Agric Sc JS1

CHAPTER 5 Factors of Agricultural ProductionPerformance ObjectivesAt the end of this chapter, students should be able to: 1. List the basic factors of production, and 2. Describe the uses of each factor in agricultural production.IntroductionThe term “factors of production” is an economic phrase describing resources or inputs whichare used to produce goods and services (outputs). These factors are also known as productiveinputs. Factors of production can be defined as goods and services which are required forproduction. A factor is indispensable for production because, without it, production will notbe possible.5.1 Factors of ProductionFactors of production can be described as the inputs that are used in the production of goodsand services in an attempt to make profit.Common definition of factors of production of farms all include at least the factors of land,labour capital and entrepreneurship/management.a. Land as a Factor of Production This refers to the farmland base, whether it is in one field or divided into different parcels, as well as its agricultural qualities (topography, altitude, soil type, natural water, and nutrient cycles). All of these characteristics set limits on farming activities (number and size of livestock) that can take place on the farm. They also affect whether production can be intensive (when there is little land available) or extensive. These are necessary for agricultural production and without them, agriculture is impossible. Land is obviously the most important natural resource for agricultural purposes and is often defined economically to include all materials and forces that are supplied by nature for use in the production of goods and services. In other words, land includes all the other natural resources, for example, water, forest, soil, climate, etc. Lastly, having secure access to land, whether it is a private or communal landholding, it has an impact on how farmers manage their land; as for example, whether they will want to invest more in long-term activities such as forestry. 39

b. Capital as a Factor of Production Capital refers to cash available or things that can be sold for cash. In many rural societies, savings are in the form of cattle or other livestock that can be sold in times of emergency. Capital is also available from local credit systems – formal and informal. The ability for farmers to raise capital depends on many aspects on the farm, for instance, having good storage facilities, being able to improve the quantity, diversity and quality of farm products and services, possibilities for adding value, as well as access to markets. The amount of money that a farmer can (readily) mobilise has a great effect on the kind of choices that can be maderegarding bought inputs, as well as further investments in farm equipment, buildings and more livestock. Ready capital also determines whether it will be possible to hire labour. Capital can be called produced means of production or intermediate production. It represents resources produced by past human efforts. Capitals include long-term investment seen as buildings, machinery as well as equipment, implements such as tractors and their implements. Seeds, fertilisers, as well as cash (at hand). Capital may also include tree crops, breeding stock (of animals), dairy cattle, and bullocks (used in land preparation) as well as Bullock plough. Some capital normally loses value over the years, the annual loses in momentary term is called depreciation or capital terms called appreciation or capital gain or accumulation. c. Labour as a Factor of Production Labour can be defined as all human efforts made in the process of transforming inputs into output. Labour is always used in combination with other factors of production to produce outputs. The labour used may be skilled or unskilled, family, hired or exchange. Labour is measured agriculturally per day, that is, man-day. For accounting purpose, children’s labour is rated 0.5 unit of adult, while women and old men (over 60 years) are rated 0.75 units of adult. But this practice may not be totally acceptable in today’s situation. Labour can be looked at in terms of hours or number of labourers needed to get the farm work carried out. How many labourers that are available is very important in determining the types of activities possible and how intensively the land can be worked (that is, the more intensive, the more labour is needed). For example, some crops are more labour-intensive than others, an example is horticultural crops as compared to cereal crops. The number of labourers available can affect whether peak activities can be done, and on time. For example, late preparation, sowing, weeding or harvesting can have an adverse effect on yield. The management of labour, the farm equipment available, as well as the use of draught animals and mechanisation, greatly affects farm activities and the quality and quantity of production. In small-scale farm, it is often seen as an advantage to have family members working on40 the farm because they do not need so much supervision, and are prepared to work long

hours in a way that hired hands are not. However, whether family members can work on the farm depends on how productive it is, as well as whether (better) opportunities for off-farm employment exist. Many farm families include members who work off-farm, sometimes far away, and who supplement the family income with remittances. The “division of labour” is another important issue in farming. In many societies, certain tasks are considered to be male or female tasks, and there can also be gender division on who can make decisions about those tasks. Studies have shown that in almost all societies and particularly in rural areas, women tend to work longer hours than men. Besides food production activities, women are usually responsible for preparing and processing food, while also caring for children and elderly members of the household. How children participate in labour activities is also something to consider, as they need time to attend to school and recreational activities. Access to special equipment, draught animals or machines eases labour pressures on the farm and increases the amount of land that can be farmed. As well, they increase the opportunities for farmers as some tasks can only be carried out with draught animals or machines. Mechanisation also makes it possible to do certain tasks quickly so as to catch critical dates in the cropping calendar. On the other hand, mechanisation increases the cost of production which is dependent on fuel, spare parts and skilled mechanics. The possibility of developing alternative sources of energy (such as solar, wind or water sources, or biofuels) is also an important consideration for easing labour constraints, while not depending on fossil fuels.d. Entrepreneurship/Management as a Factor of Production This is a qualitative input as against others, which are quantitative. It is the effective harnessing of the other factors of production for maximum profit. Thus, it involves planning, decision-making, supervision, evaluation and general coordination of all activities on the farm An entrepreneur is a person who organises the other factors and undertakes the risks and uncertainties involved in the production. He hires the other three factors, brings them together, organises and coordinates them so as to earn maximum profit. For example, Mr. X who takes the risk of manufacturing television sets will be called an entrepreneur. An entrepreneur acts as a boss and decides how the business should run. He decides in what proportion factors should be combined. What and where he will produce and by what method. He is loosely identified with the owner, speculator, innovator or inventor and organiser of the business. Thus, entrepreneurship is a trait or quality owned by the entrepreneur. Some economists are of the opinion that basically, there are only two factors of production which are land and labour. Land, they say, is appropriated from gift of nature, by human labour, while entrepreneurship is only a special variety of labour. Land and labour are, 41

therefore, primary factors, whereas capital and entrepreneurship are secondary factors. e. Water Water is one of the most important natural resources that is necessary for the rise and development of any biological and human activity. Water, as a resource, is a necessary for multiple uses, it generates a series of competitive demands whose degree of competitiveness becomes greater in the presence of factors relevant and increasing pressure. 5.2 Importance of Land as a Factor of Production a. Land is a Free Gift of Nature It is not a ‘produced’ or man-made agent. It follows, therefore, that we have to accept it as it is. No doubt man tries to improve and modify nature. But he cannot completely master it. A poor soil and a bad climate are great handicaps in the way of industrial and commercial prosperity. b. Land is Limited in Area Efforts have been made to reclaim land from the sea, and thus add to the total land surface. Yet these efforts have produced only negligible results as compared with the total area already in existence. Some lands in Holland have been reclaimed from the sea, but it is however, a small percentage of the total land surface of the world. c. Land is Permanent It is not easy to destroy it. All other factors are destructible, but land cannot be completely destroyed. Even the havoc wreaked by an atomic bomb can be cured and natural powers restored after some time. d. Land Lacks Mobility Land cannot be moved en-mass from one place to another. It lacks geographical mobility. But it can be put to many alternative uses and is thus mobile from a different point of view. e. Land is of Infinite Variety Land is not man-made. Nature has so made it that different pieces of land present infinite variations. None can say where the sandy soil ends and the clay begins. One type shades into the other. Such minute variations are not found in any other factors of production. Besides the situation of different pieces of land also varies. Summary Factors of production refers to all input used to get an output. Land, Labour, Capital and Management are the key factors under production.42

Class Activity1. Students should pick one factor of production and write a short note on it.Revision Questions1. Define factors of production.2. List the major factors of production.3. Explain three out of the listed factors of production.4. Of what importance is land as a factor of production? 43

