OROMIA JCV BUREAU

BUSINESS ENTREPRENEURSHIP TRAINING MODULE

(BETM-2015)

For Existing Enterprise

BETM - 2

JULY, 29/2023
FINFINE, OROMIA
LESSON 1:- IDENTIFYING GAP FOR EXISTING BUSINESS.................................................1
1.1 Definition of gap...................................................................................................................1
1.2 Gap identification tools.........................................................................................................1
LESSON 2:-DEVELOP EXPLAIN STRATEGIC PLAN..............................................................3
2.1 Definition of plan..................................................................................................................3
2.2 Concept Strategic planning...................................................................................................5
2.3 Advantages of Strategic Planning.......................................................................................5
2.3 Major Components of a Strategic Plan.................................................................................6
2.4 Monitoring and reviewing results of the plan and its importance.........................................7
LESSON 3: Enterprise Marketing/Marketing for Small Business..................................................8
THE 4 P’S OF MARKETING....................................................................................................9
1. PRODUCT..............................................................................................................................9
2. PRICING.................................................................................................................................9
3. PLACE....................................................................................................................................9
4. PROMOTION.......................................................................................................................10
Types of Markets.......................................................................................................................14
IDENTIFYING YOUR MARKET...........................................................................................14
LESSON 4:- PRODUCTION AND OPERATIONS MANAGEMENT.......................................19
4.2 Difference between Production and Operations Management............................................19
4.3 Scope of Operations Management......................................................................................19
4.4 Types of Production............................................................................................................20
4.5 Production planning............................................................................................................20
4.6 Inventory management........................................................................................................22
4.7 Inventory Control Method...................................................................................................22
4.8 Production Management v/s Operations Management.......................................................25
4.9 Product Life Cycle..............................................................................................................25
4.10 What Is Quality Control?..................................................................................................28
LESSON 5:-MANAGING COST AND PRICING.......................................................................30
5.1 Costs....................................................................................................................................30
Direct and Indirect Costs...........................................................................................................30
A. Direct costs:..........................................................................................................................30
B. Indirect Costs (overhead cost)..............................................................................................31
5.2 pricing..................................................................................................................................31
LESSON 6:- STRATEGY OF BUSINESS EXPANSION...........................................................35
 6.1 Product development strategy.............................................................................................35
6.2 Market penetration..............................................................................................................37
6.3 Market development strategy..............................................................................................39
6.4 Product diversification........................................................................................................39
6.5 Increasing Market Share.....................................................................................................41
6.6. Advertising........................................................................................................................42
6.7 Developing new product.....................................................................................................44
6.8 Entering new market...........................................................................................................45
LESSON 7:-MAINTAIN FINANCIAL RECORDS AND USE FOR DECISION MAKING....48
7.1 Concept of business record.................................................................................................48
7.2 Objective and Benefits of Financial Records......................................................................48
7.3 Source document.................................................................................................................49
7.4 Financial Statement............................................................................................................50
Lesson 8;-Customer Handling and conflict management..............................................................59
8.1 What is the meaning of customer handling?.......................................................................59
8.2 Conflict Management..........................................................................................................70
8.2.1 some of the conflict resolution techniques are as follows:...............................................71
LESSON 9:-BUSINESS ETHICS AND ETHIOPIAN TAX SYSTEM.......................................73
9.1 Define Ethics.......................................................................................................................73
9.2 Ethiopian Tax system..........................................................................................................75
I. Direct Tax..............................................................................................................................75
II. Indirect Tax...........................................................................................................................77
III. Obligations of Tax Payers...................................................................................................78
IV. Penalties..............................................................................................................................79
9.3 Work in Team......................................................................................................................79
LESSON 10:-SAVING..................................................................................................................82
Important Benefits of Saving Money........................................................................................82
Lesson 11:- Leading small business..............................................................................................86
Traits of a Business Leader.......................................................................................................87
Effective Business Leader If the following Traits....................................................................92
1. Self-awareness.......................................................................................................................92
2. Decisiveness..........................................................................................................................92
3. Fairness..................................................................................................................................93
4. Enthusiasm............................................................................................................................93
 5. Integrity.................................................................................................................................93
6. Knowledge............................................................................................................................94
7. Creativity and Imagination....................................................................................................94
8. Endurance..............................................................................................................................95
Lesson 12 Concept of E-commerce...............................................................................................96
1. Business to Consumer (B2C):...............................................................................................97
2. Business to Business (B2B):.................................................................................................97
3. Consumer to Consumer (C2C):.............................................................................................97
4. Consumer to Business (C2B):...............................................................................................97
APPENDIX II..............................................................................................................................102
LESSON 1:- IDENTIFYING GAP FOR EXISTING BUSINESS
Training Objectives:
By the end of this module, learners will be able to:
 Identifying the gab of MSE
 Delivering traing based on the their gab

1.1 Definition of gap

Gap is an area where there is a complete or partial absence of something skills or

knowledge such as data or something missing particularly in the area of entrepreneur
competence

1.2 Gap identification tools

The following checklist is basic skill gap identification tools for existing enterprise to fill
their gap in the area of entrepreneurship
Status
No Evaluation criteria Remark
Yes No
1 Have they clear business plan?
2 All members know about their business plan?
3 Have they organizational structure?
4 Are they put their organization vision and statement
of mission?
5 Is there division of labor?
6 Do they know their competitor very well?
7 Maintain financial records and use for decision
making
7.1 Manage personal and business books(business entity
concept )

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7.2 Sales record book
7.3 Purchase record book
7.4 Daily expense record book
7.6 Income Statement
7.8 Balance sheet statement (Asset, Liability, Owners
Equity)
7.9 statement owners’ equity
8 Have they market information?
9 Manage production and Operation
9.1 planning production and operation
9.2 Checking and controlling production /operation
process Application and maintenance of quality
control
10 Promote their product
11 Properly handle their customer?
12 Have they strategic plan to transform their
organization?
13 Have they good team sprite?
14 Have they plan to expand their business?
15 Have they organizational rule and regulation?
16 Is there reasonable price?
17 Work ethics
17.1 Are they always available on their work place?
17.2 Believe in team work?
17.3 Have they proper wearing uniform?

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LESSON 2:-DEVELOP EXPLAIN STRATEGIC PLAN
Training Objectives:
By the end of this module, learners will be able to:
 Define plan and identifying types of plan
 Developing strategic plan for MSE

2.1. Definition of plan

Definition: Planning is the fundamental management function, which involves deciding

beforehand, what is to be done, when is it to be done, how it is to be done and who is
going to do it. It is an intellectual process which lays down an organization’s objectives
and develops various courses of action, by which the organization can achieve those
objectives. It chalks out exactly, how to attain a specific goal.

There are four types of planning. Each type of plan commits employees within different
departments and their resources to specific actions. While there are many different types,
the four major types of plans include strategic, tactical, operational, and contingency.

Here is a breakdown of what each type of planning entails.

Operational Plans

Operational planning can be ongoing or single-use. The latter is usually created for a
specific event that will only occur once, such as a unique marketing campaign. Ongoing
plans can include rules and regulations, procedures, and the day to day running of the
company.

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Strategic Plans
Strategic planning is the foundation of an organization. Essentially, strategic plans dictate
the important decisions made within a business. Strategic plans can have scopes that range
from three years to ten years. These plans include the organization’s mission, values, and
vision. A good strategic plan always considers things in the long-term and remembers the
big picture.

Tactical Plans

Tactical planning is supportive of the strategic plan. It involves the tactics that will be
used to execute the strategic plan. Within a tactical plan, there are specific questions that
need to be answered about what it will take to accomplish the goals set in the strategic
plan; the most important question being how the company will accomplish the mission.
This type of planning is very focused and short-term. Tactical plans are sometimes
flexible and often break the strategy down into several parts and assign actionable tasks to
each part.

Contingency Plans

Contingency planning is important for any business because there is always the possibility
of unforeseen changes. A contingency plan is created for when the unexpected occurs or a
major change needs to be made in order to continue towards the goal. Not every change
can be anticipated which is why it’s imperative to have a contingency plan in place. Every
business leader should understand the importance of having a contingency plan.

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2.2 Concept Strategic planning
Strategic planning;-is the process of documenting and establishing a direction of your
small business—by assessing both where you are and where you’re going. The strategic
plan gives you a place to record your mission, vision, and values, as well as your long-
term goals and the action plans you’ll use to reach them. A well-written strategic plan can
play a pivotal role in your small business’s growth and success because it tells you and
your employees how best to
2.3 Advantages of Strategic Planning

1. Risk Identification; Strategic planning helps organizations identify risks. When risks
are identified, they can be managed.
2. Better Control; Strategic planning forces management to set targets, which then can
be used to use to help management control
3. Consistency; without strategic planning, short term, medium term and long term
goals could be inconsistent. For example, the organization may make decisions which
would benefit it in the short term, but damage it in the long term. By formally planning
the strategy of the organization, these goals can be harmonized and kept consistent.
4. Clarify Objectives; Strategic planning forces management to define their objectives,
which helps clarify them.
5. Decision making; some managers prefers not to make decisions. When they go
through a formal strategic planning process, they are forced to make decisions about the
future of the business. The strategic plan helps forecast the future areas the company
could be involved in, and decisions must be made in relation to which ones to pursue.

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Strategic planning approach
Strategic planning responds to the following four questions:
• Where are we?
• Where do we want to go?
• How can we get there?
• How do we ensure we get there?
Each strategic planning stage comprises the following elements.
Stages Elements
1. Where are we? Situational analysis:
External environment
Internal environment
2. Where do we want to go? Mission
Vision
Objectives
3. How do we get there? Designing strategies
Identification of expected results
Harmonization of strategic plan with
operational plans
4. How do we make sure we get there? Monitoring indicators
Means of verification

2.1. Major Components of a Strategic Plan

 Mission statement: The mission statement is an overarching, timeless expression
of your purpose and aspiration, addressing both what you seek to accomplish and
the manner in which the organization seeks to accomplish it. It’s a declaration of
why you exist as an organization.
 Vision statement: This short, concise statement of the organization’s future
answers the question of what the company will look like in five or more years.
 Values statement or guiding principles: These statements are enduring,
passionate, and distinctive core beliefs. They’re guiding principles that never
change and are part of your strategic foundation.

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  SWOT: A SWOT is a summarized view of your current position, specifically
your strengths, weaknesses, opportunities, and threats.
 Competitive advantage: Your competitive advantage includes what you’re best
at compared to the competition.
 Long-term strategic objectives: These long-term strategic focus areas span a
three-year (or more) time horizon. They answer the question of what you must
focus on to achieve your vision.
 Strategies: Strategies are the general, umbrella methods you intend to use to reach
your vision.
 Short-term goals/priorities/initiatives: These items convert the strategic
objectives into specific performance targets that fall within the one- to two-year
time horizon. They state what, when, and who and are measurable.
 Action items/plans: These specific statements explain how a goal will be
accomplished. They’re the areas that move the strategy to operations and are
generally executed by teams or individuals within one to two years.
 Scorecard: You use a scorecard to report the data of your key performance
indicators (KPIs) and track your performance against the monthly targets.
 Financial assessment: Based on historical record and future projections, this
assessment helps plan and predict the future, allowing you to gain much better
control over your organization’s financial performance.

2.2. Monitoring and reviewing results of the plan and its importance

What is a Monitoring and Evaluation Plan?

A monitoring and evaluation (M&E) plan is a document that helps to track and assess the results
of the interventions throughout the life of a program. It is a living document that should be
referred to and updated on a regular basis. While the specifics of each program’s M&E plan will
look different, they should all follow the same basic structure and include the same key element

LESSON 3: Enterprise Marketing/Marketing for Small Business

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Training Objectives:
By the end of this module, learners will be able to:
 Define marketing concepts.
 Describe the role of marketing in achieving the goals of a business enterprise.
 Apply the various marketing strategies in their businesses.
What is marketing?
Marketing is the effort to identify and satisfy customers’ needs and wants. It involves finding out
who your customers are, what they need and want, the prices, the level of competition. It
involves the knowledge and all the processes you undertake to sell your product.
Marketing answers the following questions;
 Who are my customers?
 What are my customer’s needs and wants?
 How can I satisfy my customers’?
 How do I make a profit as I satisfy my customers?
Who are your customers?
Your customers are the people or other businesses that want your products/ services and are
willing to pay for them. They include;
 People who are buying from you now.
 People you hope will buy from you in the future.
 People who stopped buying from you but you hope to get them back.
What are my customer’s needs and wants?
An important point to note is that customers want to look at different products so that they can
choose what they like best. Some customers want a different design and others want high quality
and are willing to pay extra for that.
How can I satisfy my customers’?
You need to do everything to find out who your customers are and what they need and want in
order to satisfy them improve your sales and make a profit. You need to find out;
 Products/services your customers want.
 Price your customers are willing to pay.

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  Location of your business in-order to reach your customers (Place).
 Promotion to use to inform your customers and attract them to buy your products or
services.
THE 4 P’S OF MARKETING
1. PRODUCT
Product refers to goods/services produced for sale, the product /service should relate to the needs
and wants of the customers.
Some important questions you need to ask yourself include;
 What products/services do I sell?
 Why did I decide to sell these products?
 Do I have the products customers want?
 Do any of my products not sell well?
 Do I stock products that do not sell well?
o Always listen to what your customers like and don’t like. When their needs
change, change your products and services to satisfy the new needs.
o Do more market research in order to provide those products or services and
increase your sales.
o If your product is not selling well, think of new ideas like finding new customers.
2. PRICING
Pricing refers to the process of setting a price for a product/service. Your prices must be low
enough to attract customers to buy and high enough to earn your business a profit.
To set your price you need to;
 Know your costs.
 Know how much customers are willing to pay.
 Know your competitors price.
 Know how to make your prices more attractive
3. PLACE
Place means the different ways of getting your products or services to your customers. It is also
referred to as distribution. If your business is not located near your customers, you must find

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ways to get your products/services to where it is easy for customers to buy. You can distribute
your products to your customers through;
 Selling directly to the consumers of the products.
 Retail distribution and wholesale distribution.
4. PROMOTION
Promotion means informing your customers of your products and services and attracting them to
buy them. Promotion includes advertising, sales promotion, publicity and personal selling.Use
advertising to make customers more interested in buying your products or services. Some useful
ways of advertising include signs, boards, posters, handouts, business cards, pricelists, photos
and newspapers.
You can use sales promotion to make customers buy more when they come to your business, you
could also;
 Ensure you maintain attractive displays.
 Let customers try new products.
 Have competitions
 Give demonstrations
 Sell complementary products (products that go together)
MARKET STUDY /MARKET ANALYSIS
Training objectives: By the end of the session, participants will be able to
 Define market research
 Know how to identify their likely competitors
 Know how to identify the likely demand from customers
A market is an area of potential exchange, i.e., there are potential buyers (customers), and
people who are willing to sell products or services. Prices are affected by the forces of demand
(of products) and supply (by sellers).
A product is anything that can be offered to a market for buying, use or consumption that might
satisfy a want or need, for example, eggs, coffee, and mangoes.
A service is performed when one group offers something to another. A service is not tangible
and does not result in ownership of any kind. Examples include training services, and public
transport services.

