competitors. The incumbent firms fear that
newcomers will destroy their profits.

2) The bargaining power of buyers

Buyers threaten an industry by forcing down prices for higher quality or more services, and
playing competitors against each other. These actions erode industry profitability.

3) The bargaining power of suppliers:

Suppliers can exert bargaining power over participants in an industry by threatening to raise
prices or reduce the quality of purchased goods and services. Suppliers have a large possibility
for increasing the price of raw materials in competing industry.

4) The threats of substitute products and services:

All firms within an industry compete with other industries producing substitute products and
services.

5) The intensity of rivalry among competitors in an industry:

Rivalry occurs when competitors sense the pressure or act on an opportunity to improve their
opposition. Firms use tactics like price competition, advertising battles, product introductions,
and increased customer service or warranties.

Advantages of Porter’s Five Forces Model:

- It helps a manager decide whether the firm should remain in or exit an industry.
- It provides the rationale for increasing or decreasing resource commitment.
- It helps the manager assess how to improve the firm’s competitive position with regard to
each of the five forces.
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5.3 Entrepreneurship versus Management

Entrepreneurship is a process of creating value by bringing together a specific package of

resources to exploit an opportunity, while management is a process of deciding how best to use a
business’ resources to produce goods and services. That is, entrepreneurs need management
skills to exploit a sensed opportunity.

Although entrepreneurs perform at beginning many basic management functions that might be
performed by professional managers, as their businesses grow they sometimes hire professional
managers. Consequently, for any enterprise to live and sustain its position in the marketplace for
a long period of time, entrepreneurs and professional managers need each other. Through the
following table some differences between entrepreneurs and professional managers can be raised
up (Leslie W. Rue, 2005).

Difference between entrepreneurs and professional managers:

Entrepreneurs Professional managers

- Launch and run their businesses - They do not own businesses
- They hire professional managers. - They are paid by entrepreneurs for
performing management functions.

- They take risk of business in which - They do not take risk of business they
they are engaged. are managing; they are employees
who receive salaries/wage like others.

- They are more independent than - They are not independent; they depend
managers. on their entrepreneurs as their bosses.
- They must have formal education.
- They may have less formal education.
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- They begin job with defined

- At the beginning they do not have a appointment.
defined job; they jump from job to job
before starting their own businesses.

CHAPTER SIX: ENTREPRENEURSHIP OPPORTUNITIES AND BUSINESS PLAN

5.4 Entrepreneurship opportunity

The first step in becoming an entrepreneur or starting a business enterprise is spotting or
identification of a business opportunity. The success of an entrepreneur therefore is first and
foremost based on how best he scans the environment for business opportunities and how best he
can select the best business opportunity from many business ideas and opportunities identified
from the environment. After identifying and developing a business opportunity into a business
project or enterprise, then other factors such as personal entrepreneurship qualities, business
support services and favourable Government policy, etc come into play.

5.5 Business, Business opportunity and Business idea

1. Business

The business refers to any economic activity that involves the production and selling of goods
and services, covering risks with aim of getting profits (Kato, Moses, 2008). Doing business
involves producing goods and exchanging them for money or for other goods (barter trade) with
view of making profits.

2. Business opportunity

This can be defined as an identified situation or chance that can be turned into a real and
profitable business. It is sensed when identifying the gaps between human needs and the
available goods and services, meaning that, goods and services not available in the society or in
the market place. An idea will be called an opportunity if there is evidence that the
Entrepreneur’s idea can be turned into reality. Thus business opportunities are developed from
business ideas.
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3.Business idea

A business idea refers to any thought that the entrepreneur may come up with/discover as a result
of scanning the environment with the possibility of developing it into a business opportunity. It
requires the entrepreneur to exercise creativity and innovativeness in order to discover a business
idea for the environment (Kato, Moses, 2008).