ENTREPRENEURSHIP44

CHAPTER 6 Entrepreneurship and EntrepreneurPerformance ObjectivesAt the end of this chapter, students should be able to: 1. Define entrepreneurship; 2. Describe who an entrepreneur is; 3. List the characteristics of an entrepreneur; 4. Mention different types of business enterprises, and 5. Analyse the stages of productionIntroductionEntrepreneurshipSecondary school is a stage in life when you need to have a vision of where you are going. Thedays when you will find jobs waiting for you after graduating, are gone, and in this new era,you either create your own business or you end up jobless in the unemployment market. Asresponsible students, think about what you can do for yourself and your country, no matterwhat the situation of the country might be. Several years ago, the Igbo, Yoruba and Hausawere great entrepreneurs and businessmen in their various communities in Nigeria. Theyproduced different types of food, clothes, metal products and leather items both for personaluse and for export to other communities outside Nigeria. With the arrival of the Europeans,the various communities embraced western education and culture by sending their children toschools and abandoning traditional crafts/vocations. At first, the graduates of our secondaryschools and higher institutions secured jobs easily, but later, the problem of unemploymentemerged and hopelessness follows almost immediately.Why is there a rising unemployment rate in Nigeria? The basic answer is that Nigerian studentspassed through an education system that made them dependent on the Europeans for alltheir needs such as food, clothing, services and technology. Passing through a theoreticaleducational system as students, we lost our traits of self-employment, self-reliance and self-sufficiency. To regain our past glories, we must create jobs and wealth in our communitiesafter graduation. This is the focus of entrepreneurship or pre-vocational studies in SecondarySchools. As you learn various subjects in schools, endeavour to develop a passion to own yourown business in future to save yourself from unemployment, hopelessness and idleness. 45

6.1 What is Entrepreneurship? Entrepreneurship from the teacher-learner perspective, is the process of sharing with students the practical ideas, skills and knowledge of business development, business management, opportunity-seeking and fund management. It also entails risk-taking, innovation, record- keeping, product marketing and product packaging. These skills are required to equip students to be able to run their future businesses successfully. The businesses set up by people are called enterprises. Entrepreneurship has always been taught by elders, blacksmiths, welders, farmers, hunters and other community artisans, not in classrooms but in the homes as home economics, or in the shops as family businesses and on the farms as agri-business and food processing businesses. It is a culture transferred from one generation to another. It has also survived as a habit among the major ethnic groups and exists as a mindset among the able-bodied men and women. There was nothing like unemployment or idleness. Everybody was engaged in something within all villages and communities. The mindset of Nigerians then was self- employment as opposed to working for other people (white collar jobs). 6.2 Who is an Entrepreneur? An entrepreneur is a person who can identify and evaluate business opportunities available in an environment, gather resources to take advantage of the business opportunities and initiate appropriate action to ensure success of such an enterprise or opportunity. People who set up personal business and create wealth for themselves by producing goods and rendering services to other people are called entrepreneurs. Good examples of entrepreneurs in our communities are tailors, blacksmiths, carpenters, farmers, automobile mechanics, barbers, taxi owners, shop owners, home teachers, hairdressers and thrift collectors. a. Trader selling ssorted peppers b. Fabrics on display for sale Fig. 6.1: Different marketplaces46

6.3 Qualities/Characteristics of EntrepreneursThe three major ethnic groups in Nigeria, the Igbo, Yoruba and the Hausa-Fulani areaccomplished entrepreneurs. It is important for us to note that successful entrepreneurspossess the following characteristics:i. Initiative: An entrepreneur takes necessary actions and personal decisions under different conditions without waiting for anybody;ii. Opportunity Seeking: Entrepreneurs are quick to see and seize opportunities. They do things by themselves before they are forced by any situation to work for other people;iii. Persistence: Entrepreneurs are not discouraged by difficulties and problems that come up in their business or personal lives. They are patient and committed to the goal they set;iv. Information Seeking: All entrepreneurs undertake research and carry out findings on how to satisfy their customers and solve social problems;v. Demand for Quality and Efficiency: An entrepreneur is always struggling with others to do things better, faster, and at less cost and strives to achieve excellence;vi. Risk Taking: Are you afraid of uncertainties? Entrepreneurs are risk takers, but they calculate their risks before taking investment decisions;vii. Goal Setting: An entrepreneur sets meaningful and challenging goals for the business. An entrepreneur does not just dream on entrepreneur thinks and plans on what to do, how and when;viii. Commitment to Work: An entrepreneur works long hours into the night just to be able to keep promises made to clients;ix. Planning and Monitoring: An entrepreneur plans and supervises all activities to be carried out in an organisation;x. Persuasion and Networking: An entrepreneur acts to develop and maintain business contacts by establishing good working relationship with others, andxi. Independence: Entrepreneurs start businesses and are responsible for their own decisions.6.4 Forms of Business EnterprisesAs students, if you decide in future to venture into self-employment, there are four majorforms of enterprises available. These are:i) The One-Man Business or Sole Proprietorship,ii) The Partnership;iii) The Private Company, andiv) The Public Company. 47

i) The Sole Proprietorship A sole proprietorship is a form of business run by a single person. The owner is responsible for the day-to-day running of the business. In a sole proprietorship, the owner alone provides the capital and if the business is successful, the owner alone receives all the profit. If on the contrary, the business goes down, the owner alone suffers the loss. Such a loss is often not limited to the amount of money the owner has invested in the business. This is the greatest disadvantage of this kind of enterprise. Fig. 6.2: A tailor ii) The Partnership A partnership is formed when two to twenty persons with similar interests come together to form a business for the purpose of making profits. A one-man business can become a partnership if the owner of the business decides to take on additional people who would provide additional capital for the business as well bring in particular talents into the business. Like the sole proprietorship, the liability of the partners is also not limited to the amount invested in the business. Partnerships are most common and practised among the various professions such as Law, Accounting, Engineering and Medical professions. Fig. 6.3: Two women working in their poultry sheds48

iii) The Private CompanyA private company is formed by two to fifty entrepreneurs. The owners are issued shareswhich represent the proportion of their ownership. A private company is a legal entity thatcan sue and be sued, that can own properties in its own name and can enter into contractsand buy raw materials, hire labour and sell goods in its own name. Since the private companyhas limited liability, investors cannot lose more than the amounts they have put into thebusiness if the company goes bankrupt. In addition, shares held in a private company cannotbe freely transferred. Such shares can only be sold with the consent of other shareholders.Private companies are not required to make their accounts public.iv) The Public CompanyA public company is formed by a large number of people with access to vast amounts of capital.They are so called because their shares are sold to members of the public and not becausethey are run by the government. In Nigeria today, public companies are called Public LiabilityCompanies (PLC). The minimum number of shareholders is seven while there is no upperlimit. When a person buys shares in a company, he becomes a shareholder and thereforeowns a part of it. His voting right in the process of decision-making and the proportion ofthe profits that would be distributed to him depends on the number of his shares. The day-to-day running is done by managers who are appointed by the Board of Directors. Thus, theshareholders are responsible for the provision of essential facilities that can make the smoothrunning of the business possible.Entrepreneur and Production ProcessThe word production covers manufacturing, services and distribution of goods or finalproducts to the buyers or consumers in the market. Production also extends to the provisionof important services such as teaching, banking, music, hairdressing, construction, medicalcare, cleaning, tailoring, etc. In essence, the production carried out by the entrepreneur is notcomplete until the goods and services gets to the final consumer.Types of UtilityUtility means satisfaction received from goods and services. The three types of utility fromgoods and services are discussed below.i. Utilities of Form: This is the satisfaction received from the entrepreneur’s effort to transform raw items into useful products. For example, processing of cassava into gari.ii. Utilities of Place: This is changing the location of materials used from where they are of little use to where they are of greater use. For example removing limestone rocks to factories where they are turned into cement.iii. Utilities of Time: This is the satisfaction received by consumers from having goods and services available at times when they are most useful to members of the society. For example selling cold water to thirsty people or coffins to people who lost loved ones. 49

6.5 Forms of Production Production can be divided into two forms of direct and indirect production. i. Direct Production: This form of production takes place when a family unit produces goods and services mainly to satisfy all its needs only. This type of production is very common in traditional communities and village economy. ii. Indirect Production: This form of production involves the production of goods and services for sale or exchange for money. The money realised is used to buy other things needed by the seller. Stages of Production in the Economy The stages involved in production are divided into three broad categories, namely: i. Primary Production: This involves the extractive industries where the occupation of the people is directed to the process of extracting raw material from the soil and sea. The goods and services produced at this first stage of production are known as raw materials, for example, farming, fishing and mining. ii. Secondary Production: This is a stage where the raw materials are processed and transformed into finished goods. For example, wheat is processed and transformed into various types of bread. This is a stage that utility is added to the raw material of the primary production, manufacturing and construction industries are involved in this stage of production. Fig. 6.4: Production stages iii. Tertiary Production: This is the third stage where the goods and services produced during the two previous stages are taken to those who need them. This stage completes the production processes, since production is not complete until the goods and services produced get to the final consumer.50