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Market research
Market research is conducted in order to collect information, which enables you to make the
right decision on the marketing of your product/service. The main focus within this activity is to
find out as much as possible about people’s buying habits and your competition.
Market research is a systematic, objective collection and analysis of data about a particular target
market, competition, and/or environment, often conducted as the first step in identifying the
viability of business ideas. It always incorporates some form of data collection whether it is
secondary research (often referred to as desk research) or primary research which is collected
direct from a respondent.
Having developed a business idea you first need to know about your potential customers and
competitors so you can position your business to maximize customers and overcome competition
from others. Market research helps to assess the viability of a business.
Note: It is necessary to define your potential market for the product/service you plan to offer.
This could be a village, parish, sub-county, district, region or nearby cities. There are youth
groups that produce dried fruits for export. Do not commit yourself to much in the beginning.
How to do market research
1) Talk to potential customers.
Ask them, for example:
 What products or services they want to buy?
 What do they currently buy?
 Where do they buy?
 Why do they buy from XY?
 When do they buy?
 How much do they buy?
 Which price do they pay?
 What are their preferences?
 Do they get any extras?
 What do they think about your competitors?

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2) Study your competitors’ businesses.
Find about:
 Their products or services, for example quality and design
 What prices they charge
 What exactly do they sell?
 How does their product differ from yours?
 Where do they get their inputs?
 Where do they sell?
 How do they promote their product/service?
 Do they have any special approaches to customer care?
 How can you compete?
Important note: Be very careful to carry out your research in a friendly, sensitive way; ask
questions and also observe – be aware: nobody likes more competition!
3) Ask suppliers and business friends
 Which goods sell in their business
 What they think about your business idea
 What they think about your competitor’s product.

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Checklist for Market Survey
Instructions: Go out into town with your small group, and find a business that most closely
matches the “best business” that you identified. Find out if the owner/manager, or an employee
has some time to answer some questions for you. Try to gather as much information as you can,
based on the categories/potential questions below. If there is time in the two hours that you are
out in the field, do the same with a second business, so that you can compare answers. Record
what you find out in the middle column. The column on the right is for your own comments,
analysis, suggestions, reactions, etc.
Remember to be respectful of the person’s time – he/she has a business to run – and only take as
much time as he/she wants to give. Also, keep in mind that there are some questions that the
person may not feel comfortable answering, so be respectful of that as well.
Checklist: Categories of information to be collected for market survey
Category/Question to be asked Information Further Questions/
gathered during Comments
survey
Who are customers
Working place and costing
Cost of owning or leasing premises
Availability, supply and cost of raw
materials
Availability of staff
Cost of working tools and
equipment
Competitors analysis
Advertising Methods
Tax issues and legislation

Challenges

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Types of Markets
A market is simply any group of actual or potential buyers of a product. There are three major
types of markets.
1. The consumer market: Individuals and households who buy goods for their own use or
benefit are part of the consumer market. Drug and grocery items are the most common types of
consumer products.
2. The industrial market: Individuals, groups or organizations that purchase your product or
service for direct use in producing other products or for use in their day-to-day operations.
3. The reseller market: Middlemen or intermediaries, such as wholesalers and retailers, who
buy finished goods and resell them for a profit.

IDENTIFYING YOUR MARKET

Here are three steps to follow when identifying your market:
1. Identify Why a Customer Would Want To Buy Your Product/Service
2. Segment Your Overall Market
3. Research Your Market
Step One: Identify Why A Customer Would Want To Buy Your Product/Service
The first step in identifying your target market understands what your products/services have to
offer to a group of people or businesses. To do this, identify your product or service’s features
and benefits. A feature is a characteristic of a product/service that automatically comes with it.
Step Two: Segment Your Overall Market
• It is a natural instinct to want to target as many people and groups as possible. However, by
doing this your promotional strategy will never talk specifically to any one group, and you will
most likely turn many potential customers off. Your promotional budget will be much more cost-
effective if you promote to one type of customer and speak directly to them.
This allows you to create a highly focused campaign that will directly meet the needs and desires
of a specific group. Again, this is called market segmentation.
 Larger markets are most typically divided into smaller target market segments on the
basis of geographic, demographic, psychographic and behaviorist characteristics:

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  Geographic: Potential customers are in a local, state, regional or national market
place segment.
If you are selling a product such as farm equipment, geographic location will remain a major
factor in segmenting your target markets since your customers are located in particular rural
areas. Or, if you own retail store, geographic location of the store is one of the most important
considerations.
 Demographic: Potential customers are identified by criteria such as
 Age, race, religion, gender, income level, family size, occupation, education level and
marital status. Choose those characteristics of your demographic target market that
relates to the interest, need and ability of the customer to purchase your product or
service.
 Psychographic: Many businesses offer products based on the
 Attitudes, beliefs and emotions of their target market. The desire for status, enhanced
appearance and more money are examples of psychographic variables. They are the
factors that influence your customers' purchasing decision. A seller of luxury items
would appeal to an individual's desire for status symbols.
 Behaviorist: \
 Products and services are purchased for a variety of reasons. Business owners must
determine what those reasons are, such as: brand, loyalty, cost, how frequently and at
what time of year customers in a segment use and consume products. It's important to
understand the buying habits and patterns of your customers. Consumers do not rush
and buy the first car they see, or the first sofa they sit on.
What the customer is thinking, and what they want is often different than…
What the salesperson is thinking and what they want

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  Your thinking preferences may be quite different than those of your customers.
 Your customers give clues as to their thinking preferences.
 It may be necessary to adapt your interactions with your customer to better match the
customer’s thinking preferences.
 Challenging Customer: Write down a few areas where you may have “common ground”
with this customer. Write down the areas that you feel might be the most different from
your own thinking preferences. This may be the focus of your “stretch” to better interact
with this customer.
 New Customer: Write down a few ideas on how to do a better job with gathering clues
about a customer who is new to you.

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What the Typical Buyer is dealing with Today
Higher expectations placed on them …… tighter resources … increased scrutiny on their
spending
“Every purchase decision is expected to have a clear business benefit.”
Workloads are escalating …… email inboxes are overflowing… including from people
constantly trying to sell them something
“Customers want fast and highly efficient transactions.”
What Customers Want
Flexible approaches …… solutions that simplify …… and address complex challenges
“Customers want partners… who will add value by solving their problems.”
Understanding Your Target Audience
 Answer these questions to define your target audience:
 Who will buy your product or service?
 What value proposition are you offering?
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 What is your competition offering its customers?
 How are you different than your competition?
 What is the best way to reach your audience?
 How will you get repeat business?
 Who are potential customers that have the problem your product solves?
 How frequently will your product be purchased, e.g., one-time purchase, quarterly
purchases, etc.?

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LESSON 4:- PRODUCTION AND OPERATIONS MANAGEMENT

Training Objectives:
By the end of this module, learners will be able to:
 Define production and operation management concepts.
 Describe the role of marketing in achieving the goals of a business enterprise.
1.1. Production and Operations Management

Production;- is application of resources such as people and machinery to convert

materials into finished goods and services.
Production and Operations Management is Managing people and machinery in
converting materials and resources into finished goods and services.
Production and Operations Management is defined as the process which transforms the
inputs/resources of an organization into final goods (or services) through a set of defined,
controlled and repeatable policies.
1.2. Difference between Production and Operations Management

Production and operations management are more similar than different: if manufacturing
products is a prime concern then it is called production management, whereas
management of services is somewhat broader in scope and called operations
management.

1.3. Scope of Operations Management

• Operations Management includes:

– Forecasting

– Capacity planning

– Scheduling

– Managing inventories

– Motivating employees

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 – Deciding where to locate facilities

– Assuring quality and more . . .

1.4. Types of Production

• Mass Production – manufacturing products in large amounts through

standardization, mechanization and specialized skills.

• Flexible Production – producing smaller batches using information technology,

communication and cooperation.

• Customer-Driven Production – evaluating customer demands to link with

manufacturer.

1.5. Production planning

Production planning determines the amount of resources an organization needs to

produce a certain output.

It utilizes the resource allocation of activities of employees, materials and production

capacity, in order to serve different customers.

Production planning can be combined with production control into production planning
and control, or it can be combined with enterprise resource planning.

Production planning is used in companies in several different industries, including

agriculture industry, oil & gas industry, postal industry, packaging and E-commerce
industry, amusement industry, etc.

Proper planning helps to:

• Choose what goods or services to offer customers.

• Convert original product ideas into final specifications.

• Design the most efficient facilities and layouts to produce those products.

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A business must ensure that it sells products that meet customer needs and wants. The
role of Production and Operations is to ensure that the business actually makes the
required products in accordance with the plan.

 Implementing the Production Plan

Make, Buy, or Lease Decision

• Choosing whether to manufacture a needed product or component in-house,

purchase it from an outside supplier, or lease it.

• Factors in the decision include cost, availability of reliable outside suppliers, and
the need for confidentiality.

Selection of Suppliers

• Based on comparison of quality, prices, dependability of delivery, and services

offered by competing companies.

 Controlling the Production Process

• Production control ensures implementation of a well-defined set of procedures for

coordinating people, materials, and machinery.

1) Routing

2) Scheduling

3) Dispatching

4) Follow-up

 Routing and scheduling

Routing determines the sequence of work. Managers develop timetables that specify
how long each operation in the production process takes for workers.

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 Dispatching

Supervisor instructs each department on what work to do and the time allowed for its
completion.

 Follow-Up

Employees and their supervisors spot problems in the production process and
determine needed changes.

4.6 Inventory management is a systematic approach to sourcing, storing, and selling

inventory both raw materials (components) and finished goods (products).
In business terms, inventory management means the right stock, at the right levels, in the
right place, at the right time, and at the right cost as well as price.

As a part of your supply chain, inventory management includes aspects such as

controlling and overseeing purchases from suppliers as well as customers maintaining the
storage of stock, controlling the amount of product for sale, and order fulfillment.

Naturally, your company’s precise inventory management meaning will vary based on
the types of products you sell and the channels you sell them through. But as long as
those basic ingredients are present, you’ll have a solid foundation to build upon.

Small-to-medium businesses (SMBs) often use Excel, Google Sheets, or other manual
tools to keep track of inventory databases and make decisions about ordering.

4.7 Inventory Control Method

What Is Inventory?
Inventory is the term for the goods available for sale and raw materials used to produce
goods available for sale. Inventory represents one of the most important assets of a
business because the turnover of inventory represents one of the primary sources of
revenue generation and subsequent earnings for the company's shareholders

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 Perpetual Vs periodic inventory management

For small businesses, there are two main approaches to inventory management: periodic
and perpetual system.

 Periodic inventory management: this system of inventory valuation requires physical

inventory accounts at specific intervals. This method of stock management is suitable for
small businesses with minimal inventory and is much cheaper than electronic tracking
systems. However, this method is not suitable for large companies with extensive
inventories because physical stock takes are time-consuming.
 Perpetual inventory management: this system relies on electronic tracking and POS
systems, to record and track inventory on a continual basis. Whilst this is a more
expensive system than physical inventory counts, it gives a more accurate and up-to-date
indication of stock levels and removes the risk of human error.

Inventory Costing Methods under Periodic Inventory System

One of the most important decisions in accounting for inventory is determining the per
unit costs assigned to inventory items. When all units are purchased at the same unit cost,
this process is simple since the same unit cost is applied to determine the cost of goods
sold and ending inventory. But when identical items are purchased at different costs, a
question arises as to what amounts are included in the cost of merchandise sold and what
amounts remain in inventory.

1. Specific identification ;-The specific identification inventory valuation method is a

system for tracking every single item in an inventory individually from the time it enters
the inventory until the time it leaves it.

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2.First-in first-out(FIFO) ;-is one of the methods commonly used to estimate the value
of inventory on hand at the end of an accounting period and the cost of goods sold during
the period. This method assumes that inventory purchased or manufactured first is sold
first and newer inventory remains unsold. Thus cost of older inventory is assigned to cost
of goods sold and that of newer inventory is assigned to ending inventory. The actual
flow of inventory may not exactly match the first-in, first-out pattern.
3. Last-in first-out (LIFO) Last-In, First-Out is one of the common techniques used in the
valuation of inventory on hand at the end of a period and the cost of goods sold during
the period. LIFO assumes that goods which made their way to inventory (after purchase,
manufacture etc.) later are sold first and those which are manufactured or acquired early
are sold last. Thus LIFO assigns the cost of newer inventory to cost of goods sold and
cost of older inventory to ending inventory account.
4. Weighted average;- This method of assigning cost requires computing the average cost
per unit of merchandise available for sale. That means the cost flow is an average of the
expenditures.

Stock card or bin card

Bin Card also is known as Stock Card or Bin Tag, is the summary of inventory
movement and the remaining balance. It is the movement that includes beginning
balance, stock receipt, stock issue, and the ending quantity. It is very important for the
warehouse to know how much stock remains just by looking at this report.

The stock keepers must write into the Bin Card every time the item move in or out of the
warehouse, and it sticks to each material bin for quick access. It contains only the
quantity of in and out movement and the balance at a specific point, which reconciles
with the physical balance otherwise it is useless.

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The internal auditors may perform surprise count on inventory by comparing the actual
quantity with a bin card. If there are any differences, it will lead to further investigation to
understand the cause, whether it is due to error or fraud.

4.8 Production Management v/s Operations Management

A high level comparison which distinct production and operations management can be
done on following characteristics:

 Output: Production management deals with manufacturing of products like

(computer, car, etc) while operations management cover both products and
services.
 Usage of Output: Products like computer/car are utilized over a period of time
whereas services need to be consumed immediately
 Classification of work: To produce products like computer/car more of capital
equipment and less labor are required while services require more labor and lesser
capital equipment.
 Customer Contact: There is no participation of customer during production
whereas for services a constant contact with customer is required.

Production management and operations management both are very essential in meeting
objective of an organization

4.9 Product Life Cycle

 The concept of the product life cycle describes the stages (or courses) a new
product goes through in the market place.
 In other terms, product life is the course of product’s sales and profits over its
lifetime.
 A new product progresses through five distinct stages: introduction, growth,
maturity, decline and recycling.

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  The product life cycle has an impact on the marketing strategy and the marketing
mix.