5.6 How select Business career?

Business career is a long term involvement in business activities for the purpose of making
profits. The driving motive in the business career is making profits which are achieved by
ensuring that income from business sales exceeds the business operating expenses.The following
guideline will help a person to select a business career:

 Determine your goal: To select business as a career, one must have a goal or goals to be
achieved through engaging in the business. The set goals would be the drive or reason to
go into business for example to become a successful entrepreneur, to be independent in
decision making etc.
 Analyze the benefits and challenge of engaging in business: One should carefully look
at the advantages and disadvantages of taking a business career when making decision to
take up or begin business and choosing the form of business to start.
 Analyze your strength and weakness and opportunity and threats posed by the
environment: You should analyze the resources readily available at hand and your
resource constraint. It is important to understand that you dwell/concentrate more on the
strength and opportunities since they offer inspiration but also understand the weakness
and threats and seek to minimize them in order to succeed in business.
 Make the commitment to go into business: After doing the SWOT analysis above, one
should then make decision to go into business. The desire to become an entrepreneur
should override/cancel the desire to work for someone else.

5.7 Business challenges and how overcome them

Challenges in entrepreneurship refer to the major activities undertaken in a business. There are
specific tasks or pieces of work that can be done to meet or overcome those challenges. In most
 57

cases many tasks may be done to meet a single challenge. The example of challenges and the
tasks that can be done to overcome them are given in the table below:

Challenges Tasks to be done to overcome the

challenges
Raising capital -Applying for a loan
-Reducing consumption/
expenditure to save
-Seeking credit facilities from
suppliers

Managing funds -Budgeting and budget control

-Record keeping/ accountability
Organizing production -Securing land , labor, and other
resources
- Purchasing raw material
- Feeding raw material into the
production process to produce
goods and services
- Installing efficient production
Processes for producing high
quality products

Acquiring stock - Choosing the best suppliers

- Contacting suppliers
- Transporting goods
- Storing goods

Maximizing profits - Controlling/ reducing costs

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- Sales maximization

Ensuring Quality of products - Buying high quality raw material and

input
- Employing experienced staff
- Proper packaging of products to
prevent contamination
-Products inspection to sort out
substandard items
Ensuring high production - Use of technically efficient
technology
-Ensuring reliable supply of inputs in
the production process
Obtaining sufficient market - Market survey
- Sales promotion e.g. giving discounts
and free samples
-Advertising

5.8 Business plan

5.8.1 What is business plan?

A business plan is a written summary of entrepreneur’s proposed business venture, its
operational and financial details, its marketing opportunities and strategy, and its managers’
skills and abilities. It is simply a story of your business.Its preparation must involve the
management team for its good usefulness (Jeffry A. Timmons and Stephen S., 2004). A business
plan is a living document that must be widely published to rise outside capital and attract key
advisors. It becomes obsolete over a certain time so, entrepreneurs must continually revise and
update it.

5.8.2 Why develop a business plan?

There are three essential functions to why a business plan is developed:
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1) It guides the company’s operations by charting/describing its future course and devising
(conceive) a strategy for success
2) It helps to attract lenders and investors
3) It is a tool of communication for gaining stakeholders’ support

5.8.3 Types of business plan

- Dehydrated business plan: it is typically no more than 10 pages. Its purpose is to provide an
initial conception of the business to test initial reaction to the entrepreneur idea. The entrepreneur
can share this business plan with his confidants and receive feedback from them before investing
significant time and effort on a longer business plan.

- A 25-40 pages business plan: it is written for introducing a concept to a potential investor, it
presents a short summary plan that must have 25-40 pages.

- The 80 pages business plan: is written for operational plan, primarily for the entrepreneur and
his team to guide the development launch, and initial growth of the venture, the business plan
may exceed 80 pages.

5.8.4 How do you interest people read your business plan?

In preparation of the business plan help the potential reader by highlighting different key points:
use headings and subheadings, diagrams, charts, and bars to make the document rich and visually
attractive.

5.8.5 What is interesting when reading a business plan?

When reading a business plan, stakeholders, lenders and investors look for or put interest on:

1) Capital: what amount of investment the entrepreneur puts in his business?

2) Capacity: what cash flow is expected/ projected? it becomes obsolete
3) Collateral: what assets (houses, goods, etc) an entrepreneur possesses as security of a
loan?
4) Character: has the business a competent management?
5) Conditions: what are potential growth in the market, location, strengths, weaknesses,
opportunities, and threats?
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5.8.6 Business plan outline