Defining Your Passion as an EntrepreneurIn a simple sentence, passion is the energy that pushes you to do what you like and lovedoing without getting discouraged or disappointed. If you lack passion, the tendency is foryou to start something and abandon it midway out of frustration. Therefore if you must starta business, you must have a passion for that type of business. For example, Aliko Dangotedeveloped a passion early for selling; hence he went into business and has never regretted thataction. Olorogun Ibru had great passion for business, no wonder he was very successful in allhis businesses. A distinguished author of children’s books once said that he loved thinking andwriting in order to touch many lives. Based on his passion, he woke up early in the morningwith a passion, thinking and writing-eager and stayed awake late into the night, thinking andwriting. This is also true of bakers, hunters, fishermen, farmers, tailors and mechanics. Whatis your own passion? Are you working hard to pursue your passion? Fig. 6.5: An entrepreneur at work as a chefSetting GoalsThe act of setting a goal is an important process which is based on good thinking, qualityplanning and self-motivation towards the future. Setting goals means planning for the future,or saving for a rainy day. The process of setting goals helps students to choose and decide thedirection of four things in their personal lives, namely: What you want to do in the future?Where do you want to be in the future? How do you want to achieve your set goal? When doyou want to start working on your goals? Setting goals requires that students follow a principlecalled SMART in order to actualise their goals. SMART simply means that goals should bespecific (S), measurable (M), attainable (A), relevant (R), and time-bound (T).Specific Measurable Attainable Relevant Time-boundFig. 6.6: The smart principle 51

Explanations of SMART Principle i. Specific: Specific goals guide the direction of your business as well as the decisions to be made as an entrepreneur. For example, I want to make profit after selling my poultry products. ii. Measurable: Measurable goals enable entrepreneurs to develop a yardsticks for measuring business progress. For example, an entrepreneur realises 20 per cent profit after selling some poultry products. iii. Attainable: Attainable goals are targets of the entrepreneur which are achievable in the future. Before setting a goal on what to do with your products, you must ensure that your goal could be attained. For example, deciding to have poultry farms or bakeries in 12 states in Nigeria. iv. Relevant: Relevant goals are realistic targets which push entrepreneurs to work harder. All relevant goals should not be unrealistic like the dreams of children. An irrelevant goal is difficult to achieve. v. Time-bound: Time-bound means that all your goals as entrepreneurs should have a timeframe, date, deadline and fixed period, that is, time-bound goals to be attained in a day, a week, two month, three years, five years, etc. Feel and Think Like an Entrepreneur i Think along non-traditional and non-conformist lines. ii. Think about starting small. iii. Think realistically about finances. iv. Think about viable business ideas. v. Think about what people are willing to buy. vi. Think about doing things for yourself. vii Think about cost-benefits of the business involved. viii. Think about doing things differently. ix. Think about family and people who can support and help you. x. Think like an achiever. xi. Think clearly about complex problems situations (CED Manual, p. 10). Summary This chapter focuses on entrepreneurship and how it helps students to gain from such a topic. It explains entrepreneurship in the teacher-learner perspective by calling it a process of sharing with students the practical ideas, skills and knowledge of business development,52

business management, opportunity-seeking and fund management. It also entails risk-taking,innovation, record-keeping. Product marketing and product packaging.These skills are required by students to be able to run their future businesses successfully.This chapter further explains who an entrepreneur is. An entrepreneur is described as aperson who has the ability to identify and execute business opportunities in an environment,gather resources to take advantage of the business opportunities and initiate appropriateactions to ensure success of such an enterprise or opportunity. There are various qualities anentrepreneur must have; some of them are: i. Being innovative; ii. Being consistent; iii. Must demand for quality and efficiency, and iv. Must be ready to take risks, etc.The four forms of business enterprises are: i. Sole proprietorship; ii. Partnership; iii. Private Company, and iv. Public.We also have two stages of production, which are: Primary and Secondary production.Class Activities1. Students should write an essay on how to start a small business, and explain how profit is going to be made in the long-run.2. Students should list some qualities of an entrepreneur.3. List ways through which an entrepreneur can make a living through agriculture.Revision Questions1. Define ‘Entrepreneurship’.2. Who is an entrepreneur?3. Mention the characteristics of an entrepreneur.4. List and explain the different forms of business enterprises.5. Explain the two stages of production. 53

CHAPTER 7 Leadership and Entrepreneurship Performance Objectives At the end of this chapter, students should be able to: 1. Define leadership; 2. List examples of great leaders in Nigeria, and 3. Identify traits of a leader and businessman. Introduction Leadership Every day, we hear people calling other people leaders. On television, we see world leaders holding meetings. In schools, churches, mosques and communities, we see leaders, but we bothered less about what leadership means and the duties attached to leadership. In a simple sentence, leadership means an organised system of managing affairs, especially of business organisations. In other words, it is the process and way of managing man, machine, materials and money (four Ms) for the purpose of achieving business objectives. Fig. 7.1: A teacher in class with her pupils 7.1 Who is a leader? A leader is simply a person who leads other people in carrying out a task successfully. There54

are leaders in the Senate, House of Assembly, churches, mosques, schools and in businessorganisations. Therefore, a leader in charge of a business has four big responsibilities to carryout, namely:i. To establish a clear vision for the growth of the business;ii. To share business vision with the followers for them to follow willingly;iii. To provide information, skills, knowledge and ways to realise that vision; andiv. To coordinate and settle conflicts among the followers, customers and the public.Vision, Mission and ObjectivesLeaders in charge of good enterprises are encouraged to work very hard by the set vision,mission and objectives.i. Vision: A vision of a business is the dream or the future intended for the business and where you want your business to be. All vision statements are written to communicate an idea to members of the public.ii. Mission: Mission is a statement which defines the main purpose of a business or an enterprise, stating exactly why the business exists.iii. Objectives: This refers to the goals which an entrepreneur plans to achieve in the long run. Objectives can be financial and strategic objectives. The financial objectives involve measures such as sales targets and earnings growth. Strategic objectives are related to the firm’s business position, and may include measures such as market share and reputation. Fig. 7.2: Automobile mechanics7.2 Examples of Great Leaders in NigeriaThis section looks at lessons from great business leaders in Nigeria. Deliberately, one personeach from the three major ethnic groups in Nigeria is highlighted, and it is expected thatstudents would view them as inspirational figures to emulate. 55

1. Life of Aliko Dangote (A Hausa Businessman) Aliko Dangote was born in Kano on the 10th April 1957. He is a great entrepreneur with interests in products like cement, sugar, salt, rice, noodles, juice, oil and gas and several other products. His company named the Dangote Group, was established as a small trading firm in 1977. Based on real leadership and hard work, it is now a multi-trillion naira conglomerate with presence in Nigeria, Benin, Cameroon, Ghana, South Africa, Togo, Tanzania and Zambia. Dangote’s rise to greatness is attributed to his entrepreneurial traits. Fig. 7.3: Aliko Dangote Aliko Dangote has been quoted as saying: “I can remember when I was in primary school, I would go and buy cartons of sweets and I would start selling them just to make money. I was interested in business so much. Even at that time, I was used to buying and selling. It was in my mind all through. I did that on a part-time basis. I usually bought packets of sweets and gave some people to sell for me. I would join them whenever I closed from school. I would collect my profit and give them something out of it. And we continued like that. The family had many servants. To some of them selling things, I would say; “Please, sell these for me” and he would sell and render accounts afterwards. That was what I was doing. It was not as if I established shops. If you give me today $5 billion, I will not invest any abroad; I will invest everything here in Nigeria. Let us put heads together and work.” Dangote was named as the Forbes Africa Person of the Year 2014 and he is also Forbes richest man in Africa. 2. Life of The late Moshood Kashimawo Olawale Abiola (A Yoruba Businessman) An influential leader and successful entrepreneur in Nigeria was Alhaji Moshood Kashimawo Abiola (MKO). He was born into a poor family in Abeokuta, Ogun State, Nigeria on August 24, 1937, and had his primary education there at Baptist Boys’ High School. After graduation from secondary school, he earned a scholarship to attend University of Glasgow, Scotland. Abiola was a creative businessman who climbed to the top of several corporate ladders,56