Introduction stage
 In this stage, the entrepreneur seeks to build product awareness and develops a
market for the product.
 The impact on the marketing mix is as follows:
– Product branding is established
– Pricing may be low to build up market share rapidly
– Distribution (Place) is selective until consumers show acceptance of the
product
– Promotion is aimed at product awareness and to inform potential consumers
about the product.
Growth stage
 In this stage, the firm seeks to build brand preference and increase market share.
– Product quality is maintained and additional features may be added.
– Pricing is maintained or increased when the demand is high
– Distribution is diversified
– Promotion is aimed at a broader audience
– Promotion is extended to broader public
Maturity stage
 At maturity, the strong growth in sales diminishes. There may be competition with
similar products. The primary objective is to defend the market share and to
maximize profit
– Product features may be enhanced to make the difference with competitors
– Pricing may be decreased due to competitors
– Distribution needs to be extended and incentives offered
– Promotion will emphasize product features

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Decline stage
 As sales decline the entrepreneur has different options
– Maintain demand for the product by adding new features
– Reduce costs and prices and continue to offer the product
– Stop producing the product.
Recycling
 At the end of the lifetime of any product the product or part of it can be recycled.
– At any time in the life cycle once the product reaches the end of its lifetime
the product might be collected back by the producer.
– The entire product or part of it can be reused in the production process as
recycled raw material
– Recycling can reduce costs and prices and helps to continue to offer the
product

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4.10 What Is Quality Control?
Quality control (QC) is a process through which a business seeks to ensure that product
quality is maintained or improved. Quality control requires the business to create an
environment in which both management and employees strive for perfection. This is done
by training personnel, creating benchmarks for product quality and testing products to
check for statistically significant variations.

Understanding Quality Control

Quality control involves testing of units and determining if they are within the
specifications for the final product. The purpose of the testing is to determine any needs
for corrective actions in the manufacturing process. Good quality control helps
companies meet consumer demands for better products.

Quality testing involves each step of the manufacturing process. Employees often begin
with the testing of raw materials, pull samples from along the manufacturing line and test
the finished product. Testing at the various stages of manufacturing helps identify where
a production problem is occurring and the remedial steps it requires to prevent it in the
future.

The quality control used in a business is highly dependent on the product or industry. In
food and drug manufacturing, quality control includes ensuring the product does not
make a consumer sick, so the company performs chemical and microbiological testing of
samples from the production line. Because the appearance of prepared food affects
consumer perception, the manufacturers may prepare the product according to its package
directions for visual inspection.

In automobile manufacturing, quality control focuses on the way that parts fit together
and interact and ensuring engines operate smoothly and efficiently. In electronics, testing
might involve using meters that measure the flow of electricity.

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The Techniques of Quality Control
There are several methods of measuring the performance of quality control. A quality
control chart is a graphic that depicts whether sampled products or processes are meeting
their intended specifications—and, if not, the degree by which they vary from those
specifications. When each chart analyzes a specific attribute of the product it is called a
univariate chart. When a chart measures variances in several product attributes, it is
called a multivariate chart.

Randomly selected products are tested for the given attribute or attributes the chart is
tracking. A common form of a quality control chart is the X-Bar Chart, where the y-axis
on the chart tracks the degree to which the variance of the tested attribute is acceptable.
The x-axis tracks the samples tested. Analyzing the pattern of variance depicted by
a quality control chart can help determine if defects are occurring randomly or
systematically.

The Taguchi Method of quality control is another approach that emphasizes the roles of
research and development, product design, and product development in reducing the
occurrence of defects and failures in products. The Taguchi Method considers design to
be more important than the manufacturing process in quality control and tries to eliminate
variances in production before they can occur.

The Role of Quality Control Inspectors

Quality control inspectors protect the consumer from defective products and the company
from damage to its reputation due to inferior manufacturing processes. If the testing
process reveals issues with the product, the inspector has the option of fixing the problem
himself, returning the product for repairs or tagging the product for rejection. When
issues arise, the inspector notifies supervisors and works with them to correct the
problem.

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LESSON 5:-MANAGING COST AND PRICING
Training Objectives:
By the end of this module, learners will be able to:
 Indentifying the concept of cost and price
 Applying the concept cost and price in service or manufaricng business

5.1 Costs

 Costs are resources consumed or used to produce a unit of product or service

 Every business generates costs, even if there is no ongoing production, service or

trading activities.

 To understand this, it is essential to know that there are direct costs and indirect
costs.

Direct and Indirect Costs

A. Direct costs:

 are those that only arise when an enterprise is manufacturing goods or

producing a service or buying goods to resell. These costs depend directly
on the number of products, services or goods produced.

 are composed of two cost sub-groups:

1. Direct material costs:

• Expenditures for all items that become part of a product, or are used to
produce a service, or are bought for resale, enter into the category of
direct material costs.

• Costs linked to the acquisition of raw materials, such as transport, are

included in the direct costs

2. Direct labor costs:

• All wages for workers and helpers that are directly involved in the
production or the delivery of services.
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 • This also includes costs for social security.

• Staff wages for the retailer and wholesaler are not considered as
direct costs because one person generally sells many different items.

B. Indirect Costs (overhead cost) ; cost that is not directly to the product

Total cost of a product or service:

Sum of Direct Material Costs

+ Sum of Direct Labor Costs

+ Proportion of Indirect Costs

= Total cost per product or service

5.2 pricing
Price is the main factor, which affects the sales organization. A good price policy is of
great importance to the producers, wholesalers, retailers and the consumers. If the prices
are too high, only a few buyers purchase and if the prices are low, several buyers
purchase. Thus market may be reduced or increased. Therefore, a sound pricing policy
must be adopted to have maximum sales. Prices play an important role in the economy.
The time within which the product is sold varies. The goods, which are of perishable
nature and have frequent changes of style, may not be stocked for a long time. In the case
of durable goods, they can be stocked for a longer time, in the hope of getting favorable
price. Holding the stock depends upon the financial resources of the farmer, middlemen,
wholesaler etc., and the perishable nature of goods.
What is Price?
Price may be defined as the exchange of goods or services in terms of money. Without
price there is no marketing in the society. What you pay is the price for what you get.

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Importance of Price
The market price of a product influences wages, rent, interest and profits. The price is a
matter of great importance to the buyer and the seller. Exchange of the goods or services
takes place only when the seller and the buyer agree upon the prices. Price can decide the
success or failure of a business organization. The marketing demand for a product or
service to a large extent depends upon the price of the product. Price will affect the
competitive position and share of the market.
Pricing Objectives
To perform the marketing job efficiently, the management has to set goals first. Before
determining the price itself, the management must decide the objectives of pricing. The
main goals in pricing may be classified as follows:
Factors affecting price
Price moves up: reasons
1. There is more demand but less supply.
2. There are weak competitors.
3. Sellers hold up goods for higher price.
4. There is increase in wages but not in productivity.
5. Factors of production are used inefficiently.
6. Buyers are eager to buy.
7. Goods are non-perishable by nature.
How to price your product

1. Add up your variable costs (per product)

2. Add a profit margin
3. Don't forget about fixed costs

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There are three straightforward steps to calculating a sustainable price for your product.

1. Add up your variable costs (per product)

First and foremost, you need to understand all of the costs involved in getting each
product out the door. If you order your products, you’ll have a straightforward answer as
to how much each unit costs you, which is your cost of goods sold.

If you make your products, you’ll need to dig a bit deeper and look at a bundle of your
raw materials. How much does that bundle cost, and how many products can you create
from it? That will give you a rough estimate of your cost of goods sold per item.

However, you shouldn’t forget the time you spend on your business is valuable, too. To
price your time, set an hourly rate you want to earn from your business, and then divide
that by how many products you can make in that time. To set a sustainable price, make
sure to incorporate the cost of your time as a variable product cost.

Here’s a sample list of costs you might incur on each product.

Cost of goods sold birrr3.25

Production time birrr 2.00
Packaging birrr 1.78
Promotional materials birrr 0.75
Shipping birrr 4.50
Affiliate commissions birrr 2.00
Total per-product cost birrr 14.28
In this example, your total per-product cost is birr 14.28.if you add your profit margin
the price of 20%these products cost so the price of the product Birr 16.86

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 Wondering what kind of promotional materials you might need for your products? One of
the most common ones in an ecommerce context is marketing materials or additional
gifts to level up your un boxing experience.
2. Add a profit margin
Once you’ve got a total number for your variable costs per product sold, it’s time to build
profit into your price. Let’s say you want to earn a 20% profit margin on your products
on top of your variable costs. When you’re choosing this percentage, it’s important to
remember two things.

1. You haven’t included your fixed costs yet, so you will have costs to cover beyond just
your variable costs.

2. You need to consider the overall market, and make sure that your price with this margin
still falls within the overall “acceptable” price for your market. If you’re 2x the price of
all of your competitors, you might find sales become challenging depending on your
product category.

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LESSON 6:- STRATEGY OF BUSINESS EXPANSION
Training Objectives:
By the end of this module, learners will be able to:
 Define business expansion concepts.
 Applying product development strategies in business

Business expansion - Business Expansion is a stage where the business reaches the point
for growth and seeks out for additional options to generate more profit. Different forms
of business expansion include opening in another location, adding sales employees,
increased marketing, adding franchisees, forming an alliance, offering new products or
services, entering new markets, merging with or acquiring another business, expanding
globally and expanding through the internet.
6.1. Product development strategy

Product development strategy is the process of bringing a new innovation to consumers

from concept to testing through distribution. When existing business revenue platforms
have plateau, it is time to look at new growth strategies. New product development
strategies look at improving existing products to invigorate an existing market or create
new products that the market seeks. The steps involved in product development are
similar in each type of strategy.

Improve Existing Products

Improving existing products is an efficient method for product development. It is not as

expensive as creating a new product because a lot of the time and resources were already
devoted to creating the original product. Businesses then take feedback from consumers
and find ways to improve upon products. .

The technology industry is well known for this. Think about the latest version of your
Smartphone or desktop operating system; the foundation was created in a previous
version. Sometimes there are 10 previous versions, each building on the one before.

35
Across all Industries

However, improving existing products is not limited to any one industry. Exercise
equipment rolls out new models. Even pen manufactures find ways to improve ink flow
and reduce smudging, making the product better. The goal of improving a product is to
take an already successful product that consumers love and use, and then improve the
product to maintain, or increase, the competitive advantage.

Create New Products

Innovative new products are risky because you don't know how consumers will respond
to something new. This is why developing the product properly is imperative. New
products enter into the market all the time. Large corporations are constantly developing
new products.

The evolution of home deodorizers started with candles and air fresheners to plug-in wall
diffusers. Each was a new product intended to improve upon older, less effective
methods.

Bringing New Products to Market

Crowd funding, infomercials and television shows such as Shark Tank encourage
inventors to bring innovations to market. One such product was a bee box with a spigot
that enabled honey to be collected more easily. New products require that the maker
identify a need and then develop a solution to make life easier, safer or more enjoyable.

The Steps in Product Development

Whether you're improving an existing product or innovating a completely new product,

follow a process to ensure you are creating a product that consumers will buy and use.
Identify the need. If this is an existing product that needs improvement, there may have
been an oft-reported problem with the product. Creating a new product often results from
hearing common complaints about a similar issue.

36
For example, tablets were created because people enjoyed the convenience of smart
phones but wanted a larger yet portable platform to work on.

Develop Prototypes Based on Research

Survey the market and develop a prototype based on the collected data. Find out what
people like and don't like about an existing product. Determine if any patterns exist for
consumers that are showing a trending problem.

For example, vacuums have become more nimble with articulating joints, because
consumers reported that they did not like heavy vacuums that were difficult to maneuver.
Once prototypes exist, develop a financial plan for scaling production and establishing
the target market with reasonable sales estimates.

6.2. Market penetration

Market penetration refers to ways or strategies that are proposed or adopted so as to be

able to create a niche in the already existing market. Although it can be performed
throughout the business's life, it can be especially helpful in the primary stages of set up.
It helps establish the businesses current station and which direction it needs to expand in
to achieve market growth. Successful outcomes stem from careful monitoring by key
staff and leaders. Timing is key to a successful market growth; this can be dependent on
the overall market welfare, the business's competitors and current events. Questions,
brainstorming and discussions can help distinguish whether it is the best time for market
growth. These can include questions surrounding market share increases or decreases.
Sales can be declining but shows opportunity for the business, it could be the perfect time
to make alterations so as to grow market share.

A few different options for market penetration are as followed

 Developing a new marketing strategy to entice more customers to purchase or

continue purchasing.

37
 Become price competitive as a swaying factor for customers to choose a product or
service over another company.
 Use special promotions or offers to grab attention.
 Utilized the Boston Matrix to decipher which product or service benefits further
investment and time and which can be disregarded.
 Purchase a competitors company (in mature markets) to expand market share.

customers there are that would be susceptible to a product. To this end Charles Hill came
up with a five step system to understanding advertising's influence on the market.

1. Identify the demographic most suited to a product. Even though other

demographics may use a product it is about identifying the largest demographic so
that the majority of advertising is tailored to them. (e.g. candy for children, salad
for adult woman who may be dieting)
2. Decide upon the area in which they live. Location is important and wholly
depends on the reach of a brand. If a company operates at a national level, then
the entirety of the country will have to be averaged to reach the largest number of
people. The smaller the area the more specific one can be about the people of each
demographic within it.
3. Knowing the size of the market is integral to understanding market
penetration.
4. Understanding competitors market penetration. What benchmark should one
go for? Based on the penetration that other products have reached, calculate the
number that should be reached in the demographic by multiplying the total
number of the demographic by whatever the percentage that other products are
reaching.
5. Calculate the number of customers that a business needs to sell to too earn a
profit and then compare that to the number other competitors are reaching; if the

38
 business does not make a profit with average market penetration, it's time to
rethink the business strategy.

Market penetration is a tool for understanding potential earnings of a business and is

integral to calculating a resourceful business model.

6.3. Market development strategy

Market development;- is a growth strategy that identifies and develops new market
segments for current products. A market development strategy targets non-
buying customers in currently targeted segments. It also targets new customers in new
segments.

A market development strategy entails expanding the potential market through new users
or new uses. New users can be defined as: new geographic segments, new demographic
segments, new institutional segments or new psychographic segments. Another way is to
expand sales through new uses for the product. A marketing manager has to think about
the following questions before implementing a market development strategy: Is it
profitable? Will it require the introduction of new or modified products? Is the customer
and channel well enough researched and understood?