I. Cover and title page
II. Executive summary (not to exceed two pages)
a) Company name, address, and phone number
b) Names, addresses, and phone number of all key people
c) Brief description of the business plan, its products and services, and the customer
problems they solve
d) Brief overview of the market for the products and services
e) Brief overview of the strategies that will make the firm a success
f) Brief description of the managerial and technical experience of key people
g) Brief statement of the financial request and how the money will be used
h) Charts or tables showing highlights of financial forecasts
III. Vision and mission statement
a) Entrepreneur’s vision for the company
b) “What business are we in?”
c) Values and principles on which the business stands
d) What makes the business unique? What is the source of its competitive
advantage?
IV. Company history (for existing businesses only)
a) Company founding
b) Financial and operational highlights
c) Significant achievements
V. Business and industry profile
a) Stage of growth (start-up, growth, maturity)
b) Company goals and objectives
i. Operational
ii. Financial
iii. Other
c) Industry analysis
i. Industry background and overview
ii. Significant trends
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iii. Growth rate

iv. Key success factors in the industry
v. Outlook/prediction for the future
VI. Business strategy
a) Desired image and position in the market
b) SWOT analysis
i. Strengths
ii. Weaknesses
iii. Opportunities
iv. Threats
c) Competitive strategy
i. Cost-leadership
ii. Differentiation
iii. Focus
VII. Company products and services
a) Description
i. Product or service features
ii. Customer benefits
iii. Warrantees (authorization holders) and guarantees
iv. Uniqueness
b) Patent or trademark protection: i.e. advertising more
c) Description of production process (if applicable, for existing firms)
i. Raw materials
ii. Costs
iii. Key suppliers
d) Future product or service offerings
VIII. Marketing Strategy
a) Target market
i. Complete demographic profile; i.e. level of education, economy, health,
geographic limits or location, number of people, religion, etc
ii. Other significant customer characteristics
 62

b) Customers’ motivation to buy

c) Market size and trends
i. How large is the market?
ii. Is it growing or shrinking/diminishing? How fast?
d) Advertising and promotion
i. Media used-reader, viewer, listener, profiles
ii. Media costs
iii. Frequency of usage
iv. Plans for generating publicity
e) Pricing
i. Cost structure
1) Fixed
2) Variable
ii. Desired image in market
iii. Comparison against competitors’ prices
f) Distribution strategy
i. Channels of distribution used
ii. Sales techniques and incentives
IX. Location and layout
a) Location
i. Demographic analysis of location versus target customer profile
ii. Traffic count (count potential shoppers or people passing in the market place
per day or week)
iii. Lease/ rental rates
iv. Labor needs and supply
v. Wage rates
b) Layout
i. Size requirements
ii. Ergonomic issues/ facilities
iii. Layout plan (put in appendix)
X. Competitor analysis
 63

a) Existing competitors
i. Who are they?
ii. Strengths
iii. Weaknesses
b) Potential competitors: companies that might enter the market
i. Who are they?
ii. What is their impact on the business if they enter?
XI. Description of management team
a) Key managers and employees
i. Their backgrounds
ii. Experience, skills, and know-how they bring to the company
b) Resumes/summary of key managers and employees (put in appendix)
XII. Plan of operation
a) Form of ownership chosen and reasoning (Sole proprietor, Partnership,
Corporation, Franchise etc)
b) Company structure (organization chart)
c) Decision making authority
d) Compensation and benefits packages
XIII. Financial forecasts ( put in appendix)
a) Financial statements
i. Income statement
ii. Balance sheet
iii. Cash flow statement
b) Break-even analysis
c) Sensitivity analysis
d) Ratio analysis with comparison to industry standards (applicable to existing
business)
XIV. Loan or investment proposal
a) Amount requested
b) Purpose and uses of funds
c) Repayment or “cash out” schedule
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d) Timetable for implementing plan and launching the business

XV. Appendices
Supporting documentation, including market research, financial statements,
organization charts, resumes and other items.

CHAPTER SEVEN

6 EVOLUTION OF ENTREPRENEURSHIP IN RWANDA

6.1 Statement of Creativity and Innovation in Rwanda

Traditionally, Rwandans are creative. A typical physical example of “urushingo” shows to what
extent these people are inventors. This example is an illustration of how Rwandans discovered
fire with rubbing two sticks; this is a physical phenomenon. There are many examples
throughout the country of inventors that create and make many things responding to various
needs and wants of local people i.e. handcrafts (uduseke, jowls, etc), icugutu, etc,
(NTEZIYAREMYE S. (2001) quoting Ministry of Industry and Craft, 1987 and the priest
NDEKEZI Sylvestre, 1986 in Appropriate technology: an alternative strategy for developing
Rwanda).
Those examples demonstrate the level of thinking of Rwandans in finding for themselves a
solution to their problems.