building a political and financial empire for himself on account of his key competencies. Heconsciously developed himself through training and association with various enterprises,including publishing, communications, manufacturing, shipping, transportation, and oil.With his educational background in accounting, he easily assumed the position of DeputyChief Accountant at Lagos University Teaching Hospital from 1965 to 1967, and Comptrollerof Pfizer Products Limited between 1967 and 1969. In 1969, he became the comptroller ofInternational Telephone and Telegraph (ITT), Nigeria, Ltd., and rapidly rose to become vicepresident for ITT’s Africa and Middle East branch. He was also Chairman and Chief ExecutiveOfficer of ITT Nigeria, Ltd. from 1972 through 1988. Fig. 7.4: The late Moshood Kashimawo Olawale Abiola (MKO)His adventure into entrepreneurship took him around the globe. His chains of businesses werevisible in almost all parts of the world. During this period, Abiola founded and sat as Chairmanof Concord Press of Nigeria Limited and served as chief executive at Radio CommunicationsNigeria. He was a leading figure in the development of African sports and football in particular.He founded Abiola Babes Football Club. No wonder he is regarded as a pillar of sports inAfrica. Much of Abiola’s fortune, which was estimated at close to $2 billion was freely spenton the wellbeing of others. He sponsored over 2,500 students through the university systemas well as donating money to charities and sporting events. For over 20 years, he maintainedfriends throughout the country. He considered himself well liked by the Nigerian militaryestablishment and consequently went into politics in 1993, a venture that cost him his life injail.3. Life of Dr CosmasMadukaDr Cosmas Maduka was born in Nnewi, South-East of Nigeria. Today he is the Chairman/CEO of Coscharis Group of Companies and sole distributor for BMW in Nigeria. At the age ofseven, he served as an automobile apprentice because of poverty and isolation. He lost his 57

father at the age of four, and had to hawk bean cake while assisting his poor mother. When his mother could not cope with raising Cosmas and three other children, he was sent to live with his maternal uncle. Cosmas was withdrawn from school at Elementary Three to work as an apprentice in a spare parts shop at 88 Griffith Street, near Oyingbo Bus-stop, Lagos. At that tender age, he slept in the shop because his uncle also stayed with a friend. In Lagos, Cosmas took time to learn the art of selling auto spare parts and by the age of nine, he could go Nnewi to buy spare parts for his boss. When he was 14 years old, he was competent enough to manage some stores in Sokoto and Nnewi. In 1975, at Nnewi, aged 14, he went for a four-day Christian camp, when he came back the uncle furiously sent him away with a stipend of N200 despite the pleas for mercy by Cosmas. The uncle advised him to go after his new found faith. In a newspaper interview, Cosmas said he was treated badly by his uncle, in punishment for having served him for years. He however put his trust and hope in God. After the incident, he teamed up with his elder brother to form a company called Maduka Brothers for the purpose of selling spare parts. Cosmas contributed N300 to the business. The partnership later collapsed due to ideological differences. He therefore continued on his own, coming to Lagos to buy goods. He met with big success trading with Boulous Enterprises where he ventured into the sale of motorcycle spare parts, and added a new product called motorcycle crash ban to his inventory. The product was new in Nnewi and remained exclusive, especially as the label and contact address of the marketing company had been removed by Cosmas to keep the source of purchase a secret from others. He narrated: “I sold everything the next day and joined the night bus again to Lagos to buy more. I did that four times in one week and my capital rose from N300 to over N3,000”. At a stage, Cosmas ventured into the importation of spare parts from abroad, but was sent a wrong consignment, which caused him to lose money for months. He summoned up courage to start all over again by renting out a scale at 10 kobo per person.58 Fig. 7.5: Cosmas Maduka

After raising enough money to start again, he partnered with a friend named David, toestablish a new company called CosDave. After sometime, both partners separated, again dueto ideological differences. He therefore formed another company called Coscharis, which is acombination of three letters each from Cosmas (his name) and Charity (wife’s name). Cosmasmade breakthrough in 1982 when the Federal Government of Nigeria awarded import licensesto ten motor companies including Coscharis Motors. For upcoming entrepreneurs, Cosmasoffered this useful advice: “You can start any mean job as a stepping stone to where you wantto be. The best skill you need is simply the ability to manage money properly and rely on Godfor grace. Blackberry is somebody’s brain child; same with Nokia. Unfortunately, many of us donot want to have brain children. Truly, many young people need to be completely reorientedbecause they have wrong conceptions of what it takes to be wealthy. They hit the wall becausethey search for success in wrong places like Yahoo Yahoo. Why not be practical about life ifwhite collar jobs are not coming to you as a graduate? Learn to set goals for yourself! Thereare millions of jobs you could train yourself to do! If it takes serving as an apprentice, do it.Many of us die of frustration because we do not want to pay the price”.7.3 Entrepreneurship and Leadership StylesEntrepreneurs are leaders who take on the responsibility of setting and implementing goalsfor the success of the business. To a great extent, the work of entrepreneurs is similar to whatleaders do. Therefore, entrepreneurs must strive to be the best leaders among their peers.The following are three styles of leadership with different implications.i. Autocratic Leadership Style: Here, leaders make decisions and give orders without seeking the opinion of employees. No consensus-building.ii. Democratic Leadership Style: Here, leaders give group members a voice or seek a consensus in the process of making decisions.iii. Carefree Leadership Style: Here leaders leave all decisions entirely to the group members. This is a carefree leadership model.7.4 Traits of Leaders and BusinessmenAs students hoping to have your own businesses in future, you need to have some of thetraits of entrepreneurs to be successful in business. People use the word ‘trait’ without reallyknowing what it means. Traits are rare virtuous human attributes found or noticed in successfulleaders, entrepreneurs and managers. Some important traits found in successful leaders andbusinessmen include: self-confidence, emotional stability, dominance, enthusiasm. They alsohave social boldness, tough-mindedness/flexibility, self-assurance, innovativeness, maturity,team orientation, high energy, empathy. Their other traits are charisma, task-orientation,goal-orientation, drive, achievement, motivation, ambition, energy, tenacity, and initiative,leadership motivation, honesty, integrity, self-confidence, cognitive ability, and knowledge ofthe business. 59

i. Hard Work: The trait of hard work entails ability to work for long hours and putting all your energy when necessary, to ensure success of your business. ii. Self-Confidence: This trait presupposes that to succeed in business or life, you must believe in your ability to achieve the set goals. iii. Profit Orientation: This trait means recognising that the essence of business is to produce quality products, get them sold and make profit. iv. Team Orientation: This trait means ability to get along with others in carrying out assignments or tasks. Entrepreneurs with team orientation often say “We” rather than “Ï”. We means team work, while I means doing it alone. v. Goal Orientation: This trait underscores the fact that success in business is tied to setting realistic goals or targets for the organisation and working hard to attaining the goals. vi. Persistence: This is a trait that gets you going as a leader without abandoning your idea or business in spite of problems and challenges. vii. Commitment: This entails investing time, money, effort and other valuable resources into a business and other beneficial projects. viii. High Energy: This refers to human effort, power and potentials which aid man’s ability to carry out business activities; Energy include human skills, selling skills, managerial skills, organisational skills, writing skills, knowledge and ability to make use of a network of contacts. ix. Humility: Humility is the opposite of arrogance. It means recognising that as leaders you are not superior to others and consequently that they are not inferior to you. x. Openness: Openness means being able to listen to ideas that are outside leaders’ current mental models; being able to suspend judgment until after leaders have heard others’ ideas. Open leaders listen to their followers without trying to shut them down. xi. Creativity: Creativity means thinking differently as leaders, being able to get outside the box and inventing new ways, process, and techniques of getting things done. xii. Integrity: This means alignment of words and actions with inner values; and sticking to these values even when an alternative path may be easier or more advantageous. xiii. Dedication: This means giving whole self, time, skills and energy to assigned tasks in order to get things done and leading the followers. Summary This chapter gives us an insight into the meaning of leadership in relation to entrepreneurship. Leadership is therefore defined as the action of leading a group of people or organisation, or an organised system of managing affairs, especially of business organisations. Leadership is further explained as the process and way of managing man, machine, materials60 and money (four Ms) for the purpose of achieving business objectives.