In high tech, where discontinuous innovation is the norm, a successful market

development strategy requires crossing the chasm between the early market and the
mainstream

6.4. Product diversification

Product diversification is the practice of expanding the original market for a product.
This strategy is used to increase the sales associated with an existing product line,
which is especially useful for a business that has been experiencing stagnant or
declining sales. There are a number of ways to engage in product diversification,
including the following:

39
 Repackaging. The manner in which a product is presented can be altered to make it
available to a different audience. For example, a household cleaning product could be
repackaged and sold as a cleaning agent for automobiles.

 Renaming. An existing product could be renamed, perhaps along with somewhat

different packaging, and sold in a different country. The intent is to remain true to the
original purpose of the product, but to adjust it to match the local culture.

 Resizing. A product could be repackaged into a different size or standard selling

quantity. For example, a product normally sold as a single unit could be packaged
into a quantity of ten, and then sold through a warehouse store.

 Reprising. The price of a product can be adjusted, along with other improvements, to
reposition it for sale through a new distribution channel. For example, a watch
movement could be inserted into a platinum casing and sold through jewelry stores,
rather than its original positioning as a sport watch.

 Brand extensions. It may be possible to extend an existing brand at the low or high
end, or fill in a hole somewhere in the middle of the product line. For example, a car
company decides to build a sports car that is positioned at the top end of its product
line.

 Product extensions. It may be possible to sell several versions of the same product,
perhaps by adding additional features or by offering the product in different colors.
For example, a smart phone may be offered in several colors.

Product diversification can be expensive, especially when launching it broadly in a

new market. Consequently it can make sense to launch in several test markets to
determine customer acceptance before rolling out a new concept more broadly.

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 6.5. Increasing Market Share

If you're an expert in your industry, but not necessarily in business, increasing your
market share might sound kind of intimidating, but it's not as complicated as it seems.
You likely maintain relationships of some kind with your current customers. Increasing
your market share is about nurturing those relationships and creating new ones. If you
can maintain personal relationships and enjoy a good conversation with your customer,
you already have what you need to learn the skills necessary to increase your market
share.

For instance, imagine a customer who comes into your nail salon after a particularly
stressful week at home and on the job. Your services are the much-needed relief she has
been hoping for and she shares all that has been happening, thankful for a willing
listening ear. As you listen, you take particular care to pamper her, maybe throw in a
complimentary moisture treatment for her hands, offer to book her next appointment
before she leaves and hand her a discount card for her to share with a friend.

Your customer has formed an emotional bond with you and your services that will
cause her to come back and tell her friends about you, therefore increasing your market
share. Repeating this scenario time and again as a standard of practice helps build
stability into your growing business as it gains ground in the local market.

Winning Market Shares over Competitors

When your competition is ahead of you in market share, it takes being intentional to
gain market share reliably over time. This isn't an overnight process, but it's one that's
doable, especially when you map out a plan with your business leaders and managers so
that you can work together. Here are some things to consider:

 Innovation: Apple is the market leader over many other cell phone manufacturers
largely because of their innovation and determination to come up with new ideas that
41
 nobody else has thought of. To gain market share in your industry, focus on thinking
the way nobody else is thinking and hiring creative people. Give your workforce regular
space in their schedules to be creative and think up new ideas.
 Customer satisfaction: Chick-fill-A is the market leader in customer satisfaction
because they're intentional about creating a unique customer experience. When you pull
up to the drive-through, you're greeted by people with tablets who are ready to take
your order with a smile and a, "My pleasure!" They handle large crowds with efficiency
and quality. In your industry, think of ways you can make your customers feel cared
for, remembered and treasured. This could be as simple as polite language, a well-timed
message or a faster check-out time than the competition.

 Acquisition: Sometimes the competition isn't performing as well as they hoped and
they get into a bit of hot water. You can gain market share through acquiring the
competition. For instance, AT&T acquired Time Warner in its march toward a higher
market share in multimedia services. When you acquire your competition, it's important
not to acquire all the competition so as to create a monopoly.
6.6. Advertising
Today’s business is of mass production and mass distribution. Various producers take
similar products to the market. This involves tough competition among the producers.
Companies adopt various means to remain in the market. All businessmen aim to make
profit by increasing the sales. The public must know when we manufacture good quality
products or offer expert services, these. For this, mass communication is needed as the
population is large or the market area is wide. We can adopt sales promotion and
advertising as tools for marketing. In the present business world, suitable publicity is
done through advertising, which is adopted by almost all types of companies.
Therefore, advertisement is a method of publicity.

42
What is advertising?
Advertising is the activity by which visual or oral messages are addressed to the general
public. Its purpose is to inform or influence them in order to increase the sales of the
advertiser. It is done with a view to sell the goods or services offered by the advertiser.
The success of advertising greatly depends upon effective advertising program

Objectives of Advertising
Personal selling and other forms of promotion are supported by advertisement. It is the
main objective.

The long term objectives of advertising are concerned with the achievement of the
company’s over-all objectives. Some of these are as follows:

o To do the entire selling job;

o To introduce a new product;
o To build brand preference;
o To remind users to buy the product;
o To meet competitors’ advertising;
o To increase sales in off-season;
o To introduce price deal;
o To describe the assistance offered by the company;
o To increase market share;
o To convince people about the changes in prices;
o To educate the buyers;
o To announce the location of distributors, retailers etc.;
o To invite enquiries;
o To make special offers.

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Functions of Advertising

 Increasing the number of customers

 By increasing the customers and widening the market;
 By developing brand loyalty;
 By focusing the qualities of the product in a better way than other similar
products.
 Increasing the consumption rate among the present customers
 By explaining the multiple use of the product;
 By reminding the customers about the products;
 By educating the public about the product, its uses, advantages etc
6.7. Developing new product

Develop new products and services

New products and services are the lifeblood of all businesses. Investing in their
development isn't an optional extra - it is crucial to business growth and profitability.

But embarking on the development process is risky. It needs considerable planning and
organization.

This guide will outline the key stages in the lifecycle of products and services so you
know when the time is right for your business to start the development process.

It will explain how a planned and phased development process will help you make the
wisest investment and budgeting decisions. It will also advise you on how best to create a
development team and manage a project.

A. The lifecycle of products and services

44
 B. Developing your ideas
C. Match products and services to market needs
D. Pricing your proposed service or product
E. The project development process
F. Creating a project team
G. Investment and cost control
H. Manage a development project

6.8. Entering new market

How to enter new market?
1. Commit
It is of foremost importance to clearly identify who you will be selling to. This may
sound simple, but there is often an overly optimistic need to capture a larger share of a
new market. A smaller market will make it easier to assess customer requirements and
ensure that a larger chunk of a smaller market is obtained rather than an insignificant part
of a large share. It is also imperative to set a clear timeframe within which the desired
target share is to be achieved and results of the move are to be

2. Identify Entry Points

Once a clear market is identified, it is necessary to identify potential points of entry. To
minimize initial investment and maximize future revenues it becomes vital to study key
possible entrance points, weigh pros and cons of each and then make an informed
decision. The final choice should also ideally allow for future growth possibilities, both
inside the new market as well as into adjoining ones. Any entrance point chosen should
be assessed against a set of criteria, such as, does it allow access to an underserved
market? Is there a strong need that can be fulfilled? Are the key decision makers among
the target audience accessible and do they have the funding needed to find the new
solution attractive? Are there any existing competitors and is the new solution strong
enough to counter their resources and knowledge of the market?

45
3. Define Market Entry Strategy
All the activity thus far leads right into the roadmap for future steps – the strategy for
entry into the market. The first step is to price your product. It needs to strike a balance
between affordability for the target audience and feasibility for the business. It also needs
to take into consideration existing pricing strategies and how to place the new product
within them. Once the price points are defined, the new product or solution can now be
positioned accordingly. How do you want to be perceived by the customer? With this
target perception in hand, the communication strategy comes into play, where the target
audiences as well as the methods to be used to reach them are identified and consolidated.
All levels of the target audience need to be considered carefully, including influencers,
decision makers, media, end users among others. And once all this is carefully set in
place, the distribution model is designed which is the most effective means of putting the
product into the user’s hands.

4. Assemble Plan

Any strategy needs to be followed up with a detailed action plan. This turns a high level
plan into an on-ground implementation solution. This should include details of all
required marketing plans and campaigns as well as timelines for all these to be set into
motion. Clearly defined milestones such as sales targets, market share etc need to be
decided upon with all the key stakeholders. All campaigns and targets need to be
communicated to the relevant personnel and clear ownership needs to be assigned for
each of these processes to ensure transparency in evaluations. Processes also need to be
defined and communicated for all activities such as what will be the sales cycle followed
and how will leads be pursued and closed.

5. Research
A well planned approach following the steps above should ensure that your risk is
minimized. But to further strengthen and support the plan, some basic research can be
carried out on a focus group. Identifying a well-balanced cross section of the target

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audience and approaching them either in person or via an online survey can help provide
some basic results that can provide data to make any changes before a full market entry is
committed to.

6. Test
Another risk mitigation strategy is to run a pilot project in the target market. This test
needs to be carefully defined so as to ensure that it is big enough to give an accurate
depiction of a large scale roll out effort but not so big as to suck in additional resources
and commitment. By reaching a few key milestones in the pilot study, any remaining
issues can be ironed out before full deployment.

7. Ramping Up
You are now ready for a full scale roll out. Armed with a concrete strategy, a detailed
plan of action and results of research and pilot phases, it is now time to grow and try to
achieve more market share. The goal should be to target increased market share and not
just increased revenues. A focus on market share will mean increasing both marketing
and sales efforts simultaneously. As you sell more, the easier it will to sell because there
will be more visibility of your brand in the market and general buzz about the new player

8. Exit Strategy
The last but extremely important step of this process is to plan for both success and
failure. What will you do if you achieve phenomenal success? You could commit for the
long term or sell while you’re ahead and move on to new markets. Or if you fail to
achieve the milestones set in the specified time, will you try to learn and continue or cut
out before further resources and time are wasted. In any case, a timely move can only be
made if a plan is already in place.

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 LESSON 7:-MAINTAIN FINANCIAL RECORDS AND USE FOR DECISION
MAKING
Training Objectives:
By the end of this module, learners will be able to:
 Know the concept finical records
 Applying financial records for his business

1.1. Concept of business record

Business record;-is a document (hard copy or digital) that records a business dealing.
Business records include meeting minutes, memoranda, employment contracts,
and accounting source documents.

A personal account will hold an individual’s personal money and will likely offer
various different features to help manage this.
A business bank account by comparison will hold and organize your finances, either in
the form of a limited company or a sole trader.

1.2. Objective and Benefits of Financial Records

 To provide useful information to the users of financial reports. The information

should be useful from a number of perspectives, such as whether to provide credit to
a customer, whether to lend to a borrower, and whether to invest in a business. The
information should be comprehensible to those with a reasonable grounding in
business, which means that it should not be laced with jargon or burdened with so
much detail that it is impossible to extract the essentials about a business from its
financial statements.

 To provide information about the cash flows to which an entity is subjected,

including the timing and uncertainty of cash flows. This information is critical for
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 determining the liquidity of a business, which in turn can be used to evaluate whether
an organization can continue as a going concern.

 To disclose the obligations and economic resources of an entity. There should be an

emphasis on the changes in liabilities and resources, which can be used to predict
future cash flows.

7.3 Source document

Definition: A source document, often called business paper, is the document produced
with each business event and used to record every business transaction. In other words,
it’s a physical or electronic document that lists the details of a transaction and is used by
the accounting department to journalize accounting information.

What kinds of records should a small business keep?

A. Payroll.

The owner must know the amount paid to him or herself and to employees.

B. Cash Balance.

The owner must know how much cash is available at any given time to determine if bills
can be paid. Money comes into and goes out of the firm every day, but without records
entrepreneurs would not know what they can afford.

C. Accounts Receivable.
 Under certain conditions, the owner extends credit to some customers.

 They are important records. Without them, how would the owner know when to
bill and for how much? When to discontinue credit

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D. Accounts Payable.

The amount of money owed by a business to others (such as suppliers) is called

accounts payable. These bills need to be paid on time for two reasons:

(1) Sometimes by paying a bill on time you will receive a cash discount, and

(2) You must maintain a good reputation in relation to those with whom you do
business. Without accurate records you may make mistakes.

E. Inventory Records.
Even in a small retail business, an owner must have control of inventory. What
products are selling? What products aren’t moving?

Is there a good supply on hand? Entrepreneurs can keep some of this information
in their head, but not enough to do the kind of job necessary to make a profit
F. Government Requirements.

The owner must file financial statements for tax purposes. Taxes are calculated
on the profit a business earns. Even a small retail business must file certain
reports.

Who should be responsible for keeping the financial records?

A. Keeping the records yourself.

B. Assigning an assistant.

C. Hiring a full-time bookkeeper.

D. Contracting the service out.

E. Accounting department.

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7.2 . Financial Statement
1. The Balance Sheet(Position)statement
 The balance sheet is a financial statement which indicates what you own and what
you owe on any given day in the life of a business.
 It can be calculated at any time and is designed to give a “snapshot” of the
financial condition of the business.
 The financial figures on the balance sheet change from day to day because money
is always coming in and going out of the business.

Basic Balance Sheet Equation

Asset =Liabilities + Owners’ Equity

(Economic (Economic Obligations) (Net Assets)
Resources)

2. Income/Profit and Loss Statement

 Revenues less Expenses = Net Income
 Also called the Statement of Earnings
 It helps to determine whether a business is operating at a profit or a loss for a
given time period of one month to one year.
 It is calculated for a specific time period, such as a month, three months, six
months or a year.
 The more frequently you calculate your profits and losses, the sooner you will
know the financial position of the business.
 Comparative financial statements enable users to analyze performance over
multiple periods and identify significant trends.

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  Income reported on income statement is based on Accrual Accounting, all
revenues earned in the year & all expenses incurred in that year (NOT on the cash
generated or cash paid during accounting period)
 Income Statement may be presented in the multi-step or single step form.
 Single-step
 All operating revenues and gains are reported first, followed by all
operating expenses and other losses.
 No separate section is prepared for COGS and gross profit.
 Multiple-step
 Divided into separate sections, various subtotals are reported.
 It has more detail and is more useful
 Involves separate sections for gross profit, operating income, other
income/losses, income before income taxes, and net income..