The Government of Rwanda supports the creativity of its people through establishing various
R&D institutions i.e. technological universities (KIST) to innovate and develop that creativity.
The remaining problem is to break the barriers existing in entrepreneurship; lots of Rwandans are
afraid of taking a risky investment, while the spirit of all entrepreneurs is to calculate the risk,
control and mitigate it.

6.2 Entrepreneurship promotion policy in Rwanda

Most researchers concluded that 90% of Rwandan population live on farming activities, and this
sector contributes lowery to growth domestic product (GDP), at least 14%, the Government of
 65

Rwanda engaged itself to reduce the percentage of the population living on subsistence farming
and increasing GDP; then set a target of reducing from 90% to 50% of people working in the
agricultural sector. As predicted, to meet this target will require the private sector to
generate/create at least 1.4 millions of jobs, which implies also for the Government to
accomplish its stated target of reducing the number of people living under poverty line from 64%
to 30% by 2020 (Ministry of Finance and Economic Planning, Rwanda Vision 2020, Kigali, July
2000, www.gesci.org).

For all those reasons, the Government of Rwanda took a series of measures promoting
entrepreneurship and enhancing investments in other forms of production. Among others, the
Government set many policies favoring investments in various areas; like internal and external
trade, mechanized agriculture, and diverse services. Among those policies, some are highlighted
below:

1. National Investment Code (NIC)

The Government of Rwanda has made all efforts to put in place a favorable investment regime in
order to attract foreign direct investment for its positive impacts it generates to the economy (i.e.
training of local people on various skills). This investment code provides some incentives on
income tax law (TVA) for promoting export efforts. Other fiscal incentives in strategic sectors
are given by that law i.e. 0% on Raw materials and Capital Equipment; 15% on intermediate
goods; 25% on finished goods (Ministry of Commerce, Industry, Investment Promotion, Tourism
and Cooperatives: 2006,www.eac.int/trade).

2. Rwanda Investment and Exports Promotion Agency (RIEPA)

This agency was set by the Government of Rwanda to create conducive environment for
existing and potential investors in exports. It is also provided with a law on development
of exports that gives some incentives on customs legislation to make Rwanda an
attractive environment to investors. (Ministry of Commerce, Industry, Investment
Promotion, Tourism and Cooperatives: 2006,www.eac.int/trade).

3. Rwanda Private Sector Federation (RPSF)

 66

The PSF-RWANDA was founded in December 1999 as the Private Sector’s counterpart and
umbrella organization in the Private Public Partnership framework in Rwanda replacing the
former Rwanda Chamber of Commerce, a government driven institution, which had three
important limitations: lack of autonomy, weak representation, and lack of relevant services.
As a result, Industrialists, Banks, Insurers, Transporters, and Women created stand-alone
associations to serve their needs. The PSF-RWANDA has as strategy promoting
Entrepreneurship and Business Growth, and building Private Sector Capacity (Private Sector
Federation, www.psf.org.rw).

This agency was created to inform the Government of Rwanda on the key barriers to
business success. It has a crucial role to play in the continuing improvement of the business
environment and works closely with the Government through the Ministry of Commerce in
order to facilitate the investors. This agency helps individuals engaged in private sector to
improve their initiative by giving prices to well done projects and financing them.

4. Rwanda Bureau of Standards (RBS)

It has been created in order to protect consumers and give power to new product on
market. Actually, this institution is a one-stop centre that is assigned to measure the
quality standards of the new product made by any factory before it is put on the market.
After testing the new product, the bureau of standards applies its mark on that product
which means that the product has been tested by a recognized official bureau. This mark
gives the new product a power on the market and consumers have confidence in a
recognized bureau of standards that they are buying a product which does not have bad
consequences on their health.(Ministry of Commerce, Industry, Investment Promotion,
Tourism and Cooperatives: 2006,www.eac.int/trade).