A leader is therefore, defined as a person who leads or commands a group, organisation orcountry. A leader can also be described as a person who leads other people in carrying out atask successfullyA few great leaders in the Nigerian business sector; Aliko Dangote, the late MoshoodKashirmawo Olawale Abiola (MKO) and Cosmos Maduka, were also highlighted in this chapteras shining examples. Entrepreneurship and leadership styles were also explained as well astraits of leaders and businessmen.Class Activities1. Students should make a list of Nigerian businessmen in the agricultural industry.2. List the qualities of a leader.Revision Questions1. What is leadership.2. Who is a leader?3. Write a short note on any one of the following leaders in the business industry: i. Aliko Dangote; ii. The late Moshood Kashimawo Olawale Abiola (MKO), and iii. Cosmos Maduka.4. Mention and explain five different traits of leaders and businessmen. 61

CHAPTER 8 Operations Management Performance Objectives At the end of this chapter, students should be able to: 1. Describe the meaning of an office and its functions; 2. Mention/types of offices; 3. List different types of office machines and equipment; 4. Create an office space and layout, and 5. Explain the concept of recruiting and training of staff. Introduction Concept of Operations Management In a broader sense, operation or production management deals with decision-making processes of transforming raw materials into finished products, so that higher quantity of goods and services are produced at minimum cost. Operation management does not mean production of goods alone, it covers all activities which go into the process of production. To have higher production at reduced cost, the issues of office space and office equipment must be taken seriously. 8.1 Meaning of An Office An office refers a place in your home, your community, the open space and a rented apartment where business activities are transacted or services are provided to members of the public. It may also be defined as a place in an organisation where all types of clerical work are carried out include processing of all kinds of official papers (such as letter, correspondence, files, memos, records, etc.).62

Fig. 8.1: An office spaceFunctions of an OfficeThe office is used mainly for running the day-to-day business transactions. The functions of anoffice are as discussed below.i. Receiving Information: The office provides a convenient place for receiving information relating to the business from internal and external sources. Information received from internal source include reports, letters and telephone messages, customers’ requisitions, suppliers’ quotations, government notices, alert notice from tax departments, petition from clients, etc. Information from external source takes the form of letters, orders, invoices, enquiries, etc.ii. Recording Information: An office provide platform for recording of the information in appropriate books/register/folders. This office function makes it easy for identification, but also enables quick reference. Recording of information is also obligatory for meeting legal requirements.iii. Processing Information: Information sent to an office remains raw until it is processed and used by the appropriate office. Information processing involves processing by trained office staff using electronic gadgets like computers, type-writers, calculators in order to enhance calculation, condensation and simplification.iv. Retrieval of Information: All official documents and records that have been properly stored could be recalled whenever needed. An office provides such information to the management and other users promptly. Examples of information that could be retrieved from offices are staff files, receipts, bank orders, estimates, invoices, progress reports, financial statements and instructions issued on behalf of management.v. Protecting Assets: Office serves as a place for protecting all the tangible and intangible assets of an organisation. The tangible assets are cash, equipment, furniture, cabinets, etc., while the intangible assets are the business secrets, corporate image, tactics and goodwill.vi. Arranging Funds: The office is a reliable place for making arrangements for funds and for payment of money to a third party. 63

8.2 Types of Offices Offices can be classified into the two types, viz; open and closed offices. 1. Open Office: An open office refers to a large room or hall in which all the sections of the office are located. Each section or department is allotted a separate space in the same room or hall which is often demarcated by counters, high filing cabinets or shelves. The modern tendency is to adopt the open office instead of closed offices for different sections. Advantages of Open Office An open office utilises space better; it reduces the cost of operations, cleaning and maintenance; and it also allows for better supervision because employees are made to sit together, thus allowing team work and continuous flow of work. Lastly, an open office allows sharing of machines and equipment by different sections. As good as an open office is, it has a number of disadvantages. Disadvantages of Open Office An open office does not allow for privacy, and it leaves room for distractions by fellow employees as a result of frequent movement. Noises created by telephones and typewriters also affect efficiency of staff in open offices. In an open office, the higher ranking officers feel insulted sharing office accommodation with juniors. 2. Closed Office A closed office is an office with small rooms or cubicles, where each individual is assigned his own room separated from one another by walls or partitions. Closed offices are usually allotted to top executives and senior officers whose schedule of duties/nature of work requires high degree of concentration. Advantages of Closed Office Occupants of closed office are provided personal offices which ensure the success of their assigned duties. It allows for better concentration far away from noise and distraction from fellow-employees. A closed office gives an employee a sense of prestige and importance in the organisation. Also, closed offices are usually cleaner because of absence of congestion with people, machines and equipment. Finally, closed offices are better ventilated with personal heating/cooling facilities. Disadvantages of Closed Office Closed offices encourage waste of space for partitioning, decoration and provision of basic equipment. Therefore, the cost of maintenance of the closed office tends to be very high. Supervision of closed offices is difficult and costly as supervisors and junior employees are far apart. Closed offices cause delays in the flow of communication as movement of files is delayed. 8.3 Office Machines and Equipment Office machines and equipment are simply, gadgets that enhance speed, accuracy and64 quality of work of employees in organisations. Office machines and equipment are used for

information processing and management to aid decision-making. Some basic office machinesand equipment include book keeping machines, addressing machines, typewriters, computers,cash registers and cheque protectors. Fig. 8.2: Assorted types of office machines and equipmentTypes of Machines and EquipmentThe following are the various types of machines used in the modern office:a. Typewriters: Typewriter is used for typing letters, proposals, accounting records and other forms of correspondences for both internal and external clients, although these are tasks now mostly done on the computer.b. Photocopier: Photocopier is a common office machine that is used for reproducing documents, letters and memos for filing purposes and other needs. The process entails getting exact photographic copies of the original documents.c. Accounting Machines: This machine computes and analyses figures with the utmost accuracy, quality and unprecedented speed. Accounting machines allow organisations to cope with large volumes of figures and numerical data generated in offices.d. Cash Registers: Cash registers are machines used in offices for facilitating cash payments for purchases made by customers. A cash register records cash transactions on a tape, produces printed slips and operates cash drawers with total transactions shown on the meter.e. Mailing Machines: Mailing machines are gadgets used for handling inward and outward mail. Some mailing machines are used for opening letters by cutting off one edge of the envelope. Another type of mailing machine is used for paper folding, where a large number of letters, circulars and other documents are folded each day.f. Computers: This is an electronic device which aids the collection of data, procession of 65

the data, storing of processed data and retrieval of data whenever required. It is a replica of the human brain, as it is designed to perform all types of clerical operations very quickly and accurately. With computers, it is now possible to do everything hitherto handled by publishers in publisher’s office-writing, editing, design, typesetting, paste-up, printing and indeed accounting and marketing-in one machine that you can put on your desk. Fig. 8.3: A computer g. Dictating Machines: Dictating machines are used by stenographers for writing on shorthand or typing normal words. This modern dictating machine records the voice on a variety of mediums, including wax cylinders, plastic discs, wire and coated types, or on magnetic tapes. h. Payroll Machines: These machines, also known as steel paymasters, are used in the offices in connection with the payment of wages. They facilitate calculations of wages, counting of exact amount of money to be paid to each employee and placing of the money in an envelope. i. Cheque Writing Machines: These machines are also known as protectographs. They are used for writing the particulars on a cheque, and crossing it. The machine eliminates the possibility of fraud and alteration of the contents of a cheque. j. Cheque Signing Machines: These machines imprint the specimen signature of the accredited drawers or authorised signatories on a large number of cheques to be paid to suppliers, clients and workers. The use of this machine provides protection against the forgery of signatures. k. Numbering Machines: These machines are used for the imprint of serial numbers on office forms, reports and other vital official papers. They are fitted with a self-inking device and change the number automatically after it is passed against a paper. l. Laminators: This is a machine used for protecting official and personal documents by covering the surfaces of the document with transparent nylon materials that is water, oil and ink proof. It is ideal for laminating engineering drawings, certificates, legal documents,66 identity cards, important contracts papers, etc.