Net Sales
 Less: Cost of Goods Sold (COGS): COGS is the price paid by the business for
merchandise sold; it can be computed by adding the value of the goods purchased
during the period to the initial stock and then subtracting the value of the stock on
hand at the end of the period.
 If purchased, then price plus freight-in.
 If manufactured, then DM, DL, Manufacturing Overhead.
 The relationship between COGS and sales is an important one.
 = Gross Profit/gross profit on sales/gross margin
 The excess of the net sales over the COGS.
 Calculated by subtracting the cost of goods sold from sales.
 It is called gross because operating expenses must be deducted from it.
 Key analytical tool in analyzing firm’s operating performance.
 Gross profit percentage equals

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Gross profit/Sales
Gross Profit = Net Sales - COGS

 Less: Operating Expenses: Operating expenses of a business may be grouped

into two categories: selling and administrative
 Selling Expenses: expenses that are incurred directly and entirely in
connection with the sale of merchandise.
Example: Advertising expenses, Salesmen’ salaries, store supplies used, etc..
 General and Administrative Expenses: expenses incurred in the
administration or general operations of the business.
Office and officer salaries Payroll taxes
Depreciation expense Repairs &maintain ace
Insurance expense Rent expense
Lease expense Bad debt expense
Research and Development Supplies
 Expenses that are partly connected with selling and partly connected with the
administrative operations of the business may divided between the two categories.
 In MSEs such expenses as rent, insurance, and taxes are commonly reported as
administrative expenses.
 = Operating Income (or Operating Profit or Income from Operations)
 The excess of gross profit over total operating expenses.
 Measures overall efficiency of management and the degree of profitability of an
enterprise.
 If operating expenses are greater than the gross profit, the excess is loss from
operations.
Operation Income = Gross Profit – Operating Expenses

 Operating Income

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  +/- Other Income/Expense
 Other income: Revenue from sources other than the principal activity of a
business is classified as other income or non-operating income.
 Example: In small business this category includes income from interest,
rent, dividends, and gains resulting from the sale of plant assets.
 Other expenses: expenses that cannot be associated definitely with operations are
identified as other expenses, or non-operating expense
• Example: interest expense that results from financing activities and losses
incurred in the disposal of plant assets
 + Other Income
Interest income
Gain from sale of equipment
Gain from sale of investments
o - Other Expense
Interest expense
Loss from sale of equipment
Loss from sale of investments
Loss from write-down of inventory
 If the total of other income exceeds the total of other expenses, the difference is
added to income from operations.
 If the reverse is true, the difference is subtracted from operations.

EBIT = Operating Income + Other Income – Other Expenses

 Earnings Before Income Taxes (EBIT)

 Less: Income Taxes
 Net Earnings or Net Income

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  The final figure on the income statement is labeled net income (or net loss).
 It is the net increase (or net decrease) in owner’s equity as a result of profit
making activities.

Net Income = EBIT – Income Taxes

Income Statement Format

3. Statement Owners’ Equity

This is a statement that summarizes the changes in owner’s equity for a specific period of
time. The heading of this statement identifies the company, the type of statement, and the
time period covered by the statement. The time period is the same as that covered by the
income statement and therefore is dated “For the Month Ended September 30, 200x.”
The beginning owner’s equity amount is shown on the first line of the statement. Then,
the owner’s investments, net income and the owner’s drawings are identified in the
statement.

The information provided by this statement indicates the reasons why owner’s equity has
increased or decreased during the period

Statement of Owner’s Equity = Big. Capital, + Investment + Net Income - Drawi

4. Cash Flow Statement
Basic Concepts Cash Flow
 Reports the entity’s cash flows (cash receipts and cash payments) during the
period.
 Money is either coming into the business as a debit (+) in the cash book or is
going out of the business as a credit (-). The current balance represents how much
money the business has on hand.
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  Cash that flows into a business is in most cases cash from sales of products, goods
or services.
 There are also other inflows of cash that could come from bank credits or
overdrafts, or selling of old equipment, and so on.
 Cash that flows out of the business is mainly payment of salaries, operational
costs, capital costs and so on.
 Cash flow plan is an instrument that allows the entrepreneur to estimate how much
cash is expected to enter the business and how much has to be paid out every
period of time.
 Cash flow plan helps a businessperson to avoid her/his business running out of
cash.

What is Cash?
 Cash on hand
 Cash in the bank
 Cash equivalents - highly liquid, short-term investments that can be converted into
cash with little delay
 Money-market investments
 Ethiopian Government Treasury bills
Purposes of the Statement of Cash Flows
1. Predict future cash flows based on the cash that flows into the business and the
cash that flows out of the business.
2. Shows where cash came from and how it was spent
3. Evaluate management decisions
4. Reports why cash increased or decreased during the period
5. Determine the ability to pay dividends to stockholders’ and payments to creditors
6. Communicating link between the Income Statement and cash reported on the
Balance Sheet

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Basic Form of Cash Flow Statement
 Cash Flow From Operating Activities
 Cash Flow from investing activities
 Cash Flow from financing activities
 Total (positive or negative) cash flow is added to beginning cash balance and
should result in ending cash balance
o Flow from Operating Activities
 The cash flow from operating activities section includes cash transactions that
enter into the determination of net income.
 Includes:
 Current assets
 except marketable securities and short term notes receivable which
are investing
 Current Liabilities
 except short term notes payable which are financing
 Revenue and Expenses (includes interest expense and revenue, and
dividends received)
o Flow from Investing Activities
 The cash flows from investing activities section reports the cash transactions for
the acquisition and sale of relatively long term or permanent type assets.
 Includes:
 Long-term investments; example acquisition of land.
 Short-term and long term notes receivable
 Property, Plant and Equipment (depreciation affects operating activities)
 Intangible Assets
o Flow from financing Activities

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 The cash flows from financing activities section reports the cash transactions
related to cash investments by the owner, and borrowings and cash withdrawals of
the owner.

 Includes:
 Short-term and long-term loans
 Sale of capital stock and paid in capital in excess of par
 Retained earnings (net income aspect is operating)
 Dividends paid (cash withdrawal by owner)
 Increasing or Decreasing Flow of cash
 Increasing cash inflow through:
 increasing sales
 giving less customer credit
 using a bank overdraft
 selling an investment item
 asking a friend for money
 Decreasing cash outflow though:
 reducing operational costs
 identifying a cheaper supplier
 negotiating supplier credit
 negotiating an extension of the loan period
 making a planned investment late

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Lesson 8;-Customer Handling and conflict management
Training Objectives:
By the end of this module, learners will be able to:
 how he handle his customers
 knowing and applying conflict management tecqiunies
8.1 What is the meaning of customer handling?
Types of customer
five Main Types of Customers

In the retail industry, customers can be segmented into five main types:

1. Loyal customers: Customers that make up a minority of the customer base but generate a
large portion of sales.
2. Impulse customers: Customers that do not have a specific product in mind and purchase
goods when it seems good at the time.
3. Discount customers: Customers that shop frequently but base buying decisions primarily
on markdowns.
4. Need-based customers: Customers with the intention of buying a specific product.
5. Wandering customers: Customers that are not sure of what they want to buy.

The ability to effectively handle customer complaints and problems is vital for your
customer service associates. Though providing outstanding service throughout the
selling process is beneficial, customers who do complain and get their problem
effectively solved often develop a strong emotional loyalty to a business.

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Customer Service Basics
Introduction to Customer Service “There is only one boss, and whether a person shines
shoes for a living or heads up the biggest corporation in the world, the boss remains the
same. It is the customer! The customer is the person who pays everyone’s salary and
who decides whether a business is going to succeed or fail. In fact, the customer can fire
everybody in the company from the chairman (CEO) on down, and he can do it simply by
spending his money somewhere else. The Three Key Elements about customer
Who are Your Customers? Customers, buyers and clients want to pay a fair price for
quality service or products, and feel satisfied they have paid for a service/product and
received what they have paid for in return. They also want someone to take care of them.
They need someone to understand their needs and help answer them. They need someone
to hold their hands and walk them through a process. Customer service starts with the
ability to listen to the customer and find out through polite questioning what he/she needs
or wants.

Develop a Customer Friendly Approach One commonality among all companies or

organizations that provide good service is the development of a system and attitude
promoting customer friendly service. By “customer friendly” we mean viewing the
customer as the most important part of your job. The cliché, “The customer is always
right” is derived from this customer friendly environment. Two critical qualities to the
“Customer Friendly Approach”: • Communications and Relationships The two main
tasks of successful customer relations are to communicate and develop relationships.
They don’t take a huge effort, but don’t happen instantaneously either. Positive
dialogue/communication with your customers and developing ongoing relationships with
h your customers are perhaps the two most important qualities to strive for in customer
service.
The professional qualities of customer service to be emphasized always relate to what the
customer wants. After years of polling and market research, it turns out customers are

60
constantly internalizing their customer service experience. What this means is they are
grading your customer service during each transaction but you rarely know it. While
there are a multitude of customer needs, six basics needs stand out:
• Friendliness – the most basic and associated with courtesy and politeness.
• Empathy – the customer needs to know that the service provider appreciates their
wants and circumstances.
• Fairness – the customer wants to feel they receive adequate attention and reasonable
answers.
• Control – the customer wants to feel his/her wants and input has influence on the
outcome.
• Information – customers want to know about products and services but in a pertinent
and time-sensitive manner.
It is also very important for customer service employees to have information about their
product or service. Service providers who answer, “I don’t know” or “It is not my
department” are automatically demeaned and demoted in the mind of the customer. These
employees can end up feeling hostile as well as unequipped. Customers want
information, and they disrespect and distrust the person who is supposed to have
information but does not.
Good Information is Often Good Service Employees need to be empowered to satisfy
customers. Employees will give bad service to customers if they themselves receive bad
service and little feedback from their managers and supervisors. Remember: external
customer service starts with internal customer service.
Simple Actions Huge Returns
• Customers will spend up to 10% more for the same product with better service.
• When customers receive good service they tell 10-12 people on average.
• When customers receive poor service they tell upwards of 20 people
.• There is an 82% chance customers will repurchase from a company where they were
satisfied.

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• There is a 91% chance that poor service will dissuade a customer from ever going back
to a company. It is often not what you articulate but how it is presented. What you wear
and how you express yourself has a lot to do with how what you say is received. Have
you ever noticed how a person who is dressed-up, even in older or out-of-style clothing,
always commands more authority and respect? The impression they make and what they
have to say is enhanced by their personal presentation, facial and hand gestures, as well
as the substance of what they have to say. As it turns out, substance is only part of the
equation of being persuasive and influencing perception.
• Smiling – there is nothing like a smile and pleasant face to greet a customer, especially
if he/she has a complaint. A smile and polite conversation can immediately disarm a
disgruntled customer. Facial expression sets a positive tone before you even begin
speaking. A relaxed or pleasant facial expression is the ideal most of the time.
• Eye contact – always look into your customer’s eyes. Directly address customers.
• How you look – personal grooming has a big impact on your customers. Dirty hands,
messy hair and poor dress can mean the loss of an otherwise happy customer. When
interacting with customers, dress neatly and in a professional manner so as to command
respect and to let customers know you take seriously your position.
• Shaking hands – when shaking hands with a customer a firm and professional
handshake is expected. This part of the greeting is now common among both men and
women in a professional environment.
• Be attentive - when listening to a customer, slightly lean towards your customer and
nod your head ever so slightly to indicate you are listening.
• Tone of voice – always convey friendliness and amicability. Do not raise your voice in
frustration or anger no matter how difficult or tiresome a customer may behave.
• Hand gestures - use hand movements to emphasize what you say (even on the phone)
and to emphasize your feelings.
• Personal space – this is the distance that feels comfortable between you and another
person. If another person approaches you and invades your personal space, you

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automatically move back without thought. You are uncomfortable. Leave adequate
distance between you and your customer. Adequate space is important to making
customers feel secure and unthreatened.
• Posture – slumping in a chair or leaning against a wall while interacting with a
customer are sure signs you are not interested in the customer. Your pose or posture
should express attention, friendliness, and openness. Lean forward, face the customer and
nod to let them know you are interested.
• Observation - notice how your customer behaves and what he/she reacts positively to
while you are providing service.

Remember, the little, interpersonal actions noted above mean a great deal in the area of
customer relations. They can change customer perceptions and ultimately affect the
success of your customer relations efforts.
First Impressions – You Only Get One
Making a Good First Impression Every salesperson in every business knows the
importance of making a positive first impression. Sales people know their success and
livelihood will depend on how their potential customer perceives them in the first 30
seconds of interaction. Good sales people develop an almost instantaneous rapport with
potential customers. Customers like them, follow their advice and then buy their product.

• Thoughtfulness in meeting the customer’s needs

• Personal responsibility for a customer
• Quick problem solving for customer
• Offering immediate assistance
• Friendliness
• Using customer’s name in a conversation
• Pleasant voice tone
• Polite and courteous manners

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• Neatness
Here are some factors that create a negative impression:
• Making the customer wait
• Not answering the phone promptly
• Not saying “please” and/or “thank you”
• Speaking loudly or condescendingly to customers or colleagues
• Making faces, frowning, acting distant, not smiling
• Looking disheveled or like you do not care about your appearance
• A poor handshake
• Focusing on another task while addressing or servicing a customer.
Remember, impressions stay with those you meet, especially customers, and once
registered; negative impressions are difficult to overcome. Ten Major Do’s and Don’ts of
Customer Service Every day customer service representatives face situations when what
they say makes or breaks a service interaction. Below are ten phrases that should never be
used because they frustrate and anger customers.

• “No.”
• “I don’t know.”
• “That’s not my job./That’s not my department.”
• “You are right – that is bad”
• “Calm down.”
• “I’m busy right now.”
• “Call me back.”
• “That’s not my fault.”
• “You need to talk to my supervisor.”

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Wrong Approach
Polite and Friendly Alternative “I don’t know.” “I’ll find out.” “No.” “What I can do
is…”
“That’s not my job.”
“Let me find the right person who can help you with …” “You’re right – this is bad.” “I
understand your frustrations.”
“That’s not my fault.” “Let’s see what we can do about this.”
“You want it by when?” “I’ll try my best.”
“Calm down.” “I’m sorry.”
“I’m busy right now.”
“I’ll be with you in just a moment.”
“Call me back.”
“I will call you back, what is your telephone ber.”
Practice what you preach – Dealing with the customer
Communicating with the Unsatisfied Customer How many times have you as a customer
run into the problem of excuses. There is a problem and the sales person, technician or
customer service representative is making lame excuses, namely:

• It is the fault of the computer.

• It is the fault of the other sales clerk.
• It is the fault of the chief of the department.
• It is the fault of the system.
• It is the fault of the Government
• It is just the way it is.
Sometimes it feels as if nothing is anybody’s fault or is in anybody’s department. This
is poor customer service. Good customer service means accountability, responsibility and
taking action to satisfy the customer. Having discussed the importance of knowing how

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the customer feels and WHAT NOT TO SAY, let’s address the notion of how to
communicate with an unsatisfied customer.

If your customer is unsatisfied (for just or unjust reasons), you will have to use some of
the many techniques of the customer service professional to win their support and
continued loyalty. When coming into contact with a customer, communicating with
him/her, or analyzing problems, do not forget to use the following methods or qualities of
the customer service professional: Listen: It is of primary importance when dealing with
an unsatisfied or complaining customer to listen attentively to his/her complaint, gripe,
frustration or grievance. Be patient, attentive, and friendly.

