Negotiator Role: The entrepreneur has to negotiate on behalf of the business both with the other categories of labour and other outside sources. Advantages of Entrepreneurship (a) Provides Self Employment for the entrepreneur (b) Status and pride-there is a feeling of prestige when one establishes a business and it succeeds. (c) Entrepreneurship often provides an employment and livelihood for next generations as well. (d) Freedom to use own ideas – Innovation and creativity (e) Unlimited income / higher retained income – Bill Gates has risen to become richest in the world in a single life time through entrepreneurship (f) Independence (g) Satisfaction h) Raises the standard of living of the citizens i) Leads to overall national development. Disadvantages i) Possibility of losses ii) Long working hours iii) Political interference and unfavourable policies by the government may lead to business failure. iv) Poor decision making may lead to losses. v) Competition of similar products by various firms. vi) Shortage of raw materials. Page 4 of 8
vii) Poor performance of the economy. viii) Uncertainity in terms of income especially at the beginning. ix) Inadequate capital leading to low returns Contribution of entrepreneurship to national development 1. Effective use of resources 2. Increase in per capita income 3. Improvement in physical quality of life. 4. Provision of market efficiency. Due to competition and hence lower prices and quality goods. 5. Growth of infrastructure 6. Promotion of technology e.g. New technology of making gas burners that bio fuel from cow dung. 7. Export promotion. 8. Capital formation A crucial element for economic growth 9. Employment creation. 10. Industrialisation 11. Supply of quality goods and services. Importance of entrepreneurship Provides larger employment – Entrepreneurs provide employment for self as well as other people and is source of employment creation. Results in wider distribution of wealth – This is a logical sequel of above issue. Higher the employment, greater the distribution of wealth Mobilizes local resources, skills and savings (d) Accelerates the pace of economic development – Entrepreneurship is the govt’s one of the most trusted vehicles for economic development (e) Stimulates innovation & efficiency Page 5 of 8
Role of industrial development in economic growth 1. Modernisation of Industry: Industrial development is necessary for modernisation of agriculture. In Kenya, agriculture is traditional and backward. The cost of production is high and productivity is low. We need tractors, threshers, pump sets and harvesters to modernise agriculture. To increase productivity, we need chemical fertilizers, pesticides and weedicides etc. These are all industrial products. Without industrial development, these goods cannot be produced. Agricultural products like jute, cotton, sugarcane etc. are raw materials. To prepare finished products like flex, textiles and sugar etc. we need industrialisation. So industrial development is necessary for modernisation of agriculture. 2. Development of Science and Technology: Industrial development encourages the development of science and technology. The industrial enterprises conduct research and develop new products. Ethanol in the form of biofuel is an example of industrial development. Due to industrialisation, countries have made progress in atomic science, satellite communication and missiles etc.
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