8.4 Production Space: Plant Location and Plant LayoutProduction space refers to the land area where manufacturing takes place or where servicesare rendered. Two issues are discussed here - plant location and plant layout.Plant LocationPlant location refers to a particular place or site for setting up a business or factory. The choiceof an ideal location is made after weighing the cost and benefits of different sites. An ideallocation is a place with the minimum cost of production and maximum access to customers/market share.Considerations for Plant LocationThe important considerations for production space are given as follows: a. Climatic conditions of the location; b. Availability of raw materials; c. Reduced cost of transportation for goods and persons; d. Access to large market; e. Availability of Infrastructural facilities such as roads, seaports, electricity supply, water, etc.; f. Availability of skilled, non-skilled labour and technically qualified personnel; g. Proximity to financial institutions; i. Safety and security should be accorded due importance; j. Government influences and incentives; and k. Presence of other companies.Plant LayoutPlant layout refers to the arrangement of physical facilities such as machinery, equipment,furniture, etc., within the plant location. Plant layout is important because it enhances easyproduction process, minimises material handling time and cost, and allows flexibility ofoperations.Fig. 8.4: Plant layout diagram (left) and scale model 67

8.5 Recruitment and Training of Staff Staffing of the new unit is another major problem. First of all the quantity and quality of staff required are judged. Then people with required skills are selected. Necessary training arrangements are made to prepare the selected people to handle their jobs efficiently. Step 1: Understand your need of the jobs; Step 2: Understand what you want; Step 3: Write a job description; Step 4: Decide on your selection process and criteria; Step 5: Identify sources and launch search; Step 6: Shortlist candidates; Step 7: Make your selection based on Interview, assessment, reference check; Step 8: Offer Jobs, and Step 9: Onboarding and Training. Summary In this chapter, we learnt about operations management and how an office is meant to be set- up and managed. An office is defined as a place in one’s home, community, owned or rented apartment, where business activities are transacted and services provided to members of the public. The office is used for different things, and these are; for receiving information, recording information, processing information, protecting assets, arranging funds, etc. There are two different types of offices and they are: Open and closed office. In these offices a number of machines and equipment, for example, typewriters, photocopiers, computers, etc., are needed for the office to function well. Before setting up an office, the first thing to consider is the space needed and the layout one needs in order to get a production space. Lastly, the concept of staffing and training of office workers also forms an integral part of an office. Class Activities 1. Students should list fifteen equipment and machines found in the office. 2. Students should explain the meaning of a plant layout. Revision Questions 1. What is an office? 2. List five functions of an office. 3. Differentiate between an open and closed office.68

CHAPTER 9 Products and Target CustomersPerformance ObjectivesAt the end of this chapter, students should be able to: 1. Define the meaning of a product; 2. Explain the meaning of these concepts: packaing, branding, advertising, marketing, marketing research, etc., and 3. List the different types of competitors.IntroductionProduct and Product Life CycleWhat is a product? Product is anything that is produced by the entrepreneur to give satisfactionto consumers and other members of the public. Examples of products are rice, beans, eggs,sugar, salt, pepper, cloths, fan, radio, bed, shelf and other useful household and office items.Another name for a product is a good. When a new product is produced and taken to themarket, it takes time to get known and be purchased by consumers. A product like a humanbeing has a lifecycle of four stages. The stages are discussed below. a. Introductory Stage: When the product is introduced, sales will be low until customers become aware of the product and its benefits. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. b. Growth Stage: The growth stage is a period of rapid revenue growth. Sales increase as more customers become better aware of the product and its benefits. During this growth stage, the goal is to gain consumer preference and increase sales. c. Maturity and Saturation: The maturity stage is the most profitable stage. While sales continue to increase in this stage, they do so at a slower pace. At this stage, competition decreases market share and/or prices of the product because competing products are very similar thereby making it difficult to differentiate one product from another. During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. d. Decline Stage: At the last stage sales begin to fall as the market becomes saturated with different products. During this phase, the entrepreneur is expected to maintain the product and accommodate competitors. 69

9.1 Packaging Packaging is the process of enclosing or protecting products for distribution, storage, sale, and prolonged use. Packaging also refers to a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging is the process of wrapping material around consumer goods for the purpose of identification, description, displayability, protection, promotion and marketing to the public. It is also a coordinated system in the manufacturing process which entails preparing products for transportation, warehousing, logistics and sale to the end user. Objectives of Packaging Packaging has the following objectives: i. Physical Protection: The objects packaged are protected from shock, vibration, compression, temperature. ii. Barrier Protection: Keeping the contents clean, fresh, sterile and safe for the intended purpose is a primary function. iii. Containment: Small objects are typically grouped together in one package for reasons of efficiency. Liquids, powders, and granular materials need containment. iv. Information Transmission: Packages and labels communicate how to use, transport, recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and chemical products, some types of information are required by governments. v. Marketing: The packaging and labels can be used by marketers to encourage potential buyers to purchase the product. Package graphic design and physical design have been an important and constantly evolving phenomenon for several decades. vi. Convenience: Packages can have features that add convenience in distribution, handling, stacking, display, sale, opening, reclosing, use, dispensing, and reuse. 9.2 Branding Branding refers to the use of a name, a term, a symbol to identify goods or services. Branding helps to reduce the problems the customer faces when making a choice of brands to buy in the market. For example, a shopper can make a choice from various toothpaste brands such as Maclean, Close Up and Pepsodent. Brand name is that part of the brand, which can be pronounced and vocalised, as for example, Samsung, MTN, Glo, Datsun, Toyota and Honda. Brand mark on the other hand is the part of the brand which is recognisable by sight but cannot be vocalised (pronounced). It usually appears in the form of symbols, distinctive colouring or letter or a design. Examples of brand marks include PZ, UAC and Star beer.70

9.3 Courtesy/Customer Relationship ManagementCourtesy refers to the act of showing respect to customers with the aim of attracting, retainingand making them committed buyers. The term has developed into what is currently calledCustomer Relationship Management (CRM). CRM is the process of developing and maintaininglong-term beneficial relationships with customers.Techniques for Courtesy/CRMi. As an entrepreneur, make a deliberate attempt to know customer needs;ii. Meet customers’ commitments;iii. As manufacturers and service-providers, give after sales support;iv. Tell the customers the truth always,v. Establish and retain a long-term relationship.9.4 Awareness/AdvertisementAdvertising is a non-personal form of message or communication directed at consumers andother members of the public to persuade them to purchase certain products or embracecertain services. Advertisement gives awareness on the name of a product or service andhow that product or service could benefit the consumers. Different types of media can beused to deliver the advertisement messages such as bill boards, newspapers, magazines,television, radio, and websites, bulk SMS and text messages. Advertising helps organisationsto interact with members of the public effectively and create favourable goodwill towards theorganisation. It is effective in educating customers about a product’s features, which couldhelp customers to recognise it on the shelves. It also helps to pave the way for salespersonsby educating potential customers about the product.9.5 Marketing and Marketing FunctionsMarketing refers to the task of getting the right goods and services to the right customersat the right price using the right promotional means. Marketing therefore ensures that theneeds of customers and other members of the public are satisfied. Marketing is significantin many respects. It plays a major role in the economic development of a country throughthe encouragement of consumption of all types of goods and services. Marketing enablesintermediaries to make a wide range of products available to consumers in the urban centres.Marketing has the following functions in the society: 1. Marketing as a process connects supply and demand or production and consumption in the society. 2. It builds and maintains the relationship between producers and consumers. 3. Marketing integrates all the other functions in a company to serve the markets. 71