Express you are sorry: ‘We are sorry for this mistake/problem.” “We are terribly sorry
for this inconvenience.” “How can we work to solve this problem together?” “I can
imagine how frustrated you are.” Do not argue and do not interrupt: This will only
worsen the situation, especially if the customer is angry. Let him speak before you try to
discuss with him what has happened. Do not lose your self-control: If you stay relaxed,
customers will calm down. Point out facts: Listen carefully – and write everything down.
Do not make any comments until the customer is finished talking. Admit the problem: If
you can suggest a solution, do it. If not tell the customer what actions you will take and
what actions will follow. Never make the mistake of promising something you are not
able to do. Involve the customer in problem solving: Suggest the customer alternative
solutions, if they exist. Customers appreciate the opportunity to choose the ways of
problem solving.
Follow-up: Make sure that the promised measures are taken. If you do not fulfill what
was promised and ignore the customer’s complaint, the problem will grow. Next time it
will be more difficult to solve. Give the customer a “way back”: Sometimes customers
are wrong. You should let them leave with dignity, without feeling embarrassed. Do not
question the customer’s correctness: From the very beginning you should believe that the

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customer may be right. Always be open minded toward the customer’s opinion, make
them feel they deserve to be listened to. Solving the Customer’s Problems When you
listen to the customer’s complaint you take responsibility to solve the problem.

• Listen without interruption and with full attention.

• Behave without aggression, and without arguing.
• Do not extend excuses for the problem, and thank the customer for drawing their
attention to it and helping solve it.
• Express sympathy and full understanding.

Customer service problem solving involves

: • Ask necessary questions to get more complete information and completed picture of a
situation
• Find out exactly what the customer needs you to do for them
• Explain first what you can do, and then gently add what you cannot do
• Discuss in detail all opinions, and then decide what needs to be done
• Undertake immediately what was discussed • Check the result to make sure the
customer is completely satisfied
Follow -Up with the Customer
It pays to please we like companies that treat us well, and some people will even pay
more to obtain this. Here are some recent statistics that prove the point:
• People spend up to 10 percent more for the same product with better service
• When people receive good service, on average, they tell 11 people
• When people receive poor service, on average, they tell up to 20 people
• There is an 80 percent chance that customers will repurchase from a company if their
complaint is handled quickly and pleasantly
• If the service is really poor, 90 percent of customers won’t come back

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It is extremely important to make sure that all customer service measures that were
discussed or promised are in fact taken. It is not enough for the customer to experience a
satisfactory telephone or face-to-face interaction. If nothing comes of the contact they
will be even more frustrated and unhappy. Make sure you do whatever you have
promised in a timely manner. Initiative Initiative is the difference between adequate
customer service and customer service that wins you a customer for life.

Everyday examples of exceptional customer service:

• Taxi driver who opens the door for you or waits at night for you to safely get into your
destination.
• Computer technician who does computer work and then calls back a week later to
make sure your IT is functioning well.
• Car salesperson that calls a month after you buy a car to make sure it is running well. •
The petrol station attendant who washes your window or checks your oil. • The electric
company who calls and checks to make sure your service is working well and apologizes
for any “brown outs” or “black outs.”

None of these customer service people HAD to make this extra effort or go to this
trouble. These “goodwill initiatives” are beyond the call of duty and make the customer
beyond satisfied. They make the customer remember the transaction or occasion.

Customer service traits to copy

• Be on time, open on time, deliver on time
• Follow through and deliver your promises
• Go the extra kilometer for customers
• Offer you customer options
• Express empathy to upset customers

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• Treat customers as the MOST important part of your job
• Treat co-workers as if they are customers
• Give customers your name and contact details
Benefits of good customer service Beneficiary Benefit
Providers
Higher income (more sales, repeat business, referred business) Recognition Personal
satisfaction & fulfillment Less stress Higher self-awareness and self-control Greater
authenticity Happier life at work Happier life outside work

Organizations
More repeat business more referred business fewer returns Better reputation Higher
morale, happier employees Lower employee turnover Fewer complaints Higher
productivity Better work environment Higher inventory turnover Higher .

8.2 Conflict Management

Conflict management;-is the practice of being able to identify and handle conflicts sensibly,
fairly, and efficiently. Since conflicts in a business are a natural part of the workplace, it is
important that there are people who understand conflicts and know how to resolve them. This is
important in today's market more than ever. Everyone is striving to show how valuable they are
to the company they work for and at times, this can lead to disputes with other members of the
team.

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8.2.1 Some of the conflict resolution techniques are as follows:

1. Problem Solving / Collaboration / Confronting

In this method, people involved in the conflict or having a difference in opinion, they come

forward to discuss the problem at hand with a very open mind. They focus on resolving the

conflict and finding the best alternative/solution for the team. They discuss by rising above

personal emotions with the sole intention to finding what is best for the team. This leads to a

win-win kind of an outcome. Here everyone collaborates.

2. Compromising/Reconciling

Sometimes for certain conflicts, there will be a need for the involved parties to think of a middle

path wherein both parties decide to give up something and identify a resolution. This kind of

solution will be temporary for that moment and are not long lasting solution. This leads to lose-

lose kind of an outcome as both parties may feel they have lost something.

3. Withdrawing/Avoiding

In some situation one of the parties in the conflict may decide to retract from the discussion and

allows going with the other person’s opinion. Or some situation, one of the parties may decide to

completely avoid the conflict by maintaining silence. This works well in situation where one of

the parties in the conflict is emotionally charged up or is angry. Hence avoiding any conflict

resolution provides a “cooling off” period to the people involved so that they can later come back

for meaningful resolution.

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 4. Forcing/Competing

In some situations, a person with authority and power can force his/her opinion and resolves the

conflict without giving any chance to the other party/person. This leads to a win-lose kind of an

outcome. Someone may end up feeling as a loser while the other person with authority may feel

as a winner. This technique can be used if we see the conflicts are unnecessary and mostly

destructive for the team.

5. Smoothing/Accommodating

This is a technique which is used when the atmosphere seems to be filled with

apprehension/distrust among the parties involved. And no one is coming forward for resolving

the conflict. In these kinds of scenarios, one of the parties can take charge and tries to smooth the

surrounding by using nice words and by emphasizing on the points of agreements and playing

down on the points of disagreements. This can work as catalyst to break the discomfort between

the involved parties by creating a feeling of trust and encourages them to come forward and

resolve the conflict.

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LESSON 9:-BUSINESS ETHICS AND ETHIOPIAN TAX SYSTEM
Training Objectives:
By the end of this module, learners will be able to:
 Knowing basics of business ethics
 knowing and applying tax system

9.1 Define Ethics

Business ethics;-are the moral principles that act as guidelines for the way a business
conducts itself and its transactions. In many ways, the same guidelines that individuals
use to conduct themselves in an acceptable way – in personal and professional settings –
apply to businesses as well.
Relationships at Work

 Management/owner toward client/customer

 Management/owner toward employees

 Employee toward Employer, Co-workers, Customers

Business Abuse any

 illegal

 unethical

 irresponsible Act done against an Employer

Results of Business Abuse

 Higher prices

 Business Failure

 Fewer Jobs

 Unpleasant Working Conditions

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 Results of Business Abuse

 Higher prices

 Business Failure

 Fewer Jobs

 Unpleasant Working Conditions

Examples of Business Abuse

 Stealing

 Merchandise

 Money

 Shoplift
 Kickback
 Conflict of Interest
 Unauthorized Discounts
 Time

Examples of Business Abuse (Continued)

 Vandalism

 Falsify Records

 Break Confidentiality

 Ignore Safety Rules

 Misrepresent Merchandise

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9.2 Ethiopian Tax system

I. Direct Tax
According to proclamation No 286/94 any person whose permanent residence is in
Ethiopian, has to pay tax from the income that he gets within Ethiopia or abroad. If the
person is not resident of Ethiopia gets his income which has its source in Ethiopia also
should pay tax. This is direct tax, which a person pays from any income he gets. Article
five of the proclamation, defines resident as follows:

A. The one who has permanent residence address in Ethiopia; or

B. If the person has a place in Ethiopia that he frequently resides in; or
C. If the person is an Ethiopian citizen but lives abroad for the purpose of councilor
Office, diplomatic or for any other similar purposes; and
D. If the person was present for 183 days in Ethiopia within 12 months permanently or
other way, the law regards him as an Ethiopian resident and imposes him an obligation of
paying tax from any income he gets.

According to Art 8 of Proclamation No 286/94, there are certain types of income which
are treated under direct tax. These are:
A. Income from Employment
B. Income from rent of house
C. Income from business( trade) activities
D. And others
Under other we can find many sources of income such as:
• Income From Rent of Patent and Copyright
• Income From Winning Lottery
• Income From Share in Company Etc
So, any employed person should pay tax from his salary according to table A of the
proclamation. Employers should deduct the appropriate tax from the salary of their
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employees and should submit to the tax authority.

In the same way an income from rent of house is treated under direct tax. If the income is
from legal persons, the owner should pay 30% of the income if it is from an individual, it
should be paid according to table B of the proclamation No 286/94.

Income tax shall impose on taxable business income realized from entrepreneurial
activity.
Taxable business income of bodies is taxable at the rate of 30%. If the tax is from an
individual it will be taxed according to table ‘c’ of proclamation. 286/02 Accordingly:

1. An income from royalties or an income which come from rent of copyright shall be
liable to tax at a flat rate of five percent.
2. Income from hindering of technical services will be taxed at a flat rate of ten percent.
3. Income from games of chance (e.g. Lottery) shall be subjected to tax at the rate of 15%
except from winning less than 100 birr.
4. Any person who derives an income from dividends from a share company shall be
subject to tax at the rate of 10%.
5. Income from Rental of property (any land, building or movable asset) not related to a
business activity shall be taxed on the annual gross income at the rate of 15%.
6. Every person deriving income from interest on deposits shall pay tax at the rate of 5%.

These are some of sources of income that should be treated under direct tax. The
implementation of the tax proclamation and shall be the duty of the tax authority.

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II. Indirect Tax
Indirect tax is a kind of tax which the tax payer collects it from the customers indirectly
and not from his own income. This means, the tax money comes from the customers. The
tax payer adds selling price on the service or product he renders so that the customers
may pay the tax indirectly. There are three types of indirect tax:
• Value Added Tax (VAT)
• Turnover Tax; and
• Excise Tax.

According to Proclamation No 285/94 the following persons are bound to pay VAT are
the registered payers or the one who should be registered for VAT:

• Registered, according to Art 17, means one who voluntarily registered for VAT;
• The one who should be registered is a person who carries on taxable activity and is not
registered, if the person:- at the end of any period of 12 calendar months made during that
period, taxable transaction to the total value of which exceeded 500,000 birr; or
• At the beginning of any period of 12 calendar months there are reasonable grounds to
expect that the total value of taxable transactions to be made by the person during that
period will exceed 500,000 birr. The ministry of finance and Economic Development
may be directive increase or decrease the threshold. The rate of VAT is always 15% of
the income.

When we come to turn over tax the following persons are liable for payment of TOT
according to Art 3 of proclamation. No 308/95 for goods and services they sell in
Ethiopia for value added tax shall pay turn over tax unless exempted under Article 7. The
exemptions are as follows.

• The sale or transfer of duelers used for a minimum of two years, or the lease of a
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dueling;
• The rendering of financial service;
• The supply of national or foreign currency and of security;
• The rendering by religious organizations of religious or other related services;
• The rendering by religious organizations of religious or at her related series;
• The supply of prescription drugs specified in directives issued by the relevant
government agency and the renderings of medical services;
• The rendering of educational services provided by educational institutions, as well as
child care services for children at pre-school institution;
• The supply of goods and rendering of services in the form of humanitarian aid
• The supply of electricity, kerosene and water;
• The provision of transport;
• Permits and license fees- the supply of books; and
• The supply of goods or services by a worker shop employing disabled individuals if
more than 60% of the employees are disabled. the minister of finance and economic
development may, by directive, exempt other goods and services so an income from
every goods treated under turn over tax, if they are sold within Ethiopia, shall be taxed by
2% and services rendered in Ethiopian such as construction, miles and tracker services
shall be taxed 2% for any other services the tax will be 10%.

III. Obligations of Tax Payers

any tax payer should pay his tax on time. This includes:
• If he is obligated by law to have registered account he should do the same and
• He should notify his income timely.
• If the tax payer is an employer he should withhold the appropriate amount tax from the
employees and pay to the tax authority.
• Every tax payers, when asked by the tax authority, has an obligation:- to give
information.

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• To submit records and documents.
• If necessary to show the stock record for the authority when asked.

IV. Penalties
There are two forms of penalties that entail if the person does not comply with his
obligation of tax payment:
(1) Administrative penalty; and
(2) Criminal penalties.
The administrative penalty includes the sell or seizure of tax payer’s property and pays
the tax. The criminal penalty includes Imprisonment and fine.

9.3 Work in Team

A team;-is a group of individuals (human or non-human) working together to achieve
their goal.
How to Work Effectively in a Team Environment

A team environment is one in which brainstorming, collaboration and joint projects are
the norms. This type of dynamic can be beneficial and rewarding if everyone
communicates well and pulls their weight. Working effectively in a team environment
requires tact, patience, and a willingness to work in concert with your colleagues.

Get Into the Right Mindset

When you work independently, you typically set your schedule, tackle projects in a
manner that suits your preferences, and are solely responsible for outcomes. In a team
environment, ideas are shared, workloads divided, and group consensus is required to act
effectively when determining project scope and direction. Understanding and committing
to this group dynamic puts you in the right frame of mind for a teamwork environment.

Agree to Agree

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Teams are expected to produce results, so team members must all be on the same page
when it comes to common goals and objectives. Effective approaches involve an
identified project, an agreed-upon agenda of work, and a division of labor. It is often
helpful to designate one member of the team as the group leader to facilitate organization
and provide direction.

Be Respectful of Each Other

You’re never going to agree with everyone in a team environment. However, it’s
important to be respectful of others' opinions and to recognize that in a group, there is not
one single right way to approach a project. Raise legitimate questions or concerns, but
don’t belittle colleagues or call them out for what you consider to be bad ideas. Its
majority rule in most team environments, so chances are if an idea is off base, others in
the group will speak up as well.

Don’t Be a Slacker

Even when specific roles and responsibilities are assigned to team members, there’s
going to be some overlap. Someone will work a little more and someone will work a little
less than the others. While you shouldn’t jump in to pick up every dropped ball on a
project, make an effort to contribute at 100 percent, meet deadlines, and be willing to
lend a hand to advance the team’s initiatives when needed.

