7.1. Business Ethics
1. Ethics: this is a set of moral principal that govern the action of an individual or group
2. The principal should play a significant role in guiding the conduct of manager’s entrepreneurs and employees in the operation of the business.
3. Business ethics is concerned the right and wrong in the practice of entrepreneur ( business)
4. It addresses both the body of principals governing business practice with emphasis on the product the consumers and the entrepreneur’s moral concepts.
Sources of Moral Principles
Doctrines: primarily religion & politics that have there over years since the beginning of the history e.g
- the mosaic ten commandments
- Athenian principle of democracy
- The British concept of individual justice
- The bill of rights of UK.
Value and norms
Values and norms of a given society are related to religious tendencies, customs and traditions that vary from society to society.
Code and standards
Codes and standards formulated by a particular professional groups and business organizations. The entrepreneur needs to be critical in all his dealings i.e conduct and his dealings with others should be within acceptable business limits as established
by business principals, manners and values.
Important Aspects of Business Ethics
Competition is regarded as healthy and fair when carried on within acceptable business limits as established by business principals, manners and values.
Unfair competitive aspects
- Reduction of prices of goods and services to very low levels with the object of putting competitors out of business.
- Explaining the ignorance or the consumers as on quality and quantity.
- Grouping together with a view of lowering the prices in order to push other out of business.
- Bribing – in order to get business contracts prevents fair competition.
- Gaining control over the supply of any commodity in order to create an artificial scarcity.
An entrepreneur it is necessary to give fair prices of goods and services
Over pricing is likely to put customers away while under pricing might not be good for competitors.
3. Customer/Supply relations
Ethical business owners treat customers and suppliers with fairness and consideration. Honestly and courtesy is required in dealing with customers e.g Preferential treatment.
4. Goods & service
The products and services offered by customers must meet the quality and quantity requirements
5. Employee treatment
Employees should be treated ethnically e.g
- Working for reasonable number of hours
- Pleasant working conditions
- Listen to their complaints and give satisfactory answers
- No discrimination
6. Product promotions
The entrepreneurs should make sure that all promotional activities are ethnically presented i.e No mis- representation
Packaging of the right products, Fair promotional method which confirm to good morals.
7.2 Aspects of Management Ethics
1. Organization ethics e.g code of ethics
Organization ethics refer to the moral principals or policies set by the organization with guide behaviour in the organization with guide behaviour in the organization which guide behaviour in the organization referred to as code of ethics. The code of ethics should guide the behaviour of all persons in an organization referred to as the code of ethics. The code of ethics should guide the behaviour of all persons in an organization and it’s effectiveness include.
- starting the code
- Appointing ethics committee.
- Holding regular updates on the codes
- The entrepreneur should maintain good codes of conduct in order to enable him deal with.
- legal issues
- government regulations
- social pressures
2. Individual ethics
- Involve personal attributes such as honesty avoiding criminal Acts, willingness to perform e.t.c. The individual ethics in influenced by determined by religious political and family backgrounds. Together with the standards of organization one is working in.
3. Social ethics
Involve ethical issues which relate to;
- Environmental awareness
- Public relations
- Fair competitions
4. Government obligations
Involves ethical practices to statutory laws and regulation such as
- Payment of taxes
- Making annual returns e.g NHIF, NSSF
- Insurance e.t.c
7.3 Role of an Organization (entrepreneurs) to Stakeholders
Stakeholders include the society, employees and the government.
1. The role of the business enterprise to society
- To provide employment
- Conservation of the environment
- Develop social amenities e.g schools
2. Role of the society to the organization
- A source of labour
- Raw materials to the organization
- Market for the products and services
- Capital to invest in the business.
3. Organization role to employees
- Good compensation ( wages and salaries)
- Good working conditions
- Training programmes
- Recreation facilities
4. Role of employees to organization
- Creativity and innovation
- Time management
- Working to set goals
- Following rates and regulations
- Respecting other co-working and management.