5. Regional agreements promoting interregional trade

The Government of Rwanda belongs to interregional unions i.e. New Partnership for
Africa’s Development (NEPAD), Common Market for Eastern and Southern Africa
(COMESA), etc in which it contributes lots of money in order to facilitate interregional
trade by removing some trade barriers.
 67

6.3 Other Government priorities promoting Entrepreneurship in Rwanda

The Government of Rwanda took also lots of measures in order to promote the
entrepreneurship. The most targeted are below outlined:

1. Developing infrastructure:
The target in this area is to develop rail and air ways transportation, highways /roads for a
robust distribution channel of goods and services.
A new planned railway has two branches:
- Isaka-Kigali railway project to link the port of Dar Es Salaam
- Rwanda-Burundi via Congo to link the southern Africa Cape Gauge
A new airport is planned in Bugesera at 40km out of Kigali.
14,000 km of roads are planned to be asphalted and paved (Rwanda Development Board,
Investing in Rwanda, An overview, 2009, www.rwandainvest.com).

2. Developing energy sector:

The target is power generation all over the country; power grid coverage is planned to
expand to 67% of the region by 2012. Recognizing the strategic importance of the sector,
the Government Rwanda has ambitious plans of doubling generation capacity to more
than 130MW through methane gas, macro and micro-hydro-electric power. For instance,
in micro-hydro-electric power, 333 potential sites identified (50KW-1MW) by 2008, 2
were constructed, 21 under construction and 10 scheduled (Rwanda Development Board,
Investing in Rwanda, An overview, 2009, www.rwandainvest.com). From Methane Gas,
the Government of Rwanda expects for example, to produce 4MW/hour.
3. Developing ICT:
The Government of Rwanda has invested in building the ICT infrastructure (Rwanda
Development Board, Investing in Rwanda, An overview, 2009, www.rwandainvest.com)
through:
- A 2500km optic fibre that covers Kigali city and the entire country, with 7 regional
links to the neighbouring countries (first country in the region developing internet
with many awards in that field)
- Computer software use and development
 68

- Computer hardware, assembly, and repair

REVIEW QUESTIONS

1. (a) It is actually known that there is an entrepreneurial potential in everyone. Discuss the
myth assimilated to entrepreneurs which traditionally states that “entrepreneurs are born
not made”.

(b) Most people believe that “entrepreneurs are extreme risk-takers”. This is a myth; none
can undertake an activity which will cause him to lose the totality of his investment or
cost him his life. Based on examples, explain why entrepreneurs are not risk-takers.

(c) What is entrepreneurship? Relate this concept to this adage “if you do not succeed,
thy, try, try again”.

2. a) “All you need is luck to be entrepreneur”. Explain how this can enhance

entrepreneurship into you?

b)“Entrepreneurship is unstructured and chaotic”. Explain how this can be

the origin of entrepreneurship.

3. (a) Discuss the role of entrepreneurship in the society.

(b) Through the entrepreneurial mindset, clarify the entrepreneurship

behavior.

(c) Describe the model of entrepreneurial motivation.

4. (a) There are many characteristics of successful entrepreneurs, describe

 69

at least five of your choice.

(b) Explain five types of preliminary skills that a good entrepreneur
must have in order to manage continuously his organization and keep
its position in the marketplace.

(c) Discuss factors influencing entrepreneurial performance.

5. (a) Explain five constraints of entrepreneurship and propose some solutions to those
constraints.
(b) Explain the entrepreneurial process.

6. (a) Explain how one can enhance individual creativity.

(b) Explain barriers that stifle creativity.

7. (a) Although innovation is risky, is necessary. Why is it so? Discuss.

(b) Explain the relationship existing between entrepreneurship, creativity
and innovation.

8. Distinguish limited liability from unlimited liability in legal forms of

business ownership.

9. Explain “liability of newness”.

10. Through entry strategy explain :

-pioneering new entry,
-imitative new entry,
-adaptive new entry.

11. Through generic strategy explain:

- overall cost leadership,

- differentiation,
 70

- focus.

12. Explain Porter’s Five Forces Model of Industry Competition.

13. Establish the relationship between Business, Business opportunity and

Business idea.

14. How one can select a business career?

15. (a) Explain what a business plan is. What is its importance in business?

(b) Outline the key points on which stakeholders might put interest
when reading your business plan, and explain why they must look for
those points.

16. (a) Based on an example, explain what an industry is.

(b) Explain the theory of SWOT analysis. What is its importance in
analysis of the firm?

17. (a) Assume you are undertaking an enterprise. As a new comer in the industry, how
can you analyze the existing competitors?

(b) What do you understand by market share? As you are undertaking a

new business, conduct the study on your marketing strategy.