4. It ensures realisation of profit through exchange of products between producers and customers. As students of entrepreneurship, you need to know the 4-Ps of marketing or marketing mix. The marketing mix contains four important elements needed for making good decision on goods and services to be offered for sale in the market. These 4Ps are: Product, Price, Promotion and Place. The meanings of these four Ps are provided below. 1. Product: This is anything (tangible and intangible) that can be offered to the buyers in the market. Examples of tangible products are yam, beverages, juices, razor blade, bread, TV, handset, radio, chairs, chicken, sewing machine, bed-sheet, belt and other items that give us satisfaction. Intangible products are bank accounts, hairdressing, sewing, lawyer’s advice, doctor’s treatment, teaching and other services we enjoy in the society. 2. Price: This is the amount of money charged by entrepreneurs and manufacturers for the exchange of their products and services to consumers and buyers. Example of price; N2 for 1 bottle, N3000 for a dozen and N5m for a lorry. Source: Raimi and Olayemi Fig. 9.1: The four Ps in marketing 3. Promotion: This refers to all the activities made by sellers to persuade buyers to buy their products in the market. Examples of promotional activities are buy 3 and get 3 free, discounts, raffle draws, incentives, gifts, etc. 4. Place: This refers to the location where the entrepreneurs/manufacturers sell their products and services to the customers/buyers. They can be a geographical location, internet, TV, Radio and other places. Examples of places are Aba, Kano, Ilupeju, Ikeja, Abuja, etc. 9.6 Market Research Market research is the systematic gathering, recording, and analysis of information on the business environment. It also extends to the financial analysis carried out by entrepreneurs to determine the viability of investment in a given sector in an economy. The goal of market72

research is to identify and assess the impact of changing elements of the marketing mix (Price,Product, Promotion and Place) on customer behaviour.Characteristics of Market ResearchWell planned and implemented marketing research show as the following characteristics: 1. It is Systematic: The procedures followed at each stage of a market research are methodologically sound, well documented, and, as much as possible, planned in advance. Marketing research uses scientific method in that data are collected and analysed to test prior notions or hypotheses. 2. It is Objective: Marketing research should be conducted with a free mind and objectivity. It should be free from the personal feeling or the opinion of the management that requested market research. 3. It is Useful: The findings and recommendations provided by market research should be used for management decision.9.7 Competition Versus TacticsIn business, competition simply means the rivalry between manufacturers/sellers to gainadvantage over one another in terms of profits, market share and sales volume by manipulatingthe price, product, distribution and promotion. Competition is “What are we going to do toachieve our set goal?” Tactics on the other hand is the plan for achieving a particular goal.It is also defined as using specific business resources to achieve the goal or sub-goals that abusiness has set for the future. Tactics is “How are we going to accomplish our set goal?” Fig. 9.2: Manufacturers in different industriesTypes of CompetitorsRival sellers are called competitors. There are three types of competitors, as discussed below.i. Direct Competitors: These are sellers that offer the same products or services as others and have the same business goals of deriving revenue from telephone services. For example, MTN, GLO, Airtel and Etisalat are direct competitors in Nigeria. 73

ii. Indirect Competitors: These are sellers that offer the same products or services to the customers but have different revenue-making goals, that is, they derive their revenue in different ways. For example, MTN, Visafone and Spectranet are indirect competitors in Nigeria. MTN makes it revenue from mobile telephone/internet services; Visafone makes its revenue from CDMA telephone and Spectranet makes it revenue only from internet services. iii. Replacement Competitors: These are sellers that offer the different products or services to the consumers but using the same resources like with other competitors. For example, Chocolate sweet manufacturers and Beverage drink manufacturers both use raw cocoa. 9.8 Sales Promotion Sales promotion involvestheuse of media and non-media communication to increaseconsumer demand, stimulate market demand or improve product availability. Sales promotions can be directed at the customer, sales staff, or retailers. Sales promotions targeted at the consumer are called consumer sales promotions. Sales promotions targeted at retailers and wholesale are called trade sales promotions. Objectives of Sales Promotion There are three basic objectives of sales promotion. These are: 1. To present information to consumers as well as others; 2. To increase demand, and 3. To differentiate a product by making it a brand in the market. Summary In this chapter we have learnt a lot about products and target customers, that is, how we can make a product sellable as well as profitable in a very competitive market. Product is defined as anything that is produced by an entrepreneur to give satisfaction to consumers and other members of the public. Examples of such products are household items like food stuffs (rice, beans, electrical appliances (television, radio, gas cooker, fridges, etc.). Production has four stages and there are: 1. Introductory stage. 2. Growth stage. 3. Maturity and saturation stage 4. Decline stage. Furthermore, in this chapter, several ways of achieving the goal of making a product successful are as follows:74

1. Packaging; 2. Branding; 3. Courtesy/Customer Relationship Management (CRM); 4. Advertisement; 5. Marketing; 6. Market research, and 7. Knowing one’s competitors.Class ActivityStudents should take a product that is very popular in the Nigerian market, and explain thereasons why such a product keeps on excelling in the market.Revision Questions1. Define the meaning of a product.2. Write short notes on any three of the following concepts: i. Branding; ii. Packaging; iii. Courtesy; iv. Awareness/Advertisment; v. Marketing; vi. Market research; vii. Competition, and viii. Sales promotion. 75

CHAPTER 10 Product Costing and Raising Capital Performance Objectives At the end of this chapter, students should be able to: 1. Explain the meaning of costing; 2. Define pricing and pricing strategy; 3. List the importance of pricing in entrepreneurship; 4. Mention the factors influencing pricing, and 5. Name the types of capital. Introduction Product costing and raising capital is an integral part of entrepreneurship. Without capital, a business cannot take off and likewise pricing and costing of goods and services provided cannot be known. In this chapter, we would focus our attention on the meaning of costing, pricing and pricing strategy, importance of pricing in entrepreneurship, factotrs influencing pricing and lasting types of capital. 10.1 Costing Costing (or product costing) is a method used to determine how much was expended on a manufactured product, before fixing the appropriate price (selling price). It is also a system of calculating the totality of expenses (cost of production) incurred at the various stages of production in an organisation. In order words, costing is estimating the expenses made to create a product or deliver a service to consumers. These costs include direct labour, direct materials, consumable production supplies and factory overhead. 10.2 Pricing and Pricing Strategy Pricing means the process of determining how much to sell a product or amount to charge for a service rendered. It is also defined as the amount an entrepreneur anticipated to receive by exchanging its product or services with the final users/buyers. Pricing is determined by the entrepreneur after looking at some cost elements like manufacturing cost, type of buyers, marketplace, market condition and quality of product. Pricing is a key variable among the four76

Ps of the marketing mix (price, product, promotion, and place). Pricing takes various namessuch as fee, tuition, salary, rate, fare, dues, honorarium, rent, and interest. Whatever forms ittakes, it determines the quantity of the product the organisation will sell and the revenue thatwill be derived from the sale of the products. It also influences consumer behaviour.Importance of Pricing in EntrepreneurshipPricing is very important in entrepreneurship for three reasons: i. Pricing helps entrepreneurs to achieve profit in business; ii. Pricing aids accounts preparation; iii. Pricing explains the realities in the marketplace, and iv. Pricing strengthens product, place and promotion.10.3 Pricing StrategiesA pricing strategy explains a balance between the price floor (the price below which anentrepreneur incurs losses) and the price ceiling (the price beyond which an entrepreneurexperiences a ‘no demand’ situation). The following are common pricing strategies in business.i. Mark-up Pricing: In this method the seller adds a profit margin to the cost price of the product. For example, if a pack of biscuit was produced at N100 and the expected profit margin (mark up) by the seller is N50, the sale price will be N150.ii. Discriminatory Pricing: The entrepreneur charges different prices for the same products depending on type of customers, status, packaging, brand, place and time of purchase.iii. Penetration Pricing: The entrepreneur sets low prices for products at the introductory stage to increase demand and sales. For example, when others are selling at N40, an entrepreneur using penetrating pricing may decide to charge N35 to gain control of the market.iv. Skimming Pricing: This refers to the setting of a high price for a product with the aim of making a lot of profit within a very short time. For example when other entrepreneurs are selling at N40, an entrepreneurs using skimming pricing may decide to charge N45 to take advantage of scarcity in the market to make huge profit.v. Marginal-cost Pricing: In this type of pricing, the entrepreneur fixes prices of goods closer to marginal cost of the goods. This type of pricing is used during periods of poor sales. For example, if the cost of a good is N60, the entrepreneur using marginal cost pricing decides to charge N61.vi. Price Leadership: This is a pricing strategy often adopted in a business line with few sellers. The most powerful seller leads by setting the price, while other sellers follow without any option.vii. Psychological Pricing: Pricing designed to have a positive psychological effect on the 77