Don’t Gossip About Others

Gossiping about team members only leads to a sense of distrust, which can potentially
derail the good work you’re trying to accomplish. If you have a problem with a team
member, discuss it privately or involve your team leader. Don’t segregate into smaller
groups within the team. This action only fragments efforts and creates an uncomfortable
and unproductive working environment.

Recognize the Contributions of Others

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There’s no “I” in team, but that doesn’t mean members don’t like to be singled out for
their positive efforts and contributions. Acknowledge the work of others and express your
appreciation for their creativity and insight. It infuses the team with enthusiasm and
creates a sense of camaraderie that is valuable as you work collectively as a unit.

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LESSON 10:-SAVING
Training Objectives:
By the end of this module, learners will be able to:
 how manage our saving
 knowing and applying advantage of saving

Saving: - is income not spent, or deferred consumption. Methods of saving include

putting money aside in, for example, a deposit account, a pension account, an investment
fund, or as cash. Saving also involves reducing expenditures, such as recurring costs. In
terms of personal finance, saving generally specifies low-risk preservation of money, as
in a deposit account, versus investment, wherein risk is a lot higher; in economics more
broadly, it refers to any income not used for immediate consumption.
Advantage of saving
Important Benefits of Saving Money
Saving money requires a lot of discipline. However, with firm determination, it is not a
difficult habit to adopt. Many Singaporeans can benefit greatly from the habit of saving if
they choose to do it faithfully. Some of these benefits are described below:

1. Helps in emergencies:
Emergencies are always unexpected. Therefore, when they occur, the funds required are
usually not part of the regular budget. There will be pressure to look for extra funds at a
very short notice. This problem can be compounded if the emergency is a sudden illness
or car accident. It could be a matter of life and death. Accumulated savings can go a long
way in alleviating the situation. The patient will receive the required treatment
immediately. Other emergencies that could be financed through savings are funeral
expenses, urgent house repairs and even car repairs. That said, such emergencies usually
require a large sum of money. If one lacks the requisite funds, they can consider applying
for a personal loan with a licensed money lender in Singapore. This will help to ease their
finances for the time being.

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2. Cushions against sudden job loss:
Job loss is usually traumatic. It can leave a family in a huge crisis. Saving can be a great
cushion of comfort at this time of sudden loss of income. It is usually very difficult to
borrow money when one is left jobless. Therefore, those who have not been wise enough
to save will be down to zero completely after a job loss.

3. Helps to finance vacations:

Many Singaporeans would love to go on vacation at least once a year. However, this is
normally not possible because of the lack of funds. Having accumulated savings can
make the dream of going on vacation a reality. Family and friends can enjoy a time of
rest, relaxation and bonding together. Using savings to go on vacation is a much better
option than getting into debt.

4. Limits debt:
Having some amount in savings can help one to limit the amount of debt burden that they
have. Savings can be used to finance certain expenses instead of using a credit card. This
will definitely limit the amount of debt liability and will also save the amount that could
have been spent on interest. Savings also help one to avoid taking emergency loans when
urgent situations occur, further limiting existing debt.

5. Gives financial freedom:

Accumulated savings gives one peace of mind and helps him or her to enjoy financial
freedom. There is a comfort in one knowing that there is a buffer than can be used if
funds are needed urgently. This is in contrast to those who live from one salary to the
next. They immediately become stuck financially if any unexpected expense arises.

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6. Helps prepare for retirement:
There are long-term benefits of saving. One of them is having funds available for
retirement. Many retirees who rely on a pension usually do not have enough to cater to all
their needs. Making a habit of saving a small portion of one’s income over several years
can accumulate into a substantial amount of retirement funds. This will make retirement
much more comfortable.

7. Helps finance further education:

Fees for further education are a major expense in Singapore. Accumulated savings will
enable one to further his or her education without having to source funds elsewhere. This
will help one to progress quickly in his or her career. This is especially beneficial for
those who may not be eligible to apply for a personal loan or education loan.

8. Helps to finance the down payment for a mortgage:

Having savings can be the first step towards one becoming a proud homeowner. All
banks require that a mortgage applicant places a down payment of a certain percentage
before the loan is approved. The amount to be given as a deposit cannot be borrowed.
Therefore, the applicant will need to obtain it from savings or from family and friends.
Savings will be a better option because family and friends may not have the funds
required.

9. Helps to finance a wedding:

Weddings are a major expense in Singapore. Many couples end up postponing their
ceremony because of financial constraints. Having accumulated savings enables the
couple to plan their day confidently. Using savings to finance a wedding is a much better
option than taking a wedding loan, because the couple will start their married life
together free from debt.

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10. Helps to finance the down payment for a car:
Depending on the amount required for the car, one can use savings either to purchase the
car in full or pay the initial deposit for a car loan. It is more ideal for one to budget for a
cheaper car which can be fully financed by the savings, and avoid taking the car loan.
This will enable the buyer to save the money that would have been spent on interest.
From the above points, it is obvious that those who exercise the discipline of saving have
a much lower probability of entering into financial crises.

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Lesson 11:- Leading small business
Training Objectives:
By the end of this module, learners will be able to:
 Knowing small business leadership
 knowing and applying tecqiunies small business

The Business Leader;-is confident, persistent, and inventive in business. He or she can
launch a new business and will invest all their energy into establishing it. In addition, one
of their outstanding features is a talent for inspiring people. The Business Leader is a
good communicator. They know exactly how to implement business policy, and they
actively, persistently strive for success. They know how to set goals and they strive to
reach them as quickly as possible. This dynamic approach to reaching their goals allows
them to quickly develop and promote their business.
However, their approach may also have negative effects. Because the Business Leader
strives to reach success quickly, their approach does not always lead to a sustainable
business when economic conditions are unfavorable. In such situations, they will
sometimes close their enterprise in order to start a new one they believe to be more
promising in the moment. The Business Manager flourishes most in a fast-paced
environment.
Traits of a Business Leader

Cool-headed, farseeing, visionary, courageous, a good communicator, inspiring—

whichever adjectives you choose, leadership is a winning combination of personal traits
and the ability to think and act as a leader. Leaders are people who direct the activities of
others for the good of all. Anyone can be a leader, even if the only person they're leading
is themselves.

But you can't be a leader just by saying you are one. Leadership needs to be worked at.
Transform yourself into the kind of leader your small business needs with these five keys
to business leadership
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Business Leaders Plan

The core of business leadership is being proactive rather than reactive. Sure, leaders are
good in crises—but that doesn't mean they sit around letting crises develop.

Leadership involves identifying potential problems and solving them before they reach
crisis proportions—and the ability to identify and reap potential windfalls. So good
leaders analyze and plan, and adapt their plans to new circumstances and opportunities.
Need a framework to get you going? A SWOT analysis is a useful tool for tackling any
business decision.

Have a Vision

Vision is essential to good leadership. Vision provides direction and without direction,
there’s not much point to all that planning; your small business will still flail about. So if
you don’t have one already, take your first step by creating a vision statement for your
business.

Because it embodies your dreams and your passions, a vision statement will also serve as
a leadership vision.

Share Your Vision

Sharing your leadership vision helps your vision grows and your business leadership
develop. As you tell your leadership vision to others, you will strengthen your own belief
in your vision and strengthen your determination to make your leadership vision become
reality. And other people will start to see you as a person who's "going places" and
recognize you as a person with leadership potential.

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Take Charge

At this stage of business leadership, you put together your planning and your leadership
vision and take action. Whether it's implementing a specific plan to improve your
business's bottom line or responding to a crisis, you, as the leader, are the one who makes
the decisions and sees that the appropriate actions are carried out.

You can't just "talk a good game" to be a leader; you need to act and to be seen as taking
effective action for the good of your small business.

Inspire Through Example

If asked, you could easily name three people whose leadership qualities inspire you. If
asked why, you’d tell me about the things these inspiring people did or are doing.
Leadership is defined through action. Therefore, in developing your own skills, you have
to act in ways that are fitting to your leadership vision and your self—all the time. We
can all name many actions of other people whom we admire, but what inspires us is the
integrity that gives these actions meaning.

Leadership Can Be Learned

Learning to be a leader isn't easy because it takes a conscious commitment and consistent
effort to develop one's business leadership skills. But on the positive side, anyone who is
willing to make the effort can become a good leader.

And as good business leadership is critical to business success, your efforts to improve
your leadership skills will be amply rewarded. By working on these five keys to business
leadership, you can be the leader your small business needs

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Leadership skills are a must for small business owners

Leadership skills are something that you need to acquire in order to run and lead a
successful business. Everyone is not born a natural leader, and this is not necessary in
order for you to be a good leader. You can develop leadership skills over time and
through experience. It is important to invest time in developing good leadership skills, as
this will help you be a successful entrepreneur and a good boss.

The basic idea behind being a leader is that they have the vision of the business. A good
leader has to communicate that vision and method of achieving goals to the rest of team.
You will need to have determination and passion that will motivate your staff to help you
succeed in making that vision a reality. There are multiple skills that will contribute
towards you being a good leader, here are some of the essential skills which you will
need to display being a good leader

Emotional intelligence
You need to have a certain amount of emotional intelligence in order to be a good leader.
This will help you better understand yourself and others around you. Empathy stems from
emotional intelligence as you are able to relate to other people and understand their
situation. You will need to effectively demonstrate empathy and emotional intelligence to
your team and sometimes even clients to make a real connection with them.

Leading
You need to be a clear leader in the business, if you are the business owner you need to
establish your position in the business. As the small business owner you will have a clear
vision that you will need to push to achieve. Be passionate about your goals and
objectives, and make it infectious. Having your team mirror your passion and drive will
make it easier to achieve those set goals.

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Collaborating
You need to create a ‘we’ culture in your work place. Being collaborative with your team
and working together will mean better results for you and your business. For example, if
your business is looking to sign a new client, work together to find new the right new
prospects by sharing ideas and any connections your team may have. Working together
will also make your staff feel valued and significant. It will also improve working
relationships in the workplace, making a friendlier and more productive environment.
You will need to ensure that you have hired the right people for your team because they
are the people that will essentially help you make your dream a reality.

Decision making
Making the final decision is ultimately your job as the leader. Being effective in decision
making will set an impression of you to others in your team and outside your business.
Being indecisive can make you appear weak and disorganized, so take time in making
decisions and then stick to them. You should also sometimes take risks, as this is how
your business will grow. If you remain in your comfort zone, you may get stuck in a
stagnant state. You also should ensure that you monitor how you appear and what
impression you give as this will reflect on your business.

Communication
Effective communication skills are vital to your business — from internal communication
amongst you and your team, to being able to successfully communicate with your
suppliers, manufacturers and clients. You should take time to listen to your team
members, whether this is about their personal issues that could affect their work, or a
great new idea to grow the business. Ensuring that you have good level of
communication with your team is vital to success. You should also communicate any
changes or progression of the business, and keep the staff up to date with any relevant

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business news. For example, if your small business needs to start saving money, relaying
this to your staff will enable them to help you.

Constructive criticism
There will be times when you feel the need to criticize certain the way an employee is
doing something. They may be doing something that is not in line with your business
ethos, they could be a new employee. You need to take time to communicate with them
regarding the issues and you need to be constructive about it, so you can do this by
showing them the way you normally do things in your company. This is a productive way
to deliver criticism, as it won’t demotivate your employee and it will also show them how
you run your business.

Delegation
As a small business owner, you are likely aware of how to undertake all the jobs in order
to successfully operate your business. You will also feel the need to do all these things by
yourself. However you must ensure that you are using delegating skills to assign tasks to
the relevant staff. You need to make sure that you are not overworking yourself and you
are taking time out, as this will avoid dealing with any unnecessary stress. You need to
trust your staff to carry out the tasks that you have given them, as this will give you a
chance to focus on tasks that only you can carry out. Invest time in training your staff to
high standard as this will mean that you are confident in delegating to them.

There are combinations of skills you need to become a good leader. Some of these will
come naturally with experience, as well as trial and error. Your communication and
emotional intelligence will also improve with the more experience you have in leading a
team and being a leader in your workplace.

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Effective Business Leader If the following Traits

Being an effective business leader takes years of practice. The primary reason it takes so
long is because effective leadership means being able to balance a number of skills, all of
which require their own learning curve. In fact, "skills" isn't even the best word for it.
They're really more virtues than anything else. Though different leadership styles can be
used at different times to build and run an effective business, these eight character traits
should be universal in each and every leader:

1. Self-awareness
One of the most important characteristics of a business leader is self-awareness, and the
ability to understand your own strengths and weaknesses.

Very often, I run into leaders and aspiring entrepreneurs that make the mistake of going
to great lengths to cover up their weaknesses--instead of addressing them openly so an
effective solution can be found. Or worse, they aren't aware of what their weaknesses are
at all, and instead play entirely to their strengths.

Over time, this leaves them vulnerable, and their business often suffers as a result.

2. Decisiveness
Every effective leader has to learn how to make sound decisions, quickly.What so many
leaders forget is that no decision is still a decision in itself. This is known as "paralysis by
analysis." Out of fear of making the wrong decision, they end up postponing taking
action--which almost always causes a larger problem, and so on and so forth.

Effective leaders often learn this lesson the hard way. And once they do, they know the
value in moving swiftly and confidently, even if they're not entirely certain of their
direction--because they know any direction is better than no direction.

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3. Fairness
Treating others equally, no matter the circumstance, is a must-have characteristic of any
effective leader, period.

Without fairness, you have subjectivity--and subjectivity is very difficult to scale. As a

leader, you don't have the luxury of looking at each and every situation, conflict, or
personal issue with a detailed eye. What's more important is having principles and
practices in place that ensure you reach positive desired outcomes, faster. This means
handling internal company issues with clearly established principles that are fair to all.

4. Enthusiasm
If you want people to follow you, then you have to lead them with enthusiasm. This is
something I work hard to instill in the people I work with--especially my sales teams.
And the best way to do this is to lead by example. No employee will want to work for
someone who doesn't embody the same characteristics they're being told to have and
hone themselves. And no leadership team will want to pour blood, sweat, and tears into a
business that is run by someone less enthusiastic. As a leader, it's your job--not to tell, but
to show--those around you what enthusiasm and a true commitment to greatness looks
like on a daily basis.

5. Integrity
Earning the respect of your team without having to remind them of your seniority is the
definition of integrity. Too many leaders lean on their titles as a crutch. They excuse their
own behavior by saying, "I'm the founder. I'm the CEO. I'm the manager," instead of
earning people's respect by acting and behaving appropriately. This is a concept I talk
about at length in my book.

Integrity is about more than just doing the right thing. It's about standing for something
bigger than yourself, and setting a precedent within your business. After all, a company's
culture is a reflection of its leaders. Which means it all starts with you?
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6. Knowledge
A talking head is worthless. Every business leader needs to be as much of a practitioner
as they are a facilitator. Too many CEOs get comfortable in their corner office and stop
being present in the day to day of their own businesses, which leads them to fall out of
touch with employees, their peers, and sometimes even their industry at large. If you
want to remain a leader--of your market and within your own company--it's crucial that
you keep a finger on the pulse of what's happening, and stay on top of relevant facts,
figures, and best practices.

7. Creativity and Imagination

The ability to come up with new and innovative ideas that propel your business forward
is what allows leaders to stay around for the long term.

Building a profitable company isn't the hard part. What's hard is keeping a company
profitable over the course of a decade, two decades, and three decades. And what's even
harder is taking a profitable company and doubling its revenue over, and over, and over
again.

Too many entrepreneurs, founders, and CEOs think this growth process is a directly
reflection of hard work. "Put the hours in, and you'll get the results you want out the other
side."

But that's just not true.

There is a significant amount of creativity required in order to propel your business

forward. Because often times, it's not a straight line--which means what's required is not
"more hard work," but a different approach altogether.

8. Endurance
And finally, every leader knows that what's more important than anything else in the
world is the ability to persevere--even when things go wrong.
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Part of being a leader is learning to be alright with ambiguity. You won't have all the
answers. You won't always know where to move next. You'll have your wins, and you'll
have your losses. But through it all, you can't lose your sense of confidence. You have to
always believe in yourself, and your ability to see things through to the end.

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Lesson 12 Concept of E-commerce

Training Objectives:
By the end of this module, learners will be able to:
 Knowing explaining the concept e-commerce
 applying e-commerce in business environment
Define E-commerce

E-commerce ;- Ecommerce, also known as electronic commerce or internet commerce, refers to

the buying and selling of goods or services using the internet, and the transfer of money and data
to execute these transactions. Ecommerce is often used to refer to the sale of physical products
online, but it can also describe any kind of commercial transaction that is facilitated through the
internet.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers
specifically to the transaction of goods and services.

The history of e-commerce

The history of ecommerce begins with the first ever online sale: on the August 11, 1994 a man
sold a CD by the band Sting to his friend through his website Net Market, an American retail
platform. This is the first example of a consumer purchasing a product from a business through
the World Wide Web—or “ecommerce” as we commonly know it today.

Since then, ecommerce has evolved to make products easier to discover and purchase through
online retailers and marketplaces. Independent freelancers, small businesses, and large
corporations have all benefited from ecommerce, which enables them to sell their goods and
services at a scale that was not possible with traditional offline retail.

Global retail ecommerce sales are projected to reach $27 trillion by 2020.

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Benefits of e-commerce for Business Owners

1. e-commerce has lower upfront costs.

2. You can run your business from home.
3. Building an e-commerce website can be fast and easy.
4. You tap into a larger customer base
6. You can sell 24/7, without having to be on full time
7. You can start small and scale up.
8. Online marketing can be affordable.
9. Online marketing is targeted and measurable.

Types of Ecommerce Models

There are four main types of ecommerce models that can describe almost every transaction that
takes place between consumers and businesses.

1. Business to Consumer (B2C):

When a business sells a good or service to an individual consumer (e.g. You buy a pair of shoes
from an online retailer).

2. Business to Business (B2B):

When a business sells a good or service to another business (e.g. A business sells software-as-a-
service for other businesses to use)

3. Consumer to Consumer (C2C):

When a consumer sells a good or service to another consumer (e.g. You sell your old furniture
on eBay to another consumer).

4. Consumer to Business (C2B):

When a consumer sells their own products or services to a business or organization (e.g. An
influencer offers exposure to their online audience in exchange for a fee, or a photographer
licenses their photo for a business to use).
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Examples of Ecommerce
Ecommerce can take on a variety of forms involving different transactional relationships
between businesses and consumers, as well as different objects being exchanged as part of these
transactions.

1. Retail:
The sale of a product by a business directly to a customer without any intermediary.

2. Wholesale:
The sale of products in bulk, often to a retailer that then sells them directly to consumers.

3. Drop shipping:
The sale of a product, which is manufactured and shipped to the consumer by a third party.

4. Crowd funding:
The collection of money from consumers in advance of a product being available in order to
raise the startup capital necessary to bring it to market.

5. Subscription:
The automatic recurring purchase of a product or service on a regular basis until the subscriber
chooses to cancel.

6. Physical products:
Any tangible good that requires inventory to be replenished and orders to be physically shipped
to customers as sales are made.

7. Digital products:
Downloadable digital goods, templates, and courses, or media that must be purchased for
consumption or licensed for use.
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 8. Services:
A skill or set of skills provided in exchange for compensation. The service provider’s time can
be purchased for a fee.

E-Commerce success story: The history of Amazon

 One of the most interesting things about online business is that there’s always a trail to follow.
Even the biggest ones had to grow step by step, and we can learn from what that growth means.
Today we’re going to focus on the success story of Amazon: the biggest of them all, and an
example for almost all ecommerce businesses.
I want you to look back and dissect how Jeff Bozos went from managing an online bookstore to
an international monster that threats to devour all sectors and niches in its way.

 How was Amazon born?

Basically, the history doesn’t defer much from any other startup we can think of.

In 1994, the Internet was already a reality. In fact, it is considered one of the years with the
fastest growth in the internet community. In 1994, the first online universal bank service
appeared thanks to the Stanford Federal Credit Union, and it was even possible to order a pizza
online with Telepizza.

Jeff Bozos worked on Wall Street. He was a 30-year-old executive who had graduated from the
prestigious university Princeton. During the first part of his career, he worked in diverse
business areas related in one way or another to the technology.
At some point, Bezos knew that the Internet was going to change the consumption habits of
almost all people that it was something that was already happening in front of his eyes and that
he wanted to be part of that paradigmatic change.

So, he decided to bet on the online sector. He quit his well-paid job and bet it all on his online
bookstore (including his parents' savings which help him to fund this adventure)

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 But, why sell books and not something else? Was it a matter of personal taste? A hobby? Love
for culture?

 Since the beginning, the choice was really meditated. According to Jeff Bezos, when he was
deciding what he wanted to sell, he made a matrix of cheap and high-demand products. Books
were in the middle of both axis, thus he chose that niche.

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 Amazon origins
The success was almost instantaneous. The company was founded in a Garage (literally). And in
just two months, Amazon was selling 20,000 dollars per week and was present in the 50 U.S.
States and in more than 45 different countries.

It was something virtually unprecedented, and for Bezos, part of a business model based on the
catalog deepness from the start, when it already offered more than a million of titles.

Obviously, in the beginning, it was light years from what it is today, but he was decided on
turning his company into the “The biggest bookstore of the whole world”. And from that point,
the motto passed to be part of his philosophy.

 Its first competitors

Now that we’re talking about competitors, it is interesting to study what happened to Amazon’s
competitors.

At the online level, it’s not even worth it to mention who they were as none of them were a threat
to Amazon. However, there were some strong offline competitors, such as Barnes & Noble,
which had (and still have) one of the biggest book networks in the United States and, thus, in the
world. Barnes & Noble was established in 1873 and since then, its Business model has only
changed a bit.

It’s striking that, having everything within reach to evolve from a dominant position in the
market, they let themselves be surpassed by a newly created company with no trajectory or
specific interest in literature beyond the business.

With some frustration, Barnes & Noble even said that Amazon was not the world’s biggest
bookstore; it even said Amazon was no bookstore but a book broker in reference to Amazon’s
business model

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 APPENDIX II

Dhabbata Daldala Jimlaa Fi Qinxaboo ABC

Galmee Gurgurtaa Guyyaa (Sales Register)

Guyyaa Ibsa Baayyina Gatii Tokko

Gurguurtaa Qr. Sa

Ida’ama

Gurguurtaan Guyyaa(Bankitti Galii Ta’a) Tokkon Tokkon Isaa Galmee Galii Gabatee
Bayy’ee Irratti Galmaa’aa

Lakk___________________
Guyyaa________________
101
 Dhabbaata oomisha oomishu ABC
Nagahee Gibira dabalata gurgurtta(VAT)
________________________irraa Maqaa kaffaalaa__________________
Tessoo _______________ Tessoo________________
Lakkoofsa Gibira dabalata Gurguurtaa____Lakkoofsa Gibira dabalataa _______
Lakkoofssa adda gibirra kafalaa _________ Lakkoofsa gibira kaffalaa_________
Guyya itii galmeefame________________ Guyya itii galmeefame______________
Sabaaba kaffaltii__________________________________________________________

Lakk Ibsa Baayyina Hanga kaffatii Kaffaltii

waliigalaa

Ida’amma waliigalaa A
Taksii dabalaataa15%
(B)
15% X A
Gatii Waliigaala A+B
Hanga Mallaqa jechaan________________________________________________
Lakoofsa cheekiii _____________________________________________________
Maqaa guutuu mallaaqa fudhate______________________________________
Facaatii
Koppii 1 ffaa - kaffaalaaf
“ 2 ffaa -kutaa herreegaatiif
“ 3 ffaa –haftuu xiraazii

Guyyaa__________

102
 Dhabbata Daldala Jimlaa Fi Qinxaboo ABC

Ajaja Baasii (Payment Voucher)

-----------------------------------------------------------------------------------------------------------
Tiif
Sababa
Kaffaltii------------------------------------------------------------------------------------------
Hanga Mallaqaa
Lakoofsaan-------------------------------------------------------------------------
Hanga Mallaqaa
Jechaan-----------------------------------------------------------------------------
Lakk.
Cheekii--------------------------------------------------------------------------------------------Kan
Ajaje------------Maqaa Kaffalaa-------------- Maqaa Fudhata--------------
Mallattoo------------- Mallattoo--------------------- Mallattoo-----------------------
Guyyaa------------- -- Guyyaa------------------------ Guyyaa------------------------

Intarpiraayizii Daldala Jimlaa fi Qinxaboo ABC

Nagahee Galii Meeshaa

Guyyaa-----------

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Maqaa dhiyeessaa--------------------------------------- Lakk gaffii bittaa-----------------
Lakk.sanada (Invoice No) dhiyeessa-------------------

T.L Ibsa Baayina Galii Gatii tokkoo Gatii waliigalaa Qorannoo

Lakkoofsa ajajame kan ta’e
meeshaa

Ida’ama

Kan kenne Kan fudhate

Maqaa----------------------------- Maqaa-------------------
Mallattoo --------------------------- Mallattoo ----------------
Guyyaa ------------------------------ Guyyaa ---------------------
Facaatii
Koppii duraa- kutaa herreegaaf
Koppii- 1ffaa kennaa
Koppii -2ffaa- Mana kuusaatiif
Koppii- 3ffaa- Xirazii keessatti hafa

Intarpiraayizii Daldala Jimlaa fi Qinxaboo ABC

Sanada Baasii Meeshaa

Lakkofsa------------
Guyyaa-------------
104
------------------------------------------------------------------------------------------------------------
-tiif

T.L Lakkofsa Ibsa Safartuu Bayyiina Gatii Gatii Qorannoo

meeshaa tokkoo waliigalaa

Ida’ama

Kan heyyame Kan kenne Kan fudhate

Maqaa --------------------------- Maqaa------------------ Maqaa-------------
Mallattoo ---------------------- Mallattoo -------------- Mallattoo----------
Guyyaa ------------------------- Guyyaa -------------------- guyyaa---------

Facaatii

Koppii Duraa- kutaa herreegaaf

Koppii 1ffaa Kan fudhateef
Koppii 2ffaa- Mana kuusaatiif

Kardii Herreega Qusannoo(Payable

Lakk. Herreegaa-------------

Guyyaa Ibsa Deebiitii Kireediitii Madaalii kireediitti

105
Waldaa Hojii gamtaa liqii fi qusannoo ABC
Dabatari ittiin Herrega baankii Sochootu hordofan
Guyy Ibsa Lakk Galii Baasii Madaalii
a cheekii baankii

Waldaahojii gamtaa liqii fi qusannoo ABC

Dabatari ittiin Herregni Quusannaa baankii Hordoofamu
Guyy Ibsa Lakk Galii Baasii Madaalii
a cheekii baankii

106
 Waldaa hojii gamtaa liqii fi qusannoo ABC
Araarsa herrega baankii sochootu Kan--------------------------------
Madaalii haala ibsa Baankiitiin
xxx.xx
Hirdhisuu cheekii baankii hin geenye (Outstanding check) (xxx)
Ida’uuherreega baanki hin gale (Deposit Transit) (xxx)
(xxx.xx)
A. Madaalii siraa’e xxx.xx
Bu’ura galmee herreegaatiin
xxx.xx
Tajaajila hirdhisa baankii kan hirdhate (xxx.xx)
B.Madaalii siraahe xxx.xx
107
 Kan qopheese-------------------------

KAARDII KUUSAA/ MEESHAA

BIN CARD
Maqaa Mana Hojii Dhuunfaa
Private Body __________________________ Lakk.Fuula (Page No.) ______________
Adda baasa Meeshaa/Item Code. --------------------------------------------------------
Akaakuu meeshaa/Description of item---------------------------------------------------
Safartuu/Unit ------------------------Hamma Xiqqaa/Minimum level ----------------
Hamma Guddaa/Max. Level -----------------------------------
Lakk.Sossoneessaa/Shelf No. _____________________

Guyyaa Lakk.Heertu Hamma Hamma Haftee Baasii

Date u Fudhatame( Baasiita’e(Baa irraa Qorannoo
Ref. No Galii) sii) Remain Remark
(Nagahee Quantity Quantity
Galii/Baasii) Received Issued

108
 KAARDII GALMEEFFAMA ISTOOKII
STOCK CARD
Maqaa Mana hojii /Private Body _________Lakk.Fuula /Page No.
_________
AddabaasaMeeshaa /Item Code _____________
Akaakuu meeshaa/Description of item_A-5
Safartuu/Unit _______________ HammaXiqqaa / Minimum level
_________
HammaGuddaa/ Max. Level ___________________
Lakk.Sossoneessaa/Shelf No. _____________________

Guyy Lakk.
aa Heertu Galii/ Receipt Baasii/Issue Madaala / Balance
Date u
Posting Baayyi Gatii Gatii Baayyi Gatii Gatii Baayyi Gatii Gatii
Refere na tokkoo maraa na tokko mara na tokkoo mara
nce Qty. Unit Total Qty. o a Qty. Unit a
Price value Unit Total Price Total
Price value value

109
Walumaa galatti (Generaliy)
Qabeenya (Inventory) = Istook Kaardii (Stock Card) =Biin kaardii (Bin
Card)

110