- Working to set goals
- Following roles / instructions
- Roles of organization
- Job creation
- Foreign exchange through exports
Tools of Ethics
The key terms of ethical language are values, rights, duties and roles. Values are permanent desires that seem to be good in themselves e.g peace. Values are answers to answers to questions of why? E.g why should managers behave ethically?
- It’s a claim that entails a person to do something. While a duty is an obligation to take responsibility e.g to pay tax.
How Companies/ Organizations improve their Ethical Standards
- Having codes of conduct
- Forming ethical committees
- Social audience/ judicial courts
- Enhancing control measures i.e rewarding, punishment. This will motivate people to work
- Training ethics to people
- Using role models.
- The term discipline simply means that members of a group confirm to the rules and regulations framed by an organization
- Discipline is the orderly conduct of affairs by the members of an organization who adheres to its regulations because they desire to corporate harmoniously in forwarding the end which the group has in view, and willingly recognized that, to do this, either wishes must be bought into a reasonable union with the requirements of the group in action.
- Discipline means ordering i.e the opposite of confusion.
- Discipline does not merely mean a strict and technical observance of rigid, inflexible rules and regulations
- Discipline simply means working co-operatively and behaving in an orderly and normal way as responsible person would expect and employee to do.
- Discipline is the training that corrects mould strengthens or perfects
- Discipline is the control gained by enforcing obedience.
- Discipline requires punishment.
Code of Ethics
The term ethics refers to a general idea or belief t hat influences people’s behaviour and attitude. A code of ethics refers to a set of laid down moral rules or principles which govern behaviour on deciding on what is right and what is wrong, Ethics from the foundation of the people of an organization as they make decisions or internally and with other stakeholders
The basis of ethical standards
Three main elements from a basis of ethical standards
Law defines for society as a whole, which actions are permissible and which are not. The law establishes the minimum standards of behavuiour. Actions that are legal may not necessary be ethical
Policies and procedures of the company.
N/B Research suggests that merely a half of an organization have a written code of ethics. These serve as specific guidelines for people as decisions are made.
This is the stance or the position of an individual taken when faced with a dilemma may not be governed by moral rules. Such behaviour is influenced by the values individuals learn from childhood schools and family and church.
A major determinant of ethical behaviour is training. Note” you get a good adult by getting the right child and teaching him right things. Ethical principles that guide behaviour
1. honesty; which refers to being truthful, sincere, forthright forward and frank
2. integrity – that is being principled, honorable, upright and courageous
3. act with convictions
4. do not be two faced
5. do not adopt an “ End justifies means philosophy
6. Promise keeping; being worth of trusting, keep promises, fulfill commitments and abide by the spirit as well as the intent or aim of an agreement.
7. fidelity- being faithful and loyal to family, friends, employees and the country, being confidential
Safeguard the ability to make independent professional judgment by avoiding undue influence of conflict.
Establishing Ethical Standards in an Organization
although there are no single standards for ethical behaviour managers must encourage employees to be familiar with various tasks for judging behaviour using;
this refers to choosing the option that offers the greatest number of people
Kant ‘s categorized imperative
Act such that the action taken under the circumstances could be a universal rule of behaviour
The professional ethics
Take only those actions that a disinterested panel of professional colleagues would view as proper
Refers to treating other people the way you’d like them treat you.
The television rule
Would you and colleagues fell confortable explaining your actions to a national T.V audience.
The family rule
Would you feel comfortable explaining to your children your spouse or your parent why you took a certain action?
Ways of maintaining respectful conduct by office employees
- Respect seniors by adhering to their requirements in terms of duty, social life.
- Respect of colleagues – recognize other employees and respect then to create a friendly working environment
- Respect your work simply because it sustains you and do what is expected of you.
- Respect visitors so as to get a positive image of the organization, treat them with a lot of respect.
- Respect customers and clients.
Situations of sexual harassment and discrimination
- indecent dressing is a common cause and it is be that both men and women dress in a way not provocative to others in terms of thought and feelings
- sexual favour- this can be in form of seniors asking for sexual favouor so that they can give promotion transfers e.t.c or Junior staff offering such to get promotions and transfers.
- Use of obscene language
7.4. Social Responsibility
Refers to the roles undertaken by business organization on the surrounding environment. It is the liability the organization undertakes to be called upon to account for the conduct that affects communities or the society at large Organizations are constraint in their conduct by legislation which in essence affects their relationship with stake-holders, employee’s suppliers, customers
the society at large and the environment.
Therefore business organizations have social responsibility to a number of groups (stakeholders) who include the society, employees and the government. The idea behind the stakeholder’s concept is that there are certain groups which have specific interest in a business. The interests may differ from one group to another and can be classified into three main groups.
1. Internal stakeholders (employees)
This evolves on the objectives of employees and management who are bound to have an influence on how the organization is run- they are likely to be interested in. continuity of employment, the growth of the organization in order to share its prosperity, personal esteem arising with this success and Individual interests and goals.
2. Connected stakeholders
Shareholders are not part of the organization itself, except in the case of managers and staff who hold equity in the company. They will have distinctive interests in the business, such as
- A return on their investment in the form of dividends and an increase in the capital
- Concerns that the business performs within the law and reasonable ethical parameters
- Participation in decision-taking through exercising rights to attend the annual General meeting and vote.
- The organization’s bankers will have specific concerns relating to the financial performance of the company, so that any short and long-term financing will be repaid with the minimum of risk. If the bank provides finance for a company, it will also wish to ensure that is kept informed of the company’s financial condition.
The customers of the enterprise require a good quality goods and services at the right price. They also want to have access to products through convenient, low cost distribution channels. In addition, businesses are seeing increasing evidence of consumerism – customers being more demanding of enterprise not only in what they manufacturer using child labour in Asian countries is
evidence of this- not only did it impact on the manufacture, but it had a major effect on perceptions of large football league teams buying the merchandise.
- Ongoing and mutually beneficial business relationships
- Being paid in time.
External stakeholders are those generally unconnected with the business but who nevertheless have an interest in its activities. This category includes virtually everyone else.
The government seeks compliance with legal requirements as well as;
- Ongoing creation of employment and wealth.
- Revenues in the form of income tax, capital gains tax, corporation tax, national insurance contributions, value added tax and excise duties.
- Information, such as statutory company return and export/ import information for the department on Trade and Industry.
Have a specific concern with the economic activity that can be brought to their catchments area. They will also be interested in revenues though local taxation. A wider concern is the impact of the business on the local environment. The competitors of the business with to ensure that there is fair competition and that all businesses operating in a sector are behaving ethically and in a
climate of mutual respect.
Importance of Enterprise social Responsibility
1. Enhance business relations with the society. Just as a society depends on business organization for goods and services, so business depends on society. When business participate in social responsibility. It creates acceptance by the society as a whole and as such; it will create a good working conditions that will enable them to work for the benefits of their organization.
2. Recognition of the society’s good will. By engaging in social responsibility, the business organization is appreciating is appreciating the fact that it is the society as a whole that has enabled their continual existence.
3. Supplement governments effort in development organization also have a relationships with the government at the local, state and federal levels. By participating in socially responsible activities that relates to national development such as buildings of schools or providing training activities to members of a society, the business organization are helping in the
governments efforts in development.
4. Means of waste management- business organization also acts as means of waste management because they ensure that they participate in a clean environment,.
5. They ensure that they keep the environment safe for all in the society hence they act as a means of waste management. They also help in waste management by recycling waste products.
Social Concerns of an Entrepreneur
Protection of the environment The environment has over the years become increasingly common within the business organization agenda, promoted by a consumer interest in the environment impact of business actions.
Business enterprises considers now they impact the environment ( how their activities influence the environment) and how the government influences their activities. Most business enterprises participates in activities that ensure the following That the environment is polluted as little as possible. That they adopt preventive measures ( gives due consideration to the
environment in the early stages of the activity) That law materials are used economically.
Participation in community work:-
The immediate areas play a very importance part in the creation of an organization, its reputation, and its continued operation. The business enterprise are concerned with active participation in community development programmes like welfare programmes for the aged, supporting of activities by providing educational, recreational, cultural, health, transportation, welfare
and housing facilities and welfare and welfare programmer for the handicapped and undernourished in the community.
Business organization also strive to participate in gender based issues which is a historical problem. They do this by ensuring that they employ both men and women in their organization and that the promotions at work are based on merits not on the fact that one is a woman or a man. Since women in activities that will ensure that they ensure that hey are empowered i.e creating training
programmes for women and providing funds to the women to start small businesses. They also participate in programs of gender based violence and female genital mutilation by funding such programmes.
Provision of quality goods and services.
The business enterprises are also concerned with the quality of goods and services that they provide to the market. They ensure the goods and services are safe and are of the correct standard and not defective. They do this by conducting ample research before introducing the product into the market. They also ensure that any complaints by the consumers are attendant to and
remedies made. Most business enterprise also educate consumers on their products and they also avoid misleading adverts.
Ethical Business Practices
Ethics is a major factor in the social responsibility of business. Ethical philosophy if a branch of philosophy that is concerned with the judgments of the rightness or wrongness of an act. The aim of professional or business ethics in the protection of professionalism, human rights, integrity of character, and good service. In general, the issues considered in such code of ethics consists of;
- Honest – in this respect, it is necessary that facts are presented fairly and accurately. Claims made about products or services, even in the
- Fairness – every one whom you deal with should be given appropriate consideration. This includes workers, customers, suppliers and others with whom the organization interacts.
Loyalty- this is in terms of loyalty to other stakeholders i.e customers, Workers, n suppliers’ e.g.
- Confidentially – this is especially important for service industries such as banks. It is important that transactions with customers are respected and protected so that they are not disclosed to third parties.
- Trust- there should be a mutual trust where the owners of a business should have proper trust in their customers, while the customers should also have enough trust in the organization. Without trust, no meanigl and lasting relationship can develop.
- Courage- this refers to the need to treat others with respect, be incorruptible in business operations, even when it means losing the business
There are four main schools of thought in moral philosophy, offering different approaches to solving ethical dilemmas. These approaches are ways of an organization forming their code of ethics. They include
- Deontology- this is the ethics of principle equating any decision with a moral law. This principle maintains that the act itself should be considered in judging the rightness of an act. For the “ normal idealist” the motives of the actor and the a consequences of the act should be ignored in such judgments. This means that any act is right if it is consistent with an accepted moral principles or law. Societies have developed certain rules that members generally accept e.g people do not rob or deliberately injure each other. These rules are valid in many situations including organizational ones.
- Utilitarianism – this is the most deliberate of the three approaches. It maintains that the rightness or morality of an act lies not in lies not in the act nor in the motives of the act and deems it right if majority benefits. According to utilitarianisms, if the consequences of an act to the individual and society, both the good and the bad, represent a net increase in society’s happiness,
then the act is good.
- Teleogy- this is the ethics of purpose. It considers whether the outcome of an action accomplishes the original goal. It uses the actor’s motives in determining whether the act is right or wrong. It gives priority to the individual to judge the action. If an act which is within the law ensures the continuation of the business then it is right.
- Egoism: this is the ethics of self- interest, claiming that personal or organization benefits are the only rational criterion for judging economic actions.
- Technology issues
- Communication – is the art of sending and receiving messages or information from one person to another via a channel
- Information- this is a product of data which has been given a structure and put into a context. In order for people to design and make what is needed to solve a problem, they first need information.
- Technology – this is the generation of knowledge and process to develop systems that solve problems and extend human capabilities. Other words, people create technology to solve problems and to make it possible to do new things. E.g people needed a way to keep cold during how weather so, they invested the refrigerators
- Communication technology is the knowledge, tools, machines and skills that to into communicating. In other words communication technology is all the things people make and do to send and receive messages. Telephones, radios, television and
computers are all examples of technologies that help us communicate with one another. In addition to communicating with other people, communication technology can be used to communicate with machines and to help machines communicate with each other. Information is the knowledge and skill needed in order to take a particular action.
Benefits of ICT to a Business Enterprise
- We make use of information to such a great extent in our daily lives that we probably do not realize how much we are relying on it. Although information is itself invisible and intangible, the information may have to use repeatedly will have been recorded in a paper or prepare for display on a computer screen; though we can also find whether forecast on radio, convenient at times
- Turning to the world of business, we can see that obtaining and using information effectively is vital. Business makes decisions, at all levels, more or less continuously; and the quality of those decisions depends almost entirely on the quality of the information on which they are based. Businesses complete with one another and thrive or wither according to how sound their decisions have been.
- Business thus needs accessible information that is accurate, up-to- date and sufficient. ICT (Information and Communication Technology) refers to the developed knowledge, skills and ideas that pertain to human communication process and the information they handle.
- It is the new science of collecting, storing, processing and transmitting of information.
- Although ICT is important in all organizations, there is a difference in how important it is. In some organization it is part of the infrastructure; in some the delivery of goods and services depends on it; in some, it is a major areas for strategic
- improved accuracy, internally and externally
- services to customers that are more comprehensive than before
- faster processing, leading to prompter responses to customers
- Information for management, not previously available, or available too late to be useful; and tighter financial control.
- New customer services previously not possible
- New sources of information to allow improved product design and marketing
- New customer services previously not possible
- New sources of information to allow improved product design and marketing
- Reduced costs arising from the greater productivity of staff who supported and assisted by appropriate computer services
- A more attractive, cleaner working environment in some cases, helping recruitment and retention of staff.
Uses of e- business, E, government, e, procurement in small enterprises
E- Business is the use of the internet and other networks and information technology to support electronic commerce, enterprise communication and collaboration, E, business can also be defined as web-enabled business process both within an internet worked enterprise and with its customers and business partners.
Benefits of E-Business
- consumers have a much wider choice available on the cyber market
- consumers can compare products, features, prices and even look up reviews before they select what they want
- Consumers also have the convenience of having their orders delivered right to the door step.
- Consumers are driven to e-shopping in holders as even branded goods cost less on the net.
- It minimizes inventory costs to the organization. They do this by adopting just in time- system enhancing the firm’s ability to forecast demand more accurately.
- It improves customer services
- It reduces distribution costs
It helps business globalize. This is done through the interest by making information about certain products available on the net.
It helps market products move quickly.
Because of the significance of small enterprise worldwide, it is increasingly being realized that if small sector gets behind in the information, then the whole. The information revolution has opened up a great deal of potential for small enterprise in the marketing field. The excellent opportunities E- business offers to small enterprises are to;
- Access new market
- Improve customization
- Lower various kinds of costs
- Reduce the size of the enterprise
- Sell products/ goods into global market
The fact remains that E- business has empowered small enterprise like nothing else ad done so in the past. E- Business has emerged as an opportunity for small enterprises. Not making use of a will turn into a threat to their very survival
E- Government is a new term that finds wide applicability. While the term still, means different things to different people, available evidence suggests that it had been undergoing progressive conceptual development. So for the three generations their conceptual developments that have been identified are discussed below.
1. First Generation Conceptualization
In this conceptual generation, e-government is conceived as the government equivalent of e-commerce, and used to mean the application of advanced ICT to deliver government services. This conceptualization emerged from the relative success of “ e- commerce” applications resulting in pressure being placed on government organization were doing. As a public sector equivalent of e-commerce, e-government is viewed primarily as a tool for electronic delivery of public services. The government transfers a range of services into electronic formats so as to make them more conveniently accessible over the internet.Proponents of this conceptual view include Douglas Holmes (2001), Negaham cook (2000) and John (Arrow 2001). According to Holmes “electronic government or egovernment, is the use of information technology, in particular the internet to deliver public services in as much more convenient, customer –oriented, costeffective and altogether different and better way. He further points out that cutting costs, and improving government efficiency, meeting and improving citizens expectations and relationships and facilitating economic development are some of the important considerations driving e-government.
Features of E-Government
- It is smart government in the sense that it selectively used of variety if ICT in ways and areas to add value.
- It is customer- driver in that, customer needs and conveniences drive its organizing structures and business processes.
- It is responsive, transparent and accountable, responds to the needs of its customers, and employs ICT to support continuous engagement with customers.
- It is available on a 24* 7 basis ( 24 hours a day and seven days a week.) thus it does not kept its customers waiting for office hours and working days.
- It is accessible from anywhere since it is ICT – enabled.
What E- Government is not
E- Government is not simply about technology; it is about the applicants of technology specifically ICT, in government. E- government is not so much what the government does but it is about how it accomplishes its tasks. E- government is not about building a smaller or leaner government, Smart in the sense that it is simple, moral, accountable, responsive and transparent and also in the sense that its decisions and actions are goal-oriented, outcome –driven and performance-based.
E-procurement has been defined by the CIPS as;
The combined use of information and communication technology through electronic means to enhance external and internal purchasing and supply management process alternating a shooter definition is;
E-procurement is the business –to – business purchase and sale of suppliers and services over the internet. The key enabler of e-procurement is the ability for systems to communicate across organization boundaries. While technology for e-procurement provides the basic means, the main benefits derive from the resultant change in business procedures, process and perspectives. E-procurement is made possible by the open standards of XML (extensive mark-up language), a structured language that allows easy identification of data types in multiple formats and can be understood across all standard internet technologies. Adoption of XML will help organizations to integrate policies seamlessly and exchange information with trading partners.
Implementation issues of e-procurement
The CLPs has provided the following list of issues to be overcome when implementing e-procurement, organization are not simply passing costs or process inefficiency onto another part of the organization or onto suppliers. Competition issues i.e in exchanges using collaborative purchasing. Possible negative perceptions from supplier’s e.g their margins reduced further from e-auctions. Website and information control lost to exchange administrators Negotiated procurement benefits may be shared with other exchange users who may be competitors
- Creation of catalogues can be long process and costly to suppliers.
- Education – the concerned people in the organization should be educated by the entrepreneur in new technologies that have been selected for the project.
- Product quality requirements – the technology selected should consistently give a uniform product quickly that is demanded by the customer segment.
- Technology that gives overall cost and market acceptance ;- the selection of technology should aim at giving products and services of consistent quality that market is looking for. The technology is selected based on long range requirements of the organization and that gives consistent product differentiation in the market place
7.5. Globalization Trends
Globalization is an international phenomena which sweeping across all continents and every sector of business. The political barriers to business are being eliminated. The electronic media and communication have reduced the distances putting the customer at the center of business. Business is going global due to the reasons of globalization and development of state of art technologies, infrastructural facilities and reducing time and every for transaction.
Entrepreneurs are taking up new ventures in their quest fro global size organization, profit and large markets beyond the national boundaries of the entrepreneur. With the result, entrepreneur is also going global size organizations; result entrepreneurship is also going global thus making manufacturing, marketing and management that are represented by different nationalities. The situation calls for different strategies in countries not as diverse as South Asia countries, USA,
Kazakhstan, Uzbek or Kenya.
The globalization process started worldwide in 80s, the entrepreneurs are moving to different countries and starting new ventures,. Many organizations are founded, organized and operated one the principle that the globe is their field of operations. Modern communication and transport systems are helping to go global; initially small business ventures were based on local domestic markets. International business was consideration domain of large organizations. This perception is fast changing. Trade has been conducted on international scale for many years. Establishment of manufacturing organizations, and development of business by
licensing, arrangements management contracts, joint ventures, mergers, acquisitions, subsidiaries and strategic partnerships
The availability of cheaper inputs for the production such as raw materials, infrastructure, trained labour force are taking entrepreneurs to different counties to give global competitive advantage to their proposed ventures. Large markets. Going global can generate greater revenue and greater operating margins. With large funds, it is possible to purchase sophisticated equipments, update designs and adopt global manufacturing qualities. An international entrepreneur would like to go to the countries where there are economic developments and where the scale of economies can be attained.
Factors Restraining Entrepreneurs from going Global
1. Government controls and barriers
To protect the local industries, existing industries and employment, every country tries to protect them. This is done by two ways. One, by fiscal regulatory measures like, high taxation, inspection, monitoring controls, quantitative restrictions and foreign exchange controls. Second through non- monitoring barriers like introduction of controllers and inspectors, large documentation, legal insecurity, social and cultural barriers and treatment of outsiders in a different way as compared to insiders.
2. Entrepreneurial culture
An entrepreneur should be open to consider dispassionately the business opportunities that are coming in other countries. The entrepreneur should have a wide vision to expand geographically.
Advantages of an entrepreneur going global.
- Large markets beyond home country borders
- Greater motivation in new opportunities
- Improvements in the technologies, quality and operations
- Extending life of product cycle
- Challenges in doing business in competitive environment
- Earning foreign exchange for the organization and home country.
- Social Cultural Trends
- The social cultural environment of a business consists of class structure, social
- mobility nature of social organization, social institutions, customers and taboos. People’s basic beliefs, values and norms are largely shaped by their society.
- The social setting consists of among other things, people and their characteristics, their real or apparent roles and their interpersonal relationships, culture has been defined as “ that complex whole which includes knowledge, beliefs, art, law, morals,
customs and any other capabilities and habits acquired by people as members of a society. Thus culture consists of common habits like people behaviors in their daily lives, and common interest in entrainment, sports, news advertising e.t.c
- Culture serves the needs of people within a society. For instance, culture provides standards and rules regarding when to eat and what is appropriate to, eat fro
- People‘s behaviors, particularly their consumption patterns and life styles are influenced to great extent by the social classes to which they belong. The most commonly used measures of social status are income, education, occupation and area of residence. Entrepreneurs should consider their consumers social status before introducing a product the Kenyan slum area of Kibera.
- Another dimension to social and cultural life is the manner in which social relationships manifest themselves in business, operations, and operations. Obligations to immediate and extended family members, kismen, friends and quittances are carried over to reach of considerations in most business dealings such as those involving recruitment of personnel and credit sales
- The social –cultural dimensions has been identified as one of the factors contributing to the failure in most African countries.
Some of the economic factors which promotes and hinders entrepreneurship includes.
1, Capital: capital is the most important perquisite to establish an entrepreneur one, machine of another to create his business enterprise. The stage of economic development in a country plays and important role while considering establishment of new venture. To some capital refers to funds available for investment; to others it refers to equipment and machinery used by entrepreneurs and
managers to produce goods and services; and others still, it refers to postponed consumption. All these refer to the term capital.
2. land- according to economies the term land refers to all farm land and all natural resources provided by nature. Therefore agricultural land, forests, rivers lakes, seas and all natural resources are according to economists, land, forests, rivers, lakes, seas and all natural resources area according to economies to economists land. It should be realized that the amount of land is finite and can, therefore, not be appreciably increased.. Land as a factor of economic production explains the existence of a variety of business
including furniture business and food business.
3. Labour – this refers to all the physical and mental effort exerted in the production of goods and services. Unlike land, labour can be substantially expanded by increasing both its quantity and or improving its quality. Quantity of labour can be increased by higher birthrates and or/ improving its quality its quality. Quantity of labour can be increased by higher birthrates and / or from inflow of people from other countries. The quantity on other had can be improved through better health of labourers, better education and vocational training of people or combining labour with more and better quantities of the other factors of production.
4. entrepreneurship – the process of combining land, labour and capital in some one way in order to produce pertinent goods and services is called entrepreneurship. One factor that bothers many potential business owners is how to determine in advance whether one has the qualities of a successful entrepreneur. Although it is difficult to predict to predict whether a particular individual will succeed or not if he ventures into business.
A consumer is the end user of a product offered by an organization. Understanding consumer behaviour is of paramount importance because and entrepreneur first have to identify consumer needs and then develop a product that will satisfy those needs if the firm to succeed in the long –term. There are certain factors that influence consumer behaviour that the present and future entrepreneurs have to consider.
These factors are divided into;
- Needs and motives- a need is simply a deprivation of something of value. When a need is sufficiently aroused it becomes a motive. That is, a motive is an inner state that directs and individual towards the goals of satisfying a felt need.
- Perception- perception refers to the way an individual vies the world around him. An individual’s perception of an object will determine how he or she will react towards that object or event. Entrepreneurs acquire the purchase and consumption
experience they apply to the future related behaviour.
- Attributes – an attitude is a leaned tendency to respond to product, brand of company in a way that is consistently favourable or unfavorable. The more favorable a consumer’s attitude towards a product, the higher the usage rate and vice-versa
- Personality- personality refers to rather enduring traits or factors that affect t he manner in which an individual deals with hi immediate environment. Entrepreneurs are interested in personality because they believe it affects consumer
- Culture- culture is a learned behaviour and results of behaviour whose component elements are shared and transmitted by members of a particular society. The entrepreneurs who hope to avoid costly mistakes should familiarize. Themselves with the culture and sub-cultures of people they plan to market their products to.
Social class- a social class is defined as an open aggregate of people with similar social ranking. Class differences are important to entrepreneurs because certain product is more likely to appeal to one class that another.
Family- the family has an important influence on the consumption behaviour of an individual. Quite often each consumption family member has specific roles in the buying process.
- Purchasing power- this is people’s ability to buy goods and services according to economists whether people buy a product or not largely depends on their incomes. Price of the present product and prices of substitute products and complimentary
goods among others.
Challenges Posed by Emerging Trends
- There is a challenge in changing the type of business activity to engage in.
- It is also difficult to attract additional capital especially for those who want to venture in small businesses due to the preference accorded to large enterprise owners by the loaning institutions
- Entrepreneurs also have the challenge of sustaining and maintaining their businesses
- Human resource is the one who can make best use of other resource to convert raw materials into finished products. If no proper resource to convert raw materials into finished products. If not properly managed, the enterprise may not be able to realize
- Marketing is also a challenge because if no proper marketing strategy is not formulated, then the business enterprise may collapse. Marketing is the lifeline of any firm.
- Developing and entrepreneur culture is also very difficult due to difficult of many cultural activities that inhibit entrepreneurship.
Management of the Challenges
- One should identify a business opportunity and develop a business idea and do several evaluation of the business idea before engaging into business
- To sustain the business avoid excessive optimism, prepare good marketing plans, make good cash projection, keep familiar with the market and be sensitive to stress points in the business
- To attract an additional capital ensures you have a proper business plan that can enable the lenders to lend you money.
- An entrepreneur should ensure that there are effective measures to develop, maintain and motivate his employees in order to manage his human resource effective
- The entrepreneur should find it necessary to update the technology processes and product as per the need of that time.
- An entrepreneur should ensure he/she consider all the factors that affect consumer consumption before establishing which marketing strategy to use