buyers. For example, the entrepreneur may fix the selling price of a product at N3.95 or N3.99, rather than N4. viii. Dynamic Pricing: This is a flexible pricing strategy which allows entrepreneur to adjust the prices of identical goods to correspond to a customer’s willingness to pay. The airline industry provides a good example of dynamic pricing where passengers pay different prices for the same flight. ix. Predatory Pricing: This is an aggressive pricing method intended to drive out competitors from a market. It is illegal in many parts of the world. 10.4 Factors Influencing Pricing Entrepreneurs take the following factors into consideration in pricing their goods and services to avoid making losses: a. Cost of Production: This is the total expenses incurred while producing goods and services. b. Distributors’ Commission: The margin of commission paid to wholesalers and retailers influence the prices that entrepreneurs set for their goods, c. Competitors: The pricing policy of rivals entrepreneurs influence the price policy of a business. Most entrepreneurs watch the actions of their competitors when setting pricing. d. Nature of Goods: Pricing depends on the nature of the goods, that is, luxury or normal goods. 10.5 Financing Business: Equity, Loan and Venture Capital Financing business simply means sourcing fund to establish a business and keeping it going in line with the business plan. Financing extends to planning how to get the initial capital and working capital for the day-to-day running of the business. The principal means of raising fund are: i. Equity/Owner’s capital, and ii. Loan/Debt. i. Equity: This refers to owners fund raised from personal savings and invested in a business for the purpose of earning profit. Equity is not paid back as long as the company exists because it is the financial commitment of the owner(s) to the business. ii. Loan: This refers to fund borrowed from banks or money lender with the agreement to repay with interest at a future date. For example, Tayo Bakery borrowed N5m for two years at 10 per cent interest rate per annum. In two years therefore, Tayo Bakery will repay the sum of N6m = N5m + (N500,000 X 2).78

Types of Capitali. Working Capital: This is the money needed for the day-to-day running of the business. Part of it is used for paying wages or salaries of workers, part of it is also need to buy raw materials. Working capital is provided by banks, that is, commercial. This is because commercial banks are interested in giving out short term credit (i.e. loans for a short period).ii. Fixed Capital: This is the money required by the entrepreneur for permanent investment in fixed assets such as the construction of building/factories, purchase of machines and other manufacturing equipment.10.6 Accounting Language/Relevant Books of Accountsi. Payroll: The record shows the amount paid to employees as salaries and entitlements. This Information alone requires a mini-accounting system to keep things accurate and in order.ii. Cash Balance: This is simply cash available at any given point in time; it helps to determine if amount owed workers, suppliers and outsiders can be paid. This record guides entrepreneurs to know what they can afford.iii. Accounts Receivable: These are records on amount that debtors owe to the company. The records is important to keep track of how and when to collect overdue bills? When to charge interest on such debts, if any?iv. Accounts Payable: This is the amount of money owed by a business to its trade partners such as suppliers, retailers and commission agents. These debts need to be paid on time to gain cash discount, and to maintain a good reputation for the business.v. Inventory Records: This is a record of the raw materials, semi-finished goods and finished good in the custody of the business organisation at any point in time. Inventory prevents theft, mis-use of stocks and wastage of items in the stores and warehouse.vi. Government Documents: These are vital documents that must be kept and produced on request by government agencies. Such documents include certificate of registration, business permit, land receipts, tax clearance, rent receipt, waste disposal receipt, driver licenses, etc.vii. Cash Book: This is an accounting record of all cash receipts and payments including bank deposits and withdrawals prepared according to date/time when the transactions took place. It has two sides: Cash payable/Cash Payments and Cash Receivable/Cash receipts.viii. Profit and Loss Accounts: A profit and loss accounts helps to determine whether a business is operating at a profit or a loss over a given time period of one month to one year.ix. Balance Sheet: This is a financial statement of accounts showing the assets, liabilities, andcapital of a business at a particular point in time. It also shows the balance of income andexpenditure of the previous year for comparison. 79

10.7 Entrepreneurship in Agriculture Employment and income generation are buzzwords in all the developmental sectors of the economy. Unemployment rates have been growing annually with the increase in population and Agribusiness promotion has thus evolved as an answer to the employment crisis facing the world. Agriculture, if well-funded and developed, could be a source of livelihood for over 70 percent of the world’s population when considering animal and animal products, crop and value-added products therein. A basic assumption is that shortage of capital goods in relation to employable persons constituted a fundamental constraint on growth in the economy. There is the need to improve the employment situation by focusing on agriculture therefore. Entrepreneurship in agriculture cuts across animal husbandry, crop production, inputs supplies and products processing. a) Entrepreneurship in Animal husbandry: There are various areas in animal husbandry that one can invest in or be trained as an entrepreneur for. These include animal feed production, animal feedstuffs supplies, health products, the veterinary profession and clinic practices. It also includes agro-tourism through zoo and parks establishments, diagnostic laboratory, poultry production, slaughter house operations, meat marketing, meat products production and animal production. Dairy products, animal breeding, hatchery, sales day-old chicks, biological products and vaccine production, pharmaceuticals, bio- fertiliser production, fish farming, fish processing, pet animals training, also fall under these areas. b) In the field of crop agriculture, the following enterprises also exist namely crop production, crop protection, crop processing centres (milling), herbal and medicinal plants production and processing. There are also opportunities in mushroom production, plant breeding, vegetable production, landscaping, seed multiplication and production, fodder crop production, raising seedlings, tissue culture.etc. c) Entrepreneurship opportunity also exists in area of post- harvest technology like fabrication, value-added products, processing, storage and commodity development. d) In agricultural services, farming inputs sourcing, supplies, consulting, marketing, cyber extension to existing and intending farmers are areas one can go into as an entrepreneur. Agribusiness and rural entrepreneurship development Many developing countries and economies in transition, particularly those with large rural communities, suffer from inadequate access to food and lack of employment. The problem is compounded by the dependence on outdated and inefficient technologies leading to poor productivity and slow economic growth. Agriculture-based industrial products account for half of all exports from developing countries, yet only 30 per cent of those exports involve processed goods compared to a figure of 98 per cent in the developed world. In this context, the United Nations Industrial Development Orientation (UNIDO) aims to80

promote sustainable, inclusive business opportunities for the rural poor through agri-businessand agro-value chain development. UNIDO’s technical cooperation activities in this regardfocus on adding value to agricultural commodities including non-food sectors, at various pointsof the chain of economic transactions that links input providers, farmers, traders, processors,logistic providers, distributors and retailers.Through its technical assistance, UNIDO links resources and markets in the agribusinessvalue chains and strengthens forward and backward industrial linkages in order to boost theeconomic transformation of countries, improve employment and income opportunities andreinforce sustainable livelihoods.Agro-industrial activities benefit a number of groups. These include poor and marginalisedrural populations, urban agro-industries and communities facing human security challengesor requiring urgent supplies of agricultural equipment and the rehabilitation of foodindustries. Technical cooperation and capacity-building services are provided to agro-basedand agro-related businesses and industries, inter alia, in the food, leather, textiles, wood andagricultural equipment sectors.UNIDO promotes investment in agribusiness and value chain development and buildspartnerships and linkages with strategic financing institutions. It also organises various globalforums and expert group meetings in related fields and publishes specialised training manuals,guides and electronic media.To fulfill its mandate in this area, UNIDO mobilises expert services such as cluster development,conformity with quality and standards, rural energy, environmental management and cleanerproduction.SummaryThis chapter sheds light on the importance of product costing and raising of capital.Product costing is defined as a method used to determine how much was expended on amanufactured product, before fixing the appropriate price for it (selling price). It is also asystem of calculating the totality of expenses (cost of production) incurred at the variousstages of production in an organisation.Pricing means the process of determining how much to sell a product or the amount to chargefor a service rendered. It is also defined as the amount an entrepreneur anticipates to receivefrom exchanging a product or service with the final user/buyer.Pricing is determined by the entrepreneur after looking at some cost elements likemanufacturing cost, types of buyers, market place, market condition and quality of product.Furthermore, there are four factors that influence pricing and these are: i. Cost of production; ii. Distributor’s commission; 81

iii. Competitors, and iv. Nature of goods. The different ways of raising funds for a business were explained. Class Activity Students should explain why pricing is important to an entreprenueur. Revision Questions 1. What is costing? 2. Define the meaning of pricing. 3. List five pricing strategies that you know. 4. Explain the types of